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People and communities with limited resources are a major focus of public policy. While policymakers might disagree in theory on whether or to what extent government should act to protect the economic well-being of individuals and families, the federal government in fact spends large sums of money on numerous programs targeted toward those with limited income and assets. This report attempts to identify and analyze these programs and provide a broad overview of the policies underlying them. In FY2009, federal spending on programs for people with low income was almost $708 billion, and totaled nearly $578 billion the previous year. Most of the growth between the two years was related to the recession and associated policy responses, with almost two-thirds (64%) of the increase coming from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). In both years, four programs accounted for almost 60% of total spending, and 10 programs accounted for more than 75%. The distinguishing feature of federal programs examined here is their explicit focus on low-income populations, as distinct from social insurance programs such as Social Security, Medicare, or Unemployment Insurance. Social insurance programs aim to protect American workers universally against lost wages and work-related benefits due to retirement, disability, or temporary periods of unemployment. They are financed in large part through contributions from workers and employers and their aggregate spending is much larger than programs intended specifically for those with low income. Social insurance programs play a major role in reducing poverty among significant segments of the population. In contrast to social insurance, programs examined in this report are funded through general revenues and provide benefits and services to people with limited income either by explicitly tying eligibility to a measure of income, or by targeting assistance through funding allocation formulas or other need-related mechanisms. They attempt to ameliorate or mitigate the effects of low income by providing cash or noncash benefits to help people meet basic needs, such as food, housing, and health care. They also seek to address root causes of economic disadvantage by providing education, training, and other services to improve people's employability and earnings capacity. Some programs combine these purposes by conditioning aid on participation in work or training or providing incentives to engage in these activities. Finally, some programs target assistance to communities with significant concentrations of low-income people to compensate for their low tax capacities, and help provide revenues to support benefits and services to residents. These programs are extremely diverse in their purpose, design, and target populations. Many were created independently of one another, at different times and in response to different perceived policy problems. They also changed over time in response to various societal and other factors. "Social welfare," "social safety net," and "public welfare" are generic terms sometimes used to refer to these programs; however, there is no single label that best describes all programs included in this report. Key findings of the report are presented in the Summary, above. The body of the report is organized as follows: The report begins with a very brief history of federal low-income policy, to provide context for the subsequent discussion of current programs. The report then gives an overview of current federal spending on benefits and services for low-income people, including a review of the budgetary classification of these funds (mandatory or discretionary). The next section looks specifically at the 10 largest programs, which together account for three-fourths of all spending in the report, followed by an overview of all programs, organized by major category in order of FY2009 spending: health care, cash aid, food assistance, housing and development, education, social services, energy assistance, and employment and training. The next two sections look in greater detail at the ways in which benefits and services are directed toward people with limited income, either by establishing explicit eligibility criteria for individuals or families, or by targeting assistance toward communities or entities based on a measure of need. These sections look at use of the federal poverty guidelines and other income measures in defining eligibility or otherwise targeting assistance, as well as criteria that enable certain categories of people to qualify automatically. The form of federal assistance—formula grants, competitive or discretionary awards, direct payments to individuals—is the focus of the next section, which also looks at the immediate recipients of federal funds, such as states, local governments, and nonprofit organizations. The section discusses matching or other requirements for nonfederal spending, and very briefly addresses the participation of Indian tribes and U.S. territories. The report generally does not discuss the value of benefits or services provided; however, the next section shows maximum benefit levels under selected cash and near-cash benefit programs. The report concludes by identifying potential questions for further analysis. The report includes several appendixes: Appendix A discusses the methodologies used to prepare the analysis; Appendix B provides overview tables of programs included in the report; and Appendix C is a series of short fact sheets on each program. Appendix D gives references to information about the federal poverty guidelines and other income measures and eligibility tests. The analysis in this report required numerous decisions about which programs to include, how to categorize them, and what measure of federal spending to use. The methodologies chosen are described in Appendix A . Readers should be aware, however, of the following caveats: The report refers to the target population of these benefits and services as persons with "low" or "limited" income, rather than "poor" people. Although some programs limit participation to individuals with income below federal poverty guidelines, income eligibility criteria vary widely and frequently include people with income above the federal definition of poverty. The number of programs included in this report is not meaningful. While fact sheets are presented for 82 "programs," some could have been characterized as more than one program and others could have been consolidated. In addition, only programs with new obligations of $100 million or more in a given year are included. If smaller programs were included, the overall number of programs would be larger, but the analysis would essentially be unchanged. The assignment of programs—and therefore dollars—to broad categories (health care, cash aid, food assistance, etc.) is not perfect. Certain programs provide multiple types of assistance and spending could not be disaggregated, so spending was assigned to a single category. Some programs are ambiguous; different analysts might categorize them differently. The analysis might be changed somewhat if different assignments had been made. The report does not include tax programs, with the exception of direct spending for the refundable portion of the Earned Income Tax Credit and the refundable Additional Child Tax Credit. The report does not provide long-term trend data on spending. For reasons explained in Appendix A , obligations are generally used as the measure of spending. While obligations are the most consistent program-specific measure available for the majority of programs included here, they are difficult to trace backward. Spending is provided for FY2009 because it is the most recent year for which final amounts are available for all programs included. Because FY2009 was an unusual year, however, with a large infusion of funding from the economic stimulus law (ARRA), FY2008 spending is also shown. The report provides a snapshot of policies and spending for low-income programs in FY2008 and FY2009. It does not address the effectiveness of these programs in meeting their policy goals. Readers familiar with the CRS series of reports entitled Cash and Noncash Benefits for Persons with Limited Income should know that this report is not an update of that earlier series. This report is meant to replace that series but it uses different methodologies and is therefore not comparable to the Cash and Noncash reports. See Appendix A for an explanation of the differences. A review of the evolution of federal policy for low-income people provides useful context for understanding today's programs and policies. The following is a quick overview of key milestones, such as the New Deal of the 1930s and the Great Society of the 1960s. While many current programs trace their roots to these eras, few exist today in the same form. Today's programs reflect policy changes enacted over many decades in response to numerous factors, particularly the shift in societal expectations about mothers working outside the home. Federal aid initially focused on groups who were not expected to work, including mothers of dependent children; however, federal policy today generally favors work among able-bodied aid recipients and includes incentives to "make work pay." Federal policy also expanded over time to include efforts to address root causes of poverty and disadvantage, in addition to helping people meet their basic needs. Federal involvement in providing benefits and services for people with low income generally began in the first part of the 20 th century, largely after the Great Depression overwhelmed the resources of states, local governments, and private organizations, which previously had borne primary responsibility for helping the disadvantaged. With some key exceptions, such as veterans' benefits and tax credits for low-wage workers, state and local governments still play a significant role in most programs intended for low-income populations, regardless of whether they are partially or fully federally funded. Benefits for veterans, initially to meet the medical needs of those who became disabled during service, are among the oldest in the United States, and date back in some form to the beginning of the country. By the early 1900s, these benefits had grown to include medical care and cash assistance for the indigent as well as veterans with disabilities, including assistance for dependents and survivors of veterans. These were the primary benefit programs administered by the federal government until the Great Depression of the 1930s. The New Deal was the federal government's response to the Depression, and the Social Security Act of 1935 was its cornerstone. The act brought the federal government into the fields of social insurance and cash relief for populations who either could not work or who society at that time did not expect to work. The original act established income security programs for aged and retired workers and for temporarily unemployed workers (the beginning of today's Social Security and Unemployment Compensation programs). It also authorized federal grants to states to make cash aid payments to two groups, in addition to the elderly, who were not expected to work. These groups were fatherless (dependent) children and the blind, although within these categories, the act gave states the authority to define specific eligibility and benefit levels. Aid to Dependent Children, as created in 1935, was amended over the succeeding decades and became Aid to Families with Dependent Children in 1962. Aid was provided to parents (typically single mothers) in addition to the children. However, at the same time, expectations about mothers' work began to change. Starting in the late 1960s and continuing over the next 30 years, Congress imposed work registration and work or training requirements on certain parents receiving cash benefits. In 1996, Congress replaced AFDC with Temporary Assistance for Needy Families (TANF), which established time limits on the receipt of benefits and conditioned cash aid on participation in work activities. States continue to make key decisions regarding eligibility and benefit levels under TANF, and have the added flexibility to use funds for noncash services. (In fact, the majority of TANF funds are now used for noncash services, such as social services and employment-related activities.) The 1996 law also gave states more federal funding for child care for low-income working families. The 1930s also marked the federal government's entry into the field of housing. In response to trouble in the mortgage market resulting from the Depression, the U.S. Housing Act of 1934 encouraged lending for housing construction through a new Federal Housing Administration. The U.S. Housing Act of 1937 subsequently created the low-rent Public Housing program, which required states to establish quasi-governmental local public housing authorities (PHAs) to administer the program. In 1949, Congress declared the federal goal of "a decent home and a suitable living environment for every American family," and over the next two decades it enacted provisions to provide affordable housing through incentives to private developers to build low-cost housing. The Housing Act of 1974 created a new rental assistance program, known as Section 8, which provided rental subsidies for private properties, in lieu of development subsidies. Section 8 was later expanded to include portable rental vouchers administered by PHAs. While Section 8 vouchers have effectively replaced subsidies for new development, many housing units that were subsidized under these earlier programs still provide affordable housing today. They are administered by PHAs or private properties, under contract with the federal Department of Housing and Urban Development (HUD). An early version of food stamps existed for several years during the Depression and was revived in 1961 as a small pilot program. The program became permanent during the Great Society, through the Food Stamp Act of 1964. Originally, states set their own eligibility rules, and benefits varied regionally. This changed in 1971 when the program was effectively converted to a national income guarantee, providing an amount of food stamps to participating households sufficient to buy items equivalent to the Agriculture Department's "economy diet." However, recipients had to contribute a monthly "purchase requirement" based on their income in order to obtain benefits. The law set nationally uniform eligibility rules and federally paid benefit levels, but states continued to administer the program. Congress enacted a number of major policy changes to the Food Stamp program over the next three decades, including removal of the purchase requirement in the late 1970s, allowing automatic eligibility for those receiving other public assistance benefits or services in 1985, and limiting access for able-bodied adults without dependents in 1996. In 2008, the Food Stamp program was renamed the Supplemental Nutrition Assistance Program (SNAP). States continue to administer SNAP and have some leeway in determining eligibility through application of the automatic eligibility rules, but benefit levels remain federally financed and nationally uniform. A central feature of the Great Society was the War on Poverty, and the Economic Opportunity Act of 1964 was its primary legislative vehicle. That act and its subsequent amendments authorized numerous programs that sought to address the causes of economic disadvantage, and to ameliorate its effects. Programs were designed to meet the multiple needs of low-income preschool children and their families, and the employability needs of low-income youth and adults, and to give low-income people a formal role in planning services for their communities. Modern-day programs with origins in the War on Poverty include Head Start, Job Corps, Adult Basic Education, components of the Workforce Investment Act, the Legal Services Corporation, Weatherization Assistance, the Low-Income Home Energy Assistance Program, School Breakfast, the Summer Food Service Program, the Child and Adult Care Food Program, and the Community Services Block Grant. The Great Society also focused on education; both the Elementary and Secondary Education Act and the Higher Education Act became law in 1965. The Great Society also saw the creation of Medicare and Medicaid, which have grown into the nation's largest health care programs. Medicare was created in 1965, providing health coverage as a form of social insurance to elderly and disabled individuals with a significant attachment to the workforce. The same legislation created Medicaid, a means-tested entitlement that finances medical services and long-term care for specified low-income and categorical groups. Medicaid replaced two earlier programs of federal grants to states that provided medical care to welfare recipients and the elderly. Both Medicare and Medicaid have been amended numerous times over the years, expanding both eligible populations and services. A prescription drug benefit was added to Medicare in 2003, which includes a subsidy for low-income beneficiaries. And most recently, the 2010 health reform law—the Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended by P.L. 111-152 )—significantly expanded Medicaid, so that, beginning in FY2014 (or potentially sooner, at state option), Medicaid will cover low-income childless adults in addition to the program's traditional target populations of low-income parents and children, and elderly and disabled individuals. The original Social Security Act's grants to states for cash aid to needy blind and aged individuals were expanded over time to include people with disabilities. However, in contrast to cash aid and related programs for needy families with children, which remain state-administered, Congress "federalized" programs for low-income aged, blind, and disabled people in 1972. These earlier programs were replaced by Supplemental Security Income (SSI), which has uniform federal minimum eligibility and benefit rules (rather than state-determined policies) and serves blind and disabled children as well as adults. Also in the early 1970s, Congress considered but did not enact welfare reform legislation that would have replaced AFDC with a federal minimum cash guarantee for poor families, including working families with two parents. Instead, in 1975 Congress enacted a temporary "work bonus" or wage supplement intended to return a portion of Social Security taxes to low-income working households. This program was made permanent in 1978 and became the current Earned Income Tax Credit (EITC). The credit has been expanded several times over the past 30 years and is currently one of the largest cash assistance programs for low-income households, reflecting the prevailing policy goal of "make work pay." Consistent with the emphasis on promoting work for low-income families, the welfare reform law of 1996 created TANF, which, as noted above, conditions cash aid on participation in work activities, and also expanded funding for child care. In the year following enactment of welfare reform, low-income families not sufficiently poor for Medicaid gained access to health insurance for their children through enactment of the State Children's Health Insurance Program (CHIP) in 1997. The Child Tax Credit and refundable Additional Child Tax Credit (ACTC) also were created in 1997, although the impact of the ACTC originally was limited. In 2001 and subsequent years, the ACTC was expanded so that it now targets assistance toward low-income families. Most recently, Congress enacted the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ) in 2009, in an effort to stimulate the economy during recession. While ARRA did not create significant new initiatives for people with limited income, it revised and expanded certain existing policies, at least temporarily, to make them more responsive to the needs of people and communities affected by the downturn. As the following discussion shows, ARRA resulted in a substantial increase in spending on benefits and services for low-income populations between FY2008 and FY2009. The bulk of funding provided by ARRA was intended to be spent during FY2009 and FY2010. Federal spending on benefits and services for low-income people totaled $708 billion in FY2009 and $578 billion in FY2008. These programs generally seek to mitigate the effects of low income by helping people meet basic needs such as health care, food, or shelter, or to address the root causes of economic disadvantage through services, education, or job training. Notably, few programs have poverty reduction as an explicit goal or purpose. Key target populations for many of these programs, including some of the largest, include low-income elderly and disabled individuals, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others. Figure 1 illustrates the composition of spending, by category, in FY2008 and FY2009. Figure 2 displays FY2008 and FY2009 spending by category, and also highlights the portion of spending in FY2009 attributable to ARRA. Table 1 shows this information, both overall and by category, and the percent change in spending from FY2008 to FY2009. See Appendix Table B -1 for a listing of specific programs in each category. As Figure 1 shows, spending for health care dominates all other categories, accounting for close to half (45%) of total spending for limited-income populations in FY2009. Cash aid is the second largest category but trails health care by a wide margin, with 18% of spending in FY2009. Food assistance is third (11% of FY2009 spending), followed by housing and development (almost 9%), education (8%), social services (6%), energy assistance (almost 2%), and employment and training (1%). Overall spending on federal benefits and services for low-income populations grew by 22% between FY2008 and FY2009, largely due to policy responses to the recession. Almost two-thirds (64%) of the additional spending was provided under ARRA, the economic stimulus enacted in February 2009. Some large entitlement programs (e.g., Medicaid, the Supplemental Nutrition Assistance Program (SNAP)) saw additional growth in spending beyond that provided under ARRA, likely due to an increase in eligible and enrolled individuals as a result of the economic downturn. Spending growth from FY2008 to FY2009 was uneven among categories. The largest percentage increase was for energy assistance, which represented less than 1% of all spending in FY2008 and more than tripled in FY2009. Spending for housing and development programs rose by 51%, education by 39%, and employment and training by 38%. Spending on food assistance increased between the two years (32%), as did spending for health care (24%) and social services (22%). Spending for cash aid appeared to drop by 3% between FY2008 and FY2009; however, this was the result of a one-time $300-per-child tax rebate, which was included as spending under the Additional Child Tax Credit (ACTC) in FY2008 but was not targeted toward low-income families. In terms of dollar increases between the two years, health care saw the largest growth, with $61 billion of additional obligations in FY2009. More than half of this increase (54%) resulted from provisions in ARRA that temporarily raised the federal share of Medicaid costs. However, growth in Medicaid spending—regardless of ARRA—accounted for another 30% of the dollar increase in low-income health spending from FY2008 to FY2009. The next largest dollar increase was for housing and development programs, which grew by $20 billion between FY2008 and FY2009. Most of this growth (71%) resulted from additional appropriations provided under ARRA for such programs as Public Housing, Homeless Assistance Grants (specifically for a new Homelessness Prevention and Rapid Re-Housing Program), and Section 8 Project-Based Rental Assistance. ARRA also funded two temporary grants related to the Low-Income Housing Tax Credit. Spending for food assistance rose by almost $19 billion between FY2008 and FY2009. More than a quarter of this growth resulted from ARRA provisions that increased the dollar value of SNAP benefits. As noted above, however, SNAP grew significantly regardless of the ARRA provisions, as more households became eligible and enrolled in the program during the recession and its aftermath. Additional SNAP obligations unrelated to ARRA accounted for 60% of the FY2009 spending increase in the food assistance category. Education spending grew by $16 billion from FY2008 to FY2009, although without additional appropriations provided under ARRA, this category would have decreased by $2 billion. However, ARRA was enacted before final decisions were made on total FY2009 appropriations, so appropriators were able to take into consideration the additional amounts already provided through ARRA. Pell Grants for postsecondary students and grants to disadvantaged school districts under Title I-A of the Elementary and Secondary Education Act were the largest beneficiaries of ARRA funding among education programs specifically targeted on low-income populations. Spending for social services rose by $8 billion between FY2008 and FY2009, with almost half of the increase coming from appropriations made by ARRA, specifically for Head Start, the Child Care and Development Fund, and the Community Services Block Grant. Energy spending grew by $7 billion, of which nearly two-thirds (64%) was ARRA funding for the Weatherization Assistance Program. Finally, employment and training saw a $2 billion increase in spending in FY2009, with more than three-quarters (77%) coming from appropriations under ARRA for the Workforce Investment Act and Job Corps. As noted above, cash assistance spending appeared to go down in FY2009, by about $4 billion. However, FY2008 obligations in this category included an unspecified amount of spending for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 ( P.L. 110-185 ). This one-time rebate was counted as spending under the ACTC, but was not targeted toward low-income families. Thus, FY2008 spending for low-income people under the ACTC appears higher than it actually was. While ARRA made changes in both the Earned Income Tax Credit and the ACTC, these changes did not take effect until tax year 2009, and therefore associated spending would generally not be seen until FY2010. Of total spending on programs for low-income people, about 75% is classified in budget terms as "mandatory" (also called "direct" spending) and the remainder as "discretionary." In mandatory programs, many of which are entitlements to individuals or units of government, Congress defines eligibility and payment rules in authorizing laws. These rules determine the amount of spending that will occur, so Congress generally must amend the authorizing law in order to control federal spending. The amount of federal spending for discretionary programs, on the other hand, is determined by Congress through the annual appropriations process. Mandatory spending may be structured as open-ended or capped. In an open-ended entitlement program, no predetermined ceiling is imposed on federal expenditures; instead, federal payments are made to all eligible beneficiaries for eligible expenditures as defined in law. (Medicaid is an example of an open-ended entitlement program.) In a capped program, the authorizing law limits the total amount of federal spending that can occur. (Temporary Assistance for Needy Families is an example of a capped entitlement program.) Of mandatory spending discussed in this report, more than 90% is through open-ended programs. The pattern of mandatory versus discretionary spending differs by major category of benefits and services. All cash aid spending, and most spending for health care and food assistance, is mandatory. In all three of these categories, spending occurs largely through open-ended entitlement programs. In contrast, all spending for energy assistance and employment and training, and most spending for housing and development and education, is discretionary. Social services spending is a mixture; about two-thirds is mandatory and the rest is discretionary. Of the mandatory social services spending, a little more than half is capped and the balance is open-ended. This report generally looks at spending and policy by major category, such as health care, cash aid, or food assistance. It illustrates the enormous diversity among and within categories in terms of target population and various design elements. However, it is important to note that a few individual programs account for the vast majority of spending for low-income populations, and these programs merit special attention. The four largest programs contributed almost 60% of total spending in each of FY2008 and FY2009, and the top 10 accounted for more than three-fourths. The following provides an overview of these programs; they are discussed in the context of all low-income programs in the balance of the report. Table 2 shows spending for these programs in FY2008 and FY2009, and separately under ARRA. Table 3 highlights key features of these programs. As Table 2 shows, Medicaid is the single largest program and alone accounts for nearly 40% of low-income spending. Next in size are the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC). Notably, SNAP became the second largest program in FY2009 but was number four in spending in FY2008, behind SSI and EITC. Rounding out the top 10 are Pell Grants, the Additional Child Tax Credit (ACTC), Title I-A of the Elementary and Secondary Education Act (ESEA), the low-income drug subsidy under Part D of Medicare, Temporary Assistance for Needy Families (TANF), and Section 8 Housing Choice Vouchers. Because of the effect of Medicaid, more than half (53% in FY2009) of spending under the top 10 programs fell into the health category. Spending for programs in the cash assistance category equaled 23% of spending under the 10 largest programs in FY2009, followed by programs categorized as food assistance (10%) and education (9%). Small percentages of total spending for the top 10 programs went to those categorized as housing (3%), social services (2%), and employment and training (less than 1%). Low-income elderly, disabled, and families with dependent children are the focus of much of the spending under the top 10 programs. Medicaid provides health care for low-income people within certain categorical groups, which are primarily the elderly, individuals with disabilities, and dependent children and their families. Low-income elderly and disabled Medicare recipients receive subsidized prescription drug insurance under Part D. Cash aid goes to low-income elderly and disabled beneficiaries under SSI, and to low-income working households through the EITC and ACTC. TANF serves families with dependent children; states define specific eligibility rules but federal law emphasizes participation in work activities for recipients of cash aid. SNAP provides assistance specifically for the purchase of food to households below a certain income threshold. While the program does not target benefits to certain demographic groups, nearly half of SNAP recipients in FY2009 were children and another 8% were age 60 or older. The law also requires able-bodied non-elderly adults without dependent children to participate in work or training to receive benefits for more than a brief period of time. The 10 largest programs also include housing vouchers for low-income families ("families" are defined by local public housing authorities and may include single individuals). Two education programs are among the top 10, including Pell Grants, which assist students whose family resources are not adequate to meet their college costs. The system used to determine benefit amounts under Pell sometimes gives aid to students with relatively high family income; however, the benefits given to these students are likely to be low. Finally, low-income school districts receive grants through Title I-A of ESEA, but individual students do not necessarily have to be low-income to be served by the program. As noted earlier, about 75% of all spending for limited-income populations is classified as mandatory. This percentage is higher for the top 10 programs; close to 90% of spending under these programs is mandatory, which means the amount spent is a function of program rules set forth in law rather than annual decisions made by congressional appropriators. Moreover, of mandatory programs in the top 10, only TANF is capped; the rest are open-ended. Three of the top 10 programs are classified as discretionary. These are Pell Grants (which also includes a mandatory component), Title I-A of ESEA, and housing vouchers. With one exception, the 10 largest programs all require that beneficiaries must be determined individually eligible to receive aid. In other words, except for Title I-A of ESEA, individuals or households must meet an income (or equivalent) test to benefit from these programs. The particular income test used, however, varies with the program. For example, Medicaid, SNAP, and the Part D subsidy all use different multiples of the federal poverty guidelines to determine eligibility, in addition to criteria that allow beneficiaries of certain other programs to qualify automatically. Specific dollar amounts are used to define eligibility for SSI and also to determine when EITC benefits begin to phase out. Section 8 housing vouchers use income limits that are based on area median income to define eligibility, and TANF income eligibility thresholds, as noted earlier, are set by states. No absolute income threshold determines eligibility for Pell Grants; however, the lowest-income students receive the largest grants. As stated above, children are not required to meet an income eligibility test to receive benefits funded by Title I-A of ESEA. Rather, the program uses allocation formulas to direct federal resources toward local educational agencies with relatively high concentrations of low-income students. Once these funds are received by an individual school, students may be served regardless of their family income. Title I-A is an example of a formula grant program. (Other mechanisms for distributing funds include competitive or discretionary awards, and direct benefits to individuals.) Medicaid, TANF, and Section 8 housing vouchers also use formulas to distribute funds, but the specifics vary. Because Medicaid is an open-ended entitlement, the federal government reimburses states for all eligible expenditures with no cap on federal spending; however, the federal "matching rate" is calculated for each state by a formula inversely related to its per capita income (poorer states get a larger federal match, and wealthier states get a smaller federal match). TANF allocates block grants to states according to a formula that considers their spending patterns under the predecessor Aid to Families with Dependent Children (AFDC) program. Funding to renew existing housing vouchers is distributed to local public housing authorities (not states) according to a formula established by Congress each year in appropriations law, which typically is related to the use and cost of vouchers in the local area. As noted above, formula grants are one of three major ways that federal programs for low-income populations distribute funds; the other two are competitive or discretionary awards, and direct benefits to individuals. None of the 10 largest programs award funds on a competitive or discretionary basis, other than a relatively small component of TANF. Instead, these large programs either allocate funds to states or another unit of government by formula, as just described, or give benefits to eligible individuals directly (or through a nongovernment intermediary). Federal benefits are provided directly under SNAP (although states administer the program), SSI (although states may supplement the federal benefit), EITC, ACTC, Pell Grants, and the Medicare Part D subsidy. Benefits provided by the federal government directly to eligible individuals typically are 100% federally funded, although, as noted above, states incur administrative costs under SNAP (which are reimbursed at a 50% federal rate) and may supplement federal payments under SSI. Some states also operate their own earned income tax credit programs, which supplement the federal EITC. Medicaid and TANF, however, are federal-state programs, and states must spend a significant amount of their own money to receive federal funds. As noted above, state Medicaid expenditures are reimbursed by the federal government at prescribed matching rates. Unlike Medicaid, TANF is not a matching grant; however, to receive TANF block grant funds, states must maintain a certain level of their own spending from prior years. Local educational agencies that receive Title I-A grants also are required to maintain a certain amount of prior-year spending and must use federal funds to "supplement and not supplant" nonfederal funds that would otherwise be used for the same purpose. The following sections provide brief overviews of the programs included in each major category of benefits and services, organized by size of spending in FY2009. Tables included in Appendix B individually list and identify key features of the programs, and brief fact sheets on each program are provided in Appendix C . As health care dominates federal spending on benefits and services for people with limited income, Medicaid dominates spending within the health care category. Medicaid accounted for 83% of health care spending in FY2009 and, as noted above, was nearly 40% of all spending in this report. Medicaid is intended to provide medical assistance to specified categories of low-income people who lack the income and resources to afford necessary medical care. Low-income parents, dependent children, the elderly, and individuals with disabilities have been the primary target populations served by Medicaid. The program finances the delivery of a wide range of primary and acute medical services as well as long-term care. The State Children's Health Insurance Program (CHIP) provides health coverage for low-income children who lack health insurance but whose family income exceeds Medicaid eligibility levels. The next largest health programs are the low-income subsidy under Medicare Part D, which helps low-income seniors and individuals with disabilities pay for prescription drugs, and medical care for low-income veterans without service-connected disabilities. The latter program pays for an array of primary care, specialized care, and related social and support services provided by the Department of Veterans Affairs (VA). The Indian Health Service also offers a wide variety of health services to its target population, who are American Indians or Alaskan Natives living on reservations or within a specified service delivery area. Consolidated Health Centers offer primary and other health services to low-income populations in medically underserved areas, and the Maternal and Child Health block grant supports preventive and primary health care services for low-income women, infants, and children. The Ryan White HIV/AIDS Program is intended to address the unmet care and treatment needs of individuals living with HIV or AIDS who lack insurance or resources to pay for core medical services, including prescription drugs, and related support services. Additional programs focus on specific health services, such as family planning and early breast and cervical cancer detection, or specific populations, such as refugees. Three programs account for the bulk of cash aid spending, and each is among the 10 largest of all programs for low-income people. SSI, which aims to provide a minimum income for aged, blind, or disabled individuals with very low income and resources, is the largest and accounted for slightly more than 40% of cash aid spending in FY2009. The refundable portion of the EITC accounted for another 33% of cash aid spending, and almost 19% resulted from the refundable ACTC. The EITC subsidizes the wages of low-income workers, with most benefits going to those with children. The ACTC is a refundable credit for families whose tax liability is too low for them to fully benefit from the regular nonrefundable Child Tax Credit. The cash aid category also includes TANF, the welfare reform program that replaced Aid to Families with Dependent Children (AFDC) in 1996. As AFDC's successor, TANF is still sometimes viewed as traditional "welfare" for poor families; however, the majority of TANF expenditures are for activities other than cash aid. TANF aims to increase the flexibility of states in meeting several statutory goals, including assisting needy families so that children can remain in their homes; ending dependence of needy parents through job preparation, work, and marriage; preventing and reducing incidence of out-of-wedlock pregnancies; and encouraging the formation and maintenance of two-parent families. In this report, TANF spending has been allocated among cash aid, social services, and employment and training, based on states' reporting of their actual expenditures. Finally, cash aid programs include pensions for needy elderly or disabled veterans and their dependents or survivors. SNAP (formerly food stamps) dominates spending for food assistance, accounting for about two-thirds of obligations in this category and registering as the second largest of all low-income programs in FY2009. SNAP attempts to alleviate hunger and malnutrition and to help low-income households purchase food to support a healthy diet. The next largest area of food assistance spending is for programs that subsidize the costs of breakfast and lunch served to low-income schoolchildren; these programs aim to support learning readiness, promote healthy eating, and protect the health and well-being of low-income children. Related programs subsidize the costs of meals and snacks for children in child care and other out-of-school settings (and some low-income elderly and disabled adults in adult care settings) and for children during the summer when they lack access to school-based meal programs. Food assistance programs also include the Special Supplemental Food Program for Women, Infants and Children (WIC), which provides supplemental food and nutrition education to low-income pregnant, postpartum, or breastfeeding women and their infants and young children who are at nutritional risk. The program seeks to protect children's health during critical developmental stages, to prevent health problems, and to improve health status. Food assistance programs also include congregate and home-delivered meals for the elderly to reduce hunger and promote socialization and well-being for older individuals, and emergency food assistance in the form of commodities for individuals defined by their states as needy. The federal government supports the housing needs of low-income people primarily by subsidizing the cost of rental units in the private market. Section 8 housing vouchers and project-based rental assistance together accounted for 43% of all housing and development spending in FY2009. (The voucher component of Section 8 is one of the 10 largest low-income programs.) The overarching goal of Section 8 is to provide low-income people with decent, safe, and sanitary housing. Public Housing, which represented 18% of spending in this category in FY2009, achieves a similar goal by making publicly owned rental units available to low-income tenants at affordable prices. Federal spending for Public Housing supports the capital needs and operating costs of publicly owned housing developments, as well as the HOPE VI program, which demolishes, rehabilitates, and replaces distressed public housing units. Additional housing programs are intended to expand the supply of supportive housing for low-income elderly and disabled households, as well as individuals living with AIDS. Homeless Assistance Grants attempt to meet the needs of homeless individuals and families, including individuals with disabilities, for basic shelter, short-term and long-term housing, and related support services. Two block grants—HOME and the Community Development Block Grant (CDBG)—target federal assistance toward communities with high rates of poverty and aging housing stock (among other factors) to help meet the housing needs of low-income homeowners, homebuyers, and renters (HOME) and to expand the community's supply of decent housing and economic development activities (CDBG). An additional block grant provides housing assistance and helps develop private housing finance mechanisms on Indian lands. To address housing needs in rural areas, loans are available to help low-income households purchase, build, or renovate homes, and rental subsidies are available for low-income tenants. Low-interest loans and grants also are available to support new and improved water and waste disposal facilities in low-income rural communities. Finally, the housing and development category includes the Public Works and Economic Development program, which provides grants to distressed communities to help them revitalize, expand, and upgrade their physical infrastructure to attract new industries, expand businesses, diversify their economies, and generate job and investment growth. Certain temporary programs are included in the housing and development category. The Neighborhood Stabilization Program-1 was established by the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) to assist in rehabilitating abandoned and foreclosed homes for occupancy by low-income tenants. Obligations under this program occurred in FY2009. Likewise, FY2009 spending includes obligations under two temporary programs created by ARRA as adjuncts to the Low-Income Housing Tax Credit (LIHTC) program. These temporary programs offered grants to states in lieu of tax credits and provided capital investments for owners of certain LIHTC-financed properties. They were enacted in response to the financial crisis, which, along with the departure of several large tax credit investors, made it difficult for developers to sell their tax credits to raise capital. Finally, ARRA added funds to HUD's Homeless Assistance Grants, specifically for a new Homelessness Prevention and Rapid Re-Housing Program. The Federal Pell Grant Program is the single largest education program for people with limited incomes, accounting for 43% of targeted federal education spending in FY2009. The program is among the 10 largest in this report. Pell Grants are one of several ways the federal government helps subsidize the costs of higher education for needy students. Other grant programs with similar goals include Federal Supplemental Education Opportunity Grants, Federal Work-Study, and the Academic Competitiveness and Smart Grant programs. In addition to direct assistance to students, the federal government provides institutional aid to help expand the capacity of colleges and universities that serve high proportions of low-income and minority students. Federal TRIO Programs offer grants to institutions of higher education and other organizations to motivate and support disadvantaged students as they move from high school through college. The GEAR-UP program provides services to low-income children in elementary and secondary schools who are at risk of dropping out and aims to increase the number of such students who enter and succeed in higher education. The second largest education program included in the report (also one of the 10 largest low-income programs) is Title I-A of the Elementary and Secondary Education Act, which accounted for more than one-third of targeted federal education spending in FY2009. Title I-A provides grants to local educational agencies with high concentrations of disadvantaged children and aims to ensure that all children have an opportunity to obtain a high-quality education and reach at least minimum proficiency on challenging academic achievement standards. A separate program has similar goals for children of migrant workers, and the Rural Education Achievement Program helps rural school districts meet academic achievement standards. The Bureau of Indian Education operates several programs to meet the educational needs of Indian children living on or near reservations. Other elementary and secondary education grant programs aim to increase student achievement through improvements in teacher and principal quality and to improve teacher knowledge and student performance in mathematics and science. Literacy is the focus of the Adult Basic Education program, which helps adults to become literate and obtain the skills necessary for employment and self-sufficiency, and to become partners in their own children's educational development. Reading First and Early Reading First also promoted literacy, focusing specifically on young children, from preschool through grade 3. Finally, 21 st Century Community Learning Centers are intended to provide a wide range of remedial education and academic enrichment opportunities during non-school hours for children in high-poverty and low-performing schools. The social services category is diverse and includes a wide variety of activities to support low-income or otherwise vulnerable populations. Of spending categorized as social services in this report, the vast majority—93% in FY2009—is focused directly on children and youth or their families. Services funded by TANF are the largest single activity in this category, accounting for almost a quarter of social services spending in this report. As noted in the earlier discussion of cash aid, TANF is often thought of as traditional welfare for poor families. However, states have flexibility in spending their TANF grants, and the majority of funds are used for noncash aid, including a wide variety of social services for families with children. TANF spending in the social services category also includes obligations under competitive grants for promotion of healthy marriage and responsible fatherhood. Head Start is the second largest program in this category, accounting for more than 20% of social services spending for low-income populations. Head Start aims to promote school readiness for young children through a full array of educational, health, nutritional, social and other services to children and their families. The Child Care and Development Fund (CCDF), with 16% of social services spending in FY2009, subsidizes the cost of child care for low-income parents while they work or attend school. Additional programs targeted toward children and families include Child Support Enforcement, which provides services on behalf of custodial parents who are seeking support for their children from the children's noncustodial parent. Foster Care grants are used by states to provide temporary homes for children who cannot remain safely with their families; Adoption Assistance helps facilitate the adoption of children with special needs as defined by their state; and the Chafee Foster Care Independence Program helps current and former foster children transition to a self-sufficient adulthood. Of social services programs not specifically targeted toward children and families, the Social Services Block Grant (SSBG) is the largest and most flexible. The program supports a continuum of services to promote self-sufficiency but decisions about target populations and services are left to the states. Other social services programs focus on specific target populations. For example, social services for the elderly are provided under the Older Americans Act; support and advocacy grants help people with developmental disabilities; and various human services are provided for American Indians. Programs that focus services at the community level include the Community Services Block Grant (CSBG), which aims to reduce poverty and empower low-income individuals and families to become self-sufficient, and Emergency Food and Shelter Grants, which provide services for homeless and hungry individuals in high-need communities. Finally, the Legal Services Corporation attempts to ensure equal access to the justice system for people who are otherwise unable to afford legal counsel. Two programs make up the energy assistance category. The Low-Income Home Energy Assistance Program (LIHEAP) helps low-income households pay their heating and cooling expenses, and the Weatherization Assistance Program helps increase the energy efficiency of homes occupied by low-income people to reduce energy costs and improve health and safety. Two programs serving disadvantaged youth comprised almost half of FY2009 employment and training spending included in this report. Specifically, youth activities under the Workforce Investment Act (WIA) provide a variety of services to improve the educational and skill competencies of eligible youth and to develop connections with employers and mentoring opportunities with adults. Job Corps focuses on those disadvantaged youth who can benefit from an intensive residential program to become employable and productive. The employment and training category also includes work-related services for needy families with children under TANF, a small employment and training program for recipients of SNAP benefits, and a program that provides employability and related services to help refugees and other humanitarian entrants find jobs quickly. Remaining programs include WIA's adult activities program; Community Service Employment for Older Americans, which helps older individuals (age 55 or older) become self-sufficient through community service jobs and training; and Foster Grandparents, which provides stipends for low-income older individuals to provide services to children with special needs. As described above, federal programs for low-income people can be grouped into several major categories of benefits and services. Key target groups for these benefits and services include the elderly, individuals with disabilities, and children and families, among others. Within these broad target populations, there is not necessarily a coherent policy regarding who should receive assistance, although some themes emerge within categories. Programs use different concepts to define who is eligible. Many programs use explicit income eligibility criteria that individuals, families, or households must meet, but the specific levels and measures of income vary. Some measures are uniform throughout the country; others vary by geography. Some are adjusted annually for inflation; others are not. In some cases, income criteria are used to set priorities for who is served but are not necessarily applied to every participant. Some programs use asset tests in addition to income tests. Many programs have categorical requirements, such as age or disability, in addition to income criteria; and some use alternative criteria that allow specified groups or categories of people to qualify automatically without having to meet an individual income test. Automatic "exclusions" exist under some programs, so that people who would otherwise qualify based on their income are excluded if they fall into specified categories. Finally, some programs establish federal parameters for eligibility but allow states or other entities to set their own income eligibility criteria within these parameters. This section of the report discusses the various ways in which individual eligibility is determined. The section looks at use of the federal poverty guidelines, as well as other measures of economic need used to define eligibility such as specific dollar amounts, percentages of area or state median income, and the "need analysis" system used for postsecondary student aid. The section briefly discusses asset limits, and then turns to nonfinancial or categorical rules. Table 4 summarizes the various concepts used in determining individual eligibility and Table B -2 in Appendix B shows the concepts used by specific programs. It is important to note that being eligible for a program does not necessarily mean that an individual will receive benefits from that program. While some of the programs included here, especially some of the larger ones, are entitlements to individuals, which means that all eligible applicants must receive benefits, most programs are either discretionary (subject to annual appropriations) or capped entitlements, and eligible individuals are served only to the extent that funds are available. Finally, not all programs require participants to be determined individually eligible. Some target federal resources toward communities or entities where low-income populations are likely to be concentrated and do not examine the income, assets, or other characteristics of a particular individual or family. Such targeting mechanisms are discussed in the next major section of this report. As already stated, programs in this report do not strictly serve the poor. Rather, target populations are more accurately characterized as people with "low" or "limited" income. Even among programs that use the federal poverty guidelines as a criterion for determining eligibility, very few limit participation to individuals or households with income at or below "poverty" as defined by the federal government. Most programs that use the federal poverty guidelines (FPG) as an element in defining eligibility use a multiple of poverty, with some programs defining eligibility as high as 200% or 300% of FPG. The poverty guidelines trace their origin to a 1963 Social Security Administration study that based poverty income cutoffs on the amount families needed to spend to meet their basic food needs (the "Economy Food Plan") and the relationship between expenditures on food and expenditures on other items. With food accounting for roughly one-third of low-income budgets in a 1950s survey of consumption, the poverty cutoffs were set at three times the Economy Food Plan for a given family size and type. These poverty cutoffs were subsequently adopted by the Census Bureau for counting the poor, and are also the basis for the HHS poverty guidelines used for administering programs. They are uniform nationwide (except for Alaska and Hawaii) and are updated annually for inflation (see Table 4 ). Most health care programs that serve people with limited income use FPG as a criterion in determining eligibility, typically in conjunction with categorical requirements. Mandatory coverage groups under Medicaid, for example, which has numerous pathways to eligibility, include different categories of children and families with income ranging from 100% to 185% of FPG. Optional coverage groups (which states may serve at their discretion) include additional categories, including certain elderly and disabled individuals, with income as high as 250% of FPG. The CHIP program serves children with family income above Medicaid eligibility levels, at income thresholds established by states with federal approval. (As of January 2009, the highest reported income standard was 350% of FPG, in New Jersey. ) Medicare beneficiaries are eligible for the low-income prescription drug subsidy under Part D if their income is no higher than 150% of FPG, although the deepest subsidy goes to those below 135% of poverty. Remaining health programs that use FPG either give priority to people below 100% of poverty (Family Planning and the Maternal and Child Health block grant), or provide services free of charge to those below 100% but allow higher-income participants on a sliding fee scale basis (up to 200% of FPG under Consolidated Health Centers and 250% for Breast and Cervical Cancer Early Detection). Cash aid, housing and development, and education programs generally do not use the poverty guidelines in determining eligibility. An exception is the TRIO programs for certain low-income postsecondary students, which cap income eligibility at 150% of FPG. TANF eligibility thresholds are established by states and are well below the federal poverty guidelines in most states. Food assistance programs typically use multiples of the federal poverty guidelines in determining eligibility, but they also provide automatic eligibility to categorical groups. The SNAP program generally serves those with gross income up to 130% of poverty. Child nutrition programs serve meals free to children with family income up to 130% of poverty, and at a reduced price to children with family income up to 185%. The WIC program caps eligibility at 185% of poverty. The nutrition program authorized by the Older Americans Act gives priority to certain groups, including seniors with the greatest economic need, defined as 100% of poverty. In the social services category, CSBG and Head Start use 100% of the federal poverty guidelines as their income eligibility limit, but they both provide flexibility to states (in the case of CSBG) or grantees (for Head Start) in adjusting this limit upwards. Likewise, the Legal Services Corporation sets eligibility at 125% of FPG, but allows it to be increased up to 200% in certain circumstances. The SSBG has no federal income eligibility limit except for services funded by TANF grants that are transferred to the SSBG, which may only be used for families with income below 200% of FPG. Like the elderly nutrition program mentioned above, the Older Americans Act grant programs for supportive services and senior centers and for family caregivers give priority to seniors with income below 100% of poverty. LIHEAP uses 150% of poverty as its income eligibility limit, or 60% of state median income, if higher. Weatherization formerly used 150% of FPG to define income eligibility, but effective in FY2009, this was increased to 200%. Both weatherization and LIHEAP allow automatic eligibility for those eligible for certain other programs. Employment and training programs for people with limited income use the federal poverty guidelines as one of several eligibility criteria, which include other measures of low income as well as categorical groups. Job Corps limits eligibility to those with income no higher than 100% of FPG; however, certain groups qualify automatically. Youth activities under WIA set eligibility at 100% of FPG, or 70% of the lower living standard income level (described below), if higher. The same criteria are used to give priority for certain adult activities under WIA. Both adult and youth activities under WIA also allow automatic eligibility for specified groups. Community Service Employment for Older Americans and Foster Grandparents (as in effect in FY2009) both limit eligibility to those with income no higher than 125% of poverty. Three alternative measures of income are most commonly used to define eligibility for programs that have individual income eligibility criteria but do not use the federal poverty guidelines. These measures are used primarily, but not exclusively, in three categories of federal benefits and services. Specifically, most cash assistance programs set an actual dollar amount that determines who is eligible; housing and development programs typically use a percentage of area median income; and student financial assistance programs use a relative concept of need that considers both available family resources and the actual cost of education. A fourth alternative measure is the lower living standard income level, which is used in conjunction with the poverty guidelines in certain employment and training programs. In the cash assistance category, specific dollar amounts are used to determine eligibility (and benefit levels) for pensions for needy veterans; the same concept is used in the health care category to determine eligibility for free medical care for needy veterans. Specific dollar amounts also are used to determine eligibility and benefit levels under SSI, and to determine when EITC benefits begin to phase out. Veterans' benefits, SSI, and EITC are generally adjusted each year for price inflation. Veterans' benefits and SSI adjustments are tied to Social Security cost-of-living adjustments (COLAs); and EITC is adjusted for price changes through indexing to the Consumer Price Index. As noted previously, under TANF, states set their own dollar limits to define who is eligible to participate. (See Appendix D for references to further information about the current VA income thresholds, SSI eligibility limits, and EITC phase-out limits.) Housing and development programs typically use the concept of area median income, with various percentages of local area median income used to define "low-income," "very low-income" and "extremely low-income." These income limits are then used to determine program eligibility. For example, Section 8 Housing Choice Vouchers serve "very low-income" families, defined as those with income no higher than 50% of the area median. However, 75% of the Section 8 vouchers that become available each year must go to "extremely low-income" people, defined as those with income no higher than 30% of area median. Under limited circumstances, vouchers may go to "low-income" households, with income up to 80% of area median. Similarly, Public Housing serves low-income families (80% of area median) but at least 40% of units that become available each year must go to extremely low-income families (30% of area median). Supportive housing programs for the elderly and disabled limit eligibility to households with income no higher than 50% of area median, while Housing Opportunities for Persons with AIDS (HOPWA) and Indian Housing Block Grants serve people with income up to 80% of area median. The single-family rural housing loan program makes guaranteed loans available to households with income as high as 115% of area median, while direct loans are limited to those with income no higher than 80% of area median. (See Appendix D for references to further information about area median family incomes published by the Department of Housing and Urban Development.) Few non-housing programs use the median income concept. Exceptions are the Child Care and Development Fund (CCDF) and LIHEAP, which both use state median income as a component of their eligibility criteria. CCDF allows states to define their own income eligibility limits within the federal maximum of 85% of state median income, and LIHEAP, as noted earlier, uses 60% of state median income as an alternative measure of low income, if higher than 150% of the federal poverty guidelines. There is no absolute income threshold for certain postsecondary student aid programs. As noted above, these programs use a relative concept to determine the amount of aid a student is eligible to receive. Applicants provide information about family income and assets through completion of the Free Application for Federal Student Assistance (FAFSA). This information is then used to determine the Expected Family Contribution (EFC), or the amount the student's family is expected to contribute toward the student's education. Different EFC formulas are applied to three different groups of students: those considered dependent on their parents; independent students with no dependents other than a spouse; and independent students with dependents other than a spouse. The federal need analysis methodology is used for Pell Grants and several smaller higher education programs such as Supplemental Educational Opportunity Grants, Federal Work-Study, and Academic Competiveness and Smart Grants. Aid is capped under the Pell Grant program, so that higher income students are likely to receive smaller awards and the majority of students who receive Pell grants are low-income. (See Appendix D for references to additional information on the need analysis system.) Employment and training programs for adults and youth under WIA, as discussed earlier, use the lower living standard income level (LLSIL) as one component in eligibility determinations. The LLSIL has its origins in a series of family budgets developed by the Department of Labor's Bureau of Labor Statistics (BLS). In 1967, BLS published estimates for family budgets at three standards of living—lower, intermediate, and higher—based on a list of goods and services needed to achieve those standards of living and their prices. These budgets were last fully priced in 1969. They were subsequently updated by summary components of the Consumer Price Index (CPI) through 1981, when the BLS family budget series was discontinued. Since 1981, the LLSIL has been updated annually based on overall changes in the CPI-U. (See Appendix D for references to further information about the current LLSILs.) Under WIA, individuals are determined eligible (or, in the case of certain adult activities, receive priority) if their income is at or below 100% of the federal poverty guidelines, or 70% of the LLSIL, whichever is higher. Unlike the federal poverty guidelines, the LLSIL vary by region and by metropolitan and non-metropolitan areas. As illustrated in the discussion above, measures of income used to determine eligibility vary widely among federal programs. It is important to note that definitions of countable income also vary. Some programs have explicit rules for counting income while many do not. A full discussion of the treatment of income is beyond the scope of this report; however, readers should know there may be differences between programs, so that income counted in determining eligibility for one program might not be counted in another, even though the programs might appear to use similar eligibility criteria. Wages are typically counted as income, although some programs disregard a portion of earned income as an incentive for aid recipients to work. Programs differ as to whether they count Social Security and retirement income, public or private disability insurance, other work-related benefits such as Unemployment Compensation and Workers' Compensation, and investment income such as interest and dividends. Benefits provided under means-tested programs often—but not always—are excluded from the definition of income when determining eligibility for another means-tested program. Programs vary as to whether they count the income of the individual applicant, or also the income of a spouse, children, or other household members; in other words, the definition of "filing unit" varies among programs. Income can be looked at before tax, or after tax; on a monthly or an annual basis. Finally, some programs specify allowable deductions from countable income. Moreover, income (and assets, as discussed below) used to determine eligibility for a particular program might be evaluated differently when determining benefit levels under that program. Individuals with the same amount of countable income or assets might qualify for different levels of benefits, because of the program's specific calculation rules. This section of the report has focused primarily on eligibility rules; benefit determinations are discussed briefly in a later section. In addition to income eligibility rules, some programs use explicit asset or resource tests to limit eligibility. In other words, applicants may not have assets (e.g., cars, bank accounts; see Table 4 ) valued above a certain level to be eligible for a particular program. As with income eligibility rules, the amount of assets or resources that are subject to limits varies widely among programs. Likewise, programs define countable assets differently, although typically they are limited to liquid assets. Many exclude the value of a primary residence and personal belongings, and some overlook all or part of the value of a car. Within the health care category, asset tests apply for the VA medical care program and the low-income subsidy under Part D of Medicare. Under CHIP, states have the option of applying an asset test, although few states currently do, and Medicaid is required to use an asset test only for certain categories of beneficiaries that are age 65 or older, have disabilities, and/or have high medical expenses. In the cash assistance category, asset rules apply to pensions for needy veterans and to the SSI program. States also may choose to apply asset tests in their TANF programs, and the majority of states currently do. SNAP is the only food assistance program with an explicit resource test, although it is not applied to households that are automatically eligible because they have already received benefits or services under another means-tested program. While housing programs do not have asset tests, several impute a certain amount of income from assets. These include single-family rural housing loans, supportive housing for the elderly and persons with disabilities, and Section 8 vouchers and project-based rental assistance. Higher education programs that use the "need analysis" system consider assets along with income and the cost of school attendance to determine how much financial aid a student may receive. Programs that were historically linked to the former AFDC program, including Foster Care and Adoption Assistance, still have remnants of the AFDC assets test. And, Legal Services Corporation grantees are required to establish "reasonable" asset limits for eligible individuals and households. For many programs, categorical requirements apply in addition to financial eligibility rules, so that an applicant must be both income-eligible and a member of the program's target population. While some programs are intended to help people in general below a certain income level, most are targeted on specific segments of the low-income population. As noted previously, key target populations for low-income programs, including many of the largest included here, are the elderly and individuals with disabilities, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others. Some programs also impose behavioral requirements as a condition of eligibility. For example, recipients of TANF cash assistance must comply with work and training requirements and cooperate with child support enforcement efforts; student aid recipients must generally maintain good academic standing; and certain Public Housing residents must participate in a self-sufficiency program or engage in community service. Able-bodied adults without dependent children must comply with work and training requirements to receive SNAP benefits for more than a limited time, and the EITC and ACTC go only to workers with earnings and their families. To receive CCDF-funded child care, parents must be working or in training, in addition to meeting income eligibility criteria. Certain behaviors or characteristics automatically exclude individuals from participating in some programs. For example, postsecondary students, households with members on strike (unless they were eligible before the strike), or people living in institutions are automatically disqualified from SNAP, even if they otherwise meet eligibility rules. Federal law bars individuals who are fleeing arrest or have been convicted of a drug-related felony from participation in SNAP and TANF, and individuals fleeing prosecution or confinement for a felony also are disqualified from SSI. TANF further allows states to test cash aid applicants and recipients for substance abuse and to sanction those who fail. Federal housing law prohibits individuals who have been convicted of producing methamphetamine on federally-assisted housing property or who are subject to lifetime registration on a state sex offender registry from admission to Public Housing or receipt of Section 8 vouchers. Public housing authorities have the discretion to adopt additional criteria, barring admission to households on the basis of such factors as other criminal convictions, poor credit histories, poor rental histories, or other criteria set by the PHA. Treatment of noncitizens under federal programs serving low-income populations is a complex topic that is beyond the scope of this report. Federal policy in this area is found in the various programs' authorizing statutes, but also in overarching provisions enacted in the 1996 welfare reform ( P.L. 104-193 ) and immigration reform ( P.L. 104-208 ) laws, as subsequently amended, as well as policy interpretations by executive branch agencies. Eligibility of noncitizens varies across and within programs and often depends on the noncitizens' immigration status, when they arrived in the U.S., how long they have lived here legally, their work history and military connection, and policies in the state where they live. Aliens living in the U.S. without legal authorization are generally barred from access to most federal benefits. As distinct from categorical or behavioral requirements that apply in addition to income eligibility rules, a concept of "automatic eligibility" is sometimes used as an alternative to individual income eligibility. If someone meets the eligibility criteria for one program, that person is automatically deemed eligible for another program, simplifying the process for both the applicant and the administering agency. In some programs, people are automatically determined eligible because they fit a particular demographic group or have a particular characteristic. Among health care programs, Medicaid, the low-income subsidy under Medicare Part D, and services for refugees allow some degree of automatic eligibility. For example, SSI recipients are one of several groups that automatically qualify for Medicaid; SSI and Medicaid recipients are automatically eligible for the Part D subsidy; and unaccompanied minor children are automatically eligible for transitional medical services for refugees. Cash assistance programs typically do not allow automatic eligibility for specified groups, while almost all food assistance programs do. TANF and SSI recipients automatically qualify for SNAP; TANF and SNAP recipients are automatically eligible for child nutrition programs; and TANF, SNAP and Medicaid recipients are automatically eligible for WIC, if they also are at nutritional risk. Head Start children, residents of emergency shelters, and runaway and homeless youth are examples of other groups that automatically qualify for some nutrition programs. Most housing and development programs that have individual income eligibility criteria do not allow automatic eligibility for particular groups as an alternative. Homeless Assistance Grants, however, base eligibility on a person's residential status rather than their income, and Indian Housing Block Grants allow certain non-low-income households to receive assistance if they meet other criteria related to their need for housing. In the education category, the Pell Grant program allows certain postsecondary students—dependent students and independent students with dependents other than a spouse—to qualify for an automatic zero EFC (expected family contribution). This means they would receive the maximum Pell Grant award if they enroll full-time at a school where the cost of attendance equals or exceeds the maximum award. In general, to qualify for the automatic zero EFC, these students must have received means-tested benefits from other federal programs or had been eligible to file certain federal income tax returns, or had been a dislocated worker. However, parents or students also must have family income levels at or below certain annual thresholds ($30,000 in award year 2010-2011), to qualify. Children of deceased Iraq/Afghanistan service members also may qualify for an automatic zero EFC. One of the benefits of qualifying for an automatic zero EFC is that it greatly reduces the response burden associated with completing financial aid forms. With the exception of postsecondary student aid, education programs typically do not require individuals to be determined income-eligible for assistance; rather, they target assistance toward areas or entities where low-income students are likely to be served (such targeting mechanisms are discussed later in the report). However, certain education programs use alternative criteria to identify eligible participants. For example, Adult Basic Education serves adults who lack basic skills or credentials; the Title I Migrant Education Program serves the children of migrant workers; and Education for Homeless Children and Youth bases eligibility on children's living situations. GEAR-UP serves students determined to be at risk of dropping out, and Reading First and Early Reading First based eligibility on a child's reading proficiency. Indian education programs generally serve children who are members of federally recognized tribes. Among social services programs, Child Support Enforcement automatically serves families receiving TANF, foster care payments, or who are eligible for Medicaid. Children receiving public assistance, foster children, and homeless children automatically qualify for Head Start, along with a limited number of non-low-income children if they meet other criteria related to their likelihood to benefit from the program. Individuals with developmental disabilities are eligible for services under Developmental Disabilities Basic Support and Advocacy Grants, regardless of their individual income status. Likewise, older foster children and former foster children may participate in the Chafee Foster Care Independence Program, without meeting individual income eligibility criteria. Both energy programs included in the report allow automatic eligibility for TANF and SSI recipients. Weatherization also allows states to make LIHEAP recipients automatically eligible, and LIHEAP provides automatic eligibility for beneficiaries of SNAP and certain veterans benefits. Finally, in the employment and training category, public assistance recipients, homeless youth, and certain foster youth automatically qualify for WIA youth activities and Job Corps. And, the WIA adult program gives priority for certain services to adults considered low-income, which may include those who receive public assistance or are homeless. The previous section looked at the ways in which programs define individual eligibility for federal benefits and services for low-income people. In most programs, the process of determining individual eligibility and delivering benefits and services is done through entities such as states, local governments, or private organizations. Federal funds are often provided to these entities via mechanisms that target areas with the greatest need or concentration of eligible individuals. These targeting provisions also may compensate for variation in fiscal capacity at the state and local level. This section looks at three primary concepts used to target federal resources: allocation formulas that distribute funding to states or other areas based, at least in part, on factors related to need; cost-sharing rules that vary the federal share of total program costs by a measure of need; and provisions that limit federal funds only to certain institutions or jurisdictions that serve low-income people. As with individual eligibility rules, specific targeting provisions vary widely, even within the same general concept. Moreover, some programs use a combination of these concepts; in other words, federal funds might be allocated to states according to factors related to the target population, but the federal share of the program's costs might also be determined by a measure of need. Table 5 provides a summary of these targeting concepts, and Table B -2 in Appendix B shows use of the concepts by program. There is considerable overlap between programs that impose individual eligibility criteria (those discussed in the previous section) and those that also target federal resources by a measure of need. In other words, programs may use targeting mechanisms to distribute federal funds, but individuals still must be determined income-eligible for the program. Some programs, however, rely on broad targeting mechanisms only, and do not require participants or beneficiaries to meet an individual eligibility test. Federal grant programs, especially those targeted toward a particular population, frequently use formulas to allocate funding among states or, sometimes, local governments or other entities. Many programs in this report are formula grants (as compared with competitive or discretionary awards, or direct benefits to individuals), and use population-based allocation factors as a way to direct resources toward areas with large concentrations of the program's target group. Programs that allocate funding in this way usually have a cap on total federal spending, so that allocation factors determine each jurisdiction's relative share of the total amount available. While programs for low-income people often allocate funds in part on a measure of economic need (e.g., population with income at or below the poverty guidelines), not all formula factors are need-based. Some programs base allocations in whole or in part on historic spending patterns, which may reflect a wide variety of factors; if current population-based formulas were applied to these programs, the distribution of resources might change significantly. Moreover, "hold-harmless" provisions, small-state minimums, and "ceilings" and "floors" are often used to mitigate large changes in a particular jurisdiction's formula-based allotment from one year to the next. The specific data sources to be used also are significant and sometimes are specified in statute. The following provides an overview of the types of allocation factors used in low-income programs, but does not constitute a complete explanation of any particular formula, nor does it discuss the effectiveness or efficiency of these allocation factors in actually directing resources toward areas with the greatest need. In the health care category, the CHIP program for low-income children without health insurance currently (effective FY2009) allocates funds among states according to past and projected spending. Previously, however, CHIP allocated funds among states, in part, using two relevant population factors: the number of low-income children in the state and the number of such children without health insurance. The Ryan White program for low-income people with HIV or AIDS allocates funds to metropolitan areas and states based on relative population size and incidence of AIDS cases, but does not use an income factor. The Maternal and Child Health block grant allocates funds according to states' relative shares of funding under predecessor programs, and according to their population of low-income children. TANF block grants are allocated among states according to their historic spending under the predecessor AFDC program, so that states with higher expenditures under AFDC get relatively larger grants under TANF. Among food assistance programs, WIC uses a formula that reflects actual food and caseload costs, and the Commodity Supplemental Food Program allocates resources according to caseload, based on past participation. The Emergency Food Assistance Program (TEFAP) allocates resources based on the number of poor people in each state, in combination with the number of unemployed persons. Nutrition for the elderly under the Older Americans Act allocates funds among states based on the population age 60 and older, with no income factor. Most housing and development programs use a need-based formula to allocate funds, but the formulas vary widely. Rural programs use such factors as state shares of rural population, rural poverty, overcrowded housing or housing units without plumbing, and unemployment. Housing programs for the elderly and people with disabilities use measures of elderly or disabled individuals, in addition to housing factors. Community Development Block Grants go to eligible communities and states based on poverty, population, overcrowded housing, age of housing, and slow population growth; somewhat similar factors are used for Emergency Shelter Grants and Indian Housing Block Grants. The HOME program uses the number of older housing units occupied by low-income households and number of poor families. The temporary Neighborhood Stabilization Program-1 allocated funds to states and local governments on the basis of home foreclosures, subprime mortgages, and homes in default or delinquency. In the case of Section 8 Housing Choice Vouchers, Congress establishes a formula, typically in annual appropriations laws, for allocating funding among public housing authorities to renew their existing vouchers. The formula is usually based on some measure of the utilization and cost of vouchers in the local area. However, the geographic distribution of vouchers that are renewed each year is a function of historic patterns and may not necessarily reflect the current distribution of the eligible population. Likewise, operating and capital funds for Public Housing are allocated by formula, but the distribution of public housing units that receive these funds is a reflection of decisions made by local communities to participate in the program in its earlier days. Many education programs are designed as formula grants and rely in some way on counts of poor children. Title I-A of ESEA distributes funds to local educational agencies according to four separate formulas that consider such factors as number of school-aged children in poverty and average per-pupil expenditures in the state. Areas with high concentrations of poverty receive additional weighting under two of the four formulas. Aggregate state allocations under Title I-A in turn determine state shares under other ESEA programs, including Education for Homeless Children and Youth and 21 st Century Community Learning Centers. The number of school-aged children in poverty also is an allocation factor for Reading First, Math/Science Partnerships, and Improving Teacher Quality Grants. Certain education programs use allocation factors related to the target population, but not explicitly tied to income. The Migrant Education Program (under Title I of ESEA) allocates funds according to the number of eligible migrant children and state average per pupil expenditures, and Adult Basic Education bases allocations on the number of individuals age 16 or older who have not completed high school. Federal Supplemental Educational Opportunity Grants and the Federal Work-Study Program both allocate funds to participating institutions of higher education, based on the aggregate "need" of their students, as indicated through the need analysis system discussed earlier. Most social services programs allocate funds by formulas, which often include a poverty-related allocation factor. Components of the CCDF are distributed through several formulas, which use such factors as a state's relative share of children under age 5, children who receive free or reduced-price school meals (a proxy for low-income children), and children under age 13, as well as state per capita income and historic funding patterns. Head Start allocates funds among states (from which awards are made to local grantees) according to several factors, including poor children under age 5. The Legal Services Corporation allocates funds according to each state's poverty population. As with a number of the education programs discussed above, some social services programs use allocation factors tied to their target population but not explicitly to their income. The Older Americans Act allocates funds for supportive services and senior centers according to each state's relative share of population aged 60-plus, and for the family caregiver program according to population aged 70-plus. The Chafee Foster Care Independence Program bases allocations on each state's number of foster children; the Emergency Food and Shelter Program allocates funds to local jurisdictions based on their number of unemployed persons; and SSBG allocates funds according to total state population. CSBG allocates funds based on historic funding patterns; the total amount received in 1981 by local antipoverty agencies in each state, under a now-defunct provision of the Economic Opportunity Act, determines the state's allotment of CSBG funds today. Weatherization funds go to states based on a combination of factors, including low-income population, climate conditions, and residential energy expenditures by low-income households. LIHEAP uses a particularly complex formula, which, among other things, includes total residential energy consumption, temperature variation, and low-income heating and cooling consumption. Finally, among employment and training programs, Community Service Employment for Older Americans gives states an amount based on historic funding, and then allocates funds according to state shares of the nation's population age 55-plus and state per capita income. WIA funds go to states based on their shares of "substantial" unemployment (unemployment rate of at least 6.5%), "excess" unemployment (rate above 4.5%), and the "disadvantaged" population (disadvantaged adults for the WIA adult activities program, and disadvantaged youth for the youth program). Funding for employability services for refugees (referred to as "social services and targeted assistance") are allocated according to the number of refugees, asylees, and other humanitarian cases that entered a state during the previous 36 months. Under certain programs, the federal government pays a larger share of total costs depending on the income level or concentration of poverty in the state or community to be served. This increased federal share can happen through use of a federal matching rate that is tied to income or another measure of need, or through special provisions that raise the matching rate or federal share under specified circumstances. Relatively few programs use need-related cost-sharing mechanisms; however, these programs include Medicaid which, as noted previously, is the single largest program included in this report. As discussed earlier, Medicaid is a federal-state partnership, in which the federal government and states share the costs of providing health care services to eligible beneficiaries, with no predetermined cap on federal spending. The federal government's share of expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). Generally determined annually, the FMAP varies by state and is inversely related to state per capita income, so the federal government pays a larger portion of Medicaid costs in lower-income states and a smaller portion in higher-income states. For expenditures in FY2009 (and extended through June 2011 by subsequent legislation), ARRA (the economic stimulus legislation) authorized increased FMAPs for states. Most Medicaid administrative expenditures are matched at a uniform 50% rate. The CHIP program uses an enhanced FMAP (E-FMAP) to determine the federal share of program funding, which is more generous than the regular FMAPs used under Medicaid. CHIP is a capped entitlement program and, as discussed earlier, allotments to states are based on past and projected spending, among other factors. Because CHIP is a federal-state matching program, states must spend a portion of their own money, determined through use of the E-FMAP, to receive their full formula-determined allocation of federal funds. In the social services category, the Medicaid FMAP is used to calculate the federal matching rate for certain child care funds under the CCDF, and for expenditures on maintenance payments and adoption assistance payments in the Foster Care and Adoption Assistance programs. The rural Water and Waste Disposal program varies the amount of federal support provided by the income level of the community served. The lowest interest rates are provided to projects in communities where median household income is no higher than 80% of state nonurban median income or the poverty guidelines. In addition, federal resources may cover up to 75% of costs in such communities, but no more than 45% of costs in communities where income is higher. Under the Public Works and Economic Development program, the usual 50% federal share of program costs may be increased up to 80%, depending on the relative needs of the area where a project is located, and may reach 100% for grantees that have exhausted their borrowing and/or taxing capacity. In the education category, the 21 st Century Community Learning Center program allows states to require local grantees to match federal funds; however, the match is adjusted based on the relative poverty of the grantee's target population. The developmental disabilities program requires a nonfederal match of 25%, which may be reduced to as low as 10% for projects conducted in poverty areas. As discussed previously, many programs for low-income people require individual participants or beneficiaries to meet a need-related eligibility test. Some programs also (or instead) require the geographic area or participating entity to meet an income or need-related test, which is the third general concept used to target federal resources toward low-income populations. Under this approach, funding is not necessarily distributed nationwide, but only to areas or entities meeting specified criteria. The approach is not used widely, but the following provides examples. Consolidated Health Centers assist people who are "medically underserved," defined to mean they live in an area designated by the federal government as having a shortage of personal health services. In designating such an area, economic factors such as the area's poverty population may be considered. Although TANF block grants go to all states, TANF contingency funds are available only to states that meet a test of "economic need," based on either unemployment rates or food stamp (SNAP) caseloads. TANF supplemental grants go to states that meet criteria related to high population growth and/or low historic spending for welfare. A few housing and development programs limit eligibility to communities or areas based on need. For example, Water and Waste Disposal grants and loans only go to communities that are unable to finance their projects through other means. To receive funding under the Public Works and Economic Development program, projects must be located in areas with either low per capita income (at or below 80% of the national average), high unemployment (above the national average for the most recent 24 months), or a special need arising from severe unemployment or changes in economic conditions. Education programs that target resources in this way include Institutional Aid for higher education; eligible institutions must have high proportions of students receiving need-based assistance or Pell Grants, or be minority-serving institutions. Funding goes to states by formula under the 21 st Century Community Learning Center program but must be used to serve children attending high-poverty schools. Similarly, certain formula grants to states under the Rural Education Achievement Program must go to local educational agencies where at least 20% of children are poor. To be eligible for GEAR-UP grants, partnerships must include a low-income middle school. Finally, in the social services category, eligible jurisdictions in the Emergency Food and Shelter Grant program are chosen by measures of population, unemployment, and poverty. As discussed in the previous section, federal benefits and services are frequently structured as nationwide grant programs, in which federal funds are provided to specified jurisdictions according to some type of formula; government agencies or other entities within these jurisdictions deliver the benefits and services to eligible individuals. Some programs are structured as competitive or discretionary grants, leaving decisions about specific grantees and award amounts to the federal administering agency, within parameters set forth in law. Certain federal benefits are provided to eligible individuals directly. This section looks at the three primary forms of federal assistance for low-income people—formula-based grants, competitive or discretionary awards, and direct benefits—and the immediate recipients of these funds (see Table B -3 in Appendix B ). It also discusses matching and related requirements for state or local spending, and briefly examines policies affecting participation of Indian tribes and U.S. territories. Most programs for low-income people allocate funds nationwide, dividing federal resources among jurisdictions according to a formula based on specified factors (e.g., number of children with family income below the poverty guidelines). Formula-based grants also include those that use cost-sharing formulas to determine the amount of federal funds a jurisdiction will receive (such as the Medicaid FMAP, described above, which determines the amount of state expenditures that the federal government will reimburse). Formulas are most often used to determine funding levels for states (as opposed to localities), and state governments or specified state agencies are typically the recipients of the funds. However, some programs distribute funds by formula at the local level. Moreover, programs that award formula funds to states sometimes require the states to pass through a portion (or all) of the funding to local entities, either using a substate formula specified in law or at the state's discretion. And, some programs award funds directly to local agencies, but use a state-level formula to determine the aggregate amount that grantees in the state may receive. In the health care category, Medicaid makes payments to states based on their eligible expenditures and the applicable federal matching rate. CHIP, the Maternal and Child Health block grant, and Transitional Cash and Medical Services for refugees all use formulas to allocate and award funds to states. The Ryan White program for low-income people with HIV or AIDS allocates and awards funds by formula both to states and to eligible localities. Cash aid is the only major category that does not rely significantly on formula grants. TANF operates as a formula grant to states, but all other cash programs award benefits directly to eligible individuals. Most food assistance programs operate as formula grants to states (usually state educational agencies for child nutrition programs), which then distribute resources to participating schools, institutions, or other local sponsors. SNAP is something of a hybrid; although SNAP benefits go directly to eligible individuals, states administer the program and the federal government reimburses states for part of their administrative costs, using a cost-sharing formula of 50% federal and 50% state. Housing and development formula grants typically allocate and award funds at the substate level, with a few exceptions. For example, the Water and Waste Disposal program allocates funds among the Department of Agriculture's state rural development offices using state-level formula factors, but makes loans and grants directly to local governments and organizations. Both of the temporary ARRA-created programs related to the Low-Income Housing Tax Credit made formula grants at the state level, awarding funds to state housing credit agencies. Among other housing and development formula grants, however, Community Development Block Grants go to substate "entitlement communities" and to states only on behalf of non-entitlement communities. Emergency Shelter Grants (one of HUD's homeless assistance programs), HOME, HOPWA, and the temporary NSP-1 all allocate and award federal funds to a combination of metropolitan cities and urban counties and to states on behalf of non-metropolitan areas. Funding for Public Housing and Section 8 Housing Choice Vouchers is allocated and awarded to local public housing authorities, while Indian Housing Block Grants go to Indian tribes. Education programs under ESEA are a combination of formula grants to state and local educational agencies (SEAs and LEAs). Adult Basic Education and Education for Homeless Children and Youth are non-ESEA programs that operate as formula grants to states, which in turn award funds to local projects or LEAs. Federal Supplemental Education Opportunity Grants and the Federal Work-Study program allocate and award funds by formula directly to institutions of higher education. Almost all social services programs are structured as formula grants to states. An exception is the Emergency Food and Shelter Program, which allocates funding among eligible local jurisdictions and makes grants to local boards in those jurisdictions. In addition, both Head Start and the Legal Services Corporation use state-level data to allocate funds among states, but grants are awarded from those allocations directly to local programs. CSBG requires states to pass through most of their allotments to local "eligible entities" and Older Americans Act grants are suballocated to local area agencies on aging. Weatherization and LIHEAP grants are allocated and awarded to states, which in turn use a network of local agencies and organizations to operate their programs. Among employment and training programs, WIA allocates federal funds among states by formula, but the majority of these funds are awarded directly to local workforce investment boards, with a portion given to the states. The Community Service Employment Program under the Older Americans Act allocates and awards funding by formula both to states and national organizations. Federal programs are sometimes structured as competitive or discretionary grants, in which federal agencies select specific grantees and determine amounts to be awarded. Authorizing laws provide criteria or parameters for federal agencies to follow in making such decisions, but these criteria can range from very specific to relatively broad. Grantees may be selected through an annual competition or for multi-year periods with a presumption of renewal. Competitive awards are less common than formula grants among federal benefits and services for limited-income populations. No cash, food, or energy assistance programs are structured this way; however, a number of such programs exist in other categories. In health care, Family Planning and Consolidated Health Centers are both competitive grants to eligible public and nonprofit agencies. Under the Breast/Cervical Cancer Early Detection program, states compete for grants and in turn, enter into grants or contracts with public and private nonprofits. The Ryan White program, in addition to its formula grants described earlier, makes competitive awards to specified health care providers. Under the Public Works and Economic Development program, a variety of entities are eligible to compete for grants, including designated economic development districts, states, local governments, institutions of higher education, and public and private nonprofit organizations. With the exception of the formula-driven Emergency Shelter Grants program described above, Homeless Assistance Grants award funds on a competitive basis; states, local governments, public housing authorities, private nonprofits, and (for certain grants) community mental health centers may apply. HOPWA includes a competitive grant component in addition to its formula grants, with states, local governments and nonprofit organizations eligible to apply. The HOPE VI component of Public Housing also operates as a competitive grant, open to public housing authorities. The federal government directly administers a few discretionary education programs, including Institutional Aid for colleges and universities; the TRIO programs, which are open to institutions of higher education and other public and private organizations; and GEAR-UP, which is open to states and partnerships that include an institution of higher education and a low-income middle school. While TANF is primarily a formula grant program, it includes certain grants designated for social services to promote healthy marriage and responsible fatherhood. These grants are awarded by the federal government directly to public and private nonprofit agencies through a competitive process. As described earlier, both Head Start and the Legal Services Corporation are social services programs that allocate funds among states by formula, but award funds directly to local grantees. These grantees are selected on a competitive basis, but grantees retain their designations for several years at a time. Among employment and training programs, public and nonprofit organizations may apply for sponsorship of the Foster Grandparents program, and the federal government enters into contracts for operation of Job Corps centers with selected federal, state and local agencies, area vocational schools, residential vocational schools, and other public and private organizations. A relatively small number of programs make benefits available directly to eligible individuals, or through a nongovernmental intermediary organization or entity. These programs, however, include six of the 10 largest programs in this report. Among health programs, both the Department of Veterans Affairs (VA) and the Indian Health Service (IHS) provide free medical care directly to eligible needy veterans and American Indians and Alaskan Natives, respectively, at VA and IHS facilities. The Part D Medicare program subsidizes the costs of prescription drug insurance directly through contracts with participating drug plans. Other than TANF, all cash aid is provided directly to beneficiaries. The Social Security Administration makes payments to eligible elderly and disabled individuals under SSI (although medical determinations of disability are made by state agencies). The Internal Revenue Service administers the EITC and ACTC, issuing refund checks directly to eligible workers. The VA makes direct payments to recipients of pensions for needy veterans. As noted earlier, SNAP is a hybrid of direct benefits and formula grants to states. States play a key role in SNAP—determining eligibility and benefit levels and administering a related employment and training program—but assistance to purchase food is provided directly to beneficiaries, typically through electronic benefit transfer. A few housing and development programs provide benefits directly. For example, the Department of Agriculture either makes or guarantees single-family rural housing loans, and makes direct payments to property owners who participate in the Rural Rental Assistance Payments program. Likewise, HUD makes payments directly to property owners under the Section 8 Project-Based Rental Assistance Program; these subsidies enable owners to rent units to low-income families at affordable rates. Among education programs, Pell Grants and Academic Competitiveness and Smart Grants are paid to participating institutions on behalf of eligible students; the schools receive an administrative allowance for the cost of determining students' eligibility and benefit levels. This report does not attempt to quantify nonfederal spending related to federal programs for limited-income populations. However, a significant amount of such spending occurs. For example, as already explained, Medicaid is a federal-state matching program in which states spend considerable amounts of their own money. Specifically, in calendar year (CY) 2009, national health expenditures under Medicaid totaled $385 billion, of which $254 billion were federal and $131 billion were state or local. In CY2008, national expenditures under Medicaid totaled $354 billion, of which $209 billion were federal and $145 billion were state or local. The decrease in state and local expenditures from CY2008 to CY2009 is likely a function of the increased federal medical assistance percentage (FMAP) in effect for FY2009, as authorized by ARRA ( P.L. 111-5 ). Many low-income programs have provisions that require states or other grantees to match federal funds with a specified amount of nonfederal resources ("matching" requirements), or require grantees to maintain the same level of their own spending that occurred in a previous year ("maintenance-of-effort" provisions), or prohibit grantees from substituting federal funds for nonfederal funds that would have been available otherwise ("supplement and not supplant" requirements). Matching grants are generally designed in one of two ways. Under certain programs (e.g., Medicaid), the federal government reimburses grantees for a portion of their eligible expenditures, generally based on a cost-sharing formula. Additional examples are CHIP, Child Support Enforcement, Foster Care, and Adoption Assistance. More typically, matching programs require grantees to demonstrate that they can provide nonfederal resources equal to a percentage of the federal grant, but the federal government is not necessarily reimbursing grantees for expenditures already incurred. Some federal programs require the nonfederal share to be in cash, but many also allow in-kind contributions (e.g., the value of donated real estate or other property, the services of volunteers). Programs with nonfederal matching requirements include the Ryan White program for people with HIV/AIDS, Breast/Cervical Cancer Early Detection, and the Maternal and Child Health block grant; Older Americans Act nutrition and social services programs; the Public Works and Economic Development program, certain Homeless Assistance Grants, and HOME; Adult Basic Education, Supplemental Education Opportunity Grants, and GEAR-UP; Head Start, State Councils on Developmental Disabilities, the Chafee Foster Care Independence Program; Community Service Employment for Older Americans, and Foster Grandparents. As noted above, some programs use maintenance-of-effort (MOE) requirements to ensure a minimum level of nonfederal spending. A key example is TANF, which requires states to spend annually at least 75% of the amount they had spent under the predecessor AFDC program in FY1994 (or 80% if they fail to meet certain work participation requirements). Other programs with MOE provisions include School Lunch, The Emergency Food Assistance Program (TEFAP), Title I-A of ESEA, and CCDF. Education programs in particular use the "supplement and not supplant" concept, which provides that grantees may not use federal funds to replace nonfederal (or in some cases, other federal) funds that would otherwise have been used for the same purpose. Programs with such provisions include Title I-A of ESEA, the Rural Education Achievement Program, Math and Science Partnerships, Improving Teacher Quality State Grants, and Institutional Aid for higher education. Several programs specifically for Indian populations are included in this report, namely the Indian Health Service, Indian Housing Block Grants, Indian Education, and Indian Human Services. However, tribes and tribal organizations are eligible to participate in additional programs, either by applying for competitive or discretionary awards, or through funding specifically set-aside for them. Moreover, individuals who are American Indians or Native Americans likely participate in many programs for limited-income populations, not because of their heritage or tribal affiliation but because they otherwise meet a program's eligibility rules. Examples of programs for which tribes and tribal organizations or other Indian entities are explicitly eligible to participate include the Ryan White program and Breast/Cervical Cancer Early Detection; WIC and TEFAP; Water and Waste Disposal grants and loans, Public Works and Economic Development, Homeless Assistance Grants, and HOME; Institutional Aid for colleges and universities; the Community Service Employment Program for Older Americans, Foster Grandparents and Job Corps. In addition, tribes may apply to the federal government to participate directly (rather through states) under several block grant programs, including TANF, CSBG, Weatherization Assistance, and LIHEAP. Several education programs reserve funds specifically for transfer to the Interior Department's Bureau of Indian Education (BIE) for schools overseen by BIE. These programs include Title I-A of ESEA, Education for Homeless Children and Youth, 21 st Century Community Learning Centers, Reading First, a component of the Rural Education Achievement Program, and Improving Teacher Quality State Grants. In the social services category, funds are set-aside for Indian tribes under CCDF and for Indian Head Start programs. The authorizing laws for certain programs establish a separate Indian component that is funded and administered independently of the primary program. These include SNAP (the law authorizes a separate Food Distribution Program on Indian Reservations), the Older Americans Act (Title VI authorizes separate nutrition and social services programs for Native Americans), and Community Development Block Grants (the law authorizes a separate Indian Community Development grant). United States territories or their residents are eligible to participate in the majority of federal programs that provide benefits and services to people with limited income. The specific territories that are eligible to participate, however, and the rules that apply to their participation vary by program. Territories may or may not actually participate in all programs for which they are eligible. In addition, Title V of P.L. 95-134 authorizes federal agencies to consolidate grants for certain territories, specifically American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and the Trust Territory of the Pacific Islands (which include Micronesia, the Marshall Islands, and Palau). A detailed discussion of the eligibility of U.S. territories and their rules of participation, by program, is beyond the scope of this report. A few general observations can be made about the treatment of territories in programs included here. About two-thirds of programs included in this report have some provisions for participation by at least one of the territories. Among programs that include the territories, Puerto Rico, along with American Samoa, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, are most commonly included; however, not every program includes every one of these territories. Some statutes also allow for participation by Micronesia, the Marshall Islands, and Palau. Puerto Rico is more likely than other territories to be defined as a state, subject to the same rules as the 50 states and the District of Columbia. However, while some formula grants apply the same general policies to Puerto Rico that apply to states, they sometimes use different criteria to determine its funding level. Formula grants often set aside a percentage or specific amount of funds to be made available to specified territories, subject to their meeting program-related criteria, while discretionary or competitive grants often include the territories among the various other entities and organizations that are eligible to apply. This report generally does not discuss the value of benefits and services received under programs targeted toward low-income people. For many of the programs included here, the process of quantifying their value is complex. Moreover, there may be different ways to look at the value of a particular benefit. For example, the value of Medicaid could be considered its "market value" (what a family would have to pay in the private insurance market to purchase comparable coverage), or it could be considered the amount of a family's resources that are "freed up" as a result of Medicaid coverage and therefore available to purchase other goods and services. Estimating the value of benefits provided under the range of education, housing, food assistance, and service programs included in this report raises similarly difficult questions. For many programs, benefit computations depend on factors that vary for each individual case. For example, rental assistance is a function of both family income and the fair market rent of a particular housing unit. Pell Grants and certain other higher education benefits are calculated based on a family's available resources and the cost of attendance at the student's particular college or university. In other words, both housing programs and student aid consider the cost of goods and services (i.e., the rent for a particular apartment or the cost at a particular school) as a component in the benefit calculation, in addition to an individual's income and/or assets. Calculating the value of cash and near-cash benefits (such as SNAP) is somewhat more straightforward. However, even with cash and near-cash benefits, the amount an individual or family receives depends on their specific circumstances, and the benefit computation can be complicated. Under certain programs, benefits are larger for larger family sizes, reflecting greater need. Benefits are generally reduced when a family has other sources of cash income, such as earnings or Social Security benefits. Table 6 shows the maximum benefit, under each program's specific rules, for certain individuals and family types from cash assistance programs, specifically SSI, EITC, ACTC, veterans' pensions, and TANF. It also shows the maximum benefit amounts under the "near-cash" SNAP program. Benefit amounts are shown for FY2008 and FY2009 (the years covered by this report) and, for comparison, FY2011. The table shows either maximum monthly benefits or maximum annual benefits, depending on the program, with annual benefits also shown as per month equivalents, to allow comparison. Benefits are shown for different family sizes; however, for the ACTC, the maximum benefit shown is per child . There is no limit on the number of eligible children for whom the credit may be claimed in an individual family. For TANF, the benefit levels shown are for families and households with no other source of family income, who also are in compliance with behavioral rules (notably, work requirements). SSI, EITC, veterans' pensions, and SNAP are generally adjusted each year for price inflation. However, SNAP benefits were raised by ARRA, which effectively suspended benefit adjustments in 2010 and 2011. SSI and veterans' benefit adjustments are tied to Social Security cost-of-living adjustments (COLAs); there were no such COLAs for 2010 and 2011 because of the low rate of price inflation accompanying the economic downturn that began in 2007. EITC benefits are also adjusted for price changes through indexing to the Consumer Price Index; ACTC benefits are not indexed. SSI, EITC, ACTC, veterans' pensions, and SNAP benefits are determined in federal law. It should be noted that states can also supplement SSI benefits with their own funds and many states also have their own EITCs that can increase benefits for families above the amounts shown in the table. TANF benefits are set by the states, and vary greatly from one state to another. States typically do not make regular adjustments for price inflation. Rather, states make ad-hoc adjustments to TANF cash benefits. The table shows maximum TANF cash benefits for states with the highest benefits (Alaska) and with the lowest benefits (Tennessee for family size of two, Mississippi for family size of three). Benefit levels remained the same for cash assistance recipients in these states in 2008 and 2009. However, some states did increase benefit amounts, as illustrated by the slight increase in the median state maximum benefit for both a family of two and a family of three. Federal programs providing benefits and services to low-income people are extremely diverse and are rarely looked at collectively. These programs and their underlying policies evolved over many decades; they were created to achieve different policy goals in response to different perceived policy problems. Their common feature is an explicit focus on low-income populations. This report provides a snapshot of policies and spending in FY2008 and FY2009 on specified categories of benefits and services for low-income people. It looks at the broad purposes of these programs and then focuses primarily on concepts used to determine eligibility for individual participants and to distribute federal resources according to need. The report also briefly examines the units of government or other entities that receive and administer these federal funds. Numerous additional questions can be raised about this collection of benefits and services targeted toward low-income people. For example, the report does not address programs' effectiveness in meeting their policy goals, either individually or by category. A comprehensive review of program evaluations is beyond the scope of this report; moreover, a consistent body of evaluation literature on all programs for low-income populations is not available. Likewise, the report generally does not attempt to quantify the benefits provided under these programs, for reasons stated in the previous section. Many programs included in this report rely on the federal poverty guidelines for determining income eligibility, or population statistics based on federal poverty thresholds to allocate funds. In addition to issues raised by use of different multiples of the poverty guidelines by different programs, the guidelines themselves—and the thresholds on which they are based—are the subject of considerable controversy. Despite different eligibility rules, using various concepts in addition to the federal poverty guidelines, many federal programs for low-income people have overlapping target populations. However, these programs were not necessarily designed intentionally to be consistent with or complementary to one another. Thus, questions can be raised—about potential duplication, the ease with which people can understand and access benefits or services, whether gaps exist among programs in terms of eligibility and available benefits, and the efficiency of service delivery mechanisms. The variety of targeting provisions raises questions about equity and whether "need" is addressed uniformly across the country. As for the level of participation in federal low-income programs, the fact sheets in Appendix C provide very limited data, primarily to give a sense of scope for each program. However, many questions can be asked about participation in these programs, both individually and collectively. For example, what percent of eligible beneficiaries are served or participate in each program? Assuming most programs do not serve everyone eligible, what are the characteristics of those who actually participate? Are programs targeting the lowest-income individuals, or do other criteria determine who gets served? For programs with overlapping target populations, to what extent are people served under multiple programs? Administrative data for some programs provide information about the number and characteristics of participants, but these data are inconsistent across programs, and cannot be used in combination to get a picture of multiple program participation. The Survey of Income and Program Participation (SIPP), administered by the Census Bureau, provides some insight. The most recent SIPP data, for the third quarter of 2008, indicate that about 28.4 million households—24% of total households in the United States—received cash or noncash benefits under one or more means-tested program in an average month. Most often, these programs were Medicaid, free and reduced-price school meals, or SNAP; other programs included housing assistance, SSI, TANF, WIC, LIHEAP, and veterans' pensions. Notably, however, the SIPP data do not identify the extent to which households receive benefits under the EITC or ACTC, although these cash assistance programs are among the 10 largest federal benefits for low-income people. Returning to the discussion of benefits and services by category, Figure 1 clearly demonstrates that certain categories—most notably health—have grown larger than others. The relative size of the programs, the budgetary classification of their spending (e.g., discretionary or mandatory, open-ended or capped), and the diversity of design elements have implications for the ability of lawmakers to enact new policies, change existing policies, or adjust spending priorities in a time of fiscal constraint. Finally, the report notes that many programs for low-income people operate through formula grants, typically to states. Many of these programs require states, or sometimes other entities within states, to spend a certain amount of nonfederal funds to access their full federal grant. Even in some programs that provide benefits directly to individuals, such as SNAP or SSI, states play a role in determining eligibility or conducting other administrative functions and, in some cases, in supplementing the federal benefits provided. In the current fiscal environment, with many state budgets in critical condition, the ability of states to fully access federal funding and to maintain their level of support for low-income benefits and services is an outstanding question. At the same time, continued federal spending on these benefits and services is at issue, in light of current concerns about the size of federal deficits and long-term debt. Appendix A. Methodology of Report Selection of Programs Programs were selected for inclusion in this report if they (1) have provisions that base an individual's eligibility or priority for service on a measure (or proxy) of low or limited income; or (2) target resources in some way (e.g., through allocation formulas, variable matching rates) using a measure (or proxy) of low or limited income. A few programs without an explicit low-income provision were included because either their target population is disproportionately poor or their purpose clearly indicates a presumption that participants will be low-income. Such programs that serve disproportionately low-income people include the Indian Health Service, Homeless Assistance Grants, Indian Education, Title I Migrant Education Program, and Indian Human Services. Programs with purposes that presume a low-income target population include Adult Basic Education and Social Services Block Grants. Federal student loan programs were considered for inclusion because they determine benefit levels through the same need analysis system that is used for Pell Grants and several smaller postsecondary education programs. However, this system can result in students from relatively well-off families receiving assistance, as there is no absolute income ceiling on eligibility. Pell Grants are structured in such a way that the majority of recipients are low-income and the lowest-income students receive the largest benefits. Student loan programs are not as strongly targeted and therefore, are not included in the report. On the other hand, deliberations about whether to include the Additional Child Tax Credit (ACTC) reached a different conclusion. The regular Child Tax Credit (CTC) is a nonrefundable credit and phases out at relatively high income levels. The ACTC is a refundable credit that allows families with no or insufficient tax liability to get all or part of the benefit they would otherwise receive from the CTC. Because of the refundable nature and other design features of the ACTC, including certain recently enacted changes, it serves predominantly low-income families. For example, for tax year 2008, 87% of returns that claimed the ACTC were filed by families with adjusted gross incomes (AGI) below $40,000 and 83% of the credit went to such families; 94% of returns that claimed the ACTC were filed by families with AGI below $50,000 and 93% of the credit went to such families. Thus, ACTC is included in the report. Categorization of Programs Most programs are easily assigned to broad categories, such as health, cash aid, food assistance, or education. A few, however, have multiple purposes or allowable activities. For some of those programs, spending can be disaggregated into the relevant categories. For example, using state reporting of actual expenditures, it is possible to estimate the amount of TANF obligations attributable to cash aid, social services, and employment and training. Other programs cannot be disaggregated, however, and must be assigned to a single category. For example, Transitional Cash and Medical Services for Refugees was categorized as health care, and Indian Human Services was categorized as social services although it also provides cash and housing assistance. The social services category, in general, is not well-defined and some analysts might assign some programs differently. Head Start, for example, could be considered an education program, since its purpose is to promote school readiness; however, it supports a very broad range of activities—including for children age 0-3 through its Early Head Start component—that can best be characterized collectively as social services. Foster Care and Adoption Assistance both give cash to families or other care providers, but income support is not the programs' purpose or sole use of funding. Foster Care subsidizes maintenance payments and administrative activities on behalf of children who cannot remain safely at home, and Adoption Assistance makes payments to facilitate the adoption of children who would otherwise lack permanent homes. Thus, in this report, these programs were categorized as social services and not cash assistance. Selection of Spending Measure New obligations incurred in the indicated fiscal year were chosen as the measure of spending for this report, although for many programs, readers may be more accustomed to seeing appropriations (budget authority) or outlays. These spending concepts are related. Congress and the President enact budget authority through appropriations measures or other authorizing laws. Budget authority in turn allows federal agencies to incur obligations , through actions such as entering into contracts, employing personnel, and submitting purchase orders. Outlays represent the actual payment of these obligations, usually in the form of electronic transfers or checks issued by the Treasury Department. Obligations are used in this report because they are the most consistent measure available at the necessary level of detail for the majority of programs. The source of obligations data is the U.S. Budget Appendix for FY2011 (for final FY2009 obligations) and FY2010 (for final FY2008 obligations). Obligations were either not available or not appropriate for a small number of programs. Because obligations were not available at the necessary program level, appropriations were used for the following: Transitional Cash and Medical Services for Refugees, Breast/Cervical Cancer Early Detection, the Title I Migrant Education Program, Social Services and Targeted Assistance for Refugees, and Foster Grandparents. For veterans' medical care, the Budget Appendix shows obligations for the entire program, and not solely the income-tested component. Thus, for this report, estimated obligations for Priority Group 5 veterans (needy veterans without service-connected disabilities) were calculated from Department of Veterans Affairs data on obligations for Priority Groups 1-6 and 7-8 and number of patients receiving care by individual priority group. The Budget Appendix also does not show obligations solely for the low-income subsidy portion of the Medicare Part D prescription drug program. Therefore, the report uses aggregate reimbursements for the low-income subsidy for the calendar year (instead of fiscal year), available from the annual report of the Medicare trustees. Loan subsidy outlays were used as the more appropriate measure of spending for the Section 502 single-family rural housing loan program. Direct and guaranteed loan subsidy outlays, available from the Budget Appendix, were adjusted for re-estimates provided in the Federal Credit Supplement to the U.S. Budget for the relevant years. Finally, as noted above, TANF obligations provided in the Budget Appendix were disaggregated into the categories of cash aid, social services, and employment and training, based on states' reporting to the Department of Health and Human Services of their actual expenditures. Spending Threshold Programs are included in this report if they had obligations in either FY2008 or FY2009 of at least $100 million. To simplify the analysis without significantly changing the overall picture, smaller programs were excluded, even if they met the low-income criteria. Only one program included in the report—Education for Homeless Children and Youth—had spending above the threshold in one year but below the threshold in the other. Therefore, spending totals for FY2009 include obligations for this program, but spending totals for FY2008 do not. Thus, each year's spending total is a snapshot of spending in that year for low-income programs which— in that year —had obligations totaling at least $100 million. Comparison with Predecessor CRS Report Series From 1979 to 2006, the Congressional Research Service issued a series of reports, typically every other year, called Cash and Noncash Benefits for Persons with Limited Income . The series was conceived and produced (except for the last edition in 2006) by [author name scrubbed], Specialist in Social Policy, who retired from CRS in 2004. The current report is meant to replace the Cash and Noncash series. However, this report uses different methodologies to select and categorize programs and measure spending; therefore, the current report cannot be considered an update of Cash and Noncash for various reasons. For example, the older series did not include certain programs that are included in this report, such as the low-income subsidy under Medicare Part D, Title I-A of the Elementary and Secondary Education Act, and Community Development Block Grants. At the same time, the older series had no minimum spending threshold, so it included several smaller programs that are not included here. In addition, the older series included student loans, which are not included in this report for reasons explained above. Several programs were also categorized differently in the previous series (e.g., Head Start was categorized as education; Foster Care and Adoption Assistance as cash aid; and Homeless Assistance Grants as social services). The older series used different measures of spending for different programs, while this report uses obligations where possible. The older series also provided estimates of state-local spending, which are not included in this report. Finally, the older series traced spending back to 1968, which is beyond the scope of the current report. Changes in programs and appropriations accounts over time make it virtually impossible to trace obligations backward with precision. Appendix B. Detailed Program Tables The following three tables identify and provide specific information about programs included in this report. Programs are organized by category. Within categories, programs are listed in order of their Catalog of Federal Domestic Assistance number (see Appendix C ). Table B -1 shows obligations (or another measure of spending, as noted) for each program for FY2008 and FY2009. ARRA amounts are included in the FY2009 amounts; they are also shown in a separate column. The table also indicates the federal administering agency for each program. Table B -2 identifies, for each program, the general target population and the concept (or multiple concepts) used to determine individual income eligibility and (if relevant) the concept used to target federal resources broadly based on need. These concepts are discussed in detail earlier in the report. The table indicates the general concept used but not the specific application of the concept. For example, the table might indicate that federal poverty guidelines (FPG) are used as a concept in determining income eligibility for a particular program, but does not indicate what percent of FPG is used. Likewise, the table might show that a program uses formula allocation factors to direct federal resources toward areas with the greatest need, but does not identify the specific factors or their weighting or any mitigating factors, such as small-state minimums or hold-harmless provisions. Readers are referred to the fact sheets in Appendix C , relevant CRS reports, or the statutes themselves for these details. Table B -3 shows the type of federal assistance provided (typically formula grants, competitive or discretionary grants, or direct benefits) and the immediate recipients of this assistance. As noted in the table, "immediate" recipient refers to the level of government or the organization that directly receives the federal grant or award. As discussed in the body of the report, many programs require that funds be further distributed (by formula or other criteria) to other units of government or organizations. For example, federal grants may be awarded by formula to states, but states are then required to subaward these funds to local governments or other entities. This table only shows the "immediate" grantee. The table also indicates whether a program has provisions for participation by U.S. territories or residents or organizations located within the territories. The specific details of these provisions are not provided in the table, however; readers are referred to statutory language or the federal agency that administers the program for this information. Appendix C. Program Fact Sheets The following fact sheets provide brief information about each program included in this report's analysis. Efforts were made to present the information in a relatively consistent manner; however, the programs are sufficiently different that the fact sheets vary in scope and level of detail. For each program, the following information is provided: Catalog of Federal Domestic Assistance (CFDA) number(s); statutory and regulatory citations; the name of the federal administering agency and (where appropriate) the specific office within that agency; the program's purpose; the type of benefit or service provided; criteria used to determine individual eligibility; the form and recipient of federal assistance; the allocation formula used if relevant; any matching or related nonfederal spending requirements; the amount of new obligations in FY2008 and FY2009; the budgetary classification of the program's spending; some limited detail on program participation in FY2009 or the most recent year for which data are available; and citations to relevant CRS reports. Information was derived from statutes, regulations, agency websites, or other authoritative sources. Only selected information is included in these fact sheets, relevant to the overall analysis in this report. Moreover, programs are generally described as they existed in FY2009, although references are provided in cases where significant changes have been enacted affecting years after FY2009. For complete information about a particular program of interest, readers are referred to the legal citations provided, the federal administering agency, or the identified CRS report. The following table provides a list of programs and page numbers, for easier reference to individual program fact sheets. Health Care Medical Care for Veterans Without Service-Connected Disability (CFDA #64.009) Authority: Statute: 38 USC Part 2, Chapter 17. Regulations: 38 CFR Part 17. Federal administering agency: Department of Veterans Affairs, Veterans Health Administration. Purpose of program: To provide primary care, specialized care, and related social and support services to eligible veterans. Benefit/service: Standardized medical benefits package including preventive services, such as immunizations, screening tests, and health education and training classes; primary health care diagnosis and treatment, prescription drugs, comprehensive rehabilitative services, mental health services, including professional counseling, home health care, respite (inpatient), hospice and palliative care; and emergency care. Some veterans also may receive long-term care, including nursing home care, domiciliary care, adult day care, and limited dental care. Individual eligibility criteria: In general, eligibility for VA health care is based on veteran status, service-connected disabilities or exposures, and other factors such as veterans who were former prisoners of war or who are awarded the Purple Heart. Veterans with no service-connected conditions and who are Medicaid-eligible, or who have income below a certain VA means-test threshold and below a median income threshold for the geographic area in which they live are eligible to enroll in the VA health care system. These veterans are classified as Priority Group 5 veterans. Form and recipient of federal assistance: Services are provided directly by the VA in VA facilities or through contracts. Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $11.644 billion. FY2008: $10.717 billion. (Estimated obligations on behalf of Priority Group 5 veterans.) Budgetary classification: Discretionary. Participation data: In FY2009, 1,484,467 Priority Group 5 veteran patients received care from the VA. CRS report: CRS Report R41343, Veterans Medical Care: FY2011 Appropriations , by [author name scrubbed]. Family Planning (CFDA #93.217) Authority: Statute: Title X of the Public Health Service Act, established in the Family Planning and Services and Population Research Act of 1970 (P.L. 91-572); 42 USC 300 et seq. Regulations: 42 CFR Part 59. Federal administering agency: Department of Health and Human Services, Office of Public Health and Science, Office of Population Affairs, Office of Family Planning. Purpose of program: To assist individuals to determine freely the number and spacing of their children through the provision of education, counseling, and medical services. Benefit/service: A broad range of family planning methods and services (including natural family planning methods, infertility services, and services for adolescents). Family planning services include clinical family planning and related preventive health services; information, education and counseling related to family planning; and referral services. Services are free for persons whose income does not exceed federal poverty guidelines (unless covered by Medicaid or other health insurers) and are provided on a sliding fee scale basis for those with incomes between 100% and 250% of federal poverty guidelines. Individual eligibility criteria: Priority is given to individuals from low-income families, defined in regulation as individuals whose family income does not exceed 100% of federal poverty guidelines, and individuals whose family income exceeds 100% of federal poverty guidelines but who otherwise are unable to afford family planning services. Form and recipient of federal assistance: Competitive grants to public and nonprofit agencies. Allows participation by agencies in territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Outlying Islands, the Marshall Islands, the Federated States of Micronesia, Republic of Palau, and the U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: None. However, regulations provide that no project may be fully supported by Title X funds. New obligations: FY2009: $307 million. FY2008: $300 million. Budgetary classification: Discretionary. Participation data: In calendar year 2008, a total of 5.051 million users were served by Title X-funded sites. CRS report: CRS Report RL33644, Title X (Public Health Service Act) Family Planning Program , by [author name scrubbed]. Consolidated Health Centers (CFDA #93.224) Note: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Section 330 of the Public Health Service Act, established by the Health Centers Consolidation Act of 1996 ( P.L. 104-299 ) and most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 42 USC 254b. Regulations: 42 CFR Subpart 51c and 42 CFR Parts 56.201-56.604. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary Health Care. Purpose of program: To provide health care services to groups that are determined to be medically underserved. Benefit/service: Primary and additional health care services defined in statute, delivered by community health centers, migrant health centers, health centers for the homeless, and health centers for residents of public housing. Individual eligibility criteria: The statute defines "medically underserved" as "the population of an urban or rural area designated by the Secretary as an area with a shortage of personal health services or a population group designated by the Secretary as having a shortage of such services." Regulations provide that, in designating these populations, the Secretary may consider economic factors, such as the percentage of the population with incomes below poverty. Grant funds may be used to pay the full cost of services to individuals and families with income at or below federal poverty guidelines; services are provided on a sliding fee scale basis for those with incomes between 100% and 200% of federal poverty guidelines and no discount is provided for those with incomes above 200% of poverty. Form and recipient of federal assistance: Competitive grants to public and private nonprofit entities. Allocation formula: Not applicable. Matching or related requirements: None. Grantees are expected to collect fees from third-party payors, such as Medicare, Medicaid, and private health insurance; centers may also collect fees from patients with family income above the federal poverty guidelines; and centers may also receive funding from state, local and other federal sources. For grants serving certain populations, federal funds must supplement and not supplant other funds used by the health center to serve the same population. New obligations: FY2009: $3.665 billion (includes $1.519 billion under the American Recovery and Reinvestment Act). FY2008: $2.021 billion. Budgetary classification: Discretionary. Participation data: In FY2008, a total of 1.7 million patients were served. CRS reports: CRS Report R41278, Public Health, Workforce, Quality, and Related Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed] and [author name scrubbed]; and CRS Report RL32046, Federal Health Centers Program , by Barbara English. Transitional Cash and Medical Services to Refugees (CFDA #93.566) Authority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1979 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 USC 1521-1524. Regulations: 45 CFR Parts 400-401. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement. Purpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible. Benefit/service: Cash payments to eligible individuals that are at least equal to the payment rate to a family of the same size under the state's Temporary Assistance for Needy Families (TANF) program; and medical benefits, through payments to doctors, hospitals and pharmacists. Those eligible for Supplemental Security Income (SSI) may receive refugee cash assistance while their SSI applications are pending. Individual eligibility criteria: Adult refugees, asylees, other specified humanitarian cases, and trafficking victims who meet the income and asset tests for TANF or Medicaid but who are not categorically eligible for those programs; and unaccompanied refugee minor children. Form and recipient of federal assistance: Formula grants to states, and discretionary grants to state-alternative programs and voluntary agencies. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico, the Trust Territories of the Pacific, and the U.S. Virgin Islands). Allocation formula: Formula funds are allocated to states based on their estimates of eligible expenditures. Matching or related requirements: No matching requirements for formula grants. Voluntary agencies receiving discretionary grants must provide a $1 match for each 2 federal dollars. New obligations: FY2009: $282 million. FY2008: $296 million. (Appropriations.) Budgetary classification: Discretionary. Participation data: No data available. CRS report: CRS Report R41570, U.S. Refugee Resettlement Assistance , by [author name scrubbed]. State Children's Health Insurance Program (CHIP) (CFDA #93.767) Note: The following describes this program as it operated in FY2009; see CRS reports listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Title XXI of the Social Security Act, established by the Balanced Budget Act of 1997 ( P.L. 105-33 ) and most recently reauthorized by the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3 ); 42 USC 1397aa-mm. Regulations: 42 CFR Parts 431, 433, 435. Federal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services. Purpose of program: To provide health coverage to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children. Benefit/service: Health care coverage is available through expansion of a state's existing Medicaid program, creation of a separate CHIP program, or a combination of both. In general, for separate CHIP programs under which the majority of children are enrolled, states may offer one of three "benchmark" benefit packages: (1) the standard Blue Cross/Blue Shield preferred provider plan offered under the Federal Employees Health Benefits Program (FEHBP), (2) the health coverage that is offered and generally available to state employees, and (3) the health coverage that is offered by a health maintenance organization (HMO) with the largest commercial (non-Medicaid) enrollment in the state. (States also have the option of providing "Secretary-approved" coverage for which benefits are suitable for the target population.) States that use the Medicaid expansion option can provide the full range of mandatory Medicaid benefits as well as all optional services specified in their state Medicaid plans. Alternatively, under a CHIP Medicaid expansion, states may offer benchmark benefit plans similar to those listed above. States may also waive many of the basic benefit rules described above to conduct demonstration projects under Section 1115 authority that test alternative methods of meeting the overall purpose of CHIP. Medicaid expansion programs must follow the nominal Medicaid cost-sharing rules or, for certain populations, may apply alternative higher premiums and service-related cost-sharing. States with separate CHIP programs may vary cost-sharing requirements by family income, but the total annual aggregate cost-sharing (including premiums, copayments, and similar charges) for a family may not exceed 5% of total income in a year, and certain services such as preventive care are exempt from cost-sharing. Individual eligibility criteria: Target populations are defined by states within federal parameters. Children must be under age 19, lack health insurance, and not be qualified for regular Medicaid. States may set the upper income limit for targeted children at up to 200% of federal poverty guidelines or 50 percentage points above the applicable pre-CHIP (1997) Medicaid income level. States may seek federal approval to serve higher-income children. States also may cover pregnant women who lack health insurance and meet specified income thresholds. Other groups (e.g., parents) may be covered under certain circumstances (e.g., through Section 1115 waivers or CHIP premium assistance payments). Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: The allotment methodology was changed by CHIPRA, beginning with FY2009. Rather than dividing the entire national appropriation among states, the law now calculates allotment amounts for each state, which they will receive unless the national appropriation is inadequate. The new allotment formula is based primarily on states' past and/or projected federal CHIP spending (depending on the year) increased by a growth factor. For FY2009 onward, annual allotments are available for two years, with unspent funds available for redistribution first to shortfall states and then for bonus payments directed at states that exceed certain child enrollment levels and that implement certain outreach and enrollment initiatives. Prior to CHIPRA, funds were allocated among states according to a formula based on a combination of the number of low-income children and low-income uninsured children in the state, and including a cost factor that represented average health service industry wages in the state compared to the national average. Matching or related requirements: State expenditures are matched at an "enhanced" federal medical assistance percentage (E-FMAP). The E-FMAP for CHIP lowers the state's share of CHIP expenditures by 30% compared to the regular Medicaid FMAP. The CHIP E-FMAP rate is subject to a ceiling of 85% and a floor of 65%. New obligations: FY2009: $9.534 billion. FY2008: $6.360 billion. Budgetary classification: Mandatory (capped entitlement to states). Participation data: During FY2009, the total number of children ever enrolled during the year was 7,717,317; and the total number of adults ever enrolled during the year was 504,915. CRS reports: CRS Report R40444, State Children's Health Insurance Program (CHIP): A Brief Overview , by [author name scrubbed] and [author name scrubbed]; and CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed]. Voluntary Medicare Prescription Drug Benefit—Low-Income Subsidy (CFDA 93.770) Note: The following describes this program as it operated in FY2009; see CRS report s listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Part D of Title XVIII of the Social Security Act, established by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ); 42 USC 1395w-101-152. Regulations: 42 CFR Part 423. Federal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services. Purpose of program: To provide low-income seniors and people with disabilities with comprehensive prescription drug benefits. Benefit/service: Prescription drug coverage with reduced premiums, copayments and other out-of-pocket expenses. Individual eligibility criteria: Individuals with incomes below 150% of federal poverty guidelines and limited resources are eligible for subsidized prescription drug coverage. Those with incomes no higher than 135% of federal poverty guidelines receive the highest level of subsidy. Certain individuals are automatically eligible: those also eligible for Medicaid (i.e., "dual eligibles"); Medicare Savings Program recipients; and Supplemental Security Income (SSI) recipients. Form and recipient of federal assistance: Contracts with participating prescription drug plans; payments are made to plans for the monthly premiums, deductibles and coverage gap expenses of low-income subsidy beneficiaries. Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations: CY2009: $20.300 billion. CY2008: $17.400 billion. (Aggregate reimbursements under Low-Income Subsidy in calendar year.) Budgetary classification: Mandatory (entitlement to individuals). Participation data: In calendar year 2009, 10 million beneficiaries received low-income subsidies. CRS reports: CRS Report R40611, Medicare Part D Prescription Drug Benefit , by [author name scrubbed]; and CRS Report R41196, Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline , coordinated by [author name scrubbed]. Medicaid (CFDA #93.778) Note: The following describes this program as it operated in FY2009; see CRS reports listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Title XIX of the Social Security Act, established by the Social Security Amendments of 1965 (P.L. 89-97); 42 USC 1396. Regulations: 42 CFR Parts 430-456. Federal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services. Purpose of program: To provide medical assistance to families with dependent children and aged, blind or disabled individuals who have insufficient income and resources to afford necessary medical care, and to provide rehabilitation and other services to help such families and individuals achieve independence and self-care. Benefit/service: Federal law requires states to cover certain health benefits under Medicaid; other services may be offered at state option. Examples of mandatory services for most eligibility groups include inpatient hospital services, services provided by qualified federal health centers, laboratory and x-ray services, physician services, pregnancy-related services, nursing facility services for individuals 21 and older, and home health care for those entitled to nursing home care. Examples of optional services provided for most eligibility groups in many states include prescribed drugs, physician-directed clinic services, other licensed practitioners (e.g., optometrists, podiatrists, psychologists), inpatient psychiatric care for the elderly and individuals under age 21, nursing facility services for individuals under age 21, physical therapy, prosthetic devices, and transportation. Individual eligibility criteria: Individuals must meet financial (i.e., income and sometimes resource) and nonfinancial (i.e., categorical) requirements. Federal law defines more than 50 potentially eligible population groups; some groups are mandatory (all states must cover them) and others are optional (states may cover them at their discretion). In some cases, income eligibility standards are tied directly to specified percentages of the federal poverty guidelines. For example, Medicaid mandatory coverage groups include pregnant women and children under age 6 with family incomes at or below 133% of poverty; children ages 6-18 with family incomes at or below 100% of poverty; certain parents and children in working families who are entitled to Medicaid for at least 6 months and up to 12 months if their income does not exceed 185% of poverty (i.e., Transitional Medical Assistance, TMA)); individuals who qualify for Medicare Part A whose incomes do not exceed 100% of poverty (Qualified Medicare Beneficiaries (QMBs)); and individuals who are entitled to Medicare Part A with incomes between 100% and 120% of poverty (Specified Low-Income Beneficiaries (SLMs)). Mandatory groups also include families who qualify via rules applicable to the former Aid to Families with Dependent Children (AFDC) program; also, families who lose Medicaid as a result of increased child/spousal support or earned income may receive TMA for four months. Medicaid optional groups with income eligibility standards tied directly to specified percentages of the federal poverty guidelines include pregnant women and infants with incomes between 133% and 185% of poverty; CHIP-financed targeted low-income children; disabled and elderly (age 65+) individuals with incomes up to 100% of poverty; disabled working individuals whose family income does not exceed 250% of poverty; and individuals who would be QMBs except that their incomes are between 120% and 135% of poverty (i.e., Qualifying Individuals (QI-1s)). Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no cap on federal spending. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable FMAP (see below). Matching or related requirements: The federal share of expenditures on Medicaid services is called the federal medical assistance payment (FMAP) and is inversely related to a state's per capita income. The FMAP is higher for states with lower per capita income relative to the national average and vice versa for states with higher per capita income. The FMAP ranges from a statutory low of 50% to a statutory high of 83%. Medicaid administrative expenditures are generally matched at a 50% rate, with certain exceptions. For expenditures in FY2009, the American Recovery and Reinvestment Act authorized a temporary increase in FMAPs for states. (Subsequent legislation extended this increase through June 2011.) New obligations: FY2009: $265.058 billion (includes $32.632 billion in estimated additional federal matching provided under the American Recovery and Reinvestment Act). FY2008: $214.015 billion. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data: During FY2009, an average of 51.1 million individuals were enrolled in Medicaid each month (including 24.9 million children); and a total of 65.2 million individuals were enrolled during the year (including 31.3 million children). CRS reports: CRS Report RL33202, Medicaid: A Primer , by [author name scrubbed]; and CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed]. Ryan White HIV/AIDS Program (CFDA #93.917) Authority: Statute: Title XXVI of the Public Health Service Act, established by the Ryan White Comprehensive AIDS Resources Emergency Act of 1990 ( P.L. 101-381 ) and most recently reauthorized by the Ryan White HIV/AIDS Treatment Extension Act of 2009 ( P.L. 111-87 ); 42 USC 300ff. Regulations: no formal program-specific regulations. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, HIV/AIDS Bureau. Purpose of program: To address the unmet care and treatment needs of persons living with HIV/AIDS who are uninsured or underinsured, and therefore are unable to pay for HIV/AIDS health care and vital health-related supportive services. Benefit/service: Primarily core medical services; i.e., outpatient and ambulatory health services, drug treatments (including through the AIDS Drug Assistance Program, ADAP), oral health, early intervention services, health insurance premium and cost-sharing assistance for low-income individuals, home health, medical nutrition therapy, hospice, home and community-based services, mental health, substance abuse outpatient care, and medical case management, including treatment adherence services; and some supportive services; i.e., outreach, medical transportation, language services, respite care for caregivers, and referrals for health care and support services. Services are provided without charge for individuals whose incomes are below federal poverty guidelines and are provided on a sliding fee scale basis for those whose incomes exceed federal poverty guidelines. Individual eligibility criteria: Individuals and families with HIV disease. Specific clinical and income eligibility criteria are set by states. Form and recipient of federal assistance: Formula grants to eligible metropolitan areas, "transitional grant" areas, and to states and territories; competitive supplemental grants are awarded based on need. Competitive grants are made to qualified health centers, family planning clinics, hemophilia centers, rural health clinics, Indian Health Service facilities and certain other health facilities and organizations; public and private nonprofit organizations; and dental schools. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Funds are allocated on the basis of number of living HIV and AIDS cases. Matching or related requirements: Any state with more than 1% of the nation's confirmed cases of HIV/AIDS must provide a nonfederal match equal to $1 for every federal $5 in the first year of payments under the grant, $1 for every federal $4 in the second year, $1 for every federal $3 in the third year, and $1 for every federal $2 in the fourth and fifth years of the grant. New obligations: FY2009: $2.227 billion. FY2008: $2.141 billion. Budgetary classification: Discretionary. Participation data: It is estimated that the program serves more than a half-million low-income people with HIV/AIDS each year. CRS report: CRS Report RL33279, The Ryan White HIV/AIDS Program , by [author name scrubbed]. Breast/Cervical Cancer Early Detection (CFDA #93.919) Authority: Statute: Title XV of the Public Health Service Act, established by the Breast and Cervical Cancer Mortality Prevention Act of 1990 ( P.L. 101-354 ) and most recently reauthorized by the National Breast and Cervical Cancer Early Detection Program Reauthorization Act of 2007 ( P.L. 110-18 ); 42 USC 300k. Regulations: no formal program-specific regulations. Federal administering agency: Department of Health and Human Services, Centers for Disease Control and Prevention, Division of Cancer Prevention and Control. Purpose of program: To provide low-income, uninsured, and underserved women access to timely breast and cervical cancer screening and diagnostic services. Benefit/service: Clinical breast examinations, mammograms, Pap tests, pelvic examinations, diagnostic testing if results are abnormal, and referrals to treatment. No fees for services may be charged for women with incomes below 100% of federal poverty guidelines. (Under the Breast and Cervical Cancer Prevention and Treatment Act of 2000, P.L. 106-354 , women who are screened through the CDC program are an optional Medicaid coverage group, which means that states may offer them medical services through their Medicaid programs.) Individual eligibility criteria: States must give priority to low-income women. CDC defines the eligible population as uninsured and underinsured women with income at or below 250% of federal poverty guidelines, aged 18-64 for cervical screening and 40-64 for breast screening. Form and recipient of federal assistance: Competitive grants to states, which enter into grants and contracts with public and private nonprofit entities. Allows participation by territories (Puerto Rico, American Samoa, Northern Mariana Islands, Marshall Islands, Micronesia, Palau) and Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: A nonfederal match, in cash or in-kind, of $1 for every federal $3 is required. Programs must also maintain their previous level of effort before additional resources will be considered toward the matching requirement. New obligations: FY2009: $206 million. FY2008: $201 million. (Appropriations.) Budgetary classification: Discretionary. Participation data: In program year 2009 (July 2008-June 2009), a total of 324,912 women were screened for breast cancer and 320,627 women were screened for cervical cancer. Maternal and Child Health Block Grant (CFDA #93.994) Note: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Title V of the Social Security Act, enacted in 1935 and converted into a block grant by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ); 42 USC 701. Regulations: 42 CFR Part 96. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Maternal and Child Health Bureau. Purpose of program: To improve the health of all mothers and children consistent with applicable health status goals and national health objectives established by the Secretary of HHS. Benefit/service: Preventive and primary health care services (excluding inpatient services with some exceptions) for women, infants and children, including children with special health care needs. Individual eligibility criteria: Defined by the states. Federal law emphasizes services to low-income mothers and children, defined as those with income at or below the federal poverty guidelines. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, Northern Mariana Islands, and Micronesia, Marshall Islands, and Palau). Allocation formula: Funds are allocated among states based on two factors: the amount awarded to each state in 1983 under previous programs that were consolidated into the block grant; and each state's relative share of low-income children. Matching or related requirements: States must provide $3 for every $4 in federal funding received. States must maintain their level of spending from state funds in 1989 on maternal and child health services. New obligations: FY2009: $662 million. FY2008: $666 million. Budgetary classification: Discretionary. Participation data: In FY2008, an estimated 35 million children were served. CRS report: CRS Report R41278, Public Health, Workforce, Quality, and Related Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed] and [author name scrubbed]. Indian Health Service (no CDFA #) Note: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ). Authority: Statute: Snyder Act of 1921 (P.L. 83-568) and the Indian Health Care Improvement Act of 1976 ( P.L. 94-437 ), most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 25 USC 1601 et seq. Regulations: 42 CFR Part 136. Federal administering agency: Department of Health and Human Services, Indian Health Service. Purpose of program: To elevate the health status of the Indian population to a level at parity with the general U.S. population. Benefit/service: Hospital, medical, and dental care, behavioral health, environmental health and sanitation services as well as outpatient services and the services of mobile clinics and public health nurses, and preventive care, including immunizations and health examinations of special groups, such as school children. Services are provided free of charge. Individual eligibility criteria: Persons of American Indian or Alaskan Native (AI/AN) descent who are members of a federally recognized Indian tribe, live within an Indian Health Service Health Service Delivery Area (HSDA), or are the natural minor children (18 years old or younger) of such an eligible member AI/AN and live within an HSDA. Form and recipient of federal assistance: Services are provided directly by the Indian Health Service in IHS or tribal health facilities or through contracts. Allocation formula: Not applicable. Matching or related requirements: None. The Indian Health Service collects reimbursements from Medicare and Medicaid for services that it provides to members of its eligible population who also are eligible for those programs. If an eligible AI/AN has private health insurance, IHS is reimbursed for services provided. New obligations: FY2009: $5.416 billion (includes $294 million under the American Recovery and Reinvestment Act). FY2008: $4.347 billion. (Services and facilities.) Budgetary classification: Discretionary. Participation data: In FY2009, the IHS service population was estimated at 1.9 million American Indians and Alaskan Natives. CRS report: CRS Report R41152, Indian Health Care Improvement Act Provisions in the Patient Protection and Affordable Care Act (PPACA) , by [author name scrubbed] and [author name scrubbed]. Cash Aid Pensions for Needy Veterans, their Dependents and Survivors (CFDA #64.104 and #64.105) Authority: Statute: 38 USC Chapter 15. Regulations: 38 CFR Subpart A of Part 3. Federal administering agency: Department of Veterans Affairs, Veterans Benefits Administration. Purpose of program: To provide assistance to needy veterans, their dependents and survivors. Benefit/service: Cash assistance. Individual eligibility criteria: Veterans, age 65 and older or who are permanently and totally disabled (not due to military service or willful misconduct) regardless of age, who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive. Also, surviving spouses and unmarried dependent children of deceased veterans who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive. Form and recipient of federal assistance: Direct payment to individuals. Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations: FY2009: $4.134 billion. FY2008: $3.777 billion. Budgetary classification: Mandatory (entitlement to individuals). Participation data: In FY2009, benefits were paid to 315,842 veterans and 194,807 survivors. CRS report: CRS Report RS22804, Veterans' Benefits: Pension Benefit Programs , by [author name scrubbed] and [author name scrubbed]. Temporary Assistance for Needy Families (CFDA #93.558) Authority: Statute: Title IV-A of the Social Security Act, established by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) and most recently reauthorized by the Claims Resolution Act of 2010 ( P.L. 111-291 ); 42 USC 601-619. Regulations: 45 CFR Parts 260-270. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance. Purpose of program: To increase state flexibility in operating programs designed to (a) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (b) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (c) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (d) encourage the formation and maintenance of two-parent families. Benefit/service: Benefits or services reasonably calculated to achieve the four statutory goals above, and certain "grandfathered" activities conducted under predecessor program (Aid to Families with Dependent Children) prior to enactment of P.L. 104-193 . (More than 70% of total TANF federal and state expenditures in FY2009 were for noncash services, including child care, work activities, child welfare services, and various social services directed toward the statutory goals of family formation and reduced nonmarital pregnancies.) Cash assistance benefit levels are defined by the individual states. Individual eligibility criteria: Families with dependent children as determined eligible under income and asset criteria defined by the states. Form of assistance: Formula grants to states; competitive awards to public and private entities for healthy marriage promotion and responsible fatherhood grants. Allows participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands) and federally recognized Indian tribes and certain Alaskan Native organizations. Allocation formula: The basic TANF block grant is allocated among states according to their peak expenditures for pre-TANF programs during the FY1992-FY1995 period. Supplemental TANF grants are provided to states that meet certain criteria of high population growth and/or low historic grants per poor person. TANF contingency funds are available to states that meet a test of economic "need" and increase spending from their own funds above what they spent in FY1994 on cash, emergency assistance, and job training in TANF's predecessor programs. For FY2009 (and FY2010), states could draw down additional funds from the TANF Emergency Contingency Fund, created by the American Recovery and Reinvestment Act (ARRA), which reimbursed states for increased expenditures on basic assistance, nonrecurring short-term benefits, and subsidized employment. Matching or related requirements: None. The basic TANF block grant requires states to maintain spending from their own funds on TANF or TANF-related activities for needy families with children equal to 75% of what was spent from state funds in FY1994 under TANF's predecessor programs. This maintenance-of-effort (MOE) requirement increases to 80% of FY1994 spending for states that fail to meet TANF work participation requirements. For the TANF contingency fund, a higher state spending requirement applies (100% of the historic level). New obligations: FY2009: $18.761 billion (includes $616 million under the American Recovery and Reinvestment Act). FY2008: $17.469 billion. Obligations are broken down as follows in this report, based on states' reporting of expenditures: FY2009 : $6.102 billion (cash assistance); $10.826 billion (social services); and $1.832 billion (employment and training). FY2008: $6.356 billion (cash assistance); $9.416 billion (social services); and $1.697 billion (employment and training). (Cash assistance and employment and training amounts include obligations under the TANF block grant, supplemental grants, territories and tribal grants, and contingency funds. Social services amounts include obligations under these grants as well as healthy marriage promotion and responsible fatherhood grants.) Budgetary classification: Mandatory (capped entitlement to states). Participation data: In June 2009, a total of 1.8 million families, composed of 4.3 million recipients (including 3.3 million children), received TANF- or MOE-funded cash assistance. In June 2010, a total of 1.9 million families, composed of 4.5 million recipients (including 3.4 million children), received TANF- or MOE-funded cash assistance. The larger number of individuals or families receiving any TANF- or MOE-funded benefit or service is not known. CRS report: CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An Introduction , by [author name scrubbed]. Supplemental Security Income (CFDA #96.006) Authority: Statute: Title XVI of the Social Security Act, established by the Social Security Amendments of 1973 (P.L. 92-603); 42 USC 1381-1383f. Regulations: 20 CFR Part 416. Federal administering agency: Social Security Administration. Purpose of program: To provide a minimum income for aged, blind or disabled individuals who have very limited income and assets. Benefit/service: Cash assistance. The basic federal SSI benefit is the same for all beneficiaries nationwide (reduced by any countable income). States may supplement the federal benefit. Individual eligibility criteria: Individuals who are aged 65 or older, blind or disabled (adults and children of any age), whose countable income and resources fall within certain specified limits. Form and recipient of federal assistance: Direct payments to individuals. Allows participation by individuals in the Northern Mariana Islands. Allocation formula: Not applicable. Matching or related requirements: Not applicable. However, states may supplement the federal benefit with their own funds. New obligations: FY2009: $52.446 billion. FY2008: $48.926 billion. Budgetary classification: Mandatory (entitlement to individuals). Participation data: In FY2009, a total of 7,691,602 beneficiaries received benefits, of which 263,386 received state supplements only. CRS reports: 94-486, Supplemental Security Income: A Fact Sheet , by Scott Szymendera; and CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) , by [author name scrubbed]. Additional Child Tax Credit (no CFDA #) Authority: Statute: 26 USC 24, established by the Taxpayer Relief Act of 1997 ( P.L. 105-34 ). Regulations: no formal program-specific regulations. Federal administering agency: Internal Revenue Service. Purpose of program: To assist eligible parents with dependent children whose tax liability is not sufficient to receive the full benefit of the regular nonrefundable Child Tax Credit. Benefit/service: Refundable tax credit. Individual eligibility criteria: Families with qualifying children (i.e., under age 17) who have earned income above a specified threshold, and whose tax liability is not sufficient for them to receive the full benefit of the regular nonrefundable Child Tax Credit. Form and recipient of federal assistance: The credit is provided in a refund check. Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $24.284 billion. FY2008: $34.019 billion. (Note: FY2008 amount includes an unspecified amount of spending for a one-time tax rebate of $300 per child, as authorized by the Economic Stimulus Act of 2008, P.L. 110-185 , which was not targeted toward low-income families.) Budgetary classification: Mandatory (entitlement to individuals). Participation data: For tax year 2008, 18.2 million returns claimed the Additional Child Tax Credit. Earned Income Tax Credit (refundable portion) (no CFDA #) Authority: Statute: 26 USC 32, established by the Tax Reduction Act of 1975 ( P.L. 94-12 ). Regulations: 26 CFR 1.32. Federal administering agency: Internal Revenue Service, Earned Income Tax Credit Office. Purpose of program: To offset the burden of taxes, including Social Security taxes, and provide an incentive to work. Benefit/service: Tax credit to reduce the amount of income taxes owed; an eligible worker may receive the credit regardless of whether taxes are owed (i.e., the credit is refundable). Individual eligibility criteria: Families with qualifying children (i.e., under age 19 or 24 if a full-time student, or permanently or totally disabled) and childless adults (aged 25-64) who have earned income below specified levels. Form and recipient of federal assistance: The refundable portion of the credit can be provided in a refund check, or (prior to 2011) for eligible families with children, as an adjustment to income throughout the year. (This advance payment option was repealed for tax years beginning after Dec. 31, 2010, by P.L. 111-246 .) Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $42.418 billion. FY2008: $40.600 billion. Budgetary classification: Mandatory (entitlement to individuals). Participation data: For tax year 2008, 21.7 million returns claimed the refundable portion of the EITC. CRS report: CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview , by [author name scrubbed]. Food Assistance Supplemental Nutrition Assistance Program (formerly the Food Stamp Program) (CFDA #10.551) Authority: Statute: Food Stamp Act of 1964 (P.L. 88-525), renamed and most recently reauthorized as the Food and Nutrition Act of 2008, by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 2011-2036. Regulations: 7 CFR Part 271. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To alleviate hunger and malnutrition and permit low-income households to obtain a more nutritious diet by increasing their food purchasing power. Benefit/service: Cash benefits that can be used to purchase food, typically provided through electronic benefit transfer. Allotments are determined on the basis of a low-cost model diet plan (called the Thrifty Food Plan). An individual household's allotment is equal to the inflation-indexed maximum allotment for that household's size, reduced by 30% of the household's net monthly income (gross income, less allowances for non-food living expenses). Individual eligibility criteria: Eligible households must (1) have gross monthly income no higher than 130% of federal poverty guidelines and limited liquid assets (special, higher standards apply to households with elderly/disabled members) or (2) be categorically (automatically) eligible because they receive benefits/services financed by Temporary Assistance for Needy Families (TANF) programs or the Supplemental Security Income (SSI) program. Some individuals are categorically ineligible: most noncitizens, able-bodied adults without dependents (ABAWDs) after three months (unless they are working or in a work/training program), strikers, and post-secondary students without dependents who are not working or in a work/training program. Form and recipient of federal assistance: Direct benefits to individuals; grants to states for assistance with administrative costs and operating expenses for employment/training programs for recipients. Allows participation by territories (Guam and the U.S. Virgin Islands). Separate programs operate in Puerto Rico (described later in this report), American Samoa, the Northern Mariana Islands and on Indian reservations. Allocation formula: Not applicable. Matching or related requirements: None for expenditures on benefits; 50% for state administrative and the majority of employment/training expenditures. New obligations: FY2009: $53.763 billion (includes $4.478 billion under the American Recovery and Reinvestment Act). FY2008: $37.530 billion. (Benefits, state administration, employment and training program, and other program costs.) Obligations are broken down as follows in this report: FY2009: $53.396 billion (food assistance) and $367 million (employment and training). FY2008: $37.179 billion (food assistance) and $351 million (employment and training). Budgetary classification: Mandatory (entitlement to individuals, and open-ended entitlement to states for administrative costs). Participation data: In FY2009, average monthly participation was 33.49 million persons. CRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed]. School Breakfast Program (Free and Reduced-Price Components) (CFDA #10.553) Authority: Statute: Section 4 of the Child Nutrition Act of 1966 (P.L. 89-642), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1773. Regulations: 7 CFR Part 220. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To promote learning readiness and healthy eating behaviors through provision of nutritious breakfasts. Benefit/service: Breakfasts that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions. Individual eligibility criteria: Children are eligible to receive free school breakfasts if their family income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services. Children are eligible to receive reduced-price school breakfasts if their family income is between 130% and 185% of federal poverty guidelines. Form and recipient of federal assistance: Cash is allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school breakfasts. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools and institutions also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of breakfast served (free, reduced-price, full-price). Matching or related requirements: None, although children's meal payments help finance the cost of the program. New obligations: FY2009: $2.513 billion. FY2008: $2.307 billion. (Free and reduced-price components only.) Budgetary classification: Mandatory (open-ended entitlement to participating schools and institutions). Participation data: In FY2009, average monthly participation in the free and reduced-price components was 9.068 million children. CRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed]. National School Lunch Program (Free and Reduced-Price Components) (CFDA #10.555) Authority: Statute: Richard B. Russell National School Lunch Act (P.L. 79-396), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1751-1769i. Regulations: 7 CFR Parts 210 and 245. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To safeguard the health and well-being of the nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food. Benefit/service: Lunches that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions. Individual eligibility criteria: Children are eligible to receive free school lunches if their household income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services. Children are eligible to receive reduced-price school lunches if their household income is between 130% and 185% of federal poverty guidelines. Form and recipient of federal assistance: Cash and commodity support are allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school lunches. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of lunch served (free, reduced-price, full-price). Matching or related requirements: None, although children's meal payments help finance the cost of the program. States must maintain the level of support they offered in 1980. New obligations: FY2009: $8.498 billion. FY2008: $7.863 billion. (Free and reduced-price components only.) Budgetary classification: Mandatory (open-ended entitlement to participating schools and institutions). Participation data: In FY2009, average monthly participation in the free and reduced-price components was 19.45 million children. CRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed]. Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (CFDA #10.557) Authority: Statute: Section 17 of the Child Nutrition Act of 1966, established by the National School Lunch Amendments (P.L. 92-433) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1786. Regulations: 7 CFR Part 246. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To provide supplemental food and nutrition education to eligible women and children to serve as an adjunct to good health care during critical times of development, to prevent the occurrence of health problems, including drug abuse, and improve the health status of beneficiaries. Benefit/service: Food assistance (in the form of vouchers for the purchase of specifically prescribed food packages), nutrition risk screening, and related services (e.g., nutrition education and breastfeeding support, medical care referral). Individual eligibility criteria: Eligible individuals are pregnant, postpartum or breastfeeding women, infants (to age 1) or children (to age 5) who are at nutritional risk (as defined by the Secretary), and who have family income no greater than 185% of federal poverty guidelines or who receive or are eligible for benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes and tribal organizations. Allocation formula: State allocations are based on a formula established through regulations that reflect food and caseload costs, inflation, and "need" as evidenced by poverty indices. Matching or related requirements: None. States are required to operate a cost containment system for infant formula, which results in manufacturers' rebates that reduce the cost of WIC food packages. New obligations: FY2009: $7.028 billion (includes $72 million under the American Recovery and Reinvestment Act). FY2008: $6.400 billion. Budgetary classification: Discretionary. Participation data: In FY2009, 9.1 million participants were served. CRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed]. Child and Adult Care Food Program (Lower-Income Components) (CFDA #10.558) Authority: Statute: Section 17 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1766. Regulations: 7 CFR Part 226. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To enable nonresidential day care institutions to integrate a nutritious food service with organized care services for enrolled children or adults. Benefit/service: Breakfasts, lunches, suppers and snacks that meet minimum federal nutrition standards. Individual eligibility criteria: Eligible children are age 12 or under, migrant children age 15 or under, disabled children of any age; also eligible are chronically impaired and elderly adults. In centers, individuals are eligible to receive free meals/snacks if their household income is below 130% of federal poverty guidelines, or reduced-price meals/snacks if their household income is between 130% and 185% of federal poverty guidelines. Children whose families receive benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Food Distribution Program on Indian Reservations (FDPIR), or Temporary Assistance for Needy Families (TANF) program are automatically eligible for free meals/snacks. Children who are income-eligible for Head Start or Even Start, or who are residents of emergency shelters, also are automatically eligible for free meals/snacks. Adults who receive SNAP, FDPIR, Supplemental Security Income (SSI) or Medicaid benefits are automatically eligible for free meals/snacks. Form and recipient of federal assistance: Cash and commodity support are allocated to state agencies, which distribute benefits to eligible public or private nonprofit centers and sponsoring organizations to subsidize the costs of meals and snacks. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating institutions also receive a small subsidy for meals served at full price to non-needy children and adults. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, Trust Territories of the Pacific, and the U.S. Virgin Islands). Allocation formula: Centers are reimbursed for meals based on the eligibility of participating children and adults for free, reduced-price, or full-price meals/snacks. Reimbursements to day care homes differ depending on whether they are "Tier 1" homes (located in low-income areas or operated by low-income providers) or "Tier 2" homes (not located in low-income areas or operated by low-income providers). Matching or related requirements: None. New obligations: FY2009: $2.217 billion. FY2008: $2.029 billion. (Lower-income components only.) Budgetary classification: Mandatory (open-ended entitlement to participating centers and sponsoring organizations). Participation data: In FY2009, total participation was 3.33 million persons; 82% of meals served to these participants were served either free or at reduced price. CRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed]. Summer Food Service Program (CFDA #10.559) Authority: Statute: Section 13 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1761. Regulations: 7 CFR Part 225. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To help children in low-income areas get necessary nutrition during the summer months when they are out of school. Benefit/service: Meals and snacks. Individual eligibility criteria: Children age 18 or younger and certain individuals with disabilities over the age of 18, who live in low-income areas where at least half the children are from families with incomes below 185% of federal poverty guidelines (open sites), or who are enrolled in an activity program where half the children are from families with incomes below 185% of federal poverty guidelines (enrolled sites), and children from families with incomes below 185% of federal poverty guidelines at participating camps. Automatically eligible are homeless or runaway children and children in Head Start, Early Head Start, Even Start, or state-funded pre-kindergarten programs that have received authorized waivers. Form and recipient of federal assistance: Cash and commodity support are allocated to state educational agencies, which distribute benefits to approved local public or private nonprofit sponsors to subsidize the costs of meals. Meals that are served free receive a higher subsidy than meals served at reduced price. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for the type of meal served (free or reduced-price). Matching or related requirements: None. New obligations: FY2009: $356 million. FY2008: $312 million. Budgetary classification: Mandatory (open-ended entitlement to approved sponsors). Participation data: In FY2009, a daily average of 2.23 million children participated. CRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed]. Commodity Supplemental Food Program (CFDA #10.565) Authority: Statute: Sections 4(a) and 5 of the Agriculture and Consumer Protection Act of 1973 ( P.L. 93-86 ), most recently reauthorized by the Food, Energy and Conservation Act of 2008 ( P.L. 110-246 ); 7 USC 612c note. Regulations: 7 CFR Part 247 and 250. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To meet the nutritional needs of low-income elderly persons and pregnant, postpartum, and breastfeeding women, infants, children. Benefit/service: Food packages and nutrition education. Individual eligibility criteria: Eligible elderly participants (60 years or older) must have incomes below 130% of federal poverty guidelines; eligible women, infants (under one year of age) and children (under six years old) may have incomes up to 185% of federal poverty guidelines. Regardless of income, individuals may participate if they are eligible for the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid. Individuals who participate in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) may not also participate in this program. Form and recipient of assistance: Formula grants and commodity support to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Funding and commodities are allocated among states according to the caseload, or number of slots, allotted to each project, which is based on previous participation levels. Subject to available appropriations, states may request additional caseload slots. Matching or related requirements: None. New obligations: FY2009: $165 million. FY2008: $141 million. Budgetary classification: Discretionary. Participation data: In FY2009, a monthly average of 467,000 persons participated. CRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed]. Nutrition Assistance for Puerto Rico (CFDA #10.566) Authority: Statute: Food Stamp Act of 1977 ( P.L. 95-113 ), renamed and most recently reauthorized as the Food and Nutrition Act of 2008, by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 2028. Regulations: 7 CFR Part 285. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To improve diets of needy persons living in Puerto Rico. Benefit/service: Nutrition assistance benefits. Benefits are provided through electronic benefit transfers, and at least 75% must be used for food purchases. Individual eligibility criteria: "Needy" is defined by Puerto Rico. Form and recipient of federal assistance: Block grant to Puerto Rico. Allocation formula: An annually indexed amount is specified in law. Matching or related requirements: No match required for costs of benefits; 50% match required for administrative costs. New obligations: FY2009: $2.000 billion (includes $240 million under the American Recovery and Reinvestment Act). FY2008: $1.623 billion. Budgetary classification: Mandatory (capped entitlement to Puerto Rico). Participation data: In FY2009, a monthly average of 1.19 million individuals participated. CRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed]. The Emergency Food Assistance Program (TEFAP) (CFDA #10.568 and 10.569) Authority: Statute: The Emergency Food Assistance Act of 1983 ( P.L. 98-8 ), most recently reauthorized by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 7501 et seq. Regulations: 7 CFR 251. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To supplement the diets of low-income Americans, including elderly people, by providing them with emergency food and nutrition assistance at no cost. Benefit/service: Food commodities that are distributed to local feeding programs and the administrative costs necessary to store and transport the commodities. Individual eligibility criteria: Eligible individuals must be needy as defined by the state. State criteria must ensure that only households in need of food assistance because of inadequate income receive assistance under the program. At state discretion, income-based criteria may be met through participation in other income-tested health or welfare programs. Form and recipient of federal assistance: Formula grants and commodities to states, which distribute funds and commodities among eligible local feeding organizations. Allows participation by Indian tribal organizations. Allocation formula: Commodities and funding are allocated among states according to a poverty-unemployment formula; 60% is allocated on the basis of a state's share of all persons with income below the poverty level, and 40% is based on a state's share of all unemployed persons. Matching or related requirements: Funds retained by states for administrative costs must be matched with an equal cash or in-kind contribution. States may not reduce their level of spending of their own funds on commodities or services to organizations receiving TEFAP funds in the later of FY1988 or the year the state began administering the TEFAP program. New obligations: FY2009: $425 million (includes $125 million under the American Recovery and Reinvestment Act). FY2008: $240 million. (Commodities and administrative costs.) Budgetary classification: Mandatory (capped/open-ended entitlement to states) and discretionary. Participation data: No data available. CRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed]. Nutrition Program for the Elderly (CFDA #93.045) Authority: Statute: Title III of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030d-21 - g-22. Regulations: 7 CFR 250.42 and 45 CFR Parts 1321, 1326, 1328. Federal administering agency: Department of Health and Human Services, Administration on Aging. Purpose of program: To reduce hunger and food insecurity, promote socialization, and promote the health and well-being of older individuals and delay adverse health conditions through access to nutrition and other disease prevention and health promotion services. Benefit/service: Meals served in congregate settings, home-delivered meals, and related nutrition services (nutrition screening, education and assessment and counseling). Individual eligibility criteria: Individuals age 60 or older and their spouses. Individuals with disabilities younger than 60 who live in housing facilities occupied primarily by the elderly and where congregate meals are served also may receive congregate meals. To be eligible for home-delivered meals, individuals must be homebound or otherwise isolated. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority older individuals, those with limited English proficiency, and those living in rural areas. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). A separate nutrition program for Native Americans is authorized under Title VI of the Older Americans Act. Allocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 60 and over). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority households. Matching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for nutrition services. New obligations: FY2009: $905 million (includes $97 million under the American Recovery and Reinvestment Act). FY2008: $756 million. (Congregate meals, home-delivered meals, and nutrition services incentive program.) Budgetary classification: Discretionary. Participation data: In FY2008, 1,656,634 clients received congregate meals; 909,913 received home-delivered meals; and 28,358 received nutrition counseling. C RS report: CRS Report RS21202, Older Americans Act: Title III Nutrition Services Program , by [author name scrubbed]. Housing and Development Single-Family Rural Housing Loans (Section 502) (CFDA #10.410) Authority: Statute: Section 502 of the Housing Act of 1949 (P.L. 81-171); 42 USC 1471 et seq. Regulations: 7 CFR Part 3550 Subpart B and 7 CFR Part 1980. Federal administering agency: Department of Agriculture, Rural Housing Service. Purpose of program: To assist low-income households in obtaining adequate but modest, decent, safe, and sanitary dwellings and related facilities in rural areas. Benefit/service: Guaranteed or direct loans to assist in purchasing homes; loans also can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including to provide water and sewage facilities. Individual eligibility criteria: For guaranteed loans, individuals may have incomes up to 115% of area median income. For direct loans, individuals must be either low-income (with incomes no higher than 80% of area median) or very low-income (with incomes no higher than 50% of area median). Form and recipient of federal assistance: Guaranteed or direct loans to individuals. Allows participation by residents of territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico and the U.S. Virgin Islands). Allocation formula: Loan funds are allocated among states according to the state's share of rural substandard housing units, rural population in very small communities, rural households with incomes between 80% and 100% of area median income, and rural renter households paying more than 35% of income for rent. Matching or related requirements: Not applicable. New obligations: FY2009: $225 million. FY2008: $121 million. (Re-estimated direct and guaranteed loan subsidy outlays.) Budgetary classification: Discretionary. Participation data: In FY2009, 131,335 units received assistance. CRS report: CRS Report RL33421, USDA Rural Housing Programs: An Overview , by [author name scrubbed]. Rural Rental Assistance Payments (Section 521) (CFDA #10.427) Authority: Statute: Section 521 of the Housing Act of 1949, established by the Housing and Urban Development Act of 1968 (P.L. 90-448); 42 USC 1490. Regulations: 7 CFR Part 3560. Federal administering agency: Department of Agriculture, Rural Housing Service. Purpose of program: To reduce the rent paid by low-income households in eligible units financed under certain Rural Housing Service programs. Benefit/service: Rental subsidies for low-income tenants provided through payments to eligible property owners; payments make up the difference between the tenant's rental payment to the owner and the approved rent for the unit. Individual eligibility criteria: Eligible tenants must have incomes no greater than 80% of area median income, although most assistance is targeted toward tenants with incomes no greater than 50% of area median. Form and recipient of federal assistance: Direct payments to property owners. Allocation formula: The number of rental assistance units that may be subsidized is allocated among states according to each state's share of the rural population, rural housing units that are overcrowded and/or lack plumbing, and poor persons living in rural areas. Matching or related requirements: None. New obligations: FY2009: $902 million. FY2008: $479 million. Budgetary classification: Discretionary. Participation data: In FY2009, 202,525 units were under contract to be subsidized. CRS report: CRS Report RL33421, USDA Rural Housing Programs: An Overview , by [author name scrubbed]. Water and Waste Disposal for Rural Communities (CFDA #10.760) Authority: Statute: Section 306 of the Consolidated Farm and Rural Development Act of 1972 (P.L. 92-419), most recently amended and reauthorized by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 1926. Regulations: 7 CFR Parts 1779-1780. Federal administering agency: Department of Agriculture, Rural Utility Service. Purpose of program: To provide basic human amenities, alleviate health hazards, and promote the orderly growth of the nation's rural areas by meeting the need for new and improved rural water and waste disposal facilities. Benefit/service: Long-term low-interest loans and grants to support the installation, repair, improvement or expansion of rural water facilities. Loan interest rates are based on the economic health of the community and are lowest in communities where the median household income is 80% of the state nonurban median or the poverty level, or less. Individual eligibility criteria: There are no individual eligibility criteria. Eligible communities have populations of 10,000 or less and are unable to finance their projects through other means. Grants are targeted toward projects serving poorer communities. Form and recipient of federal assistance: Loans and formula grants to local governments and public and private organizations. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands) and Indian tribes. Allocation formula: USDA allocates grant funds among its state rural development offices based on each state's rural population, number of households in poverty, and unemployment. Matching or related requirements: Grants and loans are intended to cover no more than 75% of project development costs in communities where median household income is 80% of the state nonurban median or the poverty level, or less; or 45% of project development costs in communities where median household income is higher than 80% but less than 100% of the state nonurban median. New obligations: FY2009: $1.370 million (includes $631 million from the American Recovery and Reinvestment Act). FY2008: $685 million. Budgetary classification: Discretionary. Participation data: No data available. CRS reports: CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs , coordinated by [author name scrubbed]; and CRS Report RL31837, An Overview of USDA Rural Development Programs , by [author name scrubbed]. Public Works and Economic Development (CFDA #11.300) Authority: Statute: Section 201 of the Public Works and Economic Development Act of 1965 (P.L. 89-136), most recently reauthorized by the Economic Development Administration Reauthorization Act of 2004 ( P.L. 108-373 ); 42 USC 3141. Regulations: 13 CFR Part 305. Federal administering agency: Department of Commerce, Economic Development Administration. Purpose of program: To help the nation's most distressed communities revitalize, expand and upgrade their physical infrastructure to attract new industry, encourage business expansion, diversify local economies and generate or retain long-term private sector jobs and investments. Benefit/service: Assistance in the acquisition or development of land and improvements for use for a public works, public service, or development facility; and assistance in the acquisition, design and engineering, construction, rehabilitation, alteration, expansion, or improvement of such a facility, including related machinery and equipment. Individual eligibility criteria: There are no individual eligibility criteria. Eligible projects must be located in areas that have either: low per capita income (80% of the national average or lower); unemployment for the most recent 24-month period that is at least one percentage point higher than the national average; or a special need arising from actual or threatened severe unemployment or economic adjustment problems resulting from severe changes in economic conditions. Projects may be outside such an area if they would create significant employment opportunities for unemployed, underemployed, or low-income residents of such an area. Form and recipient of federal assistance: Competitive grants to economic development districts (i.e., areas designated by EDA which have sufficient size and resources to foster economic development and which have at least one area fitting the income, unemployment or special need criteria described above), states, local governments, institutions of higher education, or public or private nonprofit organizations and associations acting in cooperation with local governments. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Not applicable. However, no more than 15% of available funds may be spent in a single state. Matching or related requirements: In general, the federal share is 50%, plus an additional federal share of no more than 30% based on the relative needs of the area where the project is located. Nonfederal contributions may be in cash or in-kind. At the discretion of the Secretary of Commerce, the federal share may be increased up to 100% for grants to Indian tribes, states or localities that have exhausted their effective taxing and borrowing capacity, or nonprofit organizations that have exhausted their borrowing capacity. New obligations: FY2009: $285 million (includes $147 million under the American Recovery and Reinvestment Act). FY2008: $170 million. Budgetary classification: Discretionary. Participation data: No data available. CRS report: CRS Report R41162, Economic Development Administration: Reauthorization and Funding Issues in the 111 th Congress , by [author name scrubbed] and [author name scrubbed]. Supportive Housing for the Elderly (CFDA #14.157) Authority: Statute: Section 202 of the U.S. Housing Act of 1959 (P.L. 86-372), most recently reauthorized by the American Homeownership and Economic Opportunity Act of 2000 ( P.L. 106-569 ); 12 USC 1701q. Regulations: 24 CFR Part 891. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To help expand the supply of affordable housing with supportive services for the elderly. Benefit/service: Financial assistance for development of supportive housing for the elderly, and rent subsidies for eligible tenants. Individual eligibility criteria: Very low-income households in which at least one member is at least 62 years old at the time of initial occupancy. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size. Form and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income elderly residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations and for-profit general partnerships where the sole general partner is a nonprofit organization. Allows participation by territories (Puerto Rico and the possessions of the U.S). Allocation formula: HUD uses a needs-based formula to allocate funds among HUD multifamily hubs, allocating 85% of funds to metropolitan areas and 15% to non-metropolitan areas, and considering relevant characteristics of the elderly population, such as the number of single elderly renters with incomes below 50% of area median income, and various housing factors. HUD awards funds to eligible applicants on a competitive basis. Matching or related requirements: None. New obligations: FY2009: $800 million. FY2008: $778 million. Budgetary classification: Discretionary. Participation data: In FY2009, 106,663 units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) CRS report: CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by [author name scrubbed]. Supportive Housing for Persons with Disabilities (CFDA #14.181) Authority: Statute: Section 811 of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ), most recently reauthorized by the Frank Melville Supportive Housing Investment Act of 2010 ( P.L. 111-374 ); 42 USC 8013. Regulations: 24 CFR Parts 891 Subparts A, C and D. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To allow persons with disabilities to live as independently as possible in the community by increasing the supply of rental housing with the availability of supportive services. Benefit/service: Financial assistance for development of supportive housing for persons with disabilities, and rent subsidies for eligible tenants. Individual eligibility criteria: Very low-income households (which may include a single individual) in which at least one member is age 18 or older and has a disability, such as a physical or developmental disability or chronic mental illness. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size. Form and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income disabled residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations. Allocation formula: HUD uses a needs-based formula to allocate funds among HUD field offices based on the number of noninstitutionalized persons within the local office jurisdiction who are between the ages of 16 and 64 and have a disability. Field offices award funds to eligible applicants on a competitive basis. Matching or related requirements: None. New obligations: FY2009: $284 million. FY2008: $256 million. Budgetary classification: Discretionary. Participation data: In FY2009, 30,221 units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) In addition, 14,811 tenant-based vouchers were in use. CRS report: CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities , by [author name scrubbed]. Section 8 Project-Based Rental Assistance (CFDA #14.195) Authority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 USC 1437f. Regulations: 24 CFR Parts 5, 880, 881, 883, 884, 886 and 891 Subpart E. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market. Benefit/service: Rent subsidies tied to units in privately-owned multifamily housing properties. Tenants are expected to pay the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. The program pays owners the difference between the tenant contribution and a previously negotiated rent. Individual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 40% of units that become available each year must be given to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income. Form and recipient of federal assistance: Project-based rental assistance contracts between HUD and private property owners. HUD has not had the authority to enter into new contracts since 1983, but does have the authority to renew existing contracts when they expire. There are properties with project-based rental assistance contracts in the territories (U.S. Virgin Islands, Puerto Rico, and Guam). Allocation formula: None. Matching or related requirements: None. New obligations: FY2009: $9.391 billion (includes $1.991 billion under the American Recovery and Reinvestment Act). FY2008: $7.004 billion. Budgetary classification: Discretionary. Participation data: In FY2009, 1.279 million housing units were eligible for assistance payments. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) CRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed]. Community Development Block Grants (CFDA #14.218 and #14.228) Authority: Statute: Title I of the Housing and Community Development Act of 1974 ( P.L. 93-383 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 5301 et seq. Regulations: 24 CFR Part 570. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low to moderate income. Benefit/service: Assistance with the acquisition of real property, relocation and demolition, rehabilitation of residential and non-residential structures, construction of public facilities and improvements, public services within certain limits, activities related to energy conservation and renewable energy resources, and assistance to nonprofit entities and to profit-motivated businesses to carry out economic development and job creation/retention activities. Individual eligibility criteria: There are no individual eligibility criteria. At least 70% of funds must be used for activities that benefit low- and moderate-income individuals. Low-income is defined as income no greater than 50% of the state or entitlement community's median; moderate-income is defined as income above 50% but no greater than 80% of the state or entitlement community's median. Form and recipient of federal assistance: Formula grants to "entitlement communities" (i.e., principal cities in metropolitan statistical areas, other metropolitan cities with populations of at least 50,000, and qualified urban counties with populations of at least 200,000); and states, which administer funds on behalf of non-entitlement communities (i.e., cities with populations of less than 50,000 and counties with populations of less than 200,000). HUD directly administers the state component of the program for Hawaii, which has elected not to participate in the program. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Of available funds, 70% are allocated to entitlement communities according to a formula that considers various measures of community need, including the extent of poverty, population size, housing overcrowding, age of housing, and lag in population growth as compared to other metropolitan areas. The remaining 30% are allocated to states according to a formula that considers population, poverty, incidence of overcrowded housing, and age of the housing. Matching or related requirements: None. New obligations: FY2009: $4.733 billion (includes $965 million under the American Recovery and Reinvestment Act). FY2008: $3.645 billion. (Community Development Formula Grants and Indian Community Development Grants.) Budgetary classification: Discretionary. Participation data: No data available. Homeless Assistance Grants (CFDA #14.231, #14.235, #14.238, #14.249) Note: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Helping Families Save Their Homes Act ( P.L. 111-22 ). Authority: Statute: Title IV of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and most recently reauthorized by the Helping Families Save Their Homes Act ( P.L. 111-22 ); 42 USC Chapter 119, Subchapter IV. Regulations: 24 CFR Parts 576, 582, 583, and 882, Subpart H. (Homeless Assistance Grants consist of four programs administered through a consolidated budget account: Supportive Housing Program (SHP), Shelter Plus Care Program (S+C), Single Room Occupancy Program (SRO), and Emergency Shelter Grants Program (ESG).) Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: SHP: To develop supportive housing and services that will allow homeless persons to live as independently as possible. S+C: To provide housing and supportive services on a long-term basis for homeless persons with disabilities and their families who are living in places not intended for human habitation or in emergency shelters. SRO: To expand the supply of single room occupancy units and use them to assist homeless persons. ESG: To provide homeless persons with basic shelter and essential support services and to prevent at-risk persons and families from becoming homeless. Benefit/service: SHP: Transitional housing for homeless individuals and families for up to 24 months, permanent housing for disabled homeless individuals, and supportive services. S+C: Rent subsidies for homeless individuals and their families, and supportive services. SRO: Permanent housing for homeless individuals in efficiency units similar to dormitories. ESG: Renovation, rehabilitation or conversion of buildings into homeless shelters, services such as employment counseling, health care and education, assistance with rent or utility payments to prevent homelessness. Individual eligibility criteria: SHP: Homeless individuals and their families, and, for permanent housing, disabled homeless individuals. S+C: Homeless individuals with disabilities (primarily those with serious mental illness, chronic drug or alcohol problems, and AIDS) and their families. SRO: Unaccompanied homeless individuals. ESG: Homeless individuals and families and families and individuals at risk of becoming homeless. Form and recipient of federal assistance: SHP: Competitive grants to states and local governments, public housing authorities, private nonprofit organizations, and community mental health centers. S+C: Competitive grants to states and local governments and public housing authorities. SRO: Competitive grants to public housing authorities and private nonprofit organizations. ESG: Formula grants to states, metropolitan cities and urban counties. Allows participation by territories (depending on the individual program: American Samoa, Guam, Northern Mariana Islands, Palau, Puerto Rico, Trust Territory of the Pacific, the U.S. Virgin Islands, and any other territory or possession of the United States). Allocation formula: SHP, S+C, SRO: Not applicable. ESG: Funds are allocated on the basis of population, poverty population, housing overcrowding, age of housing, and extent of growth lag. Matching or related requirements: SHP: Dollar-for-dollar cash matching is required for projects involving acquisition, rehabilitation or construction of new housing units; a 20% nonfederal cash match is required for supportive services; and a 25% nonfederal cash match is required for operating expenses. S+C: Grant funds used for rental assistance must be matched with an equal amount of resources used for supportive services. SRO: None. ESG: Dollar-for-dollar match (although first $100,000 provided to a state need not be matched), which might be in the form of cash or value of buildings, staff salaries or volunteer time. New obligations: FY2009: $2.861 billion (includes $1.485 billion under the American Recovery and Reinvestment Act). FY2008: $1.538 billion. Budgetary classification: Discretionary. Participation data: No data available. CRS report: CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds , by [author name scrubbed]. Home Investment Partnerships Program (HOME) (CFDA #14.239) Authority: Statute: Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ); 42 USC 12722 et seq. Regulations: 24 CFR Part 92. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To increase the number of families served with decent, safe, sanitary and affordable housing and expand the long-term supply of affordable housing; and to strengthen the ability of states and local governments to provide for housing needs. Benefit/service: Assistance for existing homeowners in repairing, rehabilitating or rebuilding their homes; assistance for homebuyers in the purchase or rehabilitation of a new home; assistance for developers or other organizations in the purchase or rehabilitation of affordable rental housing; and tenant-based rental assistance. Individual eligibility criteria: Recipient households may not have incomes above 80% of area median income. At least 90% of families receiving rental housing and tenant-based rental assistance must have incomes that are no more than 60% of area median income. Form and recipient of federal assistance: Formula grants to states and local participating jurisdictions, which are metropolitan cities or urban counties that meet certain minimum funding thresholds. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Funds are allocated according to a formula that considers various housing quality and affordability factors, as well as certain income-related factors, including the number of older units in the jurisdiction occupied by poor households and the number of poor families in the jurisdiction. Matching or related requirements: Nonfederal matching of 25% is required. New obligations: FY2009: $1.911 billion. FY2008: $1.647 billion. Budgetary classification: Discretionary. Participation data: No annual program data are available. Between 1992 and 2009, there have been 391,669 completed homebuyer units, 349,390 completed rental units, 184,268 completed homeowner rehab units assisted through HOME (for a total of 925,563 units), along with 216,563 households receiving rental assistance. CRS report: CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed]. Housing Opportunities for Persons with AIDS (HOPWA) (CFDA #14.241) Authority: Statute: AIDS Housing Opportunity Act, established by the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ) and most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 12901-12912. Regulations: 24 CFR Parts 574.3-574.655. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development, Office of HIV/AIDS Housing. Purpose of program: To devise long-term comprehensive strategies for meeting the housing needs of persons with AIDS. Benefit/service: Housing assistance and related supportive services, including housing information services; acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services; new construction (for single room occupancy dwellings and community residences only); project- or tenant-based rental assistance; short-term rent, mortgage, and utility payments to prevent homelessness; supportive services such as health and mental health services, drug and alcohol abuse treatment and counseling, day care, nutritional services, intensive care when required, and aid in gaining access to other public benefits. Individual eligibility criteria: Eligible individuals are HIV-positive or have AIDS, and have incomes no higher than 80% of area median income. Form and recipient of federal assistance: 90% of funds are awarded as formula grants to states and eligible metropolitan statistical areas (MSAs) that meet minimum AIDS case requirements; 10% are competitively awarded to states, local governments, and nonprofit agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Marshall Islands, Micronesia, Northern Mariana Islands, Palau, and the U.S. Virgin Islands). Allocation formula: Of formula funds, 75% (base funding) is awarded to eligible cities (MSAs with population of more than 500,000 and more than 1,500 cumulative reported AIDS cases) and to eligible states (those with more than 1,500 AIDS cases in areas outside of eligible MSAs); and the remaining 25% (bonus funding) is awarded on the basis of AIDS incidence during the past three years to MSAs that have populations of more than 500,000, more than 1,500 cumulative reported AIDS cases, and a higher than average per capita incidence of AIDS. Matching or related requirements: None. New obligations: FY2009: $318 million. FY2008: $310 million. Budgetary classification: Discretionary. Participation data: In program year 2008-2009, 56,627 households received permanent, transitional or emergency housing assistance. CRS report: CRS Report RL34318, Housing for Persons Living with HIV/AIDS , by [author name scrubbed]. Public Housing (CFDA #14.850, #14.872 and #14.866) Authority: Statute: Sections 9(d), 9(e), 24 and 30 of the U.S. Housing Act of 1937, as amended (P.L. 75-412); 42 USC 1437. Regulations: 24 CFR Parts 5 and 901-972. (Public Housing programs include Operating Fund, Capital Fund, and HOPE VI.) Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing. Purpose of program: To provide cost-effective, decent, safe and affordable rental housing for eligible low-income families, the elderly, and persons with disabilities; and for HOPE VI, to improve the living environment for public housing residents through demolition, rehabilitation and replacement of severely distressed housing units. Benefit/service: Subsidized publicly-owned rental housing units; eligible households pay rent equal to the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. Individual eligibility criteria: Eligible households are low-income (defined as having income at or below 80% of area median income). At least 40% of households admitted each year must be extremely low-income households (defined as having income at or below 30% of area median income). Certain residents are required to participate in an economic self-sufficiency program or contribute 8 hours per month of community service. Form and recipient of federal assistance: Operating and Capital Funds: Formula grants to public housing authorities. HOPE VI: Competitive grants to public housing authorities. Includes public housing projects located in territories (Puerto Rico, the U.S. Virgin Islands, and Guam). Allocation formula: Operating Fund: Funds to support ongoing costs of operating public housing are allocated according to a formula intended to make up the difference between the costs of maintaining public housing and the amount of tenant-paid rent received by the public housing authority; amounts are prorated to fit within the amount appropriated annually by Congress. Capital Fund: Funds to support development, financing and modernization of public housing are allocated on the basis of relative need. Matching or related requirements: None. However, an indirect local contribution results from the difference between full local property taxes and payments in lieu of taxes that are made by local housing authorities. New obligations: FY2009: $10.843 billion (includes $3.977 billion under the American Recovery and Reinvestment Act). FY2008: $6.894 billion. (Operating Fund, Capital Fund, and HOPE VI.) Budgetary classification: Discretionary. Participation data: In FY2009, 1,128,891 public housing units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) CRS reports: CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy , by [author name scrubbed] et al., CRS Report RS22557, Public Housing: Fact Sheet on the Operating Fund Formula , by [author name scrubbed], and CRS Report RL32236, HOPE VI Public Housing Revitalization Program: Background, Funding, and Issues , by [author name scrubbed]. Indian Housing Block Grants (CFDA #14.867) Authority: Statute: Native American Housing and Self-Determination Act of 1996 ( P.L. 104-330 ), most recently reauthorized by the Native American Housing and Self-Determination Reauthorization Act of 2008 ( P.L. 110-411 ); 25 USC 4101 et seq. Regulations: 24 CFR Part 1000. Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing, Office of Native American Programs. Purpose of program: To provide housing assistance and, to the extent practicable, to assist in the development of private housing finance mechanisms on Indian lands to achieve the goals of economic self-sufficiency and self-determination for tribes and their members. Benefit/service: Housing development, assistance to housing developed under the former Indian Housing Program, housing services to eligible individuals and families, crime prevention and safety, and model activities that provide creative approaches to solving affordable housing problems. Individual eligibility criteria: Low-income Indian families living on Indian reservations and other Indian lands; low-income is defined as having income no greater than 80% of the area median. Non-low-income families may be served if such families have a need for housing that cannot otherwise be met. Assistance also may be provided to non-Indian families living on Indian reservations or Indian lands if the presence of such families on the reservation or Indian land is essential to the well-being of Indian families and their housing needs cannot reasonably be met otherwise. Housing assistance also may be provided to law enforcement officers if their presence on the reservation or Indian land may deter crime. Form of assistance: Formula grants to federally recognized Indian tribes or their tribally designated housing entity, and a limited number of state recognized Indian tribes that were funded under prior law. ("State" is defined to include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands, and any other territory or possession of the United States.) Allocation formula: Funds are allocated among tribes according to a two-part formula based on "need" (e.g., Indian households with significant housing cost burdens, households that are overcrowded or lack kitchen or plumbing facilities, and number of Indian households at different levels of low-income) and "formula current assisted stock" (housing developed under the former Indian Housing Program and owned or operated by the grantee). Matching or related requirements: None. However, grant recipients must make annual user fee payments to compensate local governments for the costs of providing governmental services or must make payments in lieu of taxes to taxing authorities. New obligations: FY2009: $1.149 billion (includes $500 million under the American Recovery and Reinvestment Act). FY2008: $556 million. Budgetary classification: Discretionary. Participation data: In FY2009, the program assisted approximately 5,936 homeowners and more than 1,410 families in rental homes. Section 8 Housing Choice Vouchers (CFDA #14.871) Authority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 USC 1437f. Regulations: 24 CFR Parts 5 and 982. Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing. Purpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market. Benefit/service: Tenant-based vouchers that can be used to subsidize the cost of privately-owned rental housing, chosen by tenants in the private market. Tenants are expected to pay an amount toward rent that is at least the greater of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. The program pays the balance, up to the payment standard set by the local public housing authority at between 90% and 110% of the HUD-established fair market rent for the unit. Public housing authorities may choose to "project-base" up to 20% of their vouchers, which means the subsidy is attached to a preselected unit of housing. However, tenants living in project-based voucher units are entitled to move with a tenant-based voucher, if they so choose, after one year. Individual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 75% of vouchers that become available each year must go to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income. Form and recipient of federal assistance: Formula grants to public housing authorities. Includes public housing authorities in the territories (Puerto Rico, the U.S. Virgin Islands, Guam and Northern Mariana Islands). Allocation formula: Congress typically specifies the allocation formula in annual appropriations laws. For FY2009, funds to renew existing vouchers were provided to public housing authorities according to their utilization rates and costs from the prior year, adjusted for inflation. Matching or related requirements: None. New obligations: FY2009: $16.289 billion. FY2008: $15.552 billion. Budgetary classification: Discretionary. Participation data: In FY2009, 2.097 million vouchers were in use. CRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed]. Neighborhood Stabilization Program-1 (no CFDA #) Authority: Statute: Division B, Title III of the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ); 42 USC 5301 note. Regulations: 73 FR 58330. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To assist in the rehabilitation of abandoned and foreclosed homes, to reverse blight conditions, and to stabilize home values and the property tax base of affected communities. Benefit/service: Assistance with the purchase, rehabilitation, and resale of abandoned and foreclosed homes and residential properties, demolition of blighted structures, and redevelopment of blighted and vacant properties. Individual eligibility criteria: Individuals and families who benefit from the program must have incomes no higher than 120% of area median income. At least 25% of appropriations must be used to purchase or rehabilitate residential structures that will be used to house individuals or families with incomes no higher than 50% of area median income. Form and recipient of federal assistance: Formula grants to states and local governments. Allows participation by territories (Puerto Rico, Guam, the Northern Marianas, American Samoa and the U.S. Virgin Islands). Allocation formula: Funds are allocated on the basis of the number and percentage of home foreclosures in the state or locality, the number and percentage of subprime mortgages in the state or locality, and the number of homes in default or delinquency in the state or locality. Matching or related requirements: None. New obligations: FY2009: $3.920 billion. FY2008: None (program not authorized). Budgetary classification: Mandatory. Participation data: No data available. CRS report: CRS Report RS22919, Community Development Block Grants: Neighborhood Stabilization Program; Assistance to Communities Affected by Foreclosures , by [author name scrubbed] and [author name scrubbed]. Grants to States for Low-Income Housing Projects In Lieu of Low-Income Housing Credit Allocations (no CFDA #) Authority: Statute: Section 1602 of Division B of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Regulations: 31 CFR Part 32. Federal administering agency: Department of Treasury. Purpose of program: To support the construction and rehabilitation of affordable housing typically financed with funds from the Low-Income Housing Tax Credit (LIHTC) program. Benefit/service: Grants are provided in lieu of tax credits to help finance the construction or acquisition and rehabilitation of qualified buildings that will provide rent-restricted rental units to low-income households. Individual eligibility criteria: Qualified projects must meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income. Form and recipient of federal assistance: Grants to state housing credit agencies. Allows participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands). Allocation formula: States could elect to exchange for grants all of their unused and returned 2008 tax credit allocation, 40% of their 2009 tax credit allocation, and 40% of any allocation in 2009 made from the national LIHTC pool. Tax credits could be exchanged for grants at a rate of $0.85 on the dollar. Annual tax credit allocations are determined on the basis of each state's population. Matching or related requirements: No matching requirements for the grant program; however, the LIHTC (and this related grant program) are intended to finance only part of a project and are typically combined with other resources. New obligations: FY2009: $2.465 billion (entirely appropriated under ARRA). FY2008: None (program not authorized). Budgetary classification: Mandatory. Participation data: No data available. CRS report: CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit , by [author name scrubbed]. Tax Credit Assistance Program (no CFDA #) Authority: Statute: Division A, Title XII of the American Recovery and Reinvestment Act ( P.L. 111-5 ). Regulations: no formal program-specific regulations. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To make funds available for capital investments in Low-Income Housing Tax Credit (LIHTC) projects where the additional funds can be spent within specified deadlines. Benefit/service: Assistance is provided to owners of projects who received an award of LIHTCs. Individual eligibility criteria: To qualify for LIHTCs, projects must meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income. Form and recipient of federal assistance: Formula grants to state housing credit agencies, which competitively award funds to project owners. Allows participation by Puerto Rico. Allocation formula: Funds are allocated among states according to each state's percentage of FY2008 HOME awards. Matching or related requirements: None. However, the LIHTC is intended to finance only part of a project and is typically combined with other resources. New obligations: FY2009: $2.250 billion (entirely appropriated under ARRA). FY2008: none (program not authorized). Budgetary classification: Discretionary. Participation data: No data available. CRS reports: CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit , by [author name scrubbed]; and CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed]. Education Indian Education (CFDA #15.026, 15.028, 15.042, 15.043, 15.044, 15.046, 15.047, 15.058, 15.059, 15.060, 15.130, 15.114) Authority: Statute: Snyder Act of 1921 (P.L. 67-85), Johnson-O'Malley Act of 1934 (P.L. 73-167), Indian Adult Vocational Training Act of 1956 (P.L. 84-959), Navajo Community College Act (P.L. 92-189), Indian Self-Determination and Education Assistance Act of 1978 ( P.L. 93-638 ), Tribally Controlled College Assistance Act ( P.L. 95-471 ), Education Amendments of 1978 ( P.L. 95-561 ), Tribally Controlled Schools Act of 1988 ( P.L. 100-297 ), and Tribal Self-Governance Act of 1994 ( P.L. 103-413 ); 25 USC 13, 309 et seq., 450 et seq., 640a, Chapters 7, 20, 22, 27, 28, and 35. Regulations: 25 CFR Part 30-47, 273, 900-1001. Federal administering agency: Department of Interior, Bureau of Indian Education. Purpose of program: To provide comprehensive education programs and services for American Indians and Alaska Natives; to provide quality education opportunities from early childhood through life in accordance with the tribes' needs for educational, cultural and economic well-being in keeping with the wide diversity of Indian tribes and Alaska Native villages as distinct cultural and governmental entities. Benefit/service: Preschool, elementary, secondary, postsecondary and adult education at BIE-funded institutions, public schools, and postsecondary institutions; financial assistance for postsecondary education at accredited institutions. Individual eligibility criteria: Eligible children and postsecondary students are members of federally recognized Indian tribes or at least one-fourth degree Indian blood descendants of such members, and (for elementary and secondary students) live on or near a federal Indian reservation; members of federally recognized tribes who are accepted or enrolled at an accredited institution of higher education and are determined to have financial need by the institution's financial aid office. Form and recipient of federal assistance: Services are provided at BIE schools and institutions, public schools, and tribally controlled colleges and universities; postsecondary assistance is provided directly to students. Allocation formula: Depending on the individual program, funds are allocated to BIE-funded elementary and secondary schools based on number of students and their academic needs, commercial transportation costs, and the number of weighted bus miles driven; to tribes and tribal organizations based on the number of eligible preschool-age children and an administrative cost percentage rate; to tribes, states and public school districts based on historic funding in FY1995 and the number of Indian students served; to tribally controlled colleges based on Indian student counts and previous year allocations; and to BIE postsecondary schools based on prior allocations and unmet need. Matching or related requirements: None. New obligations: FY2009: $699 million. FY2008: $684 million. Budgetary classification: Discretionary. Participation data: In school year 2008-2009, an "average daily membership" of 40,710 students was reported at BIE-funded schools. Early childhood programs served 2,297 children and 2,286 parents in 2008-2009. BIE-funded postsecondary schools enrolled 2,042 students in academic year 2008-2009. Tribal colleges enrolled 24,572 students in academic year 2008-2009. CRS report: CRS Report RL34205, Federal Indian Elementary-Secondary Education Programs: Background and Issues , by [author name scrubbed]. Adult Basic Education Grants to States (CFDA #84.002) Authority: Statute: Adult Education and Family Literacy Act, most recently reauthorized by Title II of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 20 USC 9201 et seq. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Vocational and Adult Education, Division of Adult Education and Literacy. Purpose of program: To assist adults to become literate and obtain the knowledge and skills necessary for employment and self-sufficiency, to assist adults who are parents obtain the educational skills necessary to become full partners in the educational development of their children, and to assist adults in completing a secondary school education. Benefit/service: Adult education and literacy services, including workplace literacy services; family literacy services; and English literacy programs. Individual eligibility criteria: Qualified adults are individuals age 16 or older, who are not enrolled or required to be enrolled in secondary school under their state law, and who lack sufficient mastery of basic educational skills to function effectively in society, or who lack a secondary school diploma or equivalent and have not achieved an equivalent level of education, or who cannot speak, read or write the English language. Form and recipient of federal assistance: Formula grants to state agencies (typically state educational agencies), which fund local projects on a competitive basis. Eligible providers include local educational agencies, community-based organizations, volunteer literacy organizations, institutions of higher education, public or private nonprofit agencies, libraries, public housing authorities, other nonprofits with the ability to provide literacy services to adults and families, and consortia of eligible entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Marshall Islands, Micronesia, Northern Mariana Islands, Palau, and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states based on their relative number of qualified adults. Hold-harmless provisions apply. Matching or related requirements: A 25% nonfederal match is required for states. New obligations: FY2009: $572 million. FY2008: $555 million. Budgetary classification: Discretionary. Participation data: In FY2009, there was an estimated total of 2,537,662 participants. CRS report: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]. Federal Supplemental Educational Opportunity Grants (CFDA #84.007) Authority: Statute: Title IV, Part A, Subpart 3 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070b. Regulations: 34 CFR Parts 673 and 676. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To promote access to postsecondary education for low-income undergraduate students. Benefit/service: Grants to help students with the costs of postsecondary education. Individual eligibility criteria: Eligible students are undergraduate students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Financial aid administrators must give priority in awarding FSEOG aid to students who are Pell Grant recipients and to those with exceptional financial need. Form and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions use federal funds and institutional matching funds to award aid to eligible students. Allows participation by citizens of Palau. Allocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a "base guarantee" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's undergraduate students). Matching or related requirements: Participating institutions must provide a match equal to one-third of the federal funds received. New obligations: FY2009: $760 million. FY2008: $759 million. Budgetary classification: Discretionary. Participation data: In academic year 2008-2009, a total of 1,451,213 students received grants. CRS report: CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed]. Education for the Disadvantaged—Grants to Local Educational Agencies (CFDA #84.010) Authority: Statute: Title I-A of the Elementary and Secondary Education Act (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6301-6339, 6571-6578. Regulations: 34 CFR Part 200. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs. Purpose of program: To ensure that all children have a fair, equal and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency on challenging state academic achievement standards and state academic assessments. Benefit/service: Additional academic support and learning opportunities for students in pre-kindergarten through grade 12 to help low-achieving children master challenging curricula and meet state standards in core academic subjects. Individual eligibility criteria: Within local educational agencies (LEAs), funds are allocated to school attendance areas and schools in rank order based on their number of children from low-income families. Schools in which at least 40% of children are poor may operate schoolwide programs that serve all children. Otherwise, schools must focus services on children who are failing or most at risk of failing state academic standards. Form and recipient of federal assistance: Formula grants to local educational agencies (LEAs). Allows participation by territories (Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and Northern Mariana Islands). Allocation formula: Portions of available annual funds are allocated under four different formulas—Basic, Concentration, Targeted, and Education Finance Incentive Grants (EFIG)—although funds are then combined and used for the same purposes by recipient LEAs. Although the allocation formulas have several distinctive elements, the primary factors used in all four formulas are an eligible child count and an expenditure factor. The eligible child count includes children aged 5-17: (a) in poor families; (b) in institutions for neglected or delinquent children or in foster homes; and (c) in families receiving Temporary Assistance for Needy Families payments above the poverty level. Each element of the population factor is updated annually. The expenditure factor is the state average per pupil expenditure for public K-12 education (subject to a minimum of 80% and maximum of 120% of the national average, further multiplied by 0.40), and is the same for all LEAs in the same state. Both the Targeted and EFIG formulas include weighting schemes to increase aid to LEAs with the highest numbers or concentrations of eligible children. The EFIG formula also includes an effort factor, based on average per pupil expenditure for public K-12 education compared to personal income per capita for each state compared to the nation as a whole, and an equity factor, based on variations in average per pupil expenditures among the LEAs in each state. Each formula has a hold-harmless provision (no LEA may receive less than 85%-95% of its previous year grant, depending on the LEA's poverty level and whether the LEA continues to meet the formula's eligibility threshold). All four formulas have state minimum grant provisions. Matching or related requirements: Three requirements apply to total LEA grants under all four formulas: (1) maintenance of effort : recipient LEAs must provide, from state and local sources, a level of funding (either aggregate or per pupil) in the preceding year that is at least 90% as high as in the second preceding year; (2) funds must supplement and not supplant state and local funds that would otherwise be available for the education of disadvantaged pupils in participating schools; and (3) comparability: services provided with state and local funds in schools participating in Title I-A must be comparable to those in non-Title I-A schools of the same LEA. New obligations: FY2009: $21.495 billion (includes $9.936 billion under the American Recovery and Reinvestment Act). FY2008: $13.352 billion. Budgetary classification: Discretionary. Participation data: For school year 2008-2009, about 19.2 million public and private school students were served (of which about 217,000 students were served in private schools). The majority of students (17.2 million or 89.8%) were served through schoolwide programs in public schools. CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Title I Migrant Education Program (CFDA #84.011) Authority: Statute: Title I, Part C of the Elementary and Secondary Education Act of 1965 (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6391-6399. Regulations: 34 CFR 200 Subpart C. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Migrant Education. Purpose of program: To help reduce educational and other disruptions that result from repeated moves by migratory children; to ensure that migratory children are not penalized by education disparities among states; to ensure that migratory children receive appropriate educational and supportive services; to ensure that migratory students have opportunities to meet the same challenging standards as other students; and to prepare migratory children for a successful transition to postsecondary education or employment. Benefit/service: Education and support services, including academic instruction, remedial and compensatory instruction, bilingual and multicultural instruction, vocational instruction, career education services, special guidance, counseling and testing services, health services, preschool services, professional development, and family literacy instruction. Individual eligibility criteria: Eligible children (or their parent or spouse) are migratory agricultural workers, dairy workers, or fishermen and who, in the preceding 36 months, have moved from one school district to another for employment, or have moved for employment from one administrative area to another in a state that constitutes a single school district, or who live in a school district greater than a specified size and migrate at least 20 miles to a temporary residence to engage in a fishing activity. Form and recipient of federal assistance: Formula grants to state educational agencies, consortia of states and other appropriate entities, or public or private nonprofit agencies, which may make subgrants to local operating agencies that may include local educational agencies and other public and nonprofit entities. Allows participation by Puerto Rico. Allocation formula: Federal funds are allocated by formula, based on each state's per pupil expenditure for education and counts of eligible migratory children, ages 3 through 21, residing within the state. Matching or related requirements: None. New obligations: FY2009: $395 million. FY2008: $380 million. (Appropriations.) Budgetary classification: Discretionary. Participation data: During school year 2007-2008, the program served 650,007 students. (Note: This is a duplicated count; students may be counted more than once as they migrate to different schools during a single school year.) CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Higher Education—Institutional Aid and Developing Institutions (CFDA #84.031, #84.120, #84.382) Authority: Statute: Titles III, V and VII of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ); 20 USC 1051-1068h and 1101-1103g. Regulations: 34 CFR 606, 607, 608, 637. (Programs include Strengthening Institutions, Strengthening Tribally Controlled Colleges and Universities, Strengthening Alaska Native and Native Hawaiian-serving Institutions, Strengthening Historically Black Colleges and Universities, Strengthening Historically Black Graduate Institutions, Masters Degree Programs for Historically Black Colleges and Universities and Predominantly Black Institutions, Strengthening Predominantly Black Institutions, Strengthening Asian American and Native American Pacific Islander-serving Institutions, Strengthening Native American-serving Nontribal Institutions, Minority Science and Engineering Improvement, Developing Hispanic-serving Institutions, Developing Hispanic-serving STEM and Articulation Programs, and Promoting Postbaccalaureate Opportunities for Hispanic Americans.) Federal administering agency: Department of Education, Office of Postsecondary Education, Institutional Development and Undergraduate Education Programs. Purpose of program: To assist institutions of higher education that serve high percentages of low-income and minority students in improving their management, fiscal operations, and educational quality, to ensure access and equal educational opportunity for low-income and minority students. Benefit/service: Possible activities are broad and depend on the specific program. They may include but are not limited to assistance in planning, faculty development, and establishing endowment funds; administrative management; development and improvement of academic programs; equipment and facilities improvement, acquisition, and construction; debt reduction; staff development and tutoring. Individual eligibility criteria: There are no individual eligibility criteria. Institutional eligibility criteria differ for each program; e.g., eligible institutions must be institutions of higher education that have a high enrollment of needy students, have low educational and general expenditures per student, be accredited; be a historically black college or university; be listed in statute; be institutions of higher education with high minority enrollment; or be science-oriented societies or organizations. Form and recipient of federal assistance: Competitive and formula grants to institutions of higher education (and nonprofit organizations in the case of the Minority Science and Engineering Program). Certain grants allow participation by institutions in territories (the College of the Marshall Islands, the College of Micronesia, Palau Community College, institutions of higher education in Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa, and Northern Mariana Islands) and by tribal colleges and universities. Allocation formula: Depending on the program, factors may include Indian student enrollment, enrollment of Pell Grant recipients, number of graduates, number of graduates seeking a higher degree, student enrollment, cost of education per student, and percentage of total degrees awarded to African-American students by the applicant institution. Matching or related requirements: Funds must supplement and not supplant any funds that would otherwise be used for the same purposes. Funds used for endowment must be matched, if permitted. New obligations: FY2009: $801 million. FY2008: $755 million. Budgetary classification: Discretionary and mandatory. Participation data: No data available. Federal Work-Study (CFDA #84.033) Authority: Statute: Title IV, Part C of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 42 USC 2751-2756b. Regulations: 34 CFR Parts 673 and 675. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To assist students in financing the costs of postsecondary education. Benefit/service: Federally subsidized part-time employment for students. Individual eligibility criteria: Eligible students are undergraduate, graduate and professional students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Students must be willing to work to receive Federal Work Study (FWS) assistance. Form and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions combine federal funds and matching funds from FWS employers to compensate eligible students employed in part-time work-study jobs. Allows participation by citizens of Palau. Allocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a "base guarantee" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's students). Matching or related requirements: Student compensation is comprised of a federal share and an employer share. In general, the federal share is 75%, but may range between 50% and 100%. The remaining share is provided by the FWS employer. New obligations: FY2009: $1.156 billion (includes $200 million under the American Recovery and Reinvestment Act). FY2008: $989 million. Budgetary classification: Discretionary. Participation data: In academic year 2008-2009, a total of 677,915 students participated. CRS report: CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed]. Federal TRIO Programs (CFDA #84.042, #84.044, #84.047, #84.066, #84.103, #84.217) Authority: Statute: Title IV, Part A, Subpart 2, Chapter 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a-11 – 1070a-18. Regulations: 34 CFR Parts 642-647. (Federal TRIO programs consist of: Student Support Services, Talent Search, Upward Bound, Educational Opportunity Centers, Staff Training, and Ronald E. McNair Postbaccalaureate Achievement.) Federal administering agency: Department of Education, Office of Postsecondary Education, TRIO Programs. Purpose of program: To motivate and support students from disadvantaged backgrounds through outreach and support programs designed to help them move through the academic pipeline from middle school to postbaccalaureate programs. Benefit/service: Depending on the program, academic instruction; personal, academic and career counseling; tutoring; exposure to cultural events and academic programs; information on the availability of financial and academic assistance available for postsecondary education; assistance in filling out college applications and financial aid request forms; summer internships; research opportunities; stipends; grant aid; and staff development. Individual eligibility criteria: Specific eligibility requirements differ among the TRIO programs but generally require that two-thirds of participants be low-income students who are first-generation college students. Low-income is defined as income no greater than 150% of federal poverty guidelines. The programs also target to varying extents students from educationally underrepresented groups, students with disabilities, low-income students, first generation college students, students at high risk of academic failure, and military veterans. Form and recipient of federal assistance: Competitive grants to institutions of higher education, public and private organizations, secondary schools, and consortia of such entities. Allows participation by agencies or institutions in territories (American Samoa, Puerto Rico, the U.S. Virgin Islands, Micronesia, the Marshall Islands, or Palau). Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $905 million. FY2008: $885 million. Budgetary classification: Discretionary and mandatory. Participation data: In FY2009, the programs served a total of 2,613,890 students. (Note: This is a duplicated count; some students may have participated in more than one TRIO program.) Federal Pell Grants (CFDA #84.063) Note: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ). Authority: Statute: Title IV, Part A, Subpart 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a. Regulations: 34 CFR 690. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To promote access to postsecondary education for low-income students. Benefit/service: Need-based grants (size of grant is capped by law) to eligible students at participating institutions of higher education. Individual eligibility criteria: Eligible students may be undergraduate or certain other post baccalaureate students in good academic standing, who demonstrate financial need as determined through analysis of income and asset information provided in their Free Application for Federal Student Aid (FAFSA). This need analysis determines the student's expected family contribution (EFC) toward their education and the amount of federal student aid they may be eligible to receive. Form and recipient of federal assistance: Funds are provided to participating institutions of higher education to pay eligible students; participating institutions also receive an administrative allowance per student. Individual students receive assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allows participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations: FY2009: $26.019 billion (includes $8.497 billion under the American Recovery and Reinvestment Act). FY2008: $18.000 billion. Budgetary classification: Discretionary and mandatory (entitlement to individuals). Participation data: During award year (July-June) 2009-2010, an estimated 8,151,663 students were served. CRS report: CRS Report R41437, Federal Pell Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues , by [author name scrubbed]. Education for Homeless Children and Youth (CFDA #84.196) Authority: Statute: Title VII, Subtitle B of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and renamed by the McKinney-Vento Homeless Assistance Act ( P.L. 106-400 ), most recently reauthorized by the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ); 42 U.S.C. 11431 et seq. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs. Purpose of program: To ensure that each child of a homeless individual and each homeless youth has equal access to the same free, appropriate public education, including a public preschool education, as other children and youth. Benefit/service: Comprehensive services to facilitate the enrollment, attendance, and success in school for homeless children and youth, including, among other things, tutoring, supplemental instruction and referral services, as well as services to address barriers such as transportation, immunization, and lack of birth records. Individual eligibility criteria: Eligible children and youth are those who lack a regular, fixed and adequate nighttime residence and include those who are sharing the housing of others due to economic hardship or a similar reason; are living in motels, hotels, trailer parks, or camping grounds due to the lack of alternative adequate accommodations; are living in emergency or transitional shelters; are abandoned in hospitals; or are awaiting foster care placement; have a primary nighttime residence that is a public or private place not designed as a regular sleeping arrangement; are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; or are migratory children who also qualify as homeless. Form and recipient of federal assistance: Formula grants to state educational agencies, which make subgrants to local educational agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act. Matching or related requirements: None. New obligations: FY2009: $135 million (includes $70 million under the American Recovery and Reinvestment Act). FY2008: $64 million. Budgetary classification: Discretionary. Participation data: In school year 2008-2009, a total of 956,914 children were enrolled. CRS report: CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed]. 21 st Century Community Learning Centers (CFDA #84.287) Authority: Statute: Title IV, Part B of the Elementary and Secondary Education Act, established by the Improving America's Schools Act of 1994 ( P.L. 103-382 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 7171-7176. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Academic Improvement and Teacher Quality Programs. Purpose of program: To create community learning centers that provide academic enrichment opportunities during non-school hours to help students meet state and local academic achievement standards, particularly for children who attend high-poverty and low-performing schools. Also offers a variety of additional programs intended to reinforce and complement the students' regular academic program and offers families of participating students opportunities for literacy and related educational development. Benefit/service: Remedial education and academic enrichment learning programs, mathematics and science education activities, arts and music education activities, entrepreneurial education programs, tutoring services, after-school activities for limited-English-proficient students that emphasize language skills and academic achievement, recreational activities, telecommunications and technology education programs, expanded library service hours, programs to promote parental involvement and family literacy, academic assistance to students who are truant or suspended or expelled, drug and violence prevention programs, counseling and character education programs. Individual eligibility criteria: Funds must be used to serve students who attend schools that are eligible for schoolwide programs under Title I-A of the Elementary and Secondary Education Act (i.e., schools in which at least 40% of the children are poor) or schools that serve a high percentage of students from low-income families, and the families of such students. Form and recipient of federal assistance: Formula grants to state educational agencies, which make competitive subgrants to local educational agencies, community-based organizations, other public and private nonprofit organizations, or a consortium of the above. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act for the preceding fiscal year. Matching or related requirements: States may require local grantees to match federal funds; however, the match may not exceed the amount of federal funds and may not come from other federal or state funds. The size of the match is adjusted based on the relative poverty of the grantee's target population and the grantee's ability to obtain the match. The match may be in cash or in-kind. New obligations: FY2009: $1.127 billion. FY2008: $1.082 billion. Budgetary classification: Discretionary. Participation data: In FY2009, a total of 1,481,870 students were served. CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR-UP) (CFDA #84.334) Authority: Statute: Title IV, Part A, Subpart 2, Chapter 2 of the Higher Education Act of 1965, established by the Higher Education Amendments of 1998 ( P.L. 105-244 ) and most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a21-28. Regulations: 34 CFR Part 694. Federal administering agency: Department of Education, Office of Postsecondary Education, Teacher and Student Development Programs Service. Purpose of program: To assist low-income students attain a secondary school diploma or equivalent and prepare for and succeed in postsecondary education. Benefit/service: Teacher training, scholarships and early intervention services; e.g., financial assistance necessary for attending an institution of higher education, and additional counseling, mentoring, academic support, outreach, and supportive services. Individual eligibility criteria: A cohort of students in at least one grade level of a school in which at least 50% of students are eligible for free or reduced-price lunch; a cohort of students in at least one grade level that reside in public housing; or secondary school students eligible to be counted under the basic formula for Title I-A of the Elementary and Secondary Education Act, eligible under Title IV-B or IV-E of the Social Security Act, eligible for the homeless education program under the McKinney-Vento Act, or considered disconnected. Form and recipient of federal assistance: Competitive grants to states and to partnerships consisting of at least one degree-granting institution of higher education and one or more local educational agencies, and if desired, at least two other partners (such as community organizations, businesses, and public or private agencies or organizations). Allows participation by agencies or institutions in territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: A 50% nonfederal match is required, unless granted a waiver. New obligations: FY2009: $313 million. FY2008: $303 million. Budgetary classification: Discretionary. Participation data: In FY2009, the program served a total of 747,260 students. Reading First and Early Reading First (CFDA #84.357 and #84.359) Authority: Statute: Title I, Part B, Subparts 1 and 2 of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6361-6376. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: Reading First: To ensure that every child can read at grade level or above by no later than grade 3. Early Reading First: To enhance the early language, literacy and prereading development of preschool-aged children, particularly from low-income families. Benefit/service: Reading First: Assistance in selecting and administering reading assessments, selecting and implementing programs of reading instruction based on scientifically based reading research (SBR) that include the essential elements of reading instruction, procuring and implementing SBR-based teaching materials, providing professional development for teachers of grades K-3 and special education teachers of grades K-12, collecting and analyzing data to document program effectiveness and identify successful schools, reporting student progress, promoting reading and library programs, supporting family literacy programs, and training parents as reading tutors. Early Reading First: High-quality oral language and literature rich environments, professional training based on SBR to early childhood staff in early reading development, SBR-based language and literacy activities and instructional materials, and SBR-based reading assessments. Individual eligibility criteria: Reading First: Children in grades K- 3 who may have reading difficulties, are at risk of referral to special education because of their reading difficulties, have been evaluated but not identified as a child with disabilities, are receiving special education services because they have been identified as having a specific learning disability related to reading, are deficient in essential reading skills, or have limited English proficiency. Early Reading First: No specific eligibility criteria; however, services are targeted toward preschool children from low-income families with limited English proficiency, disabilities, or other special needs, who are also experiencing difficulty with spoken language, prereading and early reading skills. Form and recipient of federal assistance: Reading First: Formula grants to state educational agencies, which award funds competitively to local educational agencies. Early Reading First: Competitive grants to local educational agencies eligible for Title I-A ESEA grants, or to one or more public or private organizations acting on behalf of programs that serve preschool-age children located in an area served by a Title I-A-eligible LEA, or to a consortium of the above. Reading First allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the Virgin Islands). Allocation formula: Reading First: Funds are allocated among states according to their proportion of children aged 5-17 whose families have income below federal poverty guidelines. Early Reading First: Not applicable. Matching or related requirements: None. New obligations: FY2009: $129 million. FY2008: $560 million. (Note: No appropriations have been made for Reading First since FY2008 or for Early Reading First since FY2009, although both programs continued to have new obligations in FY2008 and FY2009.) Budgetary classification: Discretionary. Participation data: In school year 2008-2009, an estimated 1,245,353 students participated in Reading First. In FY2009, grantees proposed to serve a total of 33,278 children and 3,402 educators in Early Reading First. CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Rural Education Achievement Program (CFDA #84.358) Authority: Statute: Title VI, Part B of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 7341-7372. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of School Support and Technology Programs. Purpose of program: To help rural and rural low-income school districts meet their state's definition of adequate yearly progress under the No Child Left Behind Act. Benefit/service: Small Rural School Achievement Program (SRSA): Activities authorized under Title I-A (improving the academic achievement of disadvantaged children), Title II-A (teacher and principal training and recruiting), Title II-D (enhancing education through technology), Title III (language instruction for limited English proficient and immigrant children), Title IV-A (safe and drug-free schools), Title IV-B (21 st century community learning centers) and Title V-A (innovative programs) of the Elementary and Secondary Education Act. Rural and Low-Income School Program (RLIS): Teacher recruitment and retention, teacher professional development, educational technology, parental involvement activities, activities under Title IV-A (safe and drug-free schools) and Title I-A (improving the academic achievement of disadvantaged children) and Title III (language instruction for limited English proficient and immigrant children) of the Elementary and Secondary Education Act. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: SRSA: Formula grants to small local educational agencies (LEAs). RLIS: Formula grants to state educational agencies (SEAs) for suballocation to local educational agencies that do not meet the small-size thresholds for SRSA and in which 20% of the children aged 5-17 are from families below federal poverty guidelines. RLIS allows participation by territories (American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands). Allocation formula: Funds are allocated among LEAs (SRSA) and SEAs (RLIS) according to a formula that considers average daily attendance. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations: FY2009: $174 million. FY2008: $172 million. Budgetary classification: Discretionary. Participation data: In FY2009, an estimated 4,100 LEAs received SRSA grants, and 1,497 LEAs received RLIS grants. CRS report: CRS Report R40853, The Rural Education Achievement Program: Title VI-B of the Elementary and Secondary Education Act , by [author name scrubbed]. Mathematics and Science Partnerships (CFDA #84.366) Authority: Statute: Title II, Part B of the Elementary and Secondary Education Act, established by the Hawkins-Stafford Elementary and Secondary School Improvements Act of 1988 ( P.L. 100-297 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6661-6663. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: To improve the content knowledge of teachers and the performance of students in the areas of mathematics and science. Benefit/service: Enhanced and ongoing professional development of mathematics and science teachers, promotion of strong teaching skills through integrating reliable research methods and technology-based teaching methods into the curriculum, and summer workshops or institutes including follow-up training for elementary and secondary mathematics and science teachers. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: Formula grants to state educational agencies (SEAs), which award funds to partnerships of local educational agencies (LEAs) and institutions of higher education. At a minimum, partnerships must include a high-need LEA and an engineering, mathematics or science department of an institution of higher education. Allocation formula: Funds are allocated among states according to the state's share of children aged 5-17 from families with income below federal poverty guidelines. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations: FY2009: $176 million. FY2008: $182 million. Budgetary classification: Discretionary. Participation data: Most recent data available are for FY2006 (spending level of $182 million); in that year, more than 56,000 teachers received professional development. Improving Teacher Quality State Grants (CFDA #84.367) Authority: Statute: Title II, Part A of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6601-6641. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: To increase student achievement through improving teacher and principal quality and increasing the number of highly qualified teachers, principals and assistant principals in classrooms and schools. Benefit/service: State activities include teacher and principal certification reform, professional development activities, assistance to local educational agencies in teacher and principal recruitment and retention, tenure reform, subject matter testing for teachers, across-state certification reciprocity projects, technology training for teachers, assistance to help teachers become highly qualified, and teacher recruitment and placement clearinghouses. Local activities include assistance to schools in recruitment and retention of highly qualified teachers and principals, use of such teachers to reduce class size, professional development activities, and quality improvement activities such as tenure reform, merit pay and subject-area testing for teachers. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: Formula grants to state educational agencies, which make formula-based subgrants to local educational agencies, and to state agencies of higher education, which award competitive grants to partnerships of institutions of higher education and high-need local educational agencies (those with a high number or proportion of poor children). Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states and local educational agencies based first on the amounts they received under predecessor programs in 2001; excess funds are allocated according to formulas based on number of children ages 5-17 and number of children ages 5-17 from families with incomes below federal poverty guidelines. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations: FY2009: $2.687 billion. FY2008: $2.946 billion. Budgetary classification: Discretionary. Participation data: In school year 2009-2010, funds were used to hire an estimated 17,295 teachers. CRS report: CRS Report R41267, Elementary and Secondary School Teachers: Policy Context, Federal Programs, and ESEA Reauthorization Issues , by [author name scrubbed]. Academic Competitiveness and Smart Grant Program (CFDA #84.375 and 84.376) Authority: Statute: Title IV, Part A, Subpart 1, Section 401A of the Higher Education Act of 1965, established by the Higher Education Reconciliation Act of 2005 ( P.L. 109-171 ); 20 USC 1070a-1. Regulations: 34 CFR Part 691. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To help eligible financially needy students finance their postsecondary education by encouraging students to complete a rigorous high school curriculum, maintain a high grade point average (GPA), and major in math and science fields during their undergraduate studies. Benefit/service: Grant aid that, together with any other student aid received, cannot exceed the student's cost of postsecondary school attendance. Individual eligibility criteria: Eligible students are undergraduates who attend participating schools, are eligible to receive a Pell Grant, and meet other eligibility requirements related to—depending on their year in school—completing a rigorous high school curriculum; majoring in mathematics, science, or selected foreign languages; and maintaining a required minimum GPA. Form and recipient of federal assistance: Funds are provided to participating institutions of higher education to pay eligible students; participating institutions also receive an administrative allowance per student. Individual students receive assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allows participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations: FY2009: $690 million. FY2008: $297 million. Budgetary classification: Mandatory (entitlement to individuals). Participation data: During award year (July-June) 2009-2010, 731,653 students were served. Social Services Indian Human Services (CFDA #15.025, #15.113, #15.141, #15.144) Authority: Statute: Snyder Act of 1921 (P.L. 67-85), Indian Self-Determination and Education Assistance Act ( P.L. 93-638 ), Indian Child Welfare Act ( P.L. 95-608 ), and Indian Child Protection and Family Violence Prevention Act ( P.L. 101-630 ); 25 USC 13, 450 et seq., 1901 et seq., and 3210. Regulations: 25 CFR Parts 20, 23, and 256. (Programs include Social Services, Welfare Assistance, Indian Child Welfare, and Housing Improvement Program.) Federal administering agency: Department of Interior, Bureau of Indian Affairs, Division of Human Services. Purpose of program: To provide financial assistance for basic needs of needy eligible American Indians who live on or near reservations when such assistance is not available from state or local agencies; to fund federally recognized tribal governments to administer welfare assistance programs for American Indian adults and children, to support caseworkers and counselors, and to support tribal programs to reduce incidence of substance abuse and alcoholism in Indian country; to promote stability and security of American Indian tribes and families by protecting American Indian children, preventing separation of American Indian families, and assisting Indian tribes in the operation of child and family service programs; and to eliminate substantially substandard Indian owned and inhabited housing for very low-income Indians living in tribal service areas. Benefit/service: Assistance in processing welfare applications, determining suitable placement of American Indian children in need of foster care, operation of emergency shelters and similar services; cash payments to meet basic needs (i.e., food, clothing, shelter), assistance for nonmedical institutional or custodial care of adults not eligible for other programs, foster home care and nonmedical institutional care for American Indian children in need of protection; counseling, family assistance, protective day care, after-school care, recreational activities, respite care, education and training, foster care subsidies, legal advice and representation, home improvement programs; and renovations, repairs, or additions to existing homes. Individual eligibility criteria: Depending on the program, American Indian adults in need of financial assistance or social services, children in need of foster care, and youth requiring temporary emergency shelter; members of federally recognized Indian tribes who live on or near federally recognized reservations who are in need of financial assistance; American Indian children and families; and Indians who are members of federally recognized tribes. Form and recipient of federal assistance: Discretionary grants to federally recognized Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $115 million. FY2008: $118 million. Budgetary classification: Discretionary. Participation data: No data available. Older Americans Act Grants for Supportive Services and Senior Centers (CFDA #93.044) Authority: Statute: Title III, Part B of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030d. Regulations: 45 CFR 1321. Federal administering agency: Department of Health and Human Services, Administration on Aging. Purpose of program: To secure and maintain maximum independence and dignity in a home environment for older individuals capable of self-care with appropriate supportive services, to remove individual and social barriers to economic and personal independence for older individuals, and to provide a continuum of care for older individuals. Benefit/service: Supportive services, including health (and mental health), education and training, welfare, informational, recreational, homemaker, counseling, or referral services; transportation services; services to help older individuals use the services and facilities available to them (including language translation services); housing-related services; services to help older individuals avoid institutionalization, legal assistance and other counseling services; activities to attain and maintain physical and mental well-being; health and mental health screenings; preretirement counseling and assistance; ombudsman services for residents of long-term care facilities; services and assistive devices for disabled older persons; employment-related services and counseling; crime prevention and victim assistance; services to identify and meet the needs of low-income older individuals; abuse prevention; health and nutrition education services; coordinated services for mentally impaired older individuals; services for family caregivers; information and training for guardians or representative payees of older individuals; services to facilitate interaction between students and older individuals; in-home services for frail elderly; information about life-long learning programs; and any other services necessary for the general welfare of older individuals. Individual eligibility criteria: Individuals age 60 or older. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority older individuals, those with limited English proficiency, and those living in rural areas. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act. Allocation formula: Funds are allocated among states according to their relative share of the nation's population of older individuals (age 60 or older). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority individuals. Matching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for supportive services and senior centers. New obligations: FY2009: $361 million. FY2008: $351 million. Budgetary classification: Discretionary. Participation data: In FY2008, the number of clients participating by type of service were: 502,675 for case management; 165,349 for homemaker services; 109,488 for personal care; 38,432 for chore services; 44,437 for assisted transportation; and 25,204 for adult day care. CRS report : CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed]. Older Americans Act Family Caregiver Support Program (CFDA #93.052) Authority: Statute: Title III, Part E of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030s. Regulations: 45 CFR 1321. Federal administering agency: Department of Health and Human Services, Administration on Aging. Purpose of program: To provide multifaceted systems of support services for family caregivers and grandparents or older individuals who are relative caregivers. Benefit/service: Information to caregivers about available services, assistance to caregivers in gaining access to services; individual counseling, organization of support groups, and caregiver training in the areas of health, nutrition, and financial literacy, and in making decisions and solving problems related to their caregiving roles; respite care to enable caregivers to be temporarily relieved of their caregiving responsibilities; and supplemental services, on a limited basis, to complement the care provided by caregivers. Individual eligibility criteria: Family members or others providing informal care to an older individual, and those providing informal care to individuals of any age with specific cognitive disabilities. Also, grandparents or older individuals who are relative caregivers to children, including those caring for children of any age with a disability. Priority is given to older caregivers with the greatest social and economic need and to older individuals providing care to individuals with severe disabilities, including children with severe disabilities. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act. Allocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 70 or older). Matching or related requirements: A nonfederal share of 25% is required for services and administrative activities. Funds must be used to supplement and not supplant any other federal, state or local funds used for the same purpose. New obligations: FY2009: $154 million. FY2008: $153 million. Budgetary classification: Discretionary. Participation data: In FY2008, the number of clients participating by type of service were: 22,948,978 for information services, 373,130 for access assistance; 141,167 for counseling services; 72,887 for respite care; and 48,268 for supportive services. CRS report : CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed]. Child Support Enforcement (CDFA #93.563) Authority: Statute: Title IV-D of the Social Security Act, established by the Social Services Amendments of 1974 ( P.L. 93-647 ); 42 USC 651-669. Regulations: 45 CFR Chapter 3. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Support Enforcement. Purpose of program: To enforce the support obligations owed by noncustodial parents to their children and the spouse (and former spouse) with whom such children are living through locating noncustodial parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support will be available to all children who request such assistance. Benefit/service: Noncustodial parent location, paternity establishment, establishment of child support orders, review and modification of child support orders, collection of child support payments, distribution of child support payments, and establishment and enforcement of medical support. Services are free for families that are automatically eligible; states may charge a fee of up to $25 for all other families. Individual eligibility criteria: Services are available to parents with custody of a child whose other parent is living outside the home. Services are automatically available for families receiving Temporary Assistance for Needy Families (TANF), federal foster care payments, or Medicaid. Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Guam, Puerto Rico, the U.S. Virgin Islands) and Indian tribes and tribal organizations. Allocation formula: None. Payments to states are based on their eligible expenditures. Matching or related requirements: The federal government reimburses states for 66% of their eligible expenditures. New obligations: FY2009: $4.719 billion. FY2008: $4.585 billion. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data: In FY2009, the total CSE caseload was 15.8 million cases, involving 17.4 million children. CRS report: CRS Report RS22380, Child Support Enforcement: Program Basics , by [author name scrubbed]. Community Services Block Grants (CFDA #93.569) Authority: Statute: Community Services Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1980 ( P.L. 97-35 ) and most recently reauthorized by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 ( P.L. 105-285 ); 42 USC 9901 et seq. Regulations: 45 CFR Part 96, Subpart I. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To reduce poverty, revitalize low-income communities, and empower low-income individuals and families in rural and urban areas to become fully self-sufficient. Benefit/service: A wide range of activities may be supported to help low-income individuals and families become self-sufficient, find meaningful employment, attain an adequate education, make better use of available income, find and maintain adequate housing, obtain emergency assistance, and achieve greater participation in community affairs; address the needs of youth in low-income communities; and effectively use and coordinate with related programs. Individual eligibility criteria: In general, beneficiaries must have incomes no higher than the federal poverty guidelines, although states may set eligibility criteria at 125% of the poverty guidelines when "it serves the objectives of the block grant." (The American Recovery and Reinvestment Act, P.L. 111-5 , allowed states to set eligibility criteria at 200% of poverty during FY2009 and FY2010.) Form and recipient of federal assistance: Formula grants to states. Of funds received by each state, at least 90% must be passed through to "eligible entities," which are primarily community action agencies that had been designated prior to 1981 under the former Economic Opportunity Act or their successor agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Funds are allocated among states based on the relative amount received in each state in FY1981, under a section of the former Economic Opportunity Act. Matching or related requirements: None. New obligations: FY2009: $1.692 billion (includes $992 million under the American Recovery and Reinvestment Act). FY2008: $654 million. Budgetary classification: Discretionary. Participation data: In FY2008, states reported that local agencies served nearly 16 million individuals in more than 7 million families. CRS report: CRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding , by [author name scrubbed]. Child Care and Development Fund (CFDA #93.575 and #93.596) Authority: Statute: Child Care and Development Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) and most recently reauthorized by the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ( P.L. 104-193 ); 42 USC 9859. Section 418 of the Social Security Act, established by PRWORA ( P.L. 104-193 ) and most recently reauthorized by the Claims Resolution Act of 2010 ( P.L. 111-291 ); 42 USC 618. Regulations: 45 CFR Parts 98 and 99. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Care. Purpose of program: To develop child care programs that best suit the needs of children and parents in each state, to empower working parents to make their own decisions on the child care that best suits their family's needs, to provide consumer education to help parents make informed decisions, to provide child care to parents trying to achieve independence from public assistance, and to help states implement their child care regulatory standards. Benefit/service: Subsidized child care services for families provided on a sliding fee scale basis, which may be free for those with incomes below federal poverty guidelines (or, on a case-by-case basis, for those in foster care or receiving protective services). Child care providers may be paid directly by the state through a grant or contract, or through certificates (also known as vouchers) that parents may use to purchase child care from an eligible provider of their choice. Child care services may include center-based care, group home care, family care, and care provided in the child's own home. Individual eligibility criteria: Eligible children must be under age 13 (or under 18 if disabled or under court supervision), have a parent who is working or attending job training (unless the child is receiving protective services), and have family income no greater than 85% of state median income or lower depending on state policy. States must give priority to very low-income children and must target a certain amount of funds to welfare families working toward self-sufficiency or families at risk of welfare dependency. Form and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes, and for certain funds, by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Discretionary funds are allocated among states according to each state's proportion of children under age 5, its proportion of all children who receive free or reduced price school lunches, and its relative per capita income. Of mandatory funds, states receive a fixed amount each year based on their spending under predecessor programs in the mid-1990s ("guaranteed" funds). Remaining mandatory funds are allocated according to each state's share of children under age 13. Matching or related requirements: No matching requirement for discretionary funds or "guaranteed" mandatory funds. States must match remaining mandatory funds at their FMAP (federal medical assistance percentage) matching rate. States also must achieve certain maintenance-of-effort targets to qualify for these funds. New obligations: FY2009: $7.034 billion (includes $1.990 billion under the American Recovery and Reinvestment Act). FY2008: $4.979 billion. Budgetary classification: Discretionary (Child Care and Development Block Grant Act) and mandatory (Section 418 of the Social Security Act) (capped entitlement to states). Participation data: In FY2007 (the most recent year for which final data are available), the average monthly number of children served by the CCDF was 1.7 million. Preliminary data for FY2008 estimate the average monthly number of children served was 1.6 million.   CRS report: CRS Report RL30785, The Child Care and Development Block Grant: Background and Funding , by [author name scrubbed]. Head Start (CFDA #93.600) Authority: Statute: Head Start Act, established by the Omnibus Budget Reconciliation Act ( P.L. 97-35 ) and most recently reauthorized by the Head Start for School Readiness Act ( P.L. 110-134 ); 42 USC 9801 et seq. Regulations: 45 CFR Parts 1301-1311. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Head Start. Purpose of program: To promote school readiness by enhancing the social and cognitive development of children through the provision of educational, health, nutritional, social and other services to children and their families; and (for Early Head Start) to promote healthy prenatal outcomes, enhance the development of infants and toddlers, and promote healthy family functioning. Benefit/service: Comprehensive child development services, including educational, dental, medical, nutritional, and social services to children and their families. Services may be center-based, home-based, or a combination, and may be full- or part-day or full- or part-year. Individual eligibility criteria: Eligible children are those from low-income families (defined as having income below 100% of federal poverty guidelines, receiving public assistance or being a foster child) or who would be eligible for public assistance in the absence of child care, and homeless children. Up to 10% of participants may not meet these eligibility criteria if they would benefit from the program. An additional 35% of participants may have family incomes between 100% and 130% of federal poverty guidelines, as long as such children are not given higher priority than poor or homeless children. Form and recipient of federal assistance: Formula grants to local public and private nonprofit and for-profit entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands, Palau and the U.S. Virgin Islands) and Indian Head Start programs. Allocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is intended to hold states harmless at their prior year's level, award a cost-of-living adjustment, and allocate remaining funds for quality improvement and program expansion. Allocation factors include children under age 5 whose family incomes are below poverty. Matching or related requirements: A 20% nonfederal match is required unless a waiver is granted. New obligations: FY2009: $9.077 billion (includes $578 million under the American Recovery and Reinvestment Act). FY2008: $6.877 billion. Budgetary classification: Discretionary. Participation data: In FY2009, the Head Start funded enrollment level was about 965,153 children, of whom approximately 114,389 (or 12%) were in Early Head Start programs. The term "funded enrollment" refers to the number of Head Start slots that are funded, not the total number of children served throughout the year (which would be higher, accounting for turnover). CRS report: CRS Report RL30952, Head Start: Background and Issues , by [author name scrubbed]. Developmental Disabilities Basic Support and Advocacy Grants (CFDA #93.630) Authority: Statute: Developmental Disabilities Assistance and Bill of Rights Act of 1978 ( P.L. 95-602 ), most recently reauthorized by the Developmental Disabilities Assistance and Bill of Rights Act of 2000 ( P.L. 106-402 ); 42 USC 15001 et seq. Regulations: 45 CFR Parts 1385-1386. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Developmental Disabilities. Purpose of program: To enable individuals with developmental disabilities to maximize their work potential, facilitate their ability to live independently, and foster their integration into the community. Benefit/service: State councils on developmental disabilities identify the most pressing needs of individuals with developmental disabilities in their state and conduct activities to address these needs through training, technical assistance, barrier elimination, coalition development and citizen participation, informing policymakers, advocacy and capacity-building, and demonstration of new service approaches. Special financial and technical assistance must be given to organizations that serve individuals in areas designated as urban and rural poverty areas. Protection and advocacy agencies provide services intended to protect the legal and human rights of individuals with developmental disabilities. Individual eligibility criteria: Developmental disability is defined as a severe, chronic disability that is attributable to a mental or physical impairment or combination of such impairments, that is manifested before an individual becomes 22 years old, is likely to continue indefinitely, and that results in substantial functional limitations in at least three of several specified areas: self-care, receptive and expressive language, learning, mobility, self-direction, capacity for independent living, and economic self-sufficiency. Additionally, an individual from birth to age 9, inclusive, who has a substantial developmental delay or specific congenital or acquired condition, may be considered to have a developmental disability without meeting three or more of the criteria described above if the individual, without services and supports, has a high probability of meeting those criteria later in life. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Each state receives a minimum allotment; remaining funds are allocated among states on the basis of population, extent of need for services for developmentally disabled individuals, and financial need. Matching or related requirements: For state councils on developmental disabilities, a nonfederal share of 25% is required, except for projects in poverty areas where the nonfederal share may be reduced to as low as 10%. No match is required for protection and advocacy grants or for certain state planning activities. New obligations: FY2009: $114 million. FY2008: $111 million. Budgetary classification: Discretionary. Participation data: In FY2008, 1,527,995 services were provided. CRS report: CRS Report RL34507, The Developmental Disabilities Act , by [author name scrubbed]. Foster Care (CFDA #93.658) Authority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 USC 672. Regulations: 45 CFR 1355 and 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration for Children, Youth and Families, Children's Bureau. Purpose of program: To provide temporary out-of-home care for children who cannot safely remain in their own homes, until the children may be safely returned home; placed permanently with adoptive families, in a legal guardianship, or with a fit and willing relative; or placed in another planned permanent living arrangement. Benefit/service: Payments to foster care providers to cover the costs of children's maintenance (e.g., room and board, clothing and supplies, liability insurance, certain travel expenses); and support for administrative and child placement services intended to promote safety and permanency for children and well-being for children and their families. Individual eligibility criteria: For states to receive federal reimbursement for the maintenance and related costs of providing foster care, children must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations and be placed in foster care settings that meet specified requirements. Children also must have been removed from homes in which they would have been considered "needy" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996. Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate. Matching or related requirements: Maintenance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%. New obligations: FY2009: $4.705 billion. FY2008: $4.525 billion. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data: In FY2009, the average monthly number of children served was 186,303. CRS report: CRS Report RL34121, Child Welfare: Recent and Proposed Federal Funding , by [author name scrubbed]. Adoption Assistance (CFDA #93.659) Authority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 USC 673. Regulations: 45 CFR 1355 and 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children's Bureau. Purpose of program: To facilitate the timely placement of children whose special needs (which may include age, membership in a large sibling group or a racial/ethnic minority group, physical or mental disabilities or other circumstances as determined by the state) would otherwise make it difficult to place them with adoptive families. Benefit/service: One-time nonrecurring payments to assist with the costs of adopting a special needs child (e.g., adoption fees, court costs, attorney fees) and ongoing monthly payments to adoptive families; administrative and child placement services intended to promote child safety, permanency and well-being. Individual eligibility criteria: For states to receive federal reimbursement for either nonrecurring or ongoing costs of adoption assistance, the children must have special needs, as defined by the state, which generally would make their placement for adoption difficult. For states to receive federal reimbursement for the ongoing costs of adoption assistance, children also must be eligible for Supplementary Security Income (SSI) or must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations. In addition, children (who are not eligible for SSI) must have been removed from homes in which they would have been considered "needy" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996. (Under P.L. 110-351 , income-related eligibility criteria are phased out for children entering the adoption assistance program beginning in FY2010 and no income eligibility criteria will remain by FY2018.) Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate. Matching or related requirements: Adoption assistance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%. New obligations: FY2009: $2.324 billion. FY2008: $2.038 billion. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data: In FY2009, the average monthly number of children served was 416,408. CRS report: CRS Report RL34121, Child Welfare: Recent and Proposed Federal Funding , by [author name scrubbed]. Social Services Block Grants (CFDA #93.667) Authority: Statute: Title XX of the Social Security Act, established by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ); 42 USC 1397. Regulations: 45 CFR Part 96, Subpart G. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To provide services directed at the following goals: achieve or maintain economic self-support to prevent, reduce, or eliminate dependency; achieve or maintain self-sufficiency to reduce or prevent dependency; prevent or remedy abuse, neglect or exploitation of children or adults unable to protect their own interests, or to preserve, rehabilitate or reunite families; prevent or reduce inappropriate institutional care; or refer or admit individuals into institutional care when other forms of care are not appropriate or provide services to individuals in institutions. Benefit/service: Services directed at the goals listed above, such as child care services, protective services for children and adults, services for children and adults in foster care, services related to the management and maintenance of the home, day care services for adults, transportation services, family planning services, training and related services, employment services, information, referral, and counseling services, the preparation and delivery of meals, health support services and appropriate combinations of services designed to meet the special needs of children, the aged, the mentally retarded, the blind, the emotionally disturbed, the physically disabled, and alcoholics and drug addicts. Individual eligibility criteria: Eligibility criteria are determined by the states, except that any funds transferred into the Social Services Block Grant from the Temporary Assistance for Needy Families (TANF) program must be used to serve children and their families whose incomes are no greater than 200% of the federal poverty guidelines. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands). Allocation formula: Funds are allocated among states according to their relative population size. Matching or related requirements: None. New obligations: FY2009: $2.300 billion. FY2008: $1.700 billion. Budgetary classification: Mandatory (capped entitlement to states). Participation data: In FY2008, nearly 24.7 million individuals (10.9 million children, and 13.8 million adults) received services supported in whole or in part by the SSBG. CRS report: CRS Report 94-953, Social Services Block Grant: Background and Funding , by [author name scrubbed]. Chafee Foster Care Independence Program (CFDA #93.674) Authority: Statute: Section 477 of the Social Security Act, established by the Foster Care Independence Act of 1999 ( P.L. 106-169 ); 42 USC 677. Regulations: 45 CFR 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration for Children, Youth and Families, Children's Bureau. Purpose of program: To help current and former foster youth achieve self-sufficiency. Benefit/service: Educational assistance, vocational training, employment services, life skills training, mentoring, preventive health activities, counseling, and (subject to certain limitations) room and board. Individual eligibility criteria: Children who are likely to remain in foster care until age 18, youth age 18-21 who have aged out of the foster care system, and youth who left foster care after age 16 for kinship guardianship or adoption. Form and recipient of federal assistance: Formula grants to states. Allows participation by Puerto Rico. Allocation formula: Funds are allocated among states according to their share of the nation's children in foster care, except that no state may receive less than $500,000 or the amount payable to the state under the predecessor program for FY1998, whichever is greater. Matching or related requirements: A 20% nonfederal match is required. Funds must supplement and not supplant any funds that would otherwise be used for the same general purposes. New obligations: FY2009: $140 million. FY2008: $140 million. Budgetary classification: Mandatory (capped entitlement to states). Participation data: No data available. CRS report: CRS Report RL34499, Youth Transitioning from Foster Care: Background and Federal Programs , by [author name scrubbed]. Emergency Food and Shelter Program (CFDA #97.024) Authority: Statute: Title III of the Stewart B. McKinney Homeless Assistance Act of 1987 ( P.L. 100-77 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 11331-11346. Regulations: no formal program-specific regulations. Federal administering agency: The program is administered by a National Board, which operates under the auspices of the Department of Homeland Security, Federal Emergency Management Agency. Purpose of program: To provide shelter, food, and supportive services for homeless and hungry individuals nationwide. Benefit/service: Mass shelter, mass feeding, food distribution through food pantries and food banks, one-month utility payments to prevent service cutoff, one-month rent/mortgage payments to prevent evictions or help people leaving shelters to establish stable living conditions. Individual eligibility criteria: Determined by boards that administer the program at the local level. Form and recipient of federal assistance: Formula grants to local boards in eligible local jurisdictions. Local boards further distribute funds among local service providers (called local recipient organizations), which provide direct services to homeless and hungry individuals and families. Eligible jurisdictions are chosen based on measures of population, unemployment and poverty. Some funds are set-aside for states to award to local jurisdictions that don't qualify as eligible jurisdictions but have high levels of need. Allocation formula: Funds are allocated among eligible local jurisdictions based on their number of unemployed persons relative to other eligible local jurisdictions. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Matching or related requirements: None. New obligations: FY2009: $300 million (includes $100 million under the American Recovery and Reinvestment Act). FY2008: $153 million. Budgetary classification: Discretionary. Participation data: In FY2009, services "rendered" were estimated at 70.1 million meals and 5.4 million nights of lodging. In addition, funds were used to provide approximately 209,061 rent/mortgage payments and 226,822 utility bill payments. CRS report: CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed]. Legal Services Corporation (no CFDA #) Authority: Statute: Legal Services Corporation of 1974 ( P.L. 93-355 ), most recently reauthorized by the Equal Access to Courts Act ( P.L. 95-222 ); 42 USC 2996 et seq. Regulations: 45 CFR Part 1600. Federal administering agency: Legal Services Corporation. Purpose of program: To provide equal access to the justice system for individuals who seek redress of grievances and to provide high quality legal assistance to those would be otherwise unable to afford legal counsel. Benefit/service: Legal services in civil cases. Individual eligibility criteria: Eligible individuals must have incomes no greater than 125% of the federal poverty guidelines, with exceptions (up to 200% of poverty) allowed in specified circumstances. Form and recipient of federal assistance: Formula grants to public and private nonprofit entities. Allows participation by territories (American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the U.S. Virgin Islands and any other territories or possessions of the United States). Allocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is based on each state's share of the nation's poverty population. Matching or related requirements: None. New obligations: FY2009: $392 million. FY2008: $351 million. Budgetary classification: Discretionary. Participation data: In FY2009, 920,447 cases were closed. CRS report: CRS Report RL34016, Legal Services Corporation: Background and Funding , by [author name scrubbed]. Energy Assistance Weatherization Assistance (CFDA #81.042) Authority: Statute: Title IV of the Energy Conservation and Production Act of 1976 ( P.L. 94-385 ), most recently reauthorized by the Energy Independence and Security Act of 2007 ( P.L. 110-140 ); 42 USC 6871 et seq. Regulations: 10 CFR Part 440. Federal administering agency: Department of Energy, Office of Energy Efficiency and Renewable Energy. Purpose of program: To increase the energy efficiency of homes owned or occupied by low-income persons to reduce their total residential energy costs, and improve their health and safety. Benefit/service: Computerized energy audits and diagnostic equipment to determine the most energy-efficient measures for each individual home; labor and materials necessary to install such energy-efficient measures. Individual eligibility criteria: Homes eligible for weatherization assistance must be occupied by persons with income below 150% of the federal poverty guidelines—increased to 200% of poverty beginning in FY2009—or who have received cash assistance under Temporary Assistance for Needy Families (TANF) or Supplemental Security Income (SSI) in the previous 12 months, or (at state option) who are eligible for assistance under the Low-Income Home Energy Assistance Program (LIHEAP). Form and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes and, effective FY2009, by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands). Allocation formula: A specified dollar "base" amount is allocated among states; the balance is allocated according to a formula that reflects each state's relative low-income population, climatic conditions, and residential energy expenditures by low-income households in each state. Matching or related requirements: None. New obligations: FY2009 : $5.240 billion (includes $4.748 billion under the American Recovery and Reinvestment Act). FY2008: $291 million. (Weatherization and Intergovernmental Activities.) Budgetary classification: Discretionary. Participation data: In FY2007 (most recent year for which data are available), program funds accounted for the weatherization of 104,283 homes. Low-Income Home Energy Assistance Program (LIHEAP) (CFDA #93.568) Authority: Statute: Low-Income Home Energy Assistance Act, established by Title XXVI of the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) and most recently reauthorized by the Energy Policy Act of 2005 ( P.L. 109-58 ); 42 USC 8621-8630. Regulations: 45 CFR Parts 96.80-96.89. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To assist low-income households, particularly those with the lowest incomes, that pay a high proportion of their income for home energy, primarily in meeting their immediate home energy needs. Benefit/service: Assistance to households in paying their heating and cooling costs, crisis intervention, home weatherization, and services (such as counseling) to help reduce energy costs. Individual eligibility criteria: States establish their own eligibility criteria within federal parameters. Maximum federal income eligibility is 150% of federal poverty guidelines or, if greater, 60% of state median income (75% of state median income in FY2009 and FY2010). States may not set eligibility at lower than 110% of federal poverty guidelines. States may grant categorical eligibility to households in which at least one member receives benefits under Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), or certain veterans' programs. Form and recipient of federal assistance: Formula block grants and contingency funds to states. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands) and by Indian tribes. Allocation formula: Regular block grant funds are distributed to states based on a three-tier formula depending on the total amount of funds appropriated. Formula factors include total residential energy consumption, temperature variation, low-income heating and cooling consumption, among others; however, the formula also includes two hold-harmless provisions. Contingency funds are awarded by the President based on need. Matching or related requirements: None. New obligations: FY2009: $5.100 billion. FY2008: $2.590 billion. Budgetary classification: Discretionary. Participation data: In FY2008, 5.4 million households received heating/winter crisis assistance, and 600,000 households received cooling/summer crisis assistance. There may be duplication among those receiving heating and cooling assistance. CRS report: CRS Report RL31865, The Low Income Home Energy Assistance Program (LIHEAP): Program and Funding , by [author name scrubbed]. Employment and Training Community Service Employment for Older Americans (CFDA #17.235) Authority: Statute: Title V of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3056 et seq. Regulations: 20 CFR Part 641. Federal administering agency: Department of Labor, Employment and Training Administration. Purpose of program: To enable individuals to become self-sufficient through placement in community service positions and job training. Benefit/service: Part-time temporary community service jobs that pay at least minimum wage, job-related training, and supportive services that are necessary to enable an individual to participate in the program. Individual eligibility criteria: Unemployed individuals age 55 or older with low incomes (defined as no higher than 125% of the federal poverty guidelines). Regulations require priority for certain groups, including veterans and individuals age 60 or older. Regulations also require special consideration to be given to certain groups, including individuals with the "greatest economic and social need." Form and recipient of federal assistance: Formula grants to states and national nonprofit organizations. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and by tribal organizations. Allocation formula: Funds are allocated to states and national organizations according to a three-part formula: a hold-harmless factor (FY2000 level of funding); each state's relative share of individuals age 55 or older; and each state's relative per capita income. Matching or related requirements: A nonfederal share of 10% is required. New obligations: FY2009: $708 million. FY2008: $504 million. Budgetary classification: Discretionary. Participation data: In program year 2009 (July 2008-June 2009), approximately 89,000 low-income workers participated in community service assignments. CRS report: CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed]. WIA Adult Activities (CFDA #17.258) Authority: Statute: Chapter 5 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2861-2864. Regulations: 20 CFR Part 663. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment. Purpose of program: To assist eligible individuals in finding and qualifying for meaningful employment, and to help employers find the skilled workers they need to compete and succeed in business. Benefit/service: Core services, including outreach, job search and placement assistance, and labor market information. Intensive services, including comprehensive assessments, development of individual employment plans and counseling and career planning. Training services, including occupational skill training and basic skills training. Supportive services, including transportation, child care, housing and needs-related payments in certain circumstances. Individual eligibility criteria: Eligible individuals are at least 18 years old. No additional eligibility criteria apply for core services. For intensive or training services, individuals must need the services in order to become employed or to obtain or retain a job that allows for self-sufficiency. If funds are limited, priority must go to recipients of cash assistance and other low-income individuals. Low-income is defined as having income below the federal poverty guidelines or 70% of the lower living standard income level, whichever is higher; receiving means-tested public assistance; being a member of a household that receives food stamps; qualifying as homeless; or being a disabled individual whose own income meets the low-income definition but whose family income exceeds it. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, Marshall Islands, Micronesia, and Palau). Allocation formula: Funds are allocated to states on the basis of a three-part formula: state shares of the national distribution of areas of "substantial" unemployment (unemployment rate of at least 6.5%), "excess" unemployment (rate above 4.5%) and the "disadvantaged" adult population (family income below the federal poverty guidelines or 70% of the lower living standard income level). Matching or related requirements: None. New obligations: FY2009: $1.357 billion (includes $495 million under the American Recovery and Reinvestment Act). FY2008: $827 million. Budgetary classification: Discretionary. Participation data: In program year 2008 (April 2008-March 2009), there were 849,738 "exiters" from adult activities, of which 540,665 received core services only, 210,859 received core and intensive services, and 98,214 received training services. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days. CRS report: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]. WIA Youth Activities (CFDA #17.259) Authority: Statute: Chapter 4 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2851-2954. Regulations: 20 CFR Part 664. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment. Purpose of program: To improve educational and skill competencies of youth and develop connections to employers, mentoring opportunities with adults, training opportunities, supportive services, incentives for recognition and achievement, and leadership opportunities. Benefit/service: Strategies to complete secondary school, alternative secondary school services, summer employment, work experience, occupational skill training, leadership development opportunities, supportive services, adult mentoring, follow-up services, and comprehensive guidance and counseling. Individual eligibility criteria: Eligible youth are low-income, ages 14 through 21, and either deficient in basic skills, a school dropout, homeless, a runaway or foster child, pregnant or a parent, or a youth offender. Low-income is defined as receiving (or being eligible to receive) cash assistance or food stamps (now the Supplemental Nutrition Assistance Program); having family income no greater than the federal poverty guidelines or 70% of the lower living standard income level; or being homeless, a foster child for whom state or local payments are made, or a disabled person whose income meets the low-income definition but whose family income exceeds it. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the Marshall Islands, Micronesia, and Palau). Allocation formula: Funds are allocated to states according to a three-part formula: state shares of the national distribution of areas of "substantial" unemployment (unemployment rate of at least 6.5%); "excess" unemployment (rate above 4.5%); and population of "disadvantaged" youth (family income below the federal poverty guidelines or 70% of the lower living standard income level). Matching or related requirements: None. New obligations: FY2009: $2.218 billion (includes $1.182 billion under the American Recovery and Reinvestment Act). FY2008 : $984 million. Budgetary classification: Discretionary. Participation data: In program year 2008 (April 2008-March 2009), there were 115,083 "exiters" from youth activities. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days. CRS reports: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]; and CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed]. Social Services and Targeted Assistance for Refugees (CFDA 93.566) Authority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1980 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 USC 1521-1524. Regulations: 45 CFR Part 400. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement. Purpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible. Benefit/service: Employability and other services that address participants' barriers to employment such as social adjustment services, interpretation and translation services, day care for children, citizenship and naturalization services. Services are designed to enable refugees to obtain jobs within one year of becoming enrolled. Individual eligibility criteria: Refugees, asylees, other specified humanitarian cases, and trafficking victims. Priority goes to newly arriving refugees during their first year in the U.S. who apply for services; refugees who are receiving cash assistance; unemployed refugees who are not receiving cash assistance; and employed refugees in need of services to retain employment or to attain economic independence. Form and recipient of federal assistance: Formula grants to states and competitive grants to public and private nonprofit entities. Allocation formula: State formula grants are based on the number of refugees, asylees, and other eligible cases who arrived in the U.S. not more than 36 months before the start of the fiscal year and who are residing in the state. Matching or related requirements: None. New obligations: FY2009: $203 million. FY2008: $203 million. (Appropriations.) Budgetary classification: Discretionary. Participation data: No data available. CRS report: CRS Report R41570, U.S. Refugee Resettlement Assistance , by [author name scrubbed]. Foster Grandparents (CFDA #94.011) Authority: Statute: Domestic Volunteer Service Act of 1973, most recently reauthorized by the Serve America Act ( P.L. 111-13 ); 42 USC 5011. Regulations: 45 CFR Part 2552. Federal administering agency: Corporation for National and Community Service. Purpose of program: To provide opportunities for older low-income people to have a positive impact on the lives of children in need. Benefit/service: Employment (between 15 and 40 hours weekly), with hourly stipend, providing services to children with special or exceptional needs or with conditions or circumstances that limit their academic, social or economic development. Individual eligibility criteria: Eligible individuals must be age 60 or older (55 starting in FY2010) and, to be eligible to receive a stipend, individuals must have incomes no greater than 125% of federal poverty guidelines (200% starting in FY2010). Form and recipient of federal assistance: Discretionary grants to public and private nonprofit entities. Allows participation by entities in territories (American Samoa, Guam, Puerto Rico, the Trust Territories of the Pacific Islands, the U.S. Virgin Islands) and by Indian tribes. Allocation formula: Not applicable. Matching or related requirements: Nonfederal match of 10% required, which may be in cash or in-kind. New obligations: FY2009: $109 million. FY2008: $109 million. (Appropriations.) Budgetary classification: Discretionary. Participation data: In FY2009, 28,400 foster grandparents participated. CRS report: CRS Report RL33931, The Corporation for National and Community Service: Overview of Programs and FY2010 Funding , by Abigail B. Rudman and [author name scrubbed]. Job Corps (no CFDA #) Authority: Statute: Title I-C of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2881-2901. Regulations: 20 CFR Part 670. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Job Corps. Purpose of program: To assist eligible youth who need and can benefit from an intensive program, operated in a group setting in residential and nonresidential centers, to become more responsible, employable, and productive citizens. Benefit/service: Education and vocational training, including advanced career training; work experience; recreational activities; physical rehabilitation and development; job placement and counseling; and child care. Individual eligibility criteria: Low-income youth aged 16-24 who have one or more of the following characteristics: deficient in basic reading, writing or computing skills; a school drop-out; homeless, a runaway, or a foster child; a parent; in need of additional education, vocational training, or intensive counseling to accomplish regular schoolwork or to secure and hold a job. Low-income is defined as a person who receives or whose family receives cash assistance or food stamps, or has income no higher than federal poverty guidelines, is homeless or a foster child, or is a disabled person whose own income does not exceed federal poverty guidelines but whose family income does. Form and recipient of federal assistance: Competitive contracts and interagency agreements with federal, state or local agencies, area vocational education schools or residential vocational schools, or private organizations. Allows participation by Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: None. New obligations: FY2009: $1.804 billion (includes $148 million under the American Recovery and Reinvestment Act). FY2008: $1.558 billion. Budgetary classification: Discretionary. Participation data: In program year 2008 (April 2008-March 2009), total Job Corps enrollment was 60,896. CRS report: CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed]. Appendix D. Sources of Additional Information on Selected Income Measures and Eligibility Tests The following references provide additional information about selected measures of income, income thresholds, and eligibility or benefit calculations that are used under various programs discussed in this report. Federal Poverty Guidelines and Related Poverty Measures Federal Poverty Guidelines, Research and Measurement —include links to current and prior poverty guidelines and frequently asked questions about the guidelines, their use by various federal programs to determine eligibility, and the federal poverty thresholds: http://aspe.hhs.gov/ poverty/ index.shtml U.S. Census Bureau: Poverty —includes links to information about poverty data reported by the Census Bureau from several major household surveys and programs, including the Annual Social and Economic Supplement to the Current Population Survey, the American Community Survey, the Survey of Income and Program Participation, and the Small Area Income and Poverty Estimates: http://www.census.gov/ hhes/ www/ poverty/ poverty.html Department of Veterans Affairs Income Thresholds VA Health Care—National Income Thresholds for FY2011 and FY2010 : http://www4.va.gov/ healtheligibility/ Library/ pubs/ VAIncomeThresholds/ VAIncomeThresholds.pdf Questions and Answers on Veterans Pension Program : http://www.vba.va.gov/ bln/ 21/ pension/ vetpen.htm#1 Pension Rate Table, effective December 2009 —provides annual income limits for maximum annual pension rates, and includes links to prior year limits: http://www.vba.va.gov/ bln/ 21/ Rates/ pen01.htm Supplemental Security Income Monthly Federal SSI Payment (Maximum) and Monthly Income Limits, 2010 : http://www.ssa.gov/ pubs/ 10003.html Understanding Supplemental Security Income—SSI Eligibility Requirements, 2010 Edition : http://www.ssa.gov/ ssi/ text-eligibility-ussi.htm Earned Income Tax Credit Income Limits and Maximum Credit Amounts, 2010 , and links to prior year limits: http://www.irs.gov/ individuals/ article/ 0,,id= 150513,00.html Median Income State median income data published by the Census Bureau : http://www.census.gov/ hhes/ www/ income/ statemedfaminc.html FY2010 HUD Income Limits Briefing Material : http://www.huduser.org/ portal/ datasets/ il/ il10/ IncomeLimitsBriefingMaterial_FY10.pdf FY2010 Income Limits for the Public Housing and Section 8 Programs : http://www.huduser.org/ portal/ datasets/ il/ il10/ HUD-sec8.pdf Frequently Asked Questions, FY2010 Income Limits : http://www.huduser.org/ portal/ datasets/ il/ il10/ faq_10.html "Need Analysis" System The EFC Formula, 2010-2011 (June 2010 update) —explains the formula used to calculate a student's "expected family contribution" and the amount of aid the student would be eligible to receive: http://www.ifap.ed.gov/ efcformulaguide/ attachments/ 062810EFCFormulaGuideUpdate1011.pdf Lower Living Standard Income Levels Federal Register notice of determination of Lower Living Standard Income Levels for 2010 , and links to LLSILs for prior years: http://www.doleta.gov/ llsil/ 2010/

The federal government spent almost $708 billion in FY2009 on programs for low-income people, and nearly $578 billion the previous year. The increased spending between the two years was largely due to the recession, with almost two-thirds coming from the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), the economic stimulus enacted in February 2009. Low-income programs discussed in this report are distinct from social insurance programs, such as Social Security or Medicare, which aim to protect American workers universally against lost wages or benefits when they retire, become disabled, or lose a job. In contrast, programs addressed here focus explicitly on low-income populations. They provide assistance in obtaining basic needs, such as health care, food, or housing, and seek to address the causes of low income through education, training, or other services. While these programs are very diverse, the analysis in this report yields certain general findings: • Health care dominates all other categories of benefits and services, accounting for nearly half of federal spending for low-income people. Cash aid is second but trails far behind, comprising 18% of spending in FY2009. Other categories, in decreasing size, are food assistance, housing and development, education, social services, energy assistance, and employment and training. • Four programs account for 60% of federal spending for low-income people and 10 programs make up more than three-fourths. Medicaid alone accounted for nearly 40% of FY2009 low-income spending; next were the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Supplemental Security Income, and the refundable portion of the Earned Income Tax Credit. • Elderly and disabled individuals, and families with children are key target populations for much of the spending for low-income people. Federal policy toward families with children generally encourages work and includes incentives to "make work pay." Other populations served by selected programs include veterans, students, homeless people, Indians, and refugees. • Within broad target populations, programs use different concepts to determine who is eligible. Most spending is on behalf of people determined individually eligible by virtue of their low income or eligibility for another income-tested program. "Low income" is defined in a multitude of ways, using different percentages of the federal poverty guidelines, specific dollar amounts, percentages of local area median income (primarily for housing programs), or other measures. • Many programs distribute funding to states or other entities to provide benefits and services to low-income people, using population-based allocation factors, cost-sharing formulas, or other mechanisms to target resources toward areas or entities with the greatest need. Some of these programs (especially in elementary and secondary education) have no further requirements for individuals to be determined income-eligible. • Programs for low-income people are most likely to use formula grants to distribute funds to states or another unit of government. Under many of these programs, notably including Medicaid, states must spend a specified amount of their own funds to receive federal dollars. State and local governments administer most of these federal programs; however, many of the largest programs provide federal benefits directly to individuals or via a nongovernmental intermediary.

longest

In the past decade, China's "soft power"—global influence attained through diplomatic, economic, cultural, and other non-coercive means—has grown along with its international standing. Despite this development, the United States remains the preeminent global force in many areas of soft power. The United States exceeds the People's Republic of China (PRC) in global trade, and far surpasses China in GDP and foreign direct investment. It continues to be the dominant external political and military actor in the Middle East and political and economic influence in Latin America. It maintains robust, formal alliances in Europe and Asia, and far outweighs China in military spending and capabilities. However, many analysts contend that U.S. soft power has declined in relative terms, and some studies show a dramatic loss in global confidence in the United States' foreign policies. Some experts argue that China's rise poses serious challenges to U.S. interests, while others believe that its implications are limited and that U.S. strengths remain formidable. The PRC has captured the attention of many developing countries due to its pragmatic approach to diplomacy, the ways in which the government links diplomacy, commerce, and foreign aid, and the dramatic expansion of its global economic influence. Since the end of the Cold War and the acceleration of China's economic take-off in the mid-1990s, Beijing's "win-win" diplomatic style has featured greater accommodation and an emphasis on short-term, common economic interests. In the past several years, China's proliferating trade, investment, and foreign aid accords with other countries, made possible by its own rapid development, have stressed mutual benefits. Through these agreements, China has gained markets for its goods, access to raw materials, and international esteem while providing other countries with foreign investment and aid projects without imposing conditions such as political and economic performance criteria. China's style of diplomacy and its foreign policy principle of "non-interference" have been characterized as sensitive to local conditions rather than imposing standards. Many countries appear to appreciate this style. Even without Beijing's new brand of diplomacy, many developing countries are attracted to China because of what its economy represents. In Southeast Asia and Latin America, the United States continues to dominate trade and foreign direct investment. However, the PRC, which is expected to rival the United States in terms of total trade by 2011, promises its economic partners ever-growing opportunities for trade and investment. China also is perceived as representing an alternative, non-democratic model of development. Finally, many developing countries are drawn to China's example of asymmetric power. Although the U.S. government's projection of soft power has evolved to address new foreign policy challenges in the post-9/11 world, many experts believe it has been less adaptable than China to the changing needs of many developing countries. The U.S. emphasis on shared democratic values, considered to be a pillar of American soft power, can be perceived in other countries as an obstacle to arriving at solutions to international problems. Foreign policy observers have raised several issues related to the U.S. use of soft power tools: Some experts argue that the United States has neglected public diplomacy, particularly in helping to shape foreign perceptions of American policy. Leaders in many developing countries assert that U.S. bilateral and regional diplomacy has lacked sensitivity toward the local conditions in their countries and regions. Others lament that U.S. foreign aid objectives and programs, which have focused upon counter-terrorism and democracy-building, have placed a low priority on development. Some countries have found U.S. criteria for foreign aid and free trade agreements to be too stringent. Economics and diplomacy are the central, mutually reinforcing components of China's growing soft power in the regions discussed below. Trade, investment, and aid, particularly that which involves gaining access to raw materials for China's development, are behind much of the PRC's recent inroads throughout the developing world. Security and strategic concerns and goals also play prominent roles in China's soft power projections in Central Asia and Southeast Asia. Competition with Taiwan for diplomatic recognition has spurred PRC engagement with Latin America and Africa. For the medium-term, Chinese leaders appear to have accepted the military dominance of the United States in Southeast Asia and the strategic roles played by Russia and the United States in Central Asia. They also recognize the longer-term U.S. sphere of influence in Latin America and U.S. strategic role in the Middle East. Contrasting ideologies and diplomatic approaches between China and the United States may be starkest in the Middle East, where Beijing has openly supported Arab and Palestinian causes and engaged in military cooperation with Iran. The U.S. government public diplomacy and international military training programs aim in large part to cultivate shared democratic values among the professional and leadership classes of foreign countries. Despite cutbacks during the 1990s, U.S. public diplomacy programs, including educational and cultural exchange activities, continue to facilitate an understanding of American values and culture, the sharing of ideas, and access to many intellectual areas in which Americans are world leaders. The regions with the largest U.S. public diplomacy efforts in terms of funding are Europe/Eurasia and the Western Hemisphere (Latin America and the Carribean). Likewise, the U.S. International Military Education and Training (IMET) program seeks to promote democratic values, mutual understanding, and professional and personal relationships in addition to military capacity. China's fledgling public diplomacy counterparts, such as the Confucius Institutes, place more emphasis upon teaching than intellectual exchange and upon imparting an understanding of China rather than seeking common values through dialogue. Furthermore, PRC foreign military training programs do not emphasize the building of personal or cultural rapport between Chinese and foreign military officers. While U.S. public and military diplomacy programs have helped to build a social layer of professionals, academics, policy-makers, military leaders, and other opinion makers sympathetic to American ideals in many countries, China also has made strides in the area of state diplomacy. Beginning in the mid-1990s, Beijing's ideological and isolationist foreign policy became more engaged and pragmatic. The PRC began to promote its trade and security interests through bilateral and multilateral cooperation. In the past several years, many observers note, China's conduct of official bilateral exchanges has appeared to be more active than that of the United States, especially with smaller developing countries. Through these meetings, the PRC has asserted itself as a global leader. China also has played a prominent or leading role in new regional groupings that it has helped to establish, such as the East Asia Summit (EAS), the Shanghai Cooperation Organization (SCO) in Central Asia, the Forum on China-Africa Cooperation (FOCAC), and the China-Arab Cooperation Forum. By contrast, among leadership circles in some regions, particularly Latin America and Southeast Asia, Washington has been accused of neglecting regional concerns that are not related to the war on terrorism. The United States continues to exert global foreign aid leadership and maintain a major, and much appreciated, aid presence in Central Asia, Africa, the Middle East, and Latin America. U.S. foreign assistance to Southeast Asia has increased markedly since 2001, although most new funding has been directed at counter-terrorism and related programs in Indonesia and the Philippines. Japan remains the dominant provider of official development assistance (ODA) in Southeast Asia. In 2004, the Bush Administration launched two significant development aid programs—the President's Emergency Plan for AIDS Relief (PEPFAR) and the Millennium Challenge Account (MCA)—which represent far more ambitious humanitarian and development goals than does PRC aid. The MCA promotes good governance, investment in health and education, and economic freedom by providing assistance to countries that satisfy performance criteria. The U.S. State Department's Middle East Partnership Initiative (MEPI) encourages reform in four areas—politics, economics, education, and women's empowerment—through grants to non-governmental organizations (NGOs), businesses, and universities. The U.S. Peace Corps, which has sent 190,000 American volunteers to serve in 139 countries since 1960, has no real counterpart in China. The PRC's six-year-old "youth volunteers" program has sent several hundred Chinese youth to about one dozen countries in Asia, Africa, and Latin America. In terms of ODA grants, the United States is the world's largest foreign aid donor far exceeding China. According to some estimates, China's ODA ranges from $1.5 billion to $2 billion annually, compared to the United States' core ODA budget of $19.5 billion in FY2007 (not including military assistance). However, China's emergence as a major foreign aid provider has had a significant impact both in the developing world and among major foreign aid donors because of its size, growth, availability, and symbolic value. The PRC often offers concessional loans, trade deals, and state-sponsored investments as part of aid packages, and when these are included, PRC aid may far surpass U.S. ODA. According to one study using unofficial reports of both actual and pledged aid, Beijing provided or offered a total of $31 billion in economic assistance to Southeast Asian, African and Latin American countries in 2007, a threefold increase compared to 2005 and 20 times greater than 2003. Chinese foreign assistance is attractive to many developing countries because it generally does not require changes in the policies or performance of recipient countries' governments. Furthermore, PRC aid finances highly visible projects, such as infrastructure and government buildings, that provide immediate benefits and recognition of China. The PRC also is providing professional and technical training for people from developing countries, particularly in Africa. By some indicators, China's rising soft power may have experienced some recent setbacks, while the U.S. image has shown signs of a possible renewal. China has received criticism from other major powers for its economic relations with many countries reported to have serious human rights problems. China's allegedly apolitical and mercantile foreign policy, lack of transparency, and absence of political conditions and social and environmental safeguards on PRC foreign investment and aid projects have brought some instances of public outcry against Chinese political and economic influence in some developing countries. Perceptions of Beijing's poor domestic human rights record, including its policies toward ethnic minorities, also have undermined its global image and influence. Many countries, particularly in Southeast Asia, remain wary of Beijing's intentions and doubtful of its sincerity even as they welcome PRC economic ties and aid. The United States possesses latent reserves of soft power. Many aspects of U.S. social, economic, cultural, academic, technological, and other forms of influence, much of which emanate from the private sector or outside the scope of government, remain unmatched in the world. Many American ideals have long-term, universal appeal, while the United States continues to be a magnet for immigrants and foreign students. Despite a perceived lack of attention among elites, the United States has maintained favorable public image ratings in many African and Latin American countries as well as in the Philippines, a U.S. ally. According to a recent poll, Indonesians and Vietnamese regard U.S. and Japanese soft power as slightly greater than China's. Globally, negative views toward the United States appear to be significantly correlated to the Iraq war. Attitudes can vary in response to changes in U.S. foreign policies, leadership, diplomacy, and other instruments of soft power. On the one hand, this suggests that attitudes toward the United States can change. On the other hand, in some cases, such as in the Middle East, U.S. public diplomacy has had little impact within the context of unpopular U.S. foreign policies. New foreign aid programs, such as PEPFAR and the Millennium Challenge Account, and U.S. disaster relief efforts, such as those in Indonesia and Pakistan in 2005, have helped to improve the image of the United States in some countries and regions. In the past two years, public perceptions of the United States, particularly in Western Europe, Japan, South Korea, and India, have improved somewhat in comparison to those of China. Among the countries with the widest image gaps between the United States and China and that favor the United States are Poland, Japan, South Korea, and India. Those that strongly favor China include Pakistan, Egypt, Jordan, and Indonesia. While there are positive signs, the Pew Research Center suggests that much more work lies ahead, stating that, overall, the U.S. image "remains far less positive than it was before the war [in Iraq] and at the beginning of the century." While the challenge of China's soft power does not alter vital U.S. interests, it affects the ways and means the United States uses to protect its interests and attain its strategic goals. The rise of China, political recidivism in Russia, and the war in Iraq give rise to concerns about what the international power structure will be as we move through the 21 st Century. The United States still is the world's foremost military power, largest economy, technology leader, and cultural magnet. However, the pull of the "Chinese model," the rise of competing centers of power, the emergence of challenges not easily resolved using Cold War era implements of power, the decentralization of security threats, unfavorable trends in world public opinion, and burgeoning U.S. financial problems give pause to both scholars and policymakers. The United States and China share the same vital national interests of security and prosperity, although each has a particular additional interest and each defines its interests somewhat differently. Each seeks freedom from fear and want and to preserve its territorial integrity. For the United States, its particular interest lies in value preservation and projection of those values. Many Americans view the spread of democracy and free markets as enhancing national security and often seek improvements in human rights as part of their negotiating goals. China has a particular existential interest in regime preservation or the survival of the Chinese Communist Party as the sole ruler of China. This dovetails back into the Chinese vital interest of economic prosperity. The Party needs economic growth in order to deliver a rising standard of living to the people and provide legitimacy for its one-party rule. The means, goals, and strategies by which each country pursues its national interests differ in many important respects. Each country wields an array of hard and soft power that includes its military, diplomatic and political activities, economic and financial clout, and considerable cultural and informational appeal. Each country deploys its power, however, in different ways. In cases, the differences may be subtle, but some are glaring. As for strategic goals, arguably each country aims at maintaining internal and external stability and developing amicable and cooperative relations with the rest of the world. At times, though, the need for security trumps stability, and a country may undertake a destabilizing action (such a the invasion of Iraq). Each occupies a different position in world leadership. Even China recognizes that the United States is the only nation that has the will, stature, and means to mobilize the world community to undertake the great projects of the day. China's philosophy has been characterized as "live and let live," a more nonconfrontational approach that eschews outside interference in "internal matters." China portrays itself as a benign, non-colonial power with influence, deep pockets, an ever expanding manufacturing base, and a nation that has lifted 300 million of its people out of poverty and, therefore, has become a potent model for other developing nations. The United States has long viewed itself as exceptional and a "shining city on a hill" for freedom-loving peoples all over the world. It too has deep pockets. China likely recognizes that it is not the center of the world, as its name in Chinese implies (often translated as Middle Kingdom), but it seems to be wielding its soft power in order to pursue its national interests in ways not unfamiliar, but at times anathema, to the United States. It appears that Beijing views its rise as a global force or at least a dominant factor in East Asia as only a matter of time. The victory by the Western world in the Cold War brought triumph not only for the military strategists but also for those engaged in the great intangible battle for the hearts and minds of aspiring peoples everywhere. The American model reigned supreme: democracy; free markets; privatization; flows of international trade and investment; and a lifestyle of a home, car, and education for one's children. The model also placed the United States as an arguably benign global power with unquestioned military supremacy and which could marshal European and other resources to keep the peace. The Soviet model of socialist planning, one-party rule, satellite states, the hard hand of repression, and building a military machine far beyond that which government could afford collapsed with the Berlin Wall. Parallel with the American model was European unification. Intra-European conflicts had ended. The specter of another World War centered on Germany, France, and England faded as the European Coal Community evolved into the European Economic Community and finally into the European Union. Diplomatic fusion, economic integration, and the security umbrella provided by the North Atlantic Treaty Organization directed European energies from internecine strife toward building a Europe to be much more than the globe's greatest outdoor museum. At hardly any time did countries aspire to adopt the Chinese model. Mao's disastrous Great Leap Forward, Cultural Revolution, collective farms, state owned enterprises, egalitarian poverty (except for Party insiders), and repressive government had little appeal except to other dictatorial regimes. True, communist insurgencies in Southeast Asia inspired by Maoist doctrine and assisted by Beijing did gain some traction, but eventually most of them were suppressed. Now even Vietnam has turned toward the American economic model, although it has retained a political system more like that in China. Ironically, Beijing has been encouraging North Korea to follow a Chinese-type model of economic reform that includes opening its borders to more trade, allowing markets, and attracting foreign investments. Some observers believe that in the future, China could displace the United States in much the same way that the United States displaced England as the world's great power. This view is heard in many quarters: conservatives, liberals, nationalists, internationalists, and isolationists. Notable is the articulation of a view of the seeming "inevitability" of the proposition that the "East is back" with China leading the pack. For those espousing this view, the debate turns on when—not whether—this power shift will happen and what the United States can do about it. Others, however, warn of trouble down the road for China, and others caution against linear projections into the future and extrapolating onto the globe a decade or so of Chinese successes. One commentator writes that the Chinese threat or challenge is not likely to appear as another Soviet Union, straining to keep pace with America's military, but more likely to be an "asymmetrical superpower," one that manipulates a situation so effectively that the outcome favors Chinese interests. In many respects, China epitomizes what may be called a "new wave" of regional powers. The world is being confronted by a more ambitious China today, but not far behind are India and Brazil as well as a sprinkling of populous nations, such as Indonesia or Nigeria, who are in the ascendant and who feel that their time has been too long in coming. The concern over rising Chinese power today might apply to the power of India and Brazil tomorrow. As this memorandum shows, except for exports, China still lags behind the United States in most metrics of power—both soft and hard. The rate at which China is closing the gap (commensurate with its national interests) certainly has been accelerating, but the country still has a long way to go. Further, the metrics belie what may be the real story of China's ascendency. The actual story may not be in who has the most guns, largest aid budget, or whose companies are trading with and investing the most in developing nations, but it could lie in which national model is able to capture the attitudes and actions (hearts and minds) of people, states, and non-state actors in the world. The model China is offering is partly similar but contrasts strongly with much of the Western model. Some have characterized this as the decline of the so-called "Washington Consensus" among developing countries and the rise of the "Beijing Consensus." The Beijing Consensus purports to represent the thinking of policymakers in China and underlies their approach to relations with countries of the developing world. The essence of the consensus is that China, India, and other countries that ignored the Washington Consensus have succeeded while those who followed American advice or underwent World Bank or International Monetary Fund (IMF) discipline have failed in many of their basic goals—such as lifting their populations out of poverty. The Beijing consensus is skeptical about adopting wholesale Western economic ideals of privatization and free trade, molding one's political system to conform to Western-style democratic institutions, and allowing markets to handle everything, even though China actually adopted many of these policies in the process of its development over the past quarter century. The Beijing consensus contends that nations can fit into the global system without abandoning their way of life or compromising their independence (viz. authoritarian government). Countries can choose the most useful aspects of the Western model and avail themselves of foreign investments and technology without themselves becoming "Western." This Beijing Consensus is thought to have three primary principles: use of innovation and cutting edge technology to create change that moves faster than the problems that change creates; management of chaos caused by change; and self-determination or using leverage to hold away larger powers that may be tempted to tread on your toes. In practice, the Beijing Consensus implies rejection of the usual notion that workers in developing economies must be consigned to sewing garments, working handicrafts, and assembling toys. Countries can start at the labor-intensive, traditional industries, but they also can move directly into high-technology both through foreign investment and by borrowing and localizing existing world technology. When American semiconductor makers first began operating in China in the early 1990s, they reportedly did so with the belief that the China market would be a place to unload out-of-date chips. But the Chinese only wanted the newest, fastest technology. China's move directly into fiber optics rather than copper wire was driven partly by the difficulty of protecting copper wire from thieves, but it also reflected the policy to jump directly into 21 st century telecommunications rather than languish in the leftovers from the labs of Alexander Graham Bell. Chinese State Councilor Chen Zhili reportedly wrote that the country is doomed unless Chinese society finds ways to innovate. She argued that science and technology and human resources talent are the two pillars of China's future. China's problems, she says, are simply too big for old solutions, too tremendous for anything but an army of great ideas and successful implementation. The second principle of "managing chaos" recognizes that once an economy "takes off" with double-digit growth rates, society becomes an unstable stew of hope, raw ambition, fear, misinformation, corruption, competing interest groups, and politics. Traditional society quickly can give way to chaos (another term for political instability). In order to manage such chaos, policies aimed at sustainability and equality—particularly for those left behind—become important. When an economy doubles in size every seven years (growth rate of 10% per year), governments really do not know beforehand what exactly will emerge from the rough and tumble ruckus caused by economic transformation. No magic prescription exists that will both sustain rapid economic growth and maintain stability. The Washington Consensus says to "leave it to the market" and everything will work out eventually. Beijing's approach is to recognize that since the government has no previous experience to fall back upon, the Chinese people have to "wade across the stream by feeling the way with one's toes." Policymakers can stay ahead of the chaos only if they pursue policy innovations as problems occur. Central governments have to be strong, and at times autocratic, in order to both implement innovative policies and to reverse those that go bad before they cause too much damage. One allure of this approach is that some countries are concluding that they can go their own way without following prescriptions that seem designed primarily to benefit advanced industrialized economies. Measures such as restricting life-saving medicines because of intellectual property rights, exposing infant industries to global competition, saving old growth forests similar to those cut down long ago in developed nations, or accepting macroeconomic strictures prescribed by international financial institutions seem avoidable under the Chinese model. Human rights also are not an issue, at least not in the legal sense. The primary attribute in the Chinese model today is for people to be brought out of poverty, not necessarily to have legal freedoms. Developing nations may well view this as an alternative to the economic reform requirements often imposed by international lenders (such as the International Monetary Fund during various financial crises). Rather than taking funding from the World Bank or IMF, they can simply "receive" Chinese aid with no strings attached. (Of course, the rude awakening may come later when not all promised aid is forthcoming.) The third principle is self determination and using leverage to keep the great powers at bay. Although China's nuclear powered military resembles that of other military powers, Beijing recognizes that not everyone can be a superpower, and not everyone needs to be. Every nation, however, can be a power in its own right—perhaps not powerful enough for domination, but at least strong enough for self-determination. China's message to other countries may be that a country does not have to win an arms race; it only needs to build enough asymmetric power to keep hegemonic powers at water's edge. A nation's military exists primarily to deter conflict, since in Chinese military thinking, armed conflict is usually an indication of failure. China's leverage stems partly from deterrent effect of its military but also from the strength of its economic position and growing reliance of other countries on the web of trade and investment relations with businesses in China. Trading partners now have a stake in the success of the Chinese economy (and vice versa). The Chinese model also insists on national sovereignty (in China's case the one-China policy). To many analysts in the United States, the rise of China and the allure of its model for development is an indicator of the need for adjustment in U.S. foreign policy. The hard lessons of Iraq combined with a deteriorating image of the United States in world public opinion also have caused many in both the Pentagon and State Department to go back to the drawing board and think creatively about the use of U.S. military, diplomatic, economic, and cultural power. Secretary of Defense William Gates recently stated that the new thinking in overall U.S. defense strategy is to build partner-nation capacity so friends can better defend themselves, and while preserving U.S. conventional military deterrence abilities, to become more attentive to both "hard" and "soft" elements of national power. Meanwhile, Secretary of State Condoleezza Rice has proposed "Transformational Diplomacy" (working with other nations to build democracies that respond to the needs of their people and conduct themselves responsibly in the international system) and is attempting to create a Civilian Reserve Corps to assist in reconstruction efforts following military action. Another aspect of soft power is to keep weak and failing states from actually failing, descending into chaos, and becoming an incubator of or safe haven for terrorist groups. Some analysts have devised the concept of "smart power," a combination of hard and soft power. Others, however, say the use of the word "smart" is elitist and condescending or that the use of the phrase "soft power" seems politically untenable for those who already are being accused of being soft on defense. A U.S. ambassador refers to an "all elements of power" strategy in combating terrorism. Whatever name is used, the essence of the argument is that U.S. implements of power must be used in an articulated, coordinated, and concatenated way in order to be more effective. Whether the power be called hard or soft, the objective seems to be for U.S. military, diplomatic, economic, or cultural power to be employed and combined in ways that cut across government agencies and better protect and enhance U.S. interests. The U.S. experience since 9/11 also has suggested certain considerations and constraints in wielding U.S. power. These include the following: large international tasks are most effectively tackled with large international coalitions for financial, physical, as well as political support; future wars involving the United States may well be asymmetrical and involve soft power—a combination of military operations (against conventional as well as insurgent forces), reconstruction, governance, and winning the hearts and minds of people; threats to U.S. security have become "democratized"—whether a single person, a group, or an international network, all can potentially damage American people or assets; budget constraints are real both in terms of opportunity costs and for financing foreign operations; countries are placing more emphasis on national sovereignty—not just guarding against outside incursions but, for some nations, rigidly controlling humanitarian interventions or opposing foreign assistance to local non-governmental organizations for political reasons; as democratic institutions and societies become more entrenched (particularly in developing nations), public opinion, nationalism, and attitudes become large moving forces for governments (even autocratic governments use nationalism to bolster public support); international relations requires dealing not only with governments but with the perceptions and attitudes of people under those governments; globalization and technology have shrunk geographical distances among countries and created more economic interdependence; communications networks have so linked people of the world that everything seems to have a public face; that face often can be distorted according to the interests of those in the network; and the rise in prices of commodities (particularly petroleum) and the U.S. trade deficit are redistributing wealth away from the United States and other industrialized nations toward commodity exporting nations (many are either politically unstable or located in unstable regions) and toward China. Given the above and other considerations, the question becomes where and how to exercise U.S. soft and hard power in the post-9/11 world. As for the question of where, soft power naturally flows everywhere, but it also can be channeled to particular countries or regions. Figure 1 depicts a simplified view of the various countries and regions of the world with characterizations of basic U.S. relations with those countries or regions. With allied nations (NATO, Japan, South Korea, and Australia), relations are fundamentally sound although they may need adjustment at times. Shared strategic visions, military commitments, economic interaction, cultural affinity, and wide communication channels draw these nations together. Even with these nations, however, government-to-government relations often have to be combined with public diplomacy and building perceptions of trust and confidence to garner support for U.S. policies. Russia and China are often considered to be potential strategic competitors, although the United States engages heavily with each. The question with these two nations is how much hard power is necessary to hedge against a possible future strategic confrontation. Some warn of a return to totalitarianism in Russia, but the probability of open hostilities with Russia seems remote. Even Russian experts consider nuclear and large-scale wars with NATO or other U.S.-led coalitions no longer probable and see cooperation with the United States and other industrialized countries growing. As for a possible military confrontation with China, some experts point to China's growing military budget and the possibility of a conflict over the Taiwan Strait. These fit well into a Cold War mentality. The perceived security threat from China is magnified by Beijing's lack of transparency in clarifying its motives for its rising arms budget as well as its rumblings and warnings about Taiwan independence. However, Dennis Blair, the former Commander-in-Chief of U.S. Pacific Command, has written, "In evaluating China's military actions, it is most important to make judgments based on real military capabilities, not on blue-sky projections of individual Chinese actions." He argues that although China has raised suspicions that it may be developing military force for use in the East Asia region and further, the PLA (People's Liberation Army) has not developed nor demonstrated even the rudiments of the actual capabilities to do so. Since China's intentions are unknown, the strategy of the Defense Department has been to pursue a balanced approach by shaping the choices of major and emerging powers in a way that seeks cooperation but also creates prudent hedges against the possibility that cooperative approaches by themselves may fail. The strategy is also to induce China to become a constructive actor and stakeholder in the international system and to strive to ensure that preparing for a possible military confrontation does not in itself trigger one. There are other ways, however, in which China could threaten U.S. power. One would be a Chinese alignment with autocratic energy exporting countries to collaborate strategically to limit U.S. power. Another one would be an "Eurasian Entente," a loose alliance between Russia and China aimed at thwarting the interests of the United States. China and Russia have stepped up their strategic cooperation, but such countervailing alliances still seem far from being realized, and historical Sino-Russian enmities will likely limit how far that relationship can go. (The Shanghai Cooperation Organization is a fledgling attempt at drawing China, Russia, and three countries of Central Europe into an organization addressing security, economic, and cultural concerns.) For North Korea and Iran, relations are dominated by nuclear concerns. Interaction with these states is primarily through multinational diplomacy. With North Korea, both China and South Korea have used a considerable amount of economic, diplomatic, and cultural soft power in dealing with the Kim Jong-il regime, but progress has been slow. As for operations in Iraq and Afghanistan, these are large problems where both hard and soft power are being used to the maximum. The United States dominates in decision making here, and the Chinese model has little relevance. The countries in which Chinese soft power competes most directly with that of the United States fall into three categories: the arc of instability stretching from North Africa through the Middle East and into South Asia, other countries in play (Southeast Asia, Latin America, Sub-Saharan Africa, and Central Asia), and new (and re-emerging) centers of power, the so-called BRICs (Brazil, India, as well as Russia and China, for U.S. soft power). There is some overlap in the categories, but in essence these mainly are countries of the developing and newly industrializing world. Some are democratic, some autocratic, and each represents a potential power node. The United States is in competition for the hearts and minds of citizens of these countries. Some have de facto chosen sides, and others are following development paths that may or may not bring them into conflict with American values and interests. The tool kit of U.S. hard and soft power includes the military, diplomacy, economics, and culture along with several intangibles that result from U.S. actions. These include credibility, trust, and general amicability. Military forces include not only those actually engaged in combat but the threat of their use in offensive, defensive, and retaliatory operations. Diplomacy includes political forces, a nation's system of governance, alliances, and international relationships. The economy includes a nation's economic power, economic assistance, trade, foreign investment, financial position, and preferential trading arrangements. Cultural resources include the media, information, public diplomacy, communications, and traditional propaganda. Figure 2 depicts these tools of power and illustrates various combinations of them that typically are used in accomplishing ends or goals in international affairs. The percentages are not based on actual metrics but attempt to depict various combinations of the tools of power that can be used in different activities aimed at wielding power to change the behavior of other nations. The figure begins with the least forceful ways by which implements of power may be used—co-optation—and proceeds through increasingly forceful ways until countries reach open warfare and occupation. Co-opting other nations refers to a process of bringing them into international groupings or ways of thinking in order to align their interests with yours. It is primarily a non-aggressive strategy that relies heavily on the use of information, economics, and diplomacy, although military considerations are always in the background. It is the fundamental premise behind many of the world's alliances, country groupings, the World Trade Organization, and other international institutions. Co-optation also works at corporate and individual levels. Corporations engage in international trade and investment, and individuals work in businesses owned by foreign companies. In these cases, corporate and worker interests on particular issues can align more with foreign than domestic interest groups. It also is the theory behind the democratic peace hypothesis: democracies tend not to fight each other because of shared values. Co-optation is particularly important given the democratization of security threats, particularly terrorism. If anyone in the world can pose a potential security threat, then any security strategy must include winning the hearts and minds of people who might opt to engage in such activity (or those around them who might either support or report such activity to appropriate authorities). Persuasion refers to a process by which an entity is induced to behave in a particular way primarily because of changes in its own interests or because of specific concessions offered by other nations. Here diplomacy plays a key role along with economic enticements, political pressures, information, and the military in the background. A country may be persuaded to behave in a more positive way without an overt external threat of use of military force. For deterrence, the military plays a greater role by changing the target nation's perception of the costs and benefits of taking or not taking certain actions. The credibility of the military force becomes key, but the issues usually are resolved through diplomacy. Threats of a pre-emptive strike or trade sanctions may be used. So far, China has been deterred from taking Taiwan by force partly because of the negative military and political consequences that likely would ensue. If deterrence by threat fails, overt military action can be employed either to preempt or deny. If that also fails, war may ensue, and the military may be used to retaliate—in order to deter any similar adverse actions in the future. The next three activities are included to illustrate how the mix of hard and soft power changes in a sequence of military invasion, post-invasion, and occupation. The Chinese model has little relevance here. The chart depicts a rough symmetry with reliance on soft power declining as the use of hard power rises but then soft power increasing as hard power operations wind down. Changes in the mix of U.S. power prior to overt military action also may affect how both hard and soft power may be used after the battles end. In summary, many voices in policy circles in Washington are calling for the United States to wield its hard and soft power in a more coordinated and articulated way. This has arisen partly from the perceived successes of China in its attempts to win the hearts and minds of people in the developing world, but perhaps more from the complications of the Iraq War, the threat of terrorism, and the problems of globalization. However appealing this developing "consensus" appears on the surface, though, it faces the "devil in the details." It includes the long-running debate over the size of various means used to project U.S. power, particularly the budget of the Pentagon, the specific capabilities of the various instruments of power, the appropriate mix of hard and soft power, and whether new institutions are necessary to cope with the challenges of the 21 st century. Although Beijing has adopted a more accommodating and multilateralist foreign policy and has not challenged the global "status quo," many experts disagree about the PRC's capabilities and long-term intentions and as well as the implications of China's rise. Some analysts warn that China's growing soft power reflects a set of well-funded, integrated foreign policy goals, developed to secure and advance China's economic and security interests at the expense of the United States. Others argue that China's rise is limited in scope, vulnerable to domestic shocks and public backlash in foreign countries, and represents a trend toward greater integration in the global community. Furthermore, this argument goes, U.S. military might, foreign aid resources, trade and foreign direct investment, and intellectual and cultural influences remain formidable. Many countries continue to seek strong diplomatic, economic, and security relations with the United States even while cultivating ties with China. Regarding China's goals, some observers contend that China's most pressing concerns, at least in the short- to medium-term, are domestic (focused on economic growth and social stability). Furthermore, they argue, Beijing favors a stable periphery and knowingly benefits from the U.S. role in helping to maintain global security. To the extent that China may exploit its soft power for strategic ends, it is to forestall possible "containment" rather than to pursue expansion. Many analysts believe that economic development rather than military supremacy is the primary objective for China's international engagement for a host of reasons—not the least of which are to raise the living standards of its enormous population, to dampen social disaffection about economic and other inequities, and to sustain regime legitimacy after the demise of communist ideology as an acceptable organizing principle. China's annual economic growth rates routinely are in the double digits; in 2007, they reached an annual rate of 11.4 percent—the highest since 1994. This rapid and sustained economic growth has created voracious domestic appetites for resources, capital, and technology. At the same time, Chinese growth has been driven by the development of overseas markets for its goods. These twin developments have served as powerful drivers of China's international trade and investment agreements as well as foreign aid, key components of its soft power. In energy sources alone, for example, China became a net importer in 1995 (it became a net importer of oil in 1993). Its energy demands are expected to continue increasing at an annual rate of 4%-5% through at least 2015, compared to an annual rate of about 1% in industrialized countries. China steadily and successfully has sought trade accords, oil and gas contracts, scientific and technological cooperation, and de-facto multilateral security arrangements with countries both around its periphery and around the world. Access to energy resources and raw commodities to fuel China's domestic growth has played a dominant role in these relationships. Many of these activities are tied to PRC pledges of foreign aid. In pursuit of sustainable economic development, China also is seen to have placed a priority in keeping stable and relatively tension-free relations with its primary export market, the United States, and with other countries and regions. According to this view, Beijing calculates that even the appearance of a more overt pursuit of its regional and global interests could prompt the United States and other countries to strengthen their alliances or form other groupings to counterbalance and deter China's international outreach. Such a development in turn could fetter China's economic growth. China's "win-win" approach to international interactions often is considered more symbolic than substantive. Easy things are taken care of first, while inconvenient and difficult things are postponed, possibly indefinitely. Moreover, a "win-win" strategy is a slender reed for maximizing comprehensive soft power. The soft power potential that the PRC can hope to gain from such a strategy, many believe, pales next to the national capacity and willingness of the United States to take on costly and difficult global tasks such as international disaster aid. To date, they contend, nothing in Beijing's current soft power approach suggests that it is willing to embrace such altruism. Moreover, China's lack of transparency raises consistent doubts about whether the levels of aid and investment triumphantly announced are the levels of aid and investment actually provided. Even with a "win-win" strategy, acquiring and maintaining an enhanced international presence brings with it certain complications. Among other things, it provides almost innumerable opportunities for international misunderstandings, resentment, and repercussions. Cultural backlash may be heightened by the style that PRC foreign investments and construction projects have pursued to date—involving the import of Chinese workers instead of using the local population or providing substandard labor conditions for local workers. Chinese overseas operations already have begun to experience fallout from their activities: PRC oil drilling sites and well-workers have been attacked, kidnapped, or killed in Sudan, Somalia, Nigeria, and elsewhere in Africa. Some Central Asian countries have grown concerned about the level of energy assets that China has been accruing within their borders and have moved to limit such acquisitions. As China's international activities expand, tensions along these lines are likely to increase, possibly garnering unfavorable publicity for the PRC and putting stress on the "win-win" approach. Foreign entanglements also could raise political problems at home for PRC policymakers. The increasing availability of Internet and cell phones—China now has the world's largest numbers of Internet and cell phone users—assures that growing numbers of Chinese citizens have more access to information, including information about China's international activities. Confirmation that China is investing millions of dollars in overseas projects, while at home unemployment grows and infrastructure development lags, may prove objectionable to the hundreds of millions of PRC citizens still living below the poverty line—much the way many Americans sometimes react to U.S. overseas investment. As noted above, Beijing is seen to have advantages over the United States in that its overseas activities and investments are conducted by strong, well-funded state-owned companies. These large PRC government activities attract much international attention and give a "hard" edge to PRC soft power. The United States has little to match such centrally directed initiatives, particularly in the wake of years of U.S. budget cutbacks in—and in the case of the U.S. Information Agency, the termination of—high-profile U.S. international public diplomacy programs. But comparing only government-directed and -funded activities overlooks the huge advantage the United States has in the extent of its substantial global private-sector presence. In addition to U.S. business interests, American products, schools, newspapers, journals, banks, movies, TV programs, novels, rock stars, medical institutions, politicians, Chambers of Commerce, state governments, culture, religious groups, ideas, NGOs, and other American institutions and values are liberally scattered over the global map. While this U.S. presence is diverse and uncoordinated, and at times triggers anti-American feelings, it nevertheless leaves a substantial global footprint. This wealth of U.S. influence may provide resources for U.S. soft power strategy. The following section examines three aspects of non-economic soft power—public diplomacy, state diplomacy, and foreign assistance. It compares U.S. and PRC efforts in a range of areas, including educational and cultural exchanges, bilateral and multilateral diplomacy, and foreign aid funding and approaches. In the past decade, Beijing has emphasized relatively short-term, economic "mutual benefits" while using these tools of soft power. This approach, on balance, has had a positive impact on elite and public perceptions of China in many countries. By contrast, the United States, particularly since 2001, has focused upon longer-term goals of combating terrorism as well as promoting democratic governance and market-oriented economic development. The Bush Administration's five-year, $15 billion President's Emergency Plan for AIDS Relief (PEPFAR) reportedly has helped to bolster public opinion in favor of the United States in Africa while humanitarian assistance in places such as Indonesia also have helped to boost U.S. standing. However, many countries have not benefitted from counter-terrorism, PEPFAR, or Millennium Challenge Account (MCA) assistance. In 2007, over three-fourths of U.S. assistance to the Middle East consisted of military assistance. In the past decade, U.S. public diplomacy has faced serious challenges to its effectiveness, including the elimination of the U.S. Information Agency (USIA), inadequate staffing, and widespread global opposition to the U.S.-led war in Iraq. The U.S. government administers a wide array of educational and cultural exchange programs, emphasizing research, values, and ideas that may transcend national boundaries. U.S. research universities continue to rank among the world's top educational centers and attract foreign students, many from India and China. By contrast, China's most prominent counterpart, the Confucius Institutes, which teach students in other countries about Chinese history and culture, have less universalistic appeal. Nonetheless, they represent a new component in China's strategy to merge its economic influence with efforts to promote an understanding of its view of the world. The 110 th Congress has held hearings and proposed measures that support U.S. public diplomacy, diplomatic efforts, and foreign aid. The House Committee on Foreign Affairs held two hearings on reforming foreign assistance and diplomacy. (March 8, 2007 and June 25, 2008) The Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ), includes provisions supporting greater communication of U.S. policies and promotion of U.S. values. The Public Diplomacy Resource Centers Act of 2007 ( H.R. 2553 ), passed by the House and reported favorably by the Senate Committee on Foreign Relations, would provide for the establishment of new, and maintenance of existing, libraries and resource centers at or in connection with U.S. diplomatic or consular missions. Public diplomacy is the promotion of America's interests, culture and policies by informing and influencing foreign populations. The Department of States proclaims that the goals of U.S. public diplomacy strategy include promoting democracy and good governance and marginalizing extremist leaders and organizations. The U.S. government first officially acknowledged its use of public diplomacy activities in the early years of the 20 th century when President Woodrow Wilson created the Committee on Public Information to disseminate information overseas during World War I. In 1941 during World War II, President Roosevelt established the Foreign Information Service to conduct foreign intelligence and propaganda. The next year President Roosevelt created the Office of War Information (OWI) which aired the first Voice of America (VOA) program on February 24, 1942 in Europe. These activities were carried out without any authority or recognition provided by Congress. The U.S. Information and Educational Exchange Act of 1948 (P.L. 80-402), popularly referred to as the Smith-Mundt Act, provided the first overarching legislation authorizing broadcasting and cultural activities, although they had already been going on throughout the 1940s. Throughout the 1990s, both Congress and the executive branch, in the post-Cold War climate, reduced public diplomacy activity funding, and in 1999 abolished the primary public diplomacy agency, the U.S. Information Agency—USIA, altogether. During the 1990s, public diplomacy often was viewed as less important than political and military government functions and, therefore, was seen by some legislators as a pot of money that could be tapped for other government activities. Many U.S. policymakers now recognize the importance of how America and its policies are perceived abroad. At the same time, some observers believe that there are limits to what public diplomacy can do when the problem is not foreign misperceptions of America, but rather disagreements with specific U.S. foreign policies. A major expansion of U.S. public diplomacy activities and funding cannot change that, they say. According to a Pew survey, in 2000, more than 50%, and as high as 83%, of foreign populations around the world held favorable views of the United States. A number of decisions early on by the Bush Administration including refusing to sign onto the Kyoto Treaty, the International Criminal Court, the Chemical Weapons Ban, and the Anti-Ballistic Missile Treaty, lessened foreign opinion of the United States. After the September 11, 2001 terrorist attacks, people around the world expressed shock and support for the U.S. government. Since then, however, negative attitudes about America have increased. After the decision to go to war with Iraq, foreign opinion of the United States fell sharply, not only in the Arab and Muslim world, but even among some of America's closest allies. Many suggest that, ongoing issues, such as prisoners held at Guantanamo Bay and the Abu Ghraib prison torture situation, continue to exacerbate a poor world view of the United States. The United States government sponsors a broad array of cultural and educational exchange programs for the purpose of "increasing mutual understanding." The State Department's Bureau of Educational and Cultural Exchange administers a number of programs, including the Fulbright Program, English language programs, an American speakers program, citizen exchange programs, student leader programs, and English language programs. There are approximately 30,000 participants each year. U.S. embassies also oversee the U.S. Speakers Program, in which American subject-matter experts address selected audiences in foreign countries on a range of policy issues and various aspects of American society. The largest regional beneficiaries of U.S. exchange programs in terms of funding are Europe and Eurasia and East Asia and the Pacific. Public diplomacy consists primarily of three categories of activities: (1) international information programs (IIP), (2) educational and cultural exchange programs, and (3) international nonmilitary broadcasting. The Under Secretary of State for Public Diplomacy and Public Affairs administers the Bureau for International Information Programs and the Bureau for Educational and Cultural Affairs, while the Broadcasting Board of Governors manages and oversees international broadcasting. Table 1 below shows that total public diplomacy spending nearly doubled between FY1999 and FY2007 (the most recent actual data). (See Figure 3 .) The regions with the largest funding for public diplomacy (FY2007) are Europe/Eurasia and Western Hemisphere (Latin America and the Caribbean). (See Figure 4 .) For FY2009, the Bush Administration requested $395 million for International Information Programs "to influence foreign opinion and win support for U.S. foreign policy goals." The PRC government has established an office for promoting Chinese language and culture as part of a global public diplomacy effort. China's National Office for Teaching Chinese as a Foreign Language, or Hanban , reportedly has established 210 Confucius Institutes worldwide in 64 countries and regions since 2004 to teach Chinese language and culture. Some observers assert that these centers will help China to cultivate friendships and promote an understanding of China throughout the world. They typically are located in colleges and universities in host countries under cooperative arrangements with Chinese educational institutions. More than 200 educational institutes in 61 countries and regions reportedly have applied to open up Confucius Institutes, while China has trained more than 300 teachers and spent $26 million on textbooks and audio equipment for this purpose. Other PRC efforts include hosting overseas scholars in programs similar to U.S. government-sponsored scholarly exchanges and attracting and expanding facilities for foreign students. According to the PRC government, in 2005, more than 30 million people outside China were studying Chinese, although the vast majority of them were not sponsored by the Chinese government. The PRC National Office for Teaching Chinese as a Foreign Language predicted that by 2010, 100 million persons around the globe will be learning Chinese. However, the attraction to Chinese language often reflects more an interest in Chinese economic opportunities than a desire to emulate Chinese politics, society, or culture. The United States, with its first-rate universities, continues to attract far more foreign students than does China. In 2007, the U.S. Department of State issued more than 600,000 student and exchange visitor visas, an increase of 10% over 2006, following several years of decline. The second and third largest centers for foreign students are the U.K. and Germany, each with less than half the U.S. number. In 2007, 195,000 foreign students reportedly were studying in China. China has ambitious plans to enroll more foreign students. The U.S. government tightened its visa policies following the September 11, 2001 terrorist attacks, leading to cases of bureaucratic bungling, perceptions that the United States no longer welcomed foreign students, and three years of declining enrollment. During this time, China not only loosened its own requirements, but announced goals to attract more students from abroad. Other countries in Europe, Oceania, and Asia also launched recruitment efforts to attract foreign students, including those from China, many of whom were discouraged from applying to U.S. universities due to the restrictive visa process. While U.S. exchange programs may have a long-term impact on public opinion, some experts argue that they are overshadowed by China's official exchanges. China reportedly has been investing in the "best of the brightest" for recruitment into its increasingly sophisticated diplomatic corps and lengthening their assignments in order to foster improved language skills, cultural understanding, and diplomatic effectiveness. One report suggests that in many countries, PRC diplomats have a busier schedule and are more accessible than their American counterparts. By contrast, since 2005, the U.S. government reportedly has frozen staffing levels at many diplomatic posts. Budget constraints and the diversion of human resources to Iraq and Afghanistan have created not only shortfalls in staffing but also cuts in language and other training. After long shunning or passively participating in what it perceived as U.S.-dominated multilateral organizations, in the past decade, China has joined, taken on more active roles in, and created new international groupings. In doing so, Beijing has aimed to achieve several key foreign policy objectives, including enhancing its global stature, defending and promoting its own interests, constraining the United States, enhancing its "win-win" diplomacy, and creating diplomatic and economic partnerships and blocs. By contrast, the Bush Administration's appointment of John Bolton, a long time critic of the United Nations, as the country's U.N. representative (2005-2006), was seen by some foreign observers as a rejection of multilateralism. China has adopted a more assertive role in the United Nations, the World Bank, the Asian Development Bank, and other global and regional entities. The PRC has become more engaged and assertive in the U.N. and deploys a greater number of personnel than the United States to U.N. peacekeeping missions. However, many analysts argue that some aspects of China's foreign policy show a more belligerent and narrowly self-interested outlook, such as Beijing's rigid stance on Taiwan and opposition to harsher measures against Sudan. Bilateral initiatives, such as Friendship and Cooperative Partnership Agreements, Free Trade Agreements, and Strategic Partnership Agreements, have helped to seal friendships. Finally, China has sought to devise new multilateral organizations that exclude the United States, such as the East Asia Summit (EAS), the Shanghai Cooperation Organization (SCO) in Central Asia, the Forum on China-Africa Cooperation Forum (FOCAC), and the China-Arab Cooperation Forum. Foreign assistance is a fundamental component of the U.S. international affairs budget and is viewed by many as an essential instrument of U.S. foreign policy. U.S. foreign assistance programs began in earnest in the mid-1940s with a four-year $13 billion investment in rebuilding Europe under the Marshall Plan. After the Marshall Plan ended in the early 1950s, much of U.S. foreign assistance of the 1950s and 1960s was provided to Southeast Asia to counter Soviet and Chinese influence. The focus of U.S. foreign aid has changed with different world events and administrations. Famine relief in Africa and countering insurgencies in Central America were themes during the 1980s. In the 1990s, support of Middle East peace included aid to Israel, Egypt, Jordan, and the Palestinians. Since the September 11, 2001 terrorist attacks, U.S. assistance programs have taken on a strategic importance, frequently cast as supporting national security and the global war on terrorism. In its FY2009 International Affairs 150 budget the Bush Administration identified the Department of State and the U.S. Agency for International Development (USAID) as playing critical roles in implementing the National Security Strategy. At the same time, however, both State and USAID, according to many foreign policy experts and the Secretary of Defense Robert Gates, have been lacking in resources for several years: "America's civilian institutions of diplomacy and development have been chronically undermanned and underfunded for far too long—relative to what we traditionally spend on the military and more importantly, relative to the responsibilities and challenges our nation has around the world." Additionally, the effectiveness of the foreign policy agencies, particularly USAID, have been hindered by operational changes. Whereas USAID until recently was comprised of development and country experts, now, according to some development experts, it has become an agency of contract managers, both in Washington and overseas, thereby weakening the expertise of the organization. Some policy-makers have expressed concern that new initiatives, such as Secretary Rice's Transformational Diplomacy and Transformational Development (which place greater emphasis on U.S. security and democracy-building goals), have taken resources away from traditional aid programs, particularly in countries that present fewer security threats to the United States or where governments do not meet various performance criteria. Other agencies and programs, such as the Department of Defense, the Millennium Challenge Corporation (MCC), and the President's Emergency Plan for HIV/AIDS Relief (PEPFAR), also may have diverted funds from core programs and reduced coordination of U.S. foreign assistance activities, in general. Some analysts also argue that promoting democracy prematurely in some countries may waste aid or even create a backlash toward other U.S. programs in that country. The United States is the world's largest economic aid donor in dollar terms, but is the smallest contributor among major donor governments in terms of percent of gross national income. U.S. foreign assistance generally declined for several decades to an all-time low of 0.14% of national income in the mid-1990s due to the ending of the Cold War and efforts to balance the federal budget. In the late 1990s, aid gradually increased to respond to international disasters, such as Hurricane Mitch in Central America. Aid funding increased significantly in the 2000s, largely due to the wars in Iraq and Afghanistan. See Table 2 and Figure 5 . However, although the amount of spending for international activities has grown significantly since 2001, compared to changes in the overall size of the federal budget, the share allocated for foreign policy programs has declined. Spending on non-military aid has declined slightly since 2004. See Figure 6 . Out of $14.7 billion spent on bilateral and regional aid programs in FY2007, the Middle East was the largest recipient ($5.1 billion), followed by Africa ($4.7 billion), South and Central Asia ($2.1 billion), Latin America, ($1.5 billion), Europe and Eurasia ($.85 billion), and East Asia and the Pacific ($0.53 billion). See Figure 7 . China's foreign aid is difficult to quantify, due to a lack of official and reliable data. The China Statistical Yearbook 2003-06 released an annual aid figure of $970 million, but this number likely does not include loans, which according to some experts is the main form of PRC aid. According to one source, annual PRC aid ranges between $1.5 billion-$2 billion. When loans and state-sponsored investment are included, according to one study using unofficial reports of pledged aid, the PRC promised a total of $31 billion in economic assistance to Southeast Asian, Latin American, and African countries in 2007, a threefold increase compared to 2005 and 20 times greater than 2003. By contrast, the United States' core official development assistance (ODA) budget (bilateral development, economic, and security assistance; not including military and multilateral assistance) was $19.5 billion in FY2007 out of a total foreign operations budget of $26.4 billion. According to OECD data, the United States' ODA budget is the largest among OECD member countries, followed by Japan, the United Kingdom, France, and Germany. China's estimated aid levels are comparable to those of Australia, Belgium, or Denmark. Another problem with calculating Chinese foreign assistance is that it is often difficult to confirm when or whether aid and loan pledges were actually disbursed. The unique characteristics of PRC foreign aid often result in it being overlooked. Like Japan but unlike most major aid donors, a large portion of Chinese assistance consists of interest-free or concessional loans—up to 41%—rather than grants, which constitute only 3%, according to one study. Debt forgiveness is also a major form of PRC foreign aid. In addition, China often extends aid packages that include not only loans but also trade and investment agreements, largely in the energy sector. According to some analysts, when these kinds of assistance are added, China becomes one of the largest bilateral aid donors in some countries and regions. Furthermore, PRC assistance often garners appreciation among foreign leaders and citizens disproportionate to its costs: (1) China offers assistance without the conditions that Western donors frequently place on aid (i.e. democratic reform, market opening, and environmental protection). China's policy of "non-interference in other countries' domestic affairs" often wins international support because it is regarded as respectful of their countries' sovereignty; (2) Chinese aid does not require a lengthy process involving setting up and meeting social and environmental safeguards; (3) PRC assistance, often announced at lavish receptions with toasts to the recipient country's leaders, carries great symbolic value; (4) Many Chinese aid projects, such as government buildings, infrastructure, hospitals, and energy facilities, often funded by loans from the China Import-Export Bank and built by Chinese companies, are high profile efforts with tangible benefits and serve as constant reminders of China's beneficence; (5) Some Chinese aid and investment projects reportedly tackle challenging projects that other aid donors have avoided because of technical difficulties or hardships. China has taken some tentative steps toward making its foreign aid process more open, coordinating its projects with other ODA providers, and offering more development-oriented assistance, while continuing to eschew the label of major ODA donor. Beijing reportedly is gradually developing an official aid structure and considering creating a unified aid agency. In 2007, the PRC participated in the "Pacific Core Partners Meeting" which included discussions among ten countries and several multilateral organizations with an interest in reaching a consensus on goals for development aid in the Southwest Pacific. During the same year, China for the first time provided aid to Cambodia through an international pledging process. The PRC aid programs are expanding to include technical assistance, medical assistance, political development (elections), and food aid. China has begun sending "youth volunteers," similar to U.S. Peace Corps volunteers, engaged in Chinese language instruction, computer skills, agricultural and poultry technologies, sports and music training, and traditional Chinese medicine. Although public perceptions of the United States and China vary widely within regions and are sensitive to current events, some public opinion studies point to a significant decline for the United States after 2002. A comparison of surveys conducted in 2002 and 2007 by the Pew Research Center shows that images of the United States declined in 26 of 33 countries. In a 2005 Pew 16-nation survey, images of the United States had improved somewhat from its low point following the invasion of Iraq in 2003, but its favorability rating still placed it last among five major powers—Germany, France, Japan, and China. In a 2006 Harris Poll, among European countries, the United States was viewed as the greatest threat to global stability, followed by Iran and China. Although positive attitudes toward China have declined somewhat in the past few years, the PRC's image is regarded as "decidedly favorable" in 27 of 47 nations surveyed by Pew in 2007. These responses reflect a view of China's economic influence as largely positive, especially among developing countries that do not compete directly with China. However, concerns about China's military strength are evident in Europe, Japan, and South Korea. Western European nations have become increasingly critical of China's role in the world. In a 2008 Harris Poll, among major European countries, China has overtaken the United States as the "biggest threat to global stability." Some observers argue that China's self-cultivated image of "peaceful development" may have been marred by reports of the PRC police crackdown in Tibet and Chinese foreign students attacking human rights demonstrators in Seoul, South Korea during the Olympic torch relay there. This section discusses two aspects of the PRC's military diplomacy for comparison with U.S. spending: training foreign militaries and participating in peacekeeping. For many years, China has used military training to support arms sales as well as the diplomacy that is conducted by the military, collectively called the People's Liberation Army (PLA). China also has highlighted its role in United Nations (UN) peacekeeping to boost its diplomatic image and contend that the PRC is a cooperative country in international security and a responsible permanent member of the U.N. Security Council. China is not as transparent as the United States in publishing its military spending and deployment information, and PRC official media report vague and selective information about the PLA's foreign contacts. Nevertheless, some funding data about the PLA's role in peacekeeping operations has been objectively reported by the UN. The PRC's defense budget can be used as one indicator of the priority placed on the modernization of its military, collectively called the People's Liberation Army (PLA). On March 4, 2008, the PRC announced its military budget for 2008 that totaled 417.8 billion yuan (US$58.8 billion), claiming a 17.6 percent increase over last year's military budget. Actually, the newly announced 2008 budget is an increase of 19.1 percent over last year's announced budget (vs actual budget). Using the PRC's own announced military budgets, the 2008 budget is a doubling of the 2004 budget. This trend of double-digit percentage increases has persisted for years. Nominally, China has raised its announced military budget by double-digit percentage increases every year since 1989. After the Taiwan Strait Crisis of 1995-1996, China's announced military budget has increased in real terms (accounting for inflation) every year, including real double-digit percentage increases every year since 1998. China's military budget is the highest in Asia. In comparison, the U.S. base defense budget (for Defense Department activities other than the ongoing military operations in Afghanistan and Iraq) for FY2008 totaled $460.3 billion, as provided by the FY2008 Defense Appropriations Act ( P.L. 110-116 ). The Defense Department estimates that China's total military expenditures is greater than the military budget as officially announced. The Secretary of Defense's 2008 report to Congress on PRC military power estimated that China's total defense-related spending for 2007 could be $97-139 billion, about two to three times the announced military budget. In comparison, total U.S. spending for national defense in FY2007 (including base budget for the Defense Department, war-related funding, related funding for the Energy Department, and related intelligence and homeland security spending) totaled $528.6 billion. The following graph ( Figure 8 ) depicts the increase in military budgets as announced by China. The PLA has extended training to foreign militaries, mostly of developing countries. For decades, military training has been conducted in support of China's arms sales or transfers. From 1999 to 2006, China ranked 5 th among the leading suppliers of weapons to developing countries (behind the United States, Russia, United Kingdom, and France). The value of China's arms deliveries during the eight-year period totaled $5.8 billion. (The value of U.S. arms deliveries to developing countries in the same period totaled $61.1 billion.) For example, in the 1980s and 1990s, the PLA Navy trained Pakistan's and Bangladesh's naval officers to maintain frigates and torpedo boats from China. In Africa, the PLA trained air force pilots of Zimbabwe to fly F-7 fighters and to operate air defense systems supplied by the PRC. During a visit to the Philippines in September 2007, PRC Defense Minister Cao Gangchuan offered a grant worth $6.6 million to the military for non-lethal military equipment, construction machinery, Chinese-language training, participation in naval exercises in China, and military courses in Beijing. At the same time, China sought to sell at a discount eight Z-9 utility helicopters to the Philippines' army. In 2004, China provided a preferential loan to Cambodia for the purchase of seven patrol boats, one landing ship, and one floating dock, worth a total of $60 million. At the handover ceremony in November 2007 attended by China's ambassador, an executive of the China State Shipbuilding Corporation cited further cooperation with Cambodia, involving personnel training, maintenance, and spare parts. Additionally, training for foreign militaries has been conducted at the PLA's National Defense University (NDU) in Beijing in part to enhance friendly ties with foreign militaries, sometimes with scholarships. At the end of 2006, the PRC government reported that various PLA educational institutions in China hosted more than 2,000 military students from over 140 countries. However, the PLA's primary objective in offering training in China to foreign militaries is not to build personal or cultural rapport and relationships between PLA and foreign military officers. At the NDU, classrooms for foreign military officers are located in a secondary campus, and foreign students are separated from PLA students. Even officers from Zimbabwe complained about isolation from and lack of interaction from PLA officers. Some countries have refused to conduct exchanges unless foreign students are integrated with PLA students on a reciprocal basis at the PLA's NDU. In contrast, the U.S. International Military Education and Training (IMET) program seeks to increase mutual understanding and defense cooperation; support combined operations with the U.S. military; and promote democratic values and human rights. In particular, IMET helps to develop professional and personal relationships that provide U.S. access to and influence in foreign militaries as the critical actors in transitions to democracies. In reporting training as part of building bilateral military relationships, the PLA has increasingly stressed China's cooperative attitude in international security, particularly non-traditional security problems like counter-terrorism, humanitarian assistance, and disaster relief. In July 2007, a PLA training base in the southern city of Guangzhou held an exercise with Thailand's special forces, training to counter violent international drug smugglers. A report in Jakarta in early 2008 said that China offered training and education for 23 military officers from Indonesia plus a seminar in China on international disaster relief for two Indonesian officers among others from the Association for South East Asian Nations (ASEAN). In April 2008, the PLA's University of Science and Technology in Nanjing conducted the first de-mining course to train military officers from Sudan, to show China's support for that country's reconciliation. In Asia, the PLA has extended military training to Cambodia. In 2003, coinciding with a visit by the PLA Chief of General Staff, media in Phnom Penh reported rare information on the PLA's military aid, saying that China provided $3 million annually to Cambodia for military training. In addition to Cambodia, media reports have quoted senior PLA officers as mentioning vague training for the militaries of Pakistan, Vietnam, Indonesia, Singapore, Bangladesh, Mongolia, and the Philippines. China has provided military training for the forces of the junta ruling Burma. In the case of Thailand, China has proceeded to enhance military assistance, including training, in spite of the military coup in Bangkok in September 2006 and in contrast to U.S. concerns. In January 2007, the PLA hosted the Thai Army Commander-in-Chief who led the coup that ousted the prime minister and offered military aid and training worth $49 million to the Thai military. In Central and South America, where a number of countries still recognize the Republic of China (commonly called Taiwan), the PLA reportedly has provided training for the militaries of various countries, including Surinam, Argentina, Guyana, Venezuela, Cuba, and Brazil. An increasing number of officers from Latin American militaries have attended PLA academies. In August 2007, the NDU in Beijing hosted the Third Latin American Senior Officer Symposium and the First Symposium of Senior Defense Officers from the Caribbean and South Pacific. In Africa since 2006, China has stepped up its civilian engagement and military training after a visit by Foreign Minister Li Zhaoxing in January 2006 and a China-African summit of the Forum on China-Africa Cooperation (FOCAC) in November 2006. Heads of state or government from 41 African countries attended the summit in Beijing. Reportedly at times with scholarships and in support of arms sales or supplies, the PLA reportedly has trained personnel from the militaries of countries that include Egypt, Sudan, Zimbabwe, Chad, Madagascar, Guinea, Morocco, Rwanda, Zambia, Nigeria, Benin, Cameroon, Sierra Leone, Ethiopia, Eritrea, Lesotho, and Namibia. In addition, the press in Kinshasa reported in early 2006 that 83 military officers from the Democratic Republic of the Congo were studying at that time in PLA military academies. At the same time that the Beijing government touted training for foreign military students, it cited greater expenses for international cooperation as one of the reasons for China's increased military budget, in a report issued at the end of 2006. However, China's defense budget lacks detailed clarity and transparency, and accounts for only part of total military-related spending. In a more detailed discussion of China's military spending in Beijing held in November 2006, just before the release of the PRC government's report, U.S. specialists found that the PLA's foreign assistance is covered by inter-agency funds from other ministries. In contrast, U.S. military assistance is reported annually in the State Department's request to Congress for funding the budget for international affairs. Military assistance includes three categories of International Military Education and Training (IMET), Foreign Military Financing (FMF), and Peacekeeping Operations (PKO). See Table 3 . According to the budget justifications, the United States funded military assistance in the amounts shown in this table since FY2001. The IMET programs trains roughly 10,000 foreign military students per year from over 130 countries, with the largest totals coming from Europe/Eurasia and the Western Hemisphere (Latin America and the Caribbean). China shunned participation in U.N. peacekeeping operations until a policy change in 1988, in part because of opposition to what China called military intervention in the name of the U.N. in the internal affairs of other countries. The PLA first participated in a U.N. peacekeeping mission by sending military observers to the Middle East in 1990. By 2000, China was deploying about 650 personnel in 10 U.N. peacekeeping missions. By late 2007, China's personnel at U.N. peacekeeping operations totaled 1,819. However, despite the rising numbers of deployed personnel in foreign countries, the PLA's "peacekeeping" in the 1990s was mainly in sending military observers, not troops or police. The PRC Government's late 2006 report stressed the PLA's participation in U.N. peacekeeping operations, reporting that since 1990, China had sent a total of 5,915 military personnel to join 16 U.N. peacekeeping operations. However, the breakdown of types of personnel showed that they were not combat troops who maintained security. In late 2006, the total of 1,487 PLA "peacekeepers" were mainly military observers and staff officers, engineers, medical personnel, and transportation personnel. There also were 180 police in peacekeeping missions. Some U.S. observers have suspected that the PLA's "peacekeepers" collected intelligence on foreign militaries and focused on protecting China's economic, including energy, investments or facilities. Particularly since 2006, the PRC has touted its participation in U.N. peacekeeping, as part of its claimed "leading" role in international peace and security. In 2006, the PLA claimed that it was the largest contributor to U.N. peacekeeping operations among the five permanent members of the U.N. Security Council, and the Washington Post boosted China as "quietly extending its influence on the world stage through the support of international peacekeeping operations." However, China's argument about its role as the largest participant in peacekeeping among the five permanent members of the U.N. Security Council failed to take into account the various critical roles in maintaining international security played by the U.S. and European militaries outside of U.N. peacekeeping. Despite its expansion of peacekeeping deployments, PRC influence exerted through peacekeeping has been limited. PRC personnel have included, since 2004, police officers (currently numbering 134) at the U.N. peacekeeping mission in Haiti. However, while this deployment raised a concern that Beijing would use its influence for diplomatic recognition, Haiti still maintains a diplomatic relationship with the Republic of China in Taipei (commonly called Taiwan). In 2007, China agreed to send PLA troops as U.N. "peacekeepers" to Darfur to deflect criticism of China's failure to help the humanitarian crisis in Sudan and the Beijing Olympic Games as the "Genocide Olympics." But the PLA sent 315 engineers to build barracks and other construction projects. In testimony in June 2008, Deputy Assistant Secretary for East Asian and Pacific Affairs Tom Christensen criticizing China for not doing more in Sudan. He said that while China has become more involved in addressing the humanitarian crisis in Sudan, Sudan's government continues to use violence against civilians and rebels in Darfur, and renege on key elements of deployment of the United Nations African Mission in Darfur (UNAMID). In the same month, top PRC ruler Hu Jintao continued to have to urge Sudan, during a visit of its vice president, to fulfill its commitments on the deployment of the peacekeeping force and achieve peaceful conditions in Darfur. As of April 2008, China ranked 12 th in the number of military and police personnel participating in U.N. peacekeeping operations, with 1,981 personnel in total in 12 U.N. missions. In comparison, the United States ranked 43 rd , contributing 300 personnel. The top ten contributing countries to U.N. peacekeeping operations are: Pakistan, Bangladesh, India, Nigeria, Nepal, Ghana, Jordan, Rwanda, Italy, and Uruguay. However, while China increasingly has touted the increasing numbers of its personnel in peacekeeping, China has not highlighted the relatively limited funding it has provided to the U.N. for peacekeeping. The top ten contributors of funding for U.N. peacekeeping are: United States, Japan, Germany, United Kingdom, France, Italy, China, Canada, Spain, and South Korea. While the United States leads with the highest contribution to the U.N. peacekeeping budget, providing 26 percent of assessed contributions, China provides 3 percent of assessed contributions. Even at this low level of contribution for the world's fastest growing economy, a PRC diplomat at the U.N. complained in late 2007 about the "financial burden" for China when its required assessments, including for peacekeeping, increased 42 percent from 2006 to 2007. In 2007, China contributed $190.6 million for U.N. peacekeeping operations, while the United States contributed $1.2 billion. For China, international trade is playing a key role in increasing its influence around the world and in enabling the country to import the technology, resources, food, and consumer goods needed to support its economic growth, to finance the other aspects of its national power, and to maintain the legitimacy of the Communist Party government. The access that China has to foreign markets also has enabled it to attract foreign investment. These foreign-affiliated companies not only play a key role in generating economic growth and employment but in the manufacture of world-class products that account for more than half of China's exports. China is now the third largest trading nation in the world (after the United States and Germany), and its commercial interaction is having a major effect both on trading partners and on China's own economy. International trade differs from diplomacy, foreign aid, military exchanges, and other bilateral interaction that requires explicit government action and funding. Trade is largely self-motivated and self-generated, and the financial rewards are captured largely by private producers and consumers along with the chain of service providers who facilitate the transactions. Governments, however, benefit from the international trade transactions through tariff and tax revenues, economic growth, increased economic efficiency, and a generally higher standard of living for residents. Government policy also influences trade flows either in a negative (e.g., protectionism) or positive (e.g., trade promotion) manner. International trade and financial transactions, moreover, generate spillover effects, that carry over into political and security ties among nations. Trade also can be used as a weapon (as with trade sanctions) or it can be used to create interdependencies that may ameliorate hostile interactions or induce countries to take favorable political actions. Trade additionally creates interest groups within the trading countries who value stability and abhor political disruptions to their commercial transactions. Academic studies have shown that among nations, the greater the interdependence (the greater the costs of exiting from an economic relationship), the greater the probability that the nations will not seek political demands that could lead to conflict. On the other hand, economic interdependence also can be used as leverage to bolster political demands. Also, the greater the extent that internationally oriented coalitions in a country (actors with interest in expanding foreign markets or in importing) have political clout, the more likely that outside, economic incentives or sanctions will be effective in influencing policy in the country in question. In addition, economic studies indicate that the expectation of future commercial gains between nations helps to dampen political tensions and deter the onset of hostilities. Such future gains are enhanced by preferential trading arrangements, such as free trade agreements (FTAs). Membership in preferential trading arrangements tends to inhibit interstate conflict. Economic interaction also increases opportunities for international communication, establishing personal ties between people, and cooperating in diplomatic endeavors. This reduces the chances for miscalculations and misperceptions and increases the chances for direct diplomacy and back-channel communications. On the other hand, economic arrangements may increase competition for domestic industries and invite blowback from sectors hurt by increased trade liberalization. China has taken an aggressive stance toward establishing FTAs with trading partners. It has concluded a highly publicized FTA with the Association of South East Asian Nations that would create a zero-tariff market for China and the six early ASEAN members (Indonesia, Singapore, Thailand, Philippines, Malaysia, and Brunei) by 2010 and for the other four members (Vietnam, Cambodia, Laos, and Burma/Myanmar) by 2015. This included an early harvest program that eliminated tariffs on goods immediately, and in 2007 a further agreement brought services under the FTA. China also has FTAs with Hong Kong, Macao, New Zealand, and Chile. It is negotiating with or having pre-negotiation discussions with about two dozen other countries including Australia, South Korea, Pakistan, Peru, Iceland, Switzerland, the Gulf Countries, and the Southern Africa Customs Union. The United States also has been actively concluding free trade deals. It has FTAs in force or pending implementation with Israel, Canada, Mexico, Jordan, Chile, Singapore, Australia, Morocco, Bahrain, Peru, and Oman, plus FTAs with Panama and South Korea awaiting legislative approval. Negotiations have begun for FTAs with Malaysia, Thailand, and the Southern Africa Customs Union. A difference between China and the United States is that China tends to avoid insisting upon controversial or intrusive provisions in its FTAs, whereas the United States usually attempts to negotiate according to a "gold standard template" for its agreements. This high standard usually requires the partner country to open markets long protected for domestic political purposes or to enact legislation, such as greater protection of intellectual property, that may be politically difficult. As a result, China's FTAs usually engender less resistance and tend to result in considerable good will in the partner country—even if the FTA provides only for partial market opening. FTA negotiations with the United States, on the other hand, often trigger political opposition in the potential FTA partner country. Such political opposition, along with other developments, have hindered FTA talks with Thailand and Malaysia. Negotiations on the Korea-U.S. FTA were concluded despite demonstrations against it in South Korea, but the agreement is awaiting formal approval by each country. Rapid economic growth in China combined with a population (1.3 billion people) that is larger than North America and Europe combined has generated soaring demand for food, energy, and minerals as well as business equipment, and consumer goods typical of a newly industrializing nation. Chinese and other multinational corporations have established global supply chains that both feed the Chinese economic juggernaut and carry its manufactured goods to world markets. In recent years, Beijing has focused particularly on securing stable supplies of petroleum and other raw materials. It has combined its huge purchasing power with funds for overseas direct investments and economic assistance to develop supply lines and long-term contracts to ensure deliveries of needed industrial and consumer inputs. In some cases, these efforts have occurred in countries or with autocratic regimes, such as those in Africa, that are considered anathema to other nations. (These issues are discussed in more detail elsewhere in this memorandum.) This section on international trade provides an overview of China's international trade in goods with comparisons to that of the United States. It shows that both nations are major traders, but that China has surpassed the United States in total exports. Both nations trade the most heavily with the rich, industrialized nations of the world. China, however, also trades with many countries under various U.S. sanctions. In 2007, for example, China imported mineral fuel from the Sudan and Iran while the United States did not. China also has more trade overall with Cuba, North Korea, and Burma/Myanmar. Since the comparisons of this section are between the United States and China, trade between the two countries is not addressed. China's emergence as a world trade power has both positive and negative effects on the United States. In 2007, China was the largest source of U.S. imports ($322 billion), the third largest market for U.S. exports ($65 billion), and the country with which the United States has the largest merchandise trade deficit ($256 billion). Low cost imports from China have helped moderate inflation in the United States but at the same time have applied intense competitive pressures on certain U.S. industries making similar products. As shown in Figure 9 , the total trade (exports plus imports) in merchandise of the United States exceeds that of China. While both have been growing in nominal terms—no adjustment for inflation—the trade of China has been catching up with that of the United States. In 1995, U.S. total trade was $1,390 billion or five times that of China's $281 billion. By 2007, U.S. total trade of $3,116 billion was only 1.4 times that of China's $2,175 billion. China, therefore, has become a major trading nation and a competitive rival to the United States in certain industries. The two countries compete, not only in third country economies but also in each other's home markets. Given the rise of globalized supply chains, however, China's economy also complements that of the United States in certain areas. U.S. companies may rely on China to manufacture products designed, advertised, and distributed by the American-based part of the multinational corporation, or they may manufacture in the United States using Chinese components. On a global scale, China now ranks second only to the European Union (EU, extra-EU trade only) in total merchandise exports and third after the United States and the EU in imports. Japan and Canada hold fourth and fifth places in both exports and imports, respectively. A projection by Global Insight, an econometric consulting firm, indicates that by around 2011, total trade in goods by China may exceed that of the United States. (See Figure 10 .) By 2020, the total trade of China could reach nearly double that of the United States. These econometric projections are based on forecasts of economic growth rates for China of an average of 10.2% from 2006-2010 and about 7.4% for the following decade. For the United States, the projected growth rates are at around 2.5% per year. An implication of these trends in trade is that China's presence in the international marketplace is likely to continue to grow. China's imports, in particular, are projected to continue to increase and to reach the level of its exports at around 2010. At that time, China's trading partners may be relying more on China than on the United States both as a market for exports and source of imports. Figure 11 shows U.S. and Chinese total trade with selected major trading partners in 2007. The United States traded more than did China with its neighboring countries of Canada and Mexico as well as with Brazil and Venezuela. Likewise China traded more with its neighbors Hong Kong, Japan, South Korea, Russia, and Taiwan than did the United States. With the European countries of Germany, the UK, France, and the Netherlands, U.S. total trade exceeded that of China. In 2007, the value of China's exports of merchandise surpassed those of the United States. As shown in Figure 12 , whereas in 1995, U.S. exports at $620 billion were more than four times the $149 billion exports from China, in 2007, China's exports at $1,218 billion exceeded the $1,163 billion from the United States. It should be noted that more than half of the exports of merchandise from China originate from foreign invested enterprises. These are products of multinational corporations based primarily in the United States, Japan, South Korea, and Europe that manufacture products designed and marketed to industrialized societies around the world. As for imports, as shown in Figure 13 , in 2007, U.S. imports at $1.954 billion amounted to more than twice China's total of $956 billion. In 1995, however, the United States imported nearly six times as much as did China. China's imports are rising fast. China's economy is not only consuming more imports, but its demand for imports is being added to that from other industrializing nations of the world for products such as petroleum, copper, and soybeans. This rise in demand is considered to be one cause for the recent rise in world commodity prices. Figure 14 compares U.S. and Chinese exports to selected regions of the world in 2007. Both countries export about the same amount overall, but the United States exported more than did China to Oceania/Australia, the Middle East, and Latin America. China exported more than did the United States to its neighbors in South Asia and Northeast Asia as well as to Africa, Europe, and to the rest of the world. U.S. exports to China and China's exports to the United States are included in the "Rest of the World" category. The importance to both countries of export markets in the industrialized countries in Europe and Northeast Asia is evident. Figure 15 compares exports of merchandise to selected regions of the world by the United States and China over the 1995-2007 period. For the regions selected, total exports are almost the same at about $800 billion. (The U.S. and Chinese exports to the regions exclude those exports to each other.) The recent rapid growth in exports from China is readily apparent from the chart. It also is clear that the industrialized regions, such as Europe and Northeast Asia, dominate in the exports of both countries and that U.S. exports to Latin America, which includes Mexico, are considerably greater than those from China. Although China has been promoting trade with certain resource-rich countries, the Chinese pattern of exports has come to resemble that of the United States, although China's exports to Africa have increased recently. Figure 16 compares imports of merchandise from selected regions of the world for the United States and China in 2007. As indicated above, the United States imports considerably more overall than does China. China, however, imports more than does the United States from its neighbors in Northeast Asia (primarily Japan). In other regions shown, the United States imports far more than does China. Even for Africa, the United States still buys nearly three times as much as does China. A variety of factors determine why countries buy from and sell to each other. The major factors, however, tend to be proximity, price, size and sophistication of the market, political restrictions, and endowment of natural resources. Both China and the United States trade, first, with their neighbors, then seek low cost sources of imports, large markets in which to sell, high-income consumers, and certain exporters with specific minerals or fuels to sell. Trade sanctions also may override market forces and shunt potential trade away from specific countries. As shown in Figure 17 , imports by both the United States and China have been growing rapidly. From the selected regions shown, China imported in 2007 about the same amount as the United States did in 1997. The figure also shows the importance to both countries of the more industrialized economies in Europe and Northeast Asia. It also shows the greater amount of imports by the United States from Latin America. China's imports from Latin America and from the Middle East, however, have been growing rapidly. Figure 18 shows imports of energy in the form of mineral fuel and oil (includes crude oil, other oils, petroleum products, coal and coal products, and electrical energy) by China and the United States in 2007. In that year, the United States imported more than three times as much ($361 billion) as did China ($105 billion), but the major sources of those imports were somewhat different for the two countries. Both rely heavily on imports from Saudi Arabia and other nations of the Middle East as well as from Angola, the Congo, and Russia. China, however, imports energy from Sudan and Iran, two countries from which the United States buys none, and also buys more from Kazakhstan and neighboring countries in Asia. The United States also relies much more heavily on energy imports from Canada, Venezuela, Nigeria, Algeria, Iraq, Brazil, and Columbia. Figure 19 shows imports by the United States and China in 2007 from countries indicated by the U.S. State Department as nations with serious problems with human rights, particularly those whose human rights situations have deteriorated. Some of the countries, such as North Korea (Democratic People's Republic of Korea), Myanmar/Burma, and Cuba are under U.S. trade sanctions. The countries with which China imports significantly more than does the United States include Iran, Sudan, Kazakhstan, North Korea, Cuba, Burma (Myanmar), Kyrgyzstan and Sri Lanka. Those countries from which the United States buys more than does China include Vietnam, Pakistan, Bangladesh, Afghanistan, Syria, and Lebanon. Neither country imports much from Rwanda or Eritrea. Figure 20 shows U.S. and China's exports to selected countries that the U.S. State Department has indicated had serious problems with human rights, particularly those whose human rights situations have deteriorated. In 2007, the United States exported a total of $1,163 billion while China exported a total of $1,218 billion in merchandise. With the exception of Lebanon and Eritrea, China exported more to all the listed countries than did the United States. Particularly significant were Vietnam, Iran, Kazakhstan, Krygyzstan, Pakistan, and Bangladesh. China also exports to North Korea and Burma, as well as to Cuba, countries under various U.S. trade sanctions. Figure 21 shows deliveries of conventional arms to the developing world that have resulted from various arms transfer agreements by the United States and China over the 1999-2006 period. Developing nations are defined to be all countries except the United States, Russia, European nations, Canada, Japan, Australia, and New Zealand. While the United States has delivered roughly ten times the amount as has China in recent years, China is a significant supplier of such weapons. During this period, China ranked number six in the world after the United States, Russia, United Kingdom, France and Germany. China's arms deliveries were about the same level as those from Sweden and more than those from Canada and Israel. Over the 2003 to 2006 period, China's arms deliveries consisted primarily of artillery, armored personnel carriers and armored cars, minor surface combatants, supersonic combat aircraft, and other aircraft. In the Middle East, the countries taking delivery of arms from China during this time were Egypt, Iran, Kuwait, and Algeria. As in international trade, China has been generating media and government attention because of the recent surge in its overseas direct investment activity (foreign direct investments or FDI) in various countries of the world. Beijing has urged its companies to "Go Global" and is facilitating the process. While these investments still are small when compared with those of the United States or other major industrialized nations, the rapid increase in amounts, the purposes, and destinations of these investments has raised concerns in many quarters. As of the end of 2006, more than 5,000 domestic Chinese investment entities had established nearly 10,000 overseas direct invested enterprises in 172 countries (or territories) around the world, according to PRC government figures. The accumulated FDI stock had reached $90.63 billion of which non-finance FDI was $75.02 billion (83%) and $15.61 billion was in finance-related FDI. Of the total, $37.24 billion (41%) was in equity investments, $33.68 billion (37%) in reinvested earnings, and $19.71 billion (22%) in other kinds of investment. In 2006, FDI from China accounted for about 0.8% of global FDI stocks and 2.7% of global FDI outflows (13 th in the world). As of the end of 2006, the cumulative stock of FDI abroad was $2,855.6 billion for the United States as compared with $90.63 billion for China. As for annual outbound FDI flows, in 2006, China reported $21.16 billion while the United States reported $216.6 billion. (See Figure 22 .) Over the 2003-06 period, total overseas direct investment flows from the United States averaged 13 times those of China. China's companies invest outside the country for many of the same reasons that other multinational firms do. The major factors pushing the outbound direct investment are: to bypass trade barriers and to use domestic production capacity because the home market for their products is too small to service markets in order to secure access or to expand market presence; to better compete with foreign-affiliated companies in the Chinese market and to diversify manufacturing facilities; to secure supplies of raw materials and resources; and to circumvent domestic governmental controls (by sending the investment funds to an offshore destination and then bringing it back as a foreign investment). The first four motives are shared to some extent by producers in other countries. The need to "round-trip" investments, however, seems be specific to China. This practice may result in overstatement of both outward and inward FDI in China. One study estimated that 20 to 30% of capital leaving China is "round tripped" back as foreign investment in the domestic economy. Much of this is done through Hong Kong, but tax havens, such as the Cayman Islands and the British Virgin Islands reportedly also are significant. In 2006, these were the top three destinations for Chinese outward FDI with the Cayman Islands and Hong Kong receiving $14.76 billion (84%) out of total outward FDI of $21.16 billion. In China's quest for secure supplies of natural resources, for example, the Chinese investing companies frequently have been dealing with regimes that are considered to be unsavory among Western policy makers. Beijing counters such criticism by stating that its long-held policy is not to interfere in the affairs of others. This policy has enabled China to sometimes "slip under the radar" and invest in places such as Sudan, Burma/Myanmar, and North Korea that are under economic sanctions by the United States and several other Western powers. As for the regional distribution of FDI flows, illustrated in Figure 23 , overseas direct investment from the United States in the regions shown is considerably greater than that from China . This also holds for U.S. and Chinese investments in Europe (not shown). Comparing the magnitude of overseas direct investment for the two countries in the Former Soviet Union (FSU) and South Asia as well as in Africa (less Egypt) shows a similar pattern. In the 2001-2006 period, the United States invested nine times as much in the FSU and South Asia than did China. Over the same period, U.S. overseas direct investment in Latin America and the Caribbean completely dwarfs that by China. In East Asia (excluding China, Hong Kong, and Macau), the United States invested more than 30 times that done by China, although counting China's investments in Hong Kong would raise the Chinese figure by $6.9 billion. These capital flows include reinvested earnings by affiliated companies overseas. Over the 2001-2006 period, for example, U.S. companies and financiers reported direct investments of $70.6 billion in countries of East Asia. However, the companies also reported $82.6 billion in reinvested earnings for the major East Asian countries (Indonesia, Japan, S. Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand) alone. In 2006, the United States reported reinvested earnings for Latin America and other Western Hemisphere countries of $59.1 billion, while total overseas direct investment for that year amounted to $22.3 billion. Since 2002, China has included reinvested earnings in its FDI totals. These have accounted for about a third of Chinese outbound direct investments. China has been a heavy investor in its neighboring economies in East Asia, but much of that FDI has gone into Hong Kong—some for a round trip back to China. Hong Kong, Macau, and the Pacific Islands are excluded in Figure 24 . This figure shows China's outbound FDI in East Asia since 1993. Since 2000, this investment has risen rapidly with a surge in 2005 and a fall back to its previous growth path in 2006. U.S. overseas direct investment in the East Asian region, however, far surpasses that of China. The United States has long invested in countries such as Japan, South Korea, Indonesia, Singapore, and others. In many years, however, much of the investment has been in the form of reinvested earnings from existing U.S. affiliated enterprises in East Asia. Figure 25 compares U.S. and Chinese outbound direct investments in billions of U.S. dollars. Figure 24 above, shows the Chinese outbound FDI in millions of U.S. dollars. As seen in Figure 25 , U.S. investment has been much greater than that of China, but as seen in Figure 24 , the rate of increase for China has been considerable. Note the line in Figure 25 , showing much of U.S. investment is from reinvested earnings and not new equity capital flows. Figure 26 shows China's FDI in Africa, excluding Egypt which is included in the Middle East. As in other regions of the world, China's investments there have boomed in recent years. Chinese activity in Africa has helped trigger world concern over Chinese soft power. As with international trade, Chinese investing companies have been dealing with some regimes that are considered to be unsavory among Western policy makers. In addition, Chinese companies have been investing in extractive industries and possibly locking in supplies of petroleum and other critical raw materials in countries that may be in political turmoil or may be under economic sanctions by other nations. In 2006, China reported direct investment flows of more than a half billion dollars to countries in Africa. When compared with U.S. outbound direct investments in Africa, however, Chinese investment was considerably less than such investments from the United States. As shown in Figure 27 (denominated in billions of dollars), the U.S. outbound FDI in Africa completely dominated that of China during the 1990s but recently investment from China has been rising enough to rival that of the United States. In 2005, the two countries invested about the same amount, while in 2006, the U.S. amount was triple that of China. The direct investment by China in Africa appears to be a part of Beijing's strategy to bolster its energy security. In 2007, China reportedly imported $25 billion worth of crude oil from African countries (primarily Angola, Sudan, and Congo). This amounted to nearly a third of the total $79.7 billion worth of crude oil that China imported that year. China also imported copper, iron ore, and other resources from Africa. Beijing would like to secure this supply through ownership and investments, partly to avoid the price and supply uncertainty associated with buying such commodities on spot markets. These resources are deemed critical for Beijing to maintain the country's economic growth. Figure 28 shows Chinese and U.S. direct investment in the Democratic Republic of the Congo. This is a country in turmoil, so some assets may have been damaged. The cumulative stock figures for China do not seem to reflect the flows accurately. Nevertheless, this is what China reported as its outbound direct investments in the D.R. Congo. Note that while the United States has been reducing its direct investments in the country, China has been increasing its assets there. Neither country, however, has more than $100 million invested there. Figure 29 compares the amounts of U.S. and Chinese direct investments in Sudan. This is another African country undergoing political turmoil. Again, there appear to be inconsistencies between annual flows and cumulative stocks in China's reported data, but the data indicate that while U.S. FDI there has virtually disappeared, China's stock was approaching $500 million. Much of this investment has been in the oil and gas industry. Figure 30 shows various oil and gas concessions in Sudan. The China National Petroleum Corporation has been active in partnering with the Sudanese government's Sudapet and other multinational oil companies in developing Sudan's oil industry, funding the building of upstream resources, constructing industry infrastructure including the export pipeline and downstream facilities. China's concessions include Block No. 1 (Greater Nile Petroleum Operating Company, a consortium that includes the China National Petroleum Corporation); Block No. 3 (Petronas Carigali (Malaysia), Sudapet (Sudan) and China National Petroleum Corporation (CNPC); Block No. 6 (China National Petroleum Corporation); and Block No. 7 (Sudapet and China National Petroleum Corporation). In Latin America, China's outbound direct investment has been relatively small. The data in Figure 31 exclude investments in offshore tax havens (Cayman Islands and the British Virgin Islands) because that investment often is directed elsewhere—even back to China. In 1999, China's FDI to Latin America peaked at $206 million. In 2006, the total was less than $100 million. As seen in Figure 32 (denominated in billions of dollars), Latin America is a major destination for U.S. direct investment that dwarfs that of China. In the Middle East (including Egypt), China has been actively seeking secure supplies of petroleum. As shown in Figures 33 and 34 , even though Chinese investments have been rising in recent years, they still are small compared with those from the United States. China established its major sovereign wealth fund, the China Investment Corporation (CIC) on September 29, 2007—six months after it first announced its intention to create such a fund. Financed with $200 billion in initial capital, the CIC is the sixth largest sovereign wealth fund (SWF) in the world, according to one assessment. China's sovereign wealth fund potentially could provide Beijing with another instrument to project its soft power around the world. Whether or not China's political leaders created the CIC with this in mind is difficult to determine. Similarly, it is uncertain if China's State Council is willing and able to use the CIC as an instrument of soft power. Finally, even if China has no intention to project soft power globally via its sovereign wealth fund, the investments made by CIC may either enhance or diminish China's global image and, thereby, indirectly augment or reduce China' soft power. To date, the CIC is known to have made a number of investments both inside China and around the world. However, because the CIC does not generally release details of its investments, it is difficult to determine when and how it has used its available capital. Some of its known major investments are: May 20, 2007—China Jianyin Investment Company, now a wholly-owned subsidiary of CIC, signs an agreement to purchase just under 10% of U.S. investment company, Blackstone Group, for $3 billion; November 21, 2007—CIC purchases $100 million in shares of Hong Kong's initial public offering (IPO) for the new China Railway Group, a railway construction company operating mainly in China; November 28, 2007—CIC subsidiary, Central Huijin Investment Company (CHIC), invests $20 billion in China Everbright Bank, a Beijing-based joint-equity commercial bank; December 19, 2007—CIC purchases 9.9% of Morgan Stanley, a major U.S. investment company, for $5 billion; December 31, 2007—CHIC signs an agreement to invest $20 billion in China Development Bank, a state-owned bank; and March 24, 2008—CIC purchases more than $100 million in shares of Visa's IPO. There has been much discussion—and little agreement—about the reasons China chose to create a sovereign wealth fund. At the time it announced its plans to create the CIC, Chinese officials focused in an apparent desire to increase the rate of return on its foreign exchange reserve investments. Just prior to the creation of China's sovereign wealth fund, Jesse Wang Jianxi, a member of the CIC's preparatory group, reportedly stated, "The mission for this company [CIC] is purely investment-return driven." On the day CIC formally started operations, its new chairman, Lou Jiwei, said that the SWF would be making long-term investments aimed at maximizing its returns with acceptable levels of risk. However, analysts and observers of China's political economy speculated that there were other forces influencing the State Council's decision to establish a SWF at this time. Some speculated that the decision to create a separate, semi-autonomous corporation to invest a portion of China's growing foreign exchange reserves was the result of power struggles between China's major financial and economic policy institutions, including the People's Bank of China (PBoC), the Ministry of Finance (MoF), and the National Development and Reform Commission (NDRC). Others saw the move as making a logical administrative separation between the state agency responsible for overseeing overseas financial transactions and the institution managing the government's international investment portfolio. It was also postulated that a major reason the State Council was setting up the CIC was part of a plan to alleviate inflationary pressures building up in China. According to this theory, China's rapidly rising stockpile of foreign exchange reserves—which had more than doubled between September 2005 and September 2007—was creating excess liquidity in China's money supply. In order to remove the excess money from circulation, the PBoC was selling bonds to the public—a process often called sterilization. However, the Chinese bonds were offering a higher yield than the PBoC was earning on its investments in U.S. treasury bonds. Some analysts viewed the creation of the CIC as providing the Chinese government an investment avenue by which it could eliminate the financial losses associated with the sterilization of its growing foreign exchange reserves. There were also concerns raised that the Chinese government had created the CIC so it could purchase control over key industries and/or access to important natural resources. Some U.S. commentators raised the alarm that with over $1.4 trillion to invest, China could acquire several major U.S. companies and obtain the power to unduly influence the U.S. economy. Others speculated that China may use the CIC to obtain market power over key natural resources (petroleum, natural gas, iron ore, etc.) or access to sensitive technology by purchasing a seat on a corporation's board of directors. China responded to these concerns by providing reassuring statements about the types of investments the CIC would not be making. Chinese officials reportedly told German Chancellor Angela Merkel during her visit to China in August 2007 that the future CIC "had no intention of buying strategic stakes in big western companies." CIC Chairman Lou also indicated that the CIC will not invest in infrastructure. China's Vice Minister of Finance Li Yong dismissed "rumors that China would try to buy out European and American companies in large numbers." Vice Minister Li also stated that the CIC would not buy into overseas airlines, telecommunications or oil companies. An unnamed contact at CIC was cited as saying that the SWF also will not make investments in foreign technology companies as a means of obtaining advanced technology, pointing out, "That's political, and we don't do that." Even if the State Council did not originally establish the CIC to be used as an instrument of "soft power," once the SWF was in operation, the State Council could decide to use it as a means of advancing China's foreign policy objectives. One possible indication that Chinese officials recognized the "soft power" potential of the CIC was their pattern of pointing out that the investments of SWFs in ailing financial firms—such as CIC's investment in Morgan Stanley—were providing market stability at a time when there was growing concern about a global financial crisis. There is also uncertainty about the ability of the State Council to influence the CIC's investment decisions if it should decide it wants to use the SWF as an instrument of soft power. When the CIC was established, much was made of its autonomy from government influence in its investment decisions. In addition, the CIC has reportedly begun vetting private investment firms around the world as possible contracted "fund managers"for the CIC. If the CIC does subdivide its portfolio among a group of independent fund managers, it should significantly reduce the State Council's ability to influence the CIC and use the SWF as an instrument of soft power. Ironically, even if the Chinese government has no intention of using the CIC as an instrument of soft power, the investment activities of China's SWF may either enhance or detract from China's global image. China may already have benefitted from CIC's investment in Morgan Stanley among people who see the SWF's action as providing needed market stability in a time of financial uncertainty. However, in a different light, CIC's purchase of Morgan Stanley shares at a time when the firm was struggling could also be viewed as opportunistic and harm China's global image. Both interpretations have been presented by outside observers. In the same way, different analysts had different interpretations of CIC Chairman Lou's statement comparing investment opportunities to a farmer shooting "big, fat rabbits." Some commentators understood the comment to indicate CIC's willingness to jump on good investment opportunities when they occur. Others heard a veiled threat in the statement, likening U.S. financial companies to game to be hunted. Lou himself seemed to recognize the ambiguity of his initial statement, adding, "Some people may say we [CIC] were shot by Morgan Stanley. But who knows?" Since June 2008, the CIC has not made any major overseas investments. The CIC allegedly began accepting applications from investment firms to serve as contracted fund managers in April 2008, but there are no confirmed cases of companies being hired to manage portions of CIC's portfolio. Until the CIC once again becomes active in international markets, it is difficult to assess its potential effects on China's overall soft power. Many observers cast Southeast Asia as a crucial arena of Sino-U.S. competition. The United States has deep security, trade and investment relations with the region, and many believe that Southeast Asian nations deeply value the longstanding U.S. "security umbrella" against a potentially expansive China. Southeast Asia's proximity to China historically has cut two ways—creating cultural and regional affinities, but also breeding an existential Southeast Asian fear of potential PRC domination. But the PRC has spent over a decade actively courting Southeast Asian states with new diplomatic initiatives, trade and investment, and foreign aid. In fact, both China and the United States have strong ties to Southeast Asia, and both draw upon considerable strengths in projecting soft power in the region. Despite widespread improvements in public perceptions of China and parallel declines in perceptions of the United States, the United States draws upon considerable security and diplomatic assets in Southeast Asia, and neither side can really claim to be the dominant power in the region. Some analysts argue that China seeks to create a sphere of influence in Southeast Asia and to erode U.S. dominance, while others contend that the PRC has not the will, capability, nor acquiescence of countries in the region to carry out such a goal, at least in the short- to medium-term. According to many analysts, Southeast Asian countries generally welcome PRC aid, investment, and friendship, but do not want China to dominate the region militarily. Many citizens in the region support or accept the U.S. military presence, but feel that the United States has often neglected to engage them diplomatically or hear their concerns. This void has been filled in part by China's growing soft power. China's growing influence derives mainly from its role as a market for the region's natural resources, the economic benefits that it bestows through aid (mostly loans for infrastructure projects) and investment, gestures of friendship expressed through its diplomacy and foreign assistance, the PRC's standing as an economic development model, and economic and cultural integration stemming from proximity and migration. The United States maintains its influence based upon its military presence, foreign direct investment, its market for the region's manufactured goods, military and development assistance, and educational opportunities. Many Southeast Asians continue to view the United States as a model of democracy and free market economics, aspire to its middle class lifestyle, and are attracted to its popular culture. Other research emphasizes the overarching principles that inform China's soft power activities and make it a powerful alternative to U.S. soft power. The PRC's official embrace of Southeast Asia—what some refer to as its "charm offensive"—has nurtured China's rising influence. By contrast, perceptions of U.S. aloofness and narrow security interests in the region and of Washington's demanding conditions for diplomatic and financial support have contributed to Southeast Asian disillusionment with the United States. In the past decade, China has cultivated goodwill in Southeast Asia by refraining from devaluing its currency and by contributing to the International Monetary Fund "support package" to Thailand during the 1997-98 Asian Financial Crisis; downplaying territorial disputes and agreeing to strive for peaceful resolutions to such conflicts; developing a very active diplomatic agenda; promoting free trade agreements; and providing economic assistance without conditions. Overseas Chinese communities have long played important parts in the economies, societies, and cultures of Southeast Asian states, although their relations with China, the home of their ancestors, in many instances have been ambivalent. Ethnic Chinese, who for over two centuries have migrated to Southeast Asia from southern China with little apparent acknowledgment from the Chinese government, have long dominated the economies of the region. Recent Chinese immigrants to Southeast Asia have both exploited contacts with older Chinese communities and engendered resentment within these communities as well as among indigenous peoples. Many overseas Chinese in the region have downplayed their ties to China in order to help avoid ethnic discrimination against them or to improve their economic, social, and political opportunities in their adopted countries; however, as China has gained international stature, some of the more economically and politically influential overseas Chinese have proudly proclaimed their heritage and links to China. Estimates of ethnic Chinese living in Southeast Asia range from 30 million to 40 million, or over 6% of the region's population. Although their degree of assimilation, as well as discrimination against them, has varied by country, their long-term presence has brought about a local familiarity with Chinese culture. For China, despite its successes, Southeast Asia presents an uneven and challenging landscape for soft power projection. The United States maintains alliances with the Philippines and Thailand, has a strategic agreement with Singapore, is developing military-to-military relations with Indonesia, and cooperates with Malaysia on counter-terrorism efforts. These and other countries in the region, or elements within them, continue to feel ambivalent towards China due to ongoing territorial disputes, China's past and present support for repressive regimes, and tensions between indigenous peoples and the region's ethnic Chinese communities. The United States remains ASEAN's 2 nd largest trading partner (China ranks 5 th ) and its 4 th largest source of foreign direct investment (China ranks 10 th ), although China is rapidly catching up to the United States in trade. Washington also was a major contributor to countries hit by the 2004 Indian Ocean tsunami, which affected several Southeast Asian countries. The Bush Administration pledged $305 million to affected countries compared to China's $63 million and Taiwan's $50 million. The U.S. emergency response helped to improve the image of the United States in the region, particularly in Indonesia, somewhat reversing a dramatic rise in negative public perceptions of the United States after the U.S.-led invasion of Iraq in 2003. An analysis of China's bilateral relations in Southeast Asia leads to a regional division between mainland Southeast Asian states, particularly Burma, Cambodia, and Laos, where China is more influential, and maritime Southeast Asian states (Indonesia, the Philippines, and Singapore), where Beijing wields less power. Thailand, a major non-NATO ally of the United States, appears to be more comfortable in its relationship with China than other regional states. China's historical conflicts with Vietnam, including a brief border war in 1979, and Vietnam's close economic relations with Taiwan have placed limits on rapprochement between the two neighboring countries. In the past decade, the Philippines, a major non-NATO ally, has pursued stable and friendly political and economic relations with China, while relying upon the United States and the Association of Southeast Asian Nations (ASEAN) as security and diplomatic counterweights to the PRC. Muslim states in the region (Indonesia, Malaysia) look not so much to China as they do to the rest of the Muslim world for models outside their national settings. Given that Muslims represent approximately half the population of Southeast Asia, and are concentrated in maritime Southeast Asia, this should place limits on the extent of Chinese influence there. Singapore, arguably the most strategically vulnerable and trade dependent state in the region, has promoted a balanced approach to the involvement of great powers in its region. U.S. cultural and educational exchange programs in region may be considered more established and varied than China's, but their impact is less visible than China's soft power activities. In contrast to PRC government-sponsored cultural and educational exchange programs, such as the Confucius Institutes, U.S. government activities in this area place more emphasis on exchanging or transferring ideas. The Department of State's Bureau of Educational and Cultural Exchange sponsors a wide range of programs in Southeast Asia that focus on academic research, facilitating an understanding of American values and culture, and English language education. In 2004-05, the United States awarded Fulbright scholarships to 280 students, scholars, and teachers in Southeast Asia, out of a total of 579 grants for the Asia-Pacific region. Among the countries with the largest numbers of recipients were the Philippines and Indonesia (71 and 69 Fulbright grants, respectively). The Department of State's Citizen Exchange Program for Professionals currently sponsors exchanges of experts on many topics, including business (United States and Vietnam); responsible citizen participation in politics (United States and the Philippines); inter-religious dialogue (United States and Thailand); journalism and English education (United States and Indonesia). Study of the U.S. Institutes bring foreign student leaders to U.S. college campuses to study and experience the principles and practices of democracy, freedom of expression, pluralism and tolerance, and volunteerism. Participating countries include Burma, Cambodia, Laos, and Vietnam. The Department of State has two Regional English Language Officers (RELOs) in Southeast Asia, posted in Bangkok and Jakarta. RELO programs include teacher training and conferences and workshops on teaching methodologies. In 2006, the U.S. government granted over 385,000 J-1 non-immigrant visas for exchange visitors (a 12% increase over 2005), of which 16,199 went to Southeast Asian applicants, the regional countries with the largest numbers were Thailand (9,648) followed by the Philippines (2,088). The United States, with its first-rate universities, continues to attract far more foreign students than China (600,000 in 2007), including many from the PRC. Of the ten top countries sending students to the United States, six are in Asia (India, China, South Korea, Japan, Taiwan, and Thailand), accounting for 49% of the U.S. foreign student population. Thailand, at 2% of the foreign student population, is the only Southeast Asian country among the top ten. Indian, PRC, and South Korean students constitute 14% 11%, and 10% of U.S. foreign students, respectively. There may be more Southeast Asian students enrolled in China than in the United States, however. In 2007, 195,000 foreign students reportedly were studying in China, the vast majority (72%) from Asia (South Korea, Japan, and Southeast Asia). South Korea, Japan, the United States, Vietnam, and Thailand are the five largest sources of students. The remaining foreign students come from Europe, the Americas, Africa, and Oceania (13%, 10%, 3%, and 1% of foreign students, respectively), according to recent PRC statistics. Data from 2004 show that about 15% of Asian foreign students in China were from Southeast Asia. The PRC government awarded scholarships to over 10,000 foreign students in 2007, and plans to expand its scholarship program by 3,000 additional awards each year between 2008 and 2010. China plans to enroll 300,000 foreign students by 2020. China has been an increasingly active player in Asian multilateral organizations—some argue that China now participates in them "more fully than Washington." Principal regional groupings that include Southeast Asian states are ASEAN, ASEAN Plus Three—ASEAN, China, Japan, and South Korea—and the East Asia Summit (EAS), which includes China, Japan, South Korea, India, Australia, and New Zealand, as well as the ASEAN states. Some analysts argue that the EAS, which excludes the United States, may increasingly rival the Asia Pacific Economic Cooperation (APEC) group, in which the United States plays a leading role, as the preeminent multilateral organization in East Asia. Others emphasize the diverse interests and lack of unity within the EAS, efforts by some members to counterbalance China's influence, and China's lack of leadership in the grouping. Since September 11 th , 2001, the United States government has become somewhat more diplomatically engaged in the region and has increased foreign aid funding, but with a focus largely limited to counter-terrorism. The perception of U.S. inattentiveness to the region has been reinforced by recent U.S. decisions. In 2007, Secretary of State Condoleezza Rice bypassed the annual ASEAN Regional Forum (ARF) gathering, as she had in 2005, and instead traveled to the Middle East, while President Bush postponed the U.S.-ASEAN summit, set for Singapore in September, and left the APEC summit a day early reportedly because of commitments related to the Iraq war, renewing "concerns about the U.S. commitment to the region." In an apparent effort to reverse this trend, Senate Resolution 110 ( S.Res. 110 ), introduced in March 2007, called for the appointment of an ambassador to ASEAN "in recognition of the growing importance of ASEAN as an institution and belief that the United States should increase its engagement and cooperation with the region." In April 2008, the Senate confirmed Deputy Assistant Secretary of State for East Asia and Pacific Affairs Scot Marciel as Ambassador to ASEAN. China entered into Dialogue relations with ASEAN in 1991 and obtained full ASEAN Dialogue Partner status in 1996. In 2000, Chinese officials suggested the idea of a China-ASEAN FTA. In November 2002, ASEAN and China signed the Framework Agreement on Comprehensive Economic Co-operation to create an ASEAN-China Free Trade Area (ACFTA) within 10 years. In November 2004, the two sides signed the Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Co-operation between the Association of Southeast Asian Nations and the People ' s Republic of China, which included a schedule of tariff reductions and eventual elimination for most tariff lines (beginning in 2005) between the two sides. ASEAN—China cooperation covers a variety of areas, including agriculture, information and communication technology, human resource development, two-way investment, Mekong Basin development, transportation, energy, culture, tourism and public health." In January 2007, China and ASEAN signed the Agreement on Trade in Services of China-ASEAN Free Trade Area which is intended to liberalize rules on trade in services. In October 2002, the Bush Administration launched the Enterprise for ASEAN Initiative (EAI), with a stated goal of seeking closer economic ties with ASEAN countries, including the possibility of bilateral free trade agreements with countries that are committed to economic reforms and openness. A potential FTA partner would need to be a member of the World Trade Organization (WTO) and have concluded a Trade and Investment Framework Agreement (TIFA) with the United States. The United States has signed TIFA agreements with Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It has an FTA with Singapore (effective 2004) and has held negotiations with Malaysia and Thailand on reaching FTAs, although these talks have failed to reach agreements. On August 25, 2007 USTR Susan Schwab signed a TIFA agreement with ASEAN. In September 2007, President Bush met with seven ASEAN leaders attending the APEC summit in Australia. In the past several years, China, aided by its proximity, has pursued a very active diplomatic agenda in the region, reportedly sending and receiving many more—twice as many according to some experts—official, high level delegations than the United States to some countries. These efforts may have a particularly large impact on smaller, poorer states in Southeast Asia, whose own delegations also have received lavish receptions in Beijing. In the past year, for example, China's Foreign Minister as well as Chinese Communist Party delegations visited both Cambodia and Laos, while the Cambodian National Assembly President, Lao Prime Minister, and Lao Deputy Prime Minister visited Beijing. When all delegations are counted (national and provincial), those of the PRC reportedly far surpass those of the United States. These meetings may generate positive impressions that far exceed their costs. Many reports of Chinese foreign assistance to Southeast Asia refer to loans, infrastructure projects, and natural resource development rather than development aid. By some accounts, China has become one of the largest providers of economic assistance in the region; however, it is not a major provider of official development assistance (ODA). According to one study that compiled a database of PRC foreign aid projects, China pledged $12.6 billion in economic assistance to Southeast Asian countries in 2002-07. Of this amount, 59% was promised for infrastructure and 38% for investment in natural resources. The remaining 3% was divided among humanitarian assistance, military assistance, high profile "gifts" such as cultural centers and sports facilities. According to data of official development assistance among member countries of the Organization for Economic Cooperation and Development (OECD), of which China is not a member, Japan is the largest bilateral aid donor in the region. Many reports of PRC aid in the region focus on Burma, Cambodia, and Laos, the poorest countries in Southeast Asia and ones that have had relatively unfriendly relations with the United States. China is considered the "primary supplier of economic and military assistance" to these countries and provides an "implicit security guarantee." In recent years, China has financed many infrastructure and energy-related projects in Burma, Cambodia, and Laos that in turn rely upon Chinese equipment, technical expertise, and labor. Often these projects may help China access raw materials and oil. There are some indications that Chinese aid in this part of the region is diversifying, including support to counter-trafficking in persons and counter-narcotics efforts, programs involving Chinese youth volunteers (Laos), elections (Cambodia), and historical preservation (Cambodia). According to some reports, China has been the largest source of economic assistance to Burma, including $1.4 billion to $2 billion in weaponry to the ruling junta since 1988 and pledges of nearly $5 billion in loans, plants and equipment, investment in mineral exploration, hydro power and oil and gas production, and agricultural projects. China has helped the Burmese to build roads, railroads, airfields, and ports. Following the imposition of U.S. trade sanctions against Burma in 2003, China reportedly announced a loan to Burma of $200 million. In 2006, China promised another $200 million loan, although some experts say that such funds were never actually provided. China may be one of the largest sources of aid to Cambodia, including loans and support for public works, infrastructure, and hydro-power projects in the kingdom. In 2007, foreign donors reportedly pledged a total of $689 million in assistance to Cambodia, including $91.5 million from China. For the 2007-2009 period, China pledged $236 million in unspecified aid compared to Japan's $337 million and the EU's $215 million. China, the second largest aid donor by some estimates, has provided Laos with critical grants, low-interest loans, high profile development projects, technical assistance, and foreign investment. Development and other forms of aid include transportation infrastructure, hydro power projects worth $178 million, and youth volunteers engaged in medical and educational programs, and agricultural training. In 2006, Chinese President Hu Jintao visited Vientiane and offered $45 million in economic and technical cooperation and debt forgiveness. According to some reports, China may be the second largest source of foreign aid to Vietnam. In 2005, the PRC reportedly offered nearly $200 million in grants and loans. Beijing has provided loans to Vietnam for railways, hydro-power development, and ship building facilities. In 2006, Beijing reportedly pressured the Vietnamese government to exclude Taiwan from the APEC summit in Hanoi. After Hanoi refused to do so, Beijing temporarily halted aid to Vietnam. The PRC provides roughly four times as much foreign aid to the Philippines and twice as much to Indonesia compared to the United States, according to some experts. The PRC has become a major source of financing for development projects in the Philippines. In January 2007, PRC Premier Wen Jiabao and Philippines President Gloria Macapagal-Arroyo signed 20 economic agreements, including a contract for a Chinese company to build and renovate railroads, investment in agriculture, and loans for rural development. China reportedly also has begun to provide non-lethal military assistance to the Philippines, including training and equipment. In 2005, PRC President Hu Jintao and Indonesian President Susilo Bambang Yudhoyono signed a declaration proclaiming a "strategic partnership" that was accompanied by a promise of preferential loans worth $300 million. According to some analysts, despite much greater military assistance provided by the United States in terms of cost and substance, the United States may not have been sufficiently attentive to the security needs of its friends and allies in Southeast Asia, as perceived by regional leaders. In some cases, U.S. long-term strategic objectives may conflict with the goals of helping to foster democracy. After the United States government imposed sanctions on military and security-related assistance to Thailand worth approximately $29 million following the September 2006 military coup, China reportedly offered $49 million to Thailand in military aid and training. Many observers fear that China's unconditional and non-transparent aid efforts and growing economic integration in Southeast Asia may negate efforts by western nations to promote political and economic reform, reduce corruption, and protect the environment in mainland Southeast Asia. Others counter that, on balance, Chinese aid promotes development in Southeast Asia and that it does not exclude other countries' aid programs and objectives. Furthermore, in many cases, China reportedly takes on aid projects that other donor countries have avoided due to difficulty or hardship. U.S. aid to Southeast Asia has grown dramatically since 2001, largely reflecting increased aid to Indonesia and the Philippines as part of the Bush Administration's regional counter-terrorism goals. The United States is the second largest provider of ODA, after Japan, to Cambodia and the Philippines. Aid to Southeast Asia constitutes 85% of U.S. assistance to East Asia and the Pacific ($452 million out of $533 million in FY2007). Among program areas, U.S. spending on infrastructure assistance—a major form of Chinese aid—represented only 5% of total funding in the EAP region compared to peace and security programs (20%). The United States Peace Corps operates in Cambodia, the Philippines, and Thailand. See Table 4 . Conditions on aid, which many U.S. policy makers consider to be an integral part of U.S. foreign aid goals, are viewed by some analysts as sacrificing other foreign policy objectives and creating a window for Chinese engagement around the world. Unlike China's "unconditional" aid approach, the United States government often imposes criteria related to democracy and human rights on non-humanitarian aid. Despite widespread support for this approach, some policy analysts have argued that it is ineffectual at best and counterproductive at worst, denying aid resources for development and security objectives and making China an attractive aid provider. In the past several years, restrictions or sanctions have been imposed or considered toward most Southeast Asian countries, including Burma, Cambodia, Indonesia, Thailand, and Vietnam. The United States provides no direct aid to the Burmese government in response to the Burmese military junta's repression of the National League for Democracy and harassment of its leader, Aung San Suu Kyi and rejection of the voters' mandate in 1990. In 2003, the 108 th Congress passed the Burmese Freedom and Democracy Act of 2003 ( P.L. 108-61 ), which bans imports from Burma unless democracy is restored. Additional foreign aid sanctions against Burma include opposition to international bank loans to Burma and a ban on debt restructuring assistance. In addition, since 2001, when the Office to Monitor and Combat Trafficking in Persons was established by the U.S. State Department, Burma has received a "Tier 3" assessment annually by the Office for failing to make significant efforts to bring itself into compliance with the minimum standards for the elimination of trafficking in persons. The Tier 3 ranking could serve as a basis for withholding non-humanitarian aid. In February 2007, the United States government lifted a decade-long ban on direct bilateral aid to Cambodia (the last major aid donor to drop restrictions). The U.S. government had imposed restrictions on foreign assistance to Cambodia following Prime Minister Hun Sen's unlawful seizure of power in 1997 and in response to other abuses of power under his rule. U.S. assistance was permitted only to Cambodian and foreign NGOs and to local governments, with some exceptions. U.S. assistance to Laos ($4.8 million in FY2007), remains limited largely due to human rights concerns and strained relations between the two countries. Between 1993 and 2005, Indonesia faced sanctions on military assistance largely due to U.S. congressional concerns about human rights violations, particularly those committed by Indonesian military forces (TNI). In February 2005, Secretary of State Condoleezza Rice determined that the Indonesian government and armed forces (TNI) had satisfied legislative conditions and certified the resumption of full IMET for Indonesia. In November 2005, the Secretary of State waived restrictions on FMF to Indonesia on national security grounds. In response to the September 19, 2006, military coup in Thailand, the Bush Administration suspended military and peacekeeping assistance pursuant to Section 508 of the Foreign Operations Appropriations Act, which provides that such funds shall not be made available to any country whose duly elected head of government was deposed by military coup. The U.S. government also suspended funding for counter-terrorism assistance provided under Section 1206 of the National Defense Authorization Act for FY2006. In February 2008, the United States resumed security and military assistance to Thailand following the holding of democratic elections. The proposed Vietnam Human Rights Act of 2007 ( H.R. 3096 ) would prohibit U.S. non-humanitarian assistance to the government of Vietnam for FY2008 in excess of FY2007 levels unless the President certifies to Congress that the government of Vietnam has made substantial progress respecting: (1) the release of political and religious prisoners; (2) the right of religious freedom, including the return of church properties; (3) the rights of ethnic minorities; and (4) access to U.S. refugee programs by Vietnamese nationals. China has made some gains relative to the United States in the areas of cultural and political soft power in some Southeast Asian countries. A 2007 Pew Research poll found that only 29% of Indonesians and 27% of Malaysians had a favorable view of the United States as opposed to 83% of Malaysians and 65% of Indonesians who had favorable views of China. The rating for Indonesia is up slightly from a favorable view of only 15% in 2003 but remains well below the 75% favorable view of the United States in 2000. One striking exception to this trend is the Philippines, which ranks first in the world in trusting the United States to act responsibly in global affairs, according to a 2007 survey. In this survey, 64% of Indonesians and 56% of Thais did not trust the United States to act responsibly. Despite these negative views toward the United States, another poll suggests that the United States is still viewed as the predominant soft power influence in Asia. Although Southeast Asian views of the United States have reached new lows in the past decade, tensions with a potentially arrogant or uncompromising China are never far from the surface, and historical memories add to recurring wariness. In 2007, for example, as concerns rose throughout many parts of the world regarding the safety of Chinese products, officials in Indonesia, Malaysia, and the Philippines reportedly complained that the PRC government was pressuring them not to raise the issue, even when such imported goods were found to be dangerous. When they banned the sale of unsafe items from China, the PRC government reportedly threatened and/or imposed retaliatory actions, causing consternation among many Southeast Asian leaders. Some of the main beneficiaries of China's largesse in Southeast Asia remain wary of PRC power or seek to dampen its growing influence in the region. For example, many Cambodians, mindful of China's former support of the Khmer Rouge, reportedly feel resentful towards China. Vietnamese leaders reportedly began to place greater importance on relations with the United States in 2003, after concluding that China's ties to neighboring countries were growing too deep. Vietnamese citizens held anti-China demonstrations, likely with the tacit acceptance, if not encouragement, of the Vietnamese government, in Hanoi and Ho Chi Minh City in December 2007, to protest Chinese military exercises simulating invasions of the disputed Spratly Islands in the South China Sea and the creation of a new PRC administrative unit that would include the islands. Compared to other regions, China's main interests in Central Asia, which is situated along its western border, involve not only trade, but also considerations related to both external and internal security. The region, encompassing the former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, remains under the strong Russian strategic and economic influence. Since the end of the Cold War but especially since 2001, the United States has been actively engaged in the region. As "front-line" states in the war on terrorism, Central Asian states have hosted U.S. and NATO military personnel and have received substantial U.S. foreign assistance. Despite these constraints on Chinese influence, Beijing has become a major diplomatic and economic presence in Central Asia. The United States wields somewhat more influence than does China in a few non-military cultural, diplomatic, and economic areas of "soft power" in the region. These include the amount of foreign assistance and perhaps the number of mid- and lower-level official visits and presence in the regional states. In other areas, China has more regional influence than the United States, including in trade and the number of its citizens visiting the region. The Chinese-led Shanghai Cooperation Organization (SCO)—which includes Russia and all of the Central Asian states except Turkmenistan and pursues economic and security cooperation—has no equivalent U.S. counterpart. However, the United States wields influence through its membership in the Organization for Security and Cooperation in Europe (OSCE) and NATO, which are active in the region. Cross-border migration between China and Central Asia has facilitated stronger economic ties but also has contributed to more complicated diplomatic relations. There reportedly are over one million ethnic Kazakhs in China, with most residing in the Xinjiang Uighur Autonomous Region. Several tens of thousands have moved to Kazakhstan in recent years. These ethnic Kazakhs bring Chinese language skills and cultural awareness that have facilitated Kazakhstan-Chinese ties, particularly in trade. However, some ethnic Kazakh migrants also bring critical memories of perceived prejudice against Muslims in Xinjiang, which may negatively influence the views of other Kazakhs and conceivably affect Kazakhstan-Chinese relations. About 9 million ethnic Uighurs (a Turkic people) reside in China, mostly in Xinjiang, 300,000 reside in Kazakhstan, and 50,000 in Kyrgyzstan. In the early 1990s, Kazakhstan tolerated advocacy by its resident ethnic Uighurs for greater respect for human rights and autonomy for their cohorts in Xinjiang. In the later 1990s, however, Kazakhstan cracked down on such activism at China's behest. Nonetheless, Kazakhstan allegedly has remained the base for clandestine Uighur groups advocating independence for "East Turkestan," or otherwise continuing to criticize China, which may influence the views of other Kazakhs. In Kyrgyzstan, ethnic Uighurs were implicated in the murder of a Chinese diplomat in June 2002 and the bombing of a bus in March 2003 that killed nineteen Chinese visitors, leading Kyrgyzstan to ban the Eastern Turkestan Islamic Party and the Eastern Turkistan Liberation Organization. Estimates of ethnic Chinese migrants in Central Asia are unreliable, but some observers have speculated that up to a few hundred thousand legal and illegal Chinese migrants are in the region either on a temporary or indefinite basis. The number of U.S. citizens residing in Central Asia is far less. There have been complaints by some officials in Central Asian states about increasing numbers of illegal migrants from China. The Kyrgyz State Committee on Migration and Employment reported in early 2008 that there were about 8,000 Chinese illegal immigrants in Kyrgyzstan. In Kazakhstan, President Nazarbayev raised concerns in 2006 that Chinese energy companies operating in the country were employing illegal Chinese workers, and Kazakh legislators alleged that these illegal immigrants numbered about 100,000 by late 2007. Kazakh analyst Elena Sadovskaya reported that, in addition, about 40,000 legal migrants were ethnic Kazakhs who had moved from China and that about 5,000 were Chinese citizens who were legitimately in the country under approved travel documents. An opinion poll she carried out indicated that while some Kazakhs perceived that Chinese migration was rising and was harmful to the country, most Kazakhs had "indifferent" attitudes toward Chinese migrants. Kyrgyzstan and Tajikistan are not that attractive to potential Chinese migrants, according to some observers, because their under-performing economies have contributed to the exodus of many of their workers to Kazakhstan, Russia, and elsewhere. For FY2006, the latest year available, 14 Cabinet-level departments and 49 independent agencies/commissions reported 243 international exchange and training programs to the Interagency Working Group on U.S. Government-Sponsored International Exchanges and Training. These include such programs as the Peace Corps Volunteer Service, International Military Education and Training, Edmund Muskie Graduate Fellowships, various Fulbright programs, Eurasia/South Asia Teaching Excellence and Achievement Program, International Visitor Leadership Program, Hubert Humphrey Fellowships, and Benjamin Gilman Program, among others. Table 5 provides statistics on such training and exchanges involving Central Asia. The Central Asian governments also are facilitating study abroad. In 1993, Kazakhstan launched the "Bolashak" (Future) program of scholarships for college study aboard. Kazakh President Nursultan Nazarbayev in 2005 announced the enlargement of the program to up to 3,000 annual scholarships, and he reportedly urged that students attend U.S. universities to receive not only the latest professional knowledge, but also to be imbued with democratic and civic norms. The United States has received the largest cumulative number of students, amounting to over one thousand. One U.S. government program with some slight similarities to the activities of China's Confucius Institutes (language and cultural offices established worldwide; see below) is the Peace Corps, which sends volunteers to Kazakhstan, Kyrgyzstan, and Turkmenistan. (See Table 5 ) Estimated budgeted funding for the Peace Corps was $6.9 million for the Central Asian countries in FY2008. About $7.1 million was requested for FY2009. Many Peace Corps volunteers are engaged in English-language training in the Central Asian states, with most working in rural secondary schools, which may somewhat parallel the efforts of the Confucius Institutes. However, Peace Corps volunteers also work with governments and NGOs on HIV/AIDS and other healthcare, youth, environment, women, and economic development issues. Chinese educational and cultural exchanges have been stepped up, both bilaterally and under the aegis of the Shanghai Cooperation Organization. Confucius Institutes have been set up and funded in Kazakhstan (two institutes), Kyrgyzstan, and Uzbekistan to foster Chinese language and culture. The pilot program for the worldwide network of institutes was launched in 2004 in Uzbekistan. The Confucius Institutes usually are affiliated with higher educational institutions in their host countries and provide materials for students and training for teachers in secondary schools. According to various reports, they receive yearly funding of up to $100,000 or more, and at least some staffing from Chinese volunteer language teachers sponsored by the Office of the Chinese Language Council International (abbreviated as Hanban). According to one report, Hanban expects the institutes to become self-funding after three years, which some observers suggest may be optimistic. Russia and China seemed to compete at the August 2007 SCO summit in offering educational exchanges, with China offering to boost the number of exchanges and President Putin perhaps countering by calling for setting up an SCO University. At the summit, Chinese President Hu Jintao called for bolstering scientific, cultural, educational, sports, and healthcare exchanges and cooperation, and announced that China would offer 20 college scholarships per year to SCO members. He called on SCO members to start short-term student exchanges and announced that China would invite 50 college and high school students. In September 2007, Turkmen President Berdimuhamedow praised China for greatly boosting the number of Turkmen students admitted to study at leading Chinese universities. China's ability to host foreign students in its higher educational institutions is limited, in part because the schools are an "elite" educational system able to accommodate only a small fraction of the college-age cohort. Many more Chinese study abroad than foreigners study in China. The Central Asian states are not among the top ten countries sending students to China. Many more Chinese than American citizens travel to the Central Asian countries, many to engage in small- to medium-scale trade (the so-called "shuttle" or "suitcase" traders). In early 2008, the Kyrgyz Interior (police) Ministry reported that over 49,000 foreigners from 110 countries had visited Kyrgyzstan in 2007, and that the greatest number, over 12%, were from China. In Kazakhstan, the State Statistics Agency reported in 2005 that the United States was among the top seven countries of origin for inbound tourists (over 19,500), although Russia remained first with 1.7 million inbound tourists, followed by China with over 76,800. Russia was the top country of destination for citizens of Kazakhstan (with 1.65 million visitors), followed by China (nearly 85,000). The United States was not among the top eight destinations. Unlike Chinese diplomacy, which adheres to the principle that the domestic affairs of a country should not be subject to international interference, U.S. diplomacy advocates democratization and respect for human rights in the Central Asian states. Kazakh and Uzbek government officials have raised concerns about U.S. funding for NGOs in their countries that advocate democratization and respect for human rights, and both countries have moved in recent years to restrict or close down the activities of many of these NGOs. All of the governments of the region have objected to their treatment in the State Department's annual human rights reports. According to some reports, the U.S. Administration's protests over the Uzbek government's crackdown in the town of Andijon in May 2005, which resulted in many civilian deaths, contributed to the Uzbek decision to abrogate U.S. military access to the Karshi-Khanabad (K2) base two months later. Uzbekistan also cut back its diplomatic ties with the United States. Russia and China defended the "counter-terrorism" actions of the Uzbek government, and Uzbekistan subsequently enhanced its diplomatic ties with both countries. Before the terrorist attacks of September 11, 2001, the highest level U.S. visit to Central Asia was by then-Vice President Al Gore to Kyrgyzstan and Kazakhstan in December 1993. In the latter country, he signed an agreement on the provision of Cooperative Threat Reduction aid for de-nuclearization efforts. After the terrorist attacks of September 11, 2001, several high-level U.S. officials visited the region to secure transit and basing access to support operations in Afghanistan. Among high-level visits, former Secretary of State Colin Powell visited Kazakhstan and Uzbekistan in November 2001, just after a military basing agreement had been concluded with Uzbekistan. Former Defense Secretary Donald Rumsfeld visited Kyrgyzstan in April 2002 (just after a U.S. base was opened), in April 2005 (just after a revolt resulted in the seating of a new Kyrgyz president, and the two sides discussed continued U.S. basing access), and in July 2005 (just after the SCO had issued a communique—see below—questioning the continued presence of U.S. bases in the region). Secretary of State Rice visited Kazakhstan, Kyrgyzstan, and Tajikistan in October 2005. The highest-level U.S. visit to the region occurred in May 2006, when Vice President Richard Cheney led a delegation to Kazakhstan. In July 2006, Secretary Rumsfeld visited Tajikistan to discuss assistance in combating drug-trafficking and U.S.-Tajik cooperation in Afghanistan, and in June 2007, Defense Secretary Robert Gates visited Kyrgyzstan to reaffirm U.S. interest in continued basing access. Recent high-level visits by U.S. and Chinese officials to Central Asia during the period from June 2007 to early April 2008 are listed in the boxes ( Selected U.S. Official Visits to Central Asia and PRC Official Visits to Central Asia ). It appears from these visits that China places a higher priority on top-level contacts than does the United States, as reflected in visits by the Chinese premier, president, and foreign minister to several Central Asian countries. Premier Wen Jiabao, President Hu Jintao, and foreign minister Yang Jiechi attended SCO meetings but also met with regional leaders. The highest-level U.S. visitors to the region during the time period were Defense Secretary Robert Gates, Commerce Secretary Carlos Gutierrez, Energy Secretary Samuel Bodman, and several Members of Congress. However, visits by several medium-to-high-ranking State Department and other executive branch officials appear to indicate a broad range of U.S. official interest in the region. Except in Kazakhstan, U.S. embassies and consulates also appear to have larger staffs than Chinese embassies, including diplomats and other U.S. government personnel. In Kazakhstan, the Chinese diplomatic presence may approach or exceed that of the United States. China's National People's Congress has inter-parliamentary exchanges with Kazakhstan, Kyrgyzstan, and Uzbekistan. Also, the SCO summit in August 2007 called for enhanced inter-parliamentary cooperation. The U.S. Congress does not have regularized exchange relations with the Central Asian states, although several congressional delegations have visited the region in recent years, and several legislative delegations from the regional states—some federally funded through the U.S. Open World Leadership Center and other exchange programs—have visited the United States. The Administration and others stress that U.S. support for free market reforms directly serves U.S. national interests by opening new markets for U.S. goods and services and sources of energy and minerals. Most U.S. private investment has been in Kazakhstan's energy sector and has amounted to about $12.6 billion as of 2006, compared to China's reported $8 billion in investment as of 2007. U.S. trade agreements have been signed and entered into force with all the Central Asian states, but bilateral investment treaties are in force only with Kazakhstan and Kyrgyzstan. In line with Kyrgyzstan's accession to the World Trade Organization, the United States established permanent normal trade relations with Kyrgyzstan by law in June 2000, so that "Jackson-Vanik" trade provisions that call for presidential reports and waivers concerning freedom of emigration no longer apply. The U.S.-Central Asia Council on Trade and Investment . In June 2004, The U.S. Trade Representative signed a Trade and Investment Framework Agreement (TIFA) with ambassadors of the regional states to establish a U.S.-Central Asia Council on Trade and Investment. The Council represents the main U.S.-backed multilateral regional organization. It meets yearly to address intellectual property, labor, environmental protection, and other issues that impede trade and private investment flows between the United States and Central Asia. The Bush Administration at the annual meetings also has called for greater intra-regional cooperation on trade and encouraged the development of regional trade and transport ties with Afghanistan and South Asia. As stated by Secretary Rice, these Administration efforts support a "new Silk Road, a great corridor of reform" extending from Europe southward to Afghanistan and the Indian Ocean. According to Evan Feigenbaum, Deputy Assistant Secretary of State for South and Central Asia, "we are ... promoting options and opportunities omni-directionally but increasingly to the south—the least developed direction." The reorganization of the State Department in 2006 to create the Bureau of South and Central Asian Affairs facilitated this emphasis. In 2006, Robert Deutsch was appointed Senior Advisor on Regional Integration in the Bureau of South and Central Asian Affairs with a mandate to work on such linkages between Central and South Asia. On the other hand, Congress in late 2007 ( P.L. 110-140 ) directed the creation of the post of energy advisor to the Secretary of State to facilitate interagency cooperation within the U.S. government, and it was expected that efforts to encourage the transport of Caspian energy to European markets would be of major concern. At the third annual meeting of the Council on Trade and Investment in mid-July 2007, Assistant Secretary of State Boucher and Deputy Assistant Secretary Feigenbaum stressed transport, electricity, and other links between South and Central Asia as well as U.S. private investment in the region. Foreign Operations Appropriations for FY2003 ( P.L. 108-7 ) and subsequent years consolidated several programs under a new funding category, trade capacity building (TCB), "aimed at helping countries build the physical, human, and institutional capacity to participate in global trade. It includes assistance to negotiate, implement, and benefit from trade agreements, such as agreements within the World Trade Organization (WTO), and regional and bilateral free trade agreements." In Central Asia, TCB funds have been devoted to improving export controls (modernizing customs offices and other border security), supporting business information technology and business associations, bolstering business skills, developing agribusiness, and increasing government transparency and inter-agency coordination. Multilateral, region-wide programs also have been implemented. (See Table 7 ) It appears that the United States has placed more emphasis on systems building and less emphasis on physical infrastructure development—the latter including the construction of telecommunications, power, and water systems, ports, airports, roads, and industrial zones—than China has in the Central Asian region. However, as noted below, the United States has supported some important energy and other infrastructure development projects in Central Asia and between Central and South Asia. Among some specific TCB-related efforts in Central Asia, in October 2005, the U.S. Trade and Development Agency (TDA) announced the launch of a $1 million "U.S. Infrastructure Integration Initiative in Central Asia," which includes the countries of Afghanistan, Kazakhstan, Kyrgyzstan, and Tajikistan. The program focuses on regional energy, transport, and communications infrastructure development. Technical teams visited the countries in early 2006 and recommended projects. To facilitate regional transportation, the TDA supports building a 1,860 mile "North-South Silk Road" from Almaty, Kazakhstan, through Kyrgyzstan, Tajikistan, and Afghanistan to Karachi, Pakistan. As part of this route, the United States completed construction of a $30 million bridge connecting Afghanistan and Tajikistan. The United States also has provided assistance for border and customs posts, such as $600,000 for a truck inspection facility at the border between Kazakhstan and Kyrgyzstan. TDA hosted an April 2007 conference to support reforming Central and South Asia's telecommunications regulations. In the energy sector, USAID in 2006 launched a three-year, $3.3 million "Regional Electricity Marketing Assistance Program" (REMAP; implementor is the U.S. Energy Association) that encourages the development of electrical power infrastructure and power sharing between Central Asia and Afghanistan, Pakistan, and India. In October 2006, a U.S.-facilitated memorandum of understanding was signed between Afghanistan, Kyrgyzstan, Pakistan, and Tajikistan envisaging the supply of 1,000 megawatts of electricity from Tajikistan and Kyrgyzstan to Pakistan via Afghanistan. REMAP also facilitated agreements between Kazakhstan and Tajikistan and between Kazakhstan and Kyrgyzstan on electricity sales. USAID launched a $400,000 "U.S.-Central Asia Trade Facilitation Initiative" in 2005 that focused on customs reform. Technical teams visited Central Asia and Afghanistan to identify impediments to regional trade, and the United States and Kazakhstan hosted a meeting of regional states, donors, and the private sector to develop plans to facilitate trade. The Millennium Challenge Corporation (MCC), created in 2004 to provide U.S. aid to countries with promising development records, announced in late 2005 that Kyrgyzstan was eligible to apply for assistance as a country on the "threshold" of meeting the criteria for full-scale development aid. On March 14, 2008, the MCC signed an agreement with Kyrgyzstan to provide $16 million over the next two years to help the country combat corruption and bolster the rule of law. One early TCB-related project will be $1 million in technical assistance to the judiciary and other actors to improve the processing of commercial cases and the enforcement of judgments. Besides its leading role in the regional Council on Trade and Investment (discussed above), the United States plays a prominent role in the regional activities of the OSCE and NATO. Role of the OSCE . All the Central Asian states were admitted soon after their independence to membership in the OSCE as successor states of the Soviet Union. Perhaps the most controversial type of "soft power" wielded by the OSCE in the region has been its encouragement of democratization and respect for human rights, including through its monitoring of legislative and presidential elections. At OSCE meetings, U.S. diplomats have raised regular concerns about democratization and human rights problems in the region. The Central Asian states and Russia increasingly in recent years have accused the OSCE of interfering in domestic affairs and of fomenting "colored revolutions" to overthrow the sitting governments. After long raising concerns that democratization and human rights problems in Kazakhstan needed to be addressed before the country could hold the presidency of the OSCE, the United States and other member-states in late 2007 accepted Kazakhstan's promises to accelerate reforms and agreed that it could hold the presidency in 2010. Role of NATO ' s Partnership for Peace (PFP) . All the Central Asian states except Tajikistan joined NATO's PFP by mid-1994 (Tajikistan joined in 2002). Central Asian troops have participated in periodic PFP (or "PFP-style") exercises in the United States since 1995, and U.S. troops have participated in exercises in Central Asia since 1997. A June 2004 NATO summit communique pledged enhanced Alliance attention to the countries of the South Caucasus and Central Asia. Uzbekistan sharply reduced its participation in PFP after NATO raised concerns that Uzbek security forces had used excessive and disproportionate force in Andijon. In contrast to Uzbekistan's participation, Kazakhstan's progress in military reform enabled NATO in January 2006 to elevate it to participation in an Individual Partnership Action Plan. Among its objectives, PFP aims to encourage transparency and accountability in military budgeting, civilian control over the military, and other elements of "soft power." U.S. officials appear to view the Russia- and China-dominated SCO with caution. In his testimony at a hearing in September 2006, Assistant Secretary of State Richard Boucher stated that the United States had not asked to participate in the SCO, and that "in terms of our cooperation with the region, we don't think this is a particularly helpful organization. It's certainly not one that we would want to back, or sponsor, or promote in any way. We think our money, our energy, our time is better invested in working with the individual countries and working with the organizations that take a broader view, the NATO, the OSCE, the European Union, other partners, Japan, working with them in the region, people who are interested in all aspects of cooperation in that region." Deputy Assistant Secretary of State Feigenbaum appeared to take a more equivocal position about the role of the SCO in a talk in September 2007, where he stated that "we in the United States are still struggling to sort fact from fiction, to distinguish statements from actions, and to differentiate what is 'good' for our interests from what might be rather less productive." He discounted speculation that the SCO is a "new Warsaw Pact" (a former Soviet-East European security alliance), because the Central Asian states cooperate militarily with the United States and participate in NATO's Partnership for Peace initiative. He also stressed that the United States has bilateral and multilateral trade and investment ties with the Central Asian states. He stated that the United States hopes that China and Russia as members of the SCO are not colluding against a U.S. presence in Central Asia. Instead, he called for SCO members to help Afghanistan develop economically and to embrace an "open, market-based approach to global energy supply and security," rather than attempting to form an energy cartel. In testimony in April 2008, Assistant Secretary of State Boucher indicated some reassessment of the SCO's role in Central Asia. For awhile, it seemed that the SCO was becoming a means "for big countries to push little countries around," he averred, and the United States objected to such efforts, but recently the SCO seems to have stressed "border security, cross-border cooperation, [and] common efforts against terrorism. And to that extent, you know, when it does that, we think it makes a contribution to the region." Nonetheless, he did not envisage that the United States would seek to cooperate with the SCO. China has pursued both bilateral ties with each Central Asian state as well as multilateral ties through the Shanghai Cooperation Organization (SCO), whose members include China, Russia, and all the Central Asian countries except Turkmenistan, which claims to be nonaligned. China's growing bilateral and multilateral ties with Central Asia are the major impetus to political and economic integration in the region, according to some observers. China has concluded Friendship and Cooperation Treaties with Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan that provide a framework for enhancing bilateral relations. The most recent Friendship and Cooperation Treaty was signed with Tajikistan in January 2007 and contains features common to all the treaties. Both sides foreswear forming alliances with or hosting troops from countries or groups that might threaten the security of the other party. Both sides agree to hold consultations if there is a situation that threatens the peace or security of either side. They pledge to create opportunities for investment and trade, and to work both bilaterally and within the SCO to crack down on terrorism, separatism, and extremism, and cross-border organized crime, illegal immigration, and arms and drug trafficking. Both sides promise to guarantee the legal rights of each other's visiting citizens. Some observers suggest that China may regard close relations with Kazakhstan as the most important to achieving its strategic goals. China and Kazakhstan proclaimed a "strategic partnership" in 2005, and in December 2006 concluded a strategy for "deepening cooperation in the 21 st Century." This agreement proclaimed that both countries had resolved border demarcation and called for expanding trade turnover to $10 billion by 2010 and to $15 billion by 2015, building pipelines and other transport routes, and cooperating in oil and gas development. Despite these growing ties between Kazakhstan and China, many in Kazakhstan remain concerned about Chinese intentions and the spillover effects of tensions in Xinjiang. Some have raised concerns about growing numbers of Chinese traders and immigrants, and there are tensions over issues like water resources. China's crackdown on dissidents in Xinjiang creates concern in Kazakhstan, because over one million ethnic Kazakhs reside in Xinjiang and many Uighurs reside in Kazakhstan (some ethnic Kyrgyz also reside in Xinjiang). Some in Kazakhstan fear that Uighur separatism in Xinjiang could spread among Uighurs residing in Kazakhstan, who may demand an alteration of Kazakh borders to create a unified Uighur "East Turkestan." While pursuing close ties with Kazakhstan, China also has focused on bolstering the economic and security capabilities of bordering Kyrgyzstan and Tajikistan in order to prevent instability in these countries from affecting its own territory. China's interest in close relations with Uzbekistan derives in part from the country's large number of potential consumers (it is the most populous Central Asian state) as well as its role as a transit state to markets further west. Since Kazakhstan is no longer taking on new public sector foreign debt, Kyrgyzstan, Tajikistan, and Uzbekistan apparently were the targets of loans that China announced in 2004 would be made available for regional development (see below). In December 2007, China announced the formation of a China-Central Asia Friendship Society, a propaganda organization under the direction of the Chinese Communist Party. Chinese Foreign Minister Yang Jiechi hailed the society as marking "the beginning of a new development phase in our non-governmental diplomacy with Central Asian nations." He stated that the society would assist in the "implementation of the country's overall diplomatic strategy, promote our mutual understanding and traditional friendship with Central Asia nations and their peoples, and augment our good-neighborly and friendly relations of cooperation with the five Central Asian nations." The deputy foreign minister stated that "non-governmental diplomacy, as an important supplement to official diplomacy, is playing an increasingly important role" in Central Asia. China cooperates in the Central Asia Regional Economic Cooperation program (CAREC; members are China, Afghanistan, Azerbaijan, Mongolia, and all the Central Asian states except Turkmenistan), initiated by the Asian Development Bank in 1997 to improve living standards and reduce poverty in its member states through regional economic collaboration. Also participating in CAREC are the European Bank for Reconstruction and Development (EBRD), the International Monetary Fund (IMF), the Islamic Development Bank, the United Nations Development Program (UNDP), and the World Bank. For the period from 2006 to 2008, CAREC plans to provide over $2.3 billion for more than 40 projects. The Shanghai Cooperation Organization . Some observers argue that China increasingly has stressed multilateral relations with the Central Asian region through the mechanism of the SCO, in which China plays the leading role. The genesis of the organization was an April 1996 treaty among the presidents of China, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan pledging the sanctity and substantial demilitarization of the former Soviet-Chinese borders. The presidents also signed protocols that they would not harbor or support separatists, aimed at China's efforts to quash separatism in Xinjiang. In April 1997, the five presidents met again to sign a follow-on treaty demilitarizing the 4,000 mile former Soviet border with China. In May 2001, the parties admitted Uzbekistan as a member and formed the SCO. The states signed a Shanghai Convention on joint fighting against what President Jiang Zemin termed "the forces of separatism, terrorism and extremism." The SCO also agreed to set up an anti-terrorism coordinating center in the region. In theory, the treaty allows China to send troops into Central Asia at the request of one of the states. Besides security cooperation, China stressed the "huge economic and trade potential" of regional cooperation. Some observers have viewed the creation of the SCO as reflecting the common goal of Russia and China to encourage the Central Asian states to combat regime opponents of the two major powers. While cooperating on this broad goal, Russia and China have appeared to disagree on other goals of the SCO and to vie for dominance within the organization. Russia has viewed the SCO mainly as a means to further military cooperation and to limit China's influence in Central Asia, while China in recent years has viewed the SCO not only as enhancing regional security but also as an instrument to increase trade and access to oil and gas. China stressed economic initiatives at the June 2004 SCO summit when President Hu Jintao offered $900 million in export credits with a 2% interest rate for a period of 20 years to Kyrgyzstan, Tajikistan, and Uzbekistan. The summit declaration emphasized that "the cornerstone of stability and security of the Central Asian region and the adjacent countries lies in their economic progress, in meeting the essential needs of the population." Russia emphasized the security aspects of the SCO in early October 2007 when the Russia-led Collective Security Treaty Organization (CSTO; members include Russia, Armenia, Belarus, and all the Central Asian states except Turkmenistan) signed an information-sharing accord with the SCO. According to some observers, China anticipates that with its increasing economic and military power, it will gradually eclipse the influence of Russia in the region. It is possible that as China's influence grows in the region, Russia will become more alarmed and will reduce its role in the SCO (see also below, Implications for Central Asia ). For the Central Asian states, the SCO is seen as balancing Russian and Chinese influence, since the regional states also belong to the economic and security organizations that are part of the Russia-led Commonwealth of Independent States. At the same time, according to some observers, regional leaders have preferred the economic and security cooperation offered by the SCO over what they view as U.S. advocacy of democratic "color revolutions." It may also be the case that Central Asian leaders value the SCO's economic prospects more than its security prospects, given the history of the group. The regional leaders may have devalued SCO as a security organization after September 11, 2001, when U.S. and Western military activities in Afghanistan demonstrated the lack of effectiveness of the SCO in combating terrorism. SCO members did not respond collectively to U.S. requests for assistance but mainly as individual states. Further challenges to the prestige of the SCO as a collective security organization occurred in 2005, when it failed to respond to the coup in Kyrgyzstan or to civil unrest in Uzbekistan. Russia and China have not used the SCO to channel significant amounts of military training and equipment to the regional states. In the case of China, relatively small amounts of security assistance have been provided to the Central Asian states either through the SCO or bilaterally, and largely have taken the form of training in exercises. During an early July 2005 SCO summit, the presidents of China, Russia, Uzbekistan, Kyrgyzstan, and Tajikistan signed a declaration that "as large-scale military operations against terrorism have come to an end in Afghanistan, the SCO member states maintain that the relevant parties to the anti-terrorist coalition should set a deadline for the temporary use of ... infrastructure facilities of the SCO member states and for their military presence in these countries." The declaration allegedly was strongly pushed by Russia and Uzbekistan. Later that month, Uzbekistan requested that the United States vacate an airbase near the town of Karshi Khanabad, which was used for U.S.-led coalition operations in Afghanistan, for reasons that included what Uzbekistan claimed was a stabilizing security situation in Afghanistan. According to analyst Stephen Blank of the U.S. Army War College, China has fashioned "the SCO as a template of the future organization of Asia against the American alliance system." He also states that China has resisted the Russian "idea of the SCO being a military bloc." Taking a different view, analyst Martha Olcott of the Carnegie Endowment for International Peace has argued that China focuses more on fostering regional stability than on using the SCO as an anti-U.S. forum, and that Russia and the Central Asian states have resisted Chinese efforts to expand security cooperation within the SCO. The most recent SCO summit of the heads of state took place in Bishkek, Kyrgyzstan, in mid-August 2007. A Bishkek Declaration and a multilateral Friendship and Cooperation Treaty were signed. The Bishkek Declaration appeared to refer to the United States when it criticized "unilateral actions" by some countries and when it stated that "Central Asia's security and stability first relies on the efforts of various countries in this region." It called for the members to coordinate their energy security strategies. The Friendship Treaty largely reiterated provisions of the bilateral friendship treaties China has signed with regional states. The United States has been the largest bilateral aid donor to the Central Asian region since 1992, followed by the EU. U.S. foreign aid budgeted to Central Asia for FY1992 through FY2006 amounted to $4.1 billion. The EU has reported that it has provided approximately 1.39 billion euros ($2.13 billion at current exchange rates) in assistance to the region since 1991. For much of the 1990s and until September 11, 2001, the United States provided much more aid each year to Russia and Ukraine than to any Central Asian state (most such aid was funded through the Freedom Support Act (FSA) account in Foreign Operations Appropriations, but some derived from other program and agency budgets). Cumulative foreign aid budgeted to Central Asia for FY1992 through FY2006 was about 14% of the amount budgeted to all the Eurasian states, reflecting the lesser priority given to these states prior to September 11. Budgeted spending for FY2002 for Central Asia, during OEF, was greatly boosted in absolute amounts ($584 million) and as a share of total aid to Eurasia (about one-quarter of such aid). The Administration's aid requests since then have gradually declined in absolute amounts, although it has continued to stress important U.S. interests in the region. The Administration has highlighted the phase-out of economic aid to Kazakhstan (because of its "quantifiable reform progress" in the democratic, economic, and social sectors) and restrictions on aid to Uzbekistan (see below) as among the reasons for declining aid requests. Aid to Central Asia in FY2005 and thereafter has been about the same or less in absolute and percentage terms than that provided to the South Caucasian region. (See Table 8 .) Not reflected in this table, the United States also contributes to international financial institutions and international organizations that aid Central Asia. The Millennium Challenge Corporation (MCC), created in 2004 to provide U.S. aid to countries with promising development records, announced in late 2005 that Kyrgyzstan was eligible to apply for assistance as a country on the "threshold" of meeting the criteria for full-scale development aid. On March 14, 2008, the MCC signed an agreement with Kyrgyzstan to provide $16 million over the next two years to help the country combat corruption and bolster the rule of law. According to one report, the signing of the agreement had been delayed over U.S. concerns over non-transparency of the vote count in the December 2007 Kyrgyz legislative election. In Congress, Omnibus Appropriations for FY2003 ( P.L. 108-7 ) forbade FREEDOM Support Act (FSA) assistance to the government of Uzbekistan unless the Secretary of State determined and reported that it was making substantial progress in meeting commitments under the Strategic Partnership Declaration to democratize and respect human rights. The act also forbade assistance to the Kazakh government unless the Secretary of State determined and reported that it significantly had improved its human rights record during the preceding six months. However, the legislation permitted the Secretary to waive the requirement on national security grounds. The Secretary reported in May 2003 that Uzbekistan was making such progress (by late 2003, the Administration decided that it could no longer make this claim). In July 2003, the Secretary reported that Kazakhstan was making progress. Some in Congress were critical of these findings. Yearly appropriations for foreign operations since FY2004 have retained these conditions, while clarifying that conditions on assistance to the government of Uzbekistan include substantial progress in respecting human rights, establishing a "genuine" multi-party system, and ensuring free and fair elections and freedom of expression and media. In July 2004, the State Department announced that, despite some "encouraging progress" in respecting human rights, up to $18 million in aid to Uzbekistan might be withheld because of "lack of progress on democratic reform and restrictions put on U.S. assistance partners on the ground" (in contrast, progress was reported regarding Kazakhstan). This determination potentially affected IMET and FMF programs as well as FREEDOM Support Act funding, since legislative provisions condition IMET and FMF on respect for human rights. The State Department reprogrammed or used notwithstanding authority (after consultation with Congress) to expend some of the funds, so that about $8.5 million was ultimately withheld. In FY2005 and subsequent years, Secretary of State Condoleezza Rice reported to Congress that Kazakhstan had failed to significantly improve its human rights record, but that she waived aid restrictions on national security grounds. She has not reported substantial progress by Uzbekistan in meeting its commitments, so aid restrictions have remained in place. There are no official Chinese data on grant assistance to Central Asia. Most Chinese assistance to Central Asia has been in the form of concessionary loans, in most cases to governments and joint ventures to finance the purchase of Chinese equipment and services. Most observers have suggested that Chinese grant assistance to Central Asia has been greatly eclipsed by that given by the United States and other donors. In some categories, however, Chinese assistance may be notable, particularly educational exchange grants (see above). Among reports of Chinese grant assistance to Central Asia, several appear to involve security assistance. According to one U.S. analyst, these grants are indicative of China's increased military diplomacy activities in developing countries worldwide since the early 2000s. Examples in Central Asia include uniforms for the Tajik armed forces, 20 jeeps for Kyrgyzstan's Ministry of Public Security, and 40 all-terrain vehicles for the Kazakhstan military. According to a report by Agence Presse France , "Since 1993 China has given more than $30 million to [Tajikistan] in technical aid for the Tajik police and army." Turkmen media reported in July 2006 that China had provided a $2.5 million grant to the Turkmen State Customs Service for the delivery of a mobile customs inspection system. Kyrgyz Television reported in September 2006 that the Kyrgyz National Guard received a technical assistance grant in the form of cars and barracks worth about $245,000 from the Chinese People's Armed Police Force. In March 2007, the Chinese Ministry of State Security provided computers, printers, laptops, video cameras, riot gear, night vision devices, and other equipment worth $321,000 to Kyrgyzstan's Interior Ministry. In May 2007, China provided crime detection equipment and training "as a gift" to the Uzbek Ministry of Internal Affairs. Among concessional loans, China has reported that it has funded 127 projects since launching its $900 million SCO loan initiative in 2004. Although offered under the SCO framework, each country has to negotiate separately with China about specific projects. Many of the loans have focused on upgrading Central Asia's transportation and communications systems, including those linking the region with China, in order to facilitate China's trade with the region and the economic development of Xinjiang. Among the loans: Visiting Chinese Deputy Minister of Foreign Trade Zhang Xiang signed an agreement with Kyrgyzstan's then-Prime Minister Nikolay Tanayev in August 2002 for a $1.875 million loan to complete a feasibility study for building the Kashgar-Andijon rail line and for purchasing broadcasting, agricultural, and security-related equipment. In 2005, China allocated $3.75 million to repair the 16 miles of roadway between the Kyrgyz capital of Bishkek and the Manas airport. In September 2006, China provided a loan for Kyrgyzstan's purchase of automobiles worth $1.8 million. In 2005, China announced loans of $110 million (for 20 years at 2% interest with a five-year grace period) to finance Chinese construction of two highway tunnels, one connecting Dushanbe to the southern city of Kulyab and the other connecting Dushanbe to the northern city of Khujand. Construction on the Dushanbe-Kulyab tunnel project reportedly began in October 2006 and is projected to be completed in 2009. Other projects funded with Chinese loans include repaving the highway from Dushanbe through Khujand to Chanak (near the Uzbek border), modernization of the telecommunications system, and upgrading of electricity transmission lines. The repaving project is expected to be completed in 2008. In January 2007, Chinese and Tajik firms signed an agreement in Beijing for the provision of a $200 million loan (for 25 years with an annual interest of 1%) to build a 150-megawatt hydroelectric power station on the River Zarafshon in northern Tajikistan. That same month, the visiting deputy head of China's Eximbank, Li Jun, praised Tajikistan as a leading country among SCO members in taking advantage of preferential loans to carry out projects. He also announced new loans to provide 23 Chinese locomotives to the Tajik railway directorate, and to finance work on a railway from Dushanbe to the southern city of Qurghonteppa, a railway from the southern city of Kolkhozobod to the town of Panji Poyon (on the Afghan border), and a railway from the northern town of Konibodom to the Uzbek town of Bekobad. Tajikistan's state-run news agency reported in January 2008 that Tajikistan owed China $217 million, the largest amount owed to one country. In late 2006, China extended a $24.5 million low-interest loan to finance construction or revamping of fiber optic and cellular telephone networks throughout Turkmenistan. In March 2007, China provided a $24 million loan for the purchase of Chinese drilling equipment and field camps for geological work and a $36 million loan to purchase Chinese railway passenger cars. In January 2003, China's Eximbank proposed extending a $2 million loan for 15 years at 3% interest to Uzbekistan for small-scale energy projects. In June 2004, Chinese President Hu Jintao visited Tashkent to take part in the SCO summit, and announced grants and long-term loans amounting to $350 million for economic development in Uzbekistan. A Russian newspaper reported that "members of the Chinese delegation said that this is the biggest economic aid package ever granted by China to any country at one time." In July 2005, China allocated two grants worth $3.6 million for economic training and other cooperation. China has pursued ties with sub-Saharan Africa ("Africa" hereafter) since the 1950s. Prior to China's broad economic reforms of the 1980s, its engagement in Africa was primarily defined by political factors (e.g., colonial liberation, Third World development, and the Cold War). The 1980s brought a gradual shift in Chinese foreign policy in Africa and elsewhere, as Beijing's motivations increasingly came to be dominated by pragmatic economic and trade-related considerations. This has increased in recent years with China's outward investment push and its search for new sources of energy and natural resources. China continues to support aid projects in Africa, but many of these projects are increasingly commercially driven. As with China, U.S. relations were long influenced by Cold War concerns, and by associated support for free markets, along with a desire to provide humanitarian assistance when needed and assist in Africa's socio-economic development. After the Cold War, U.S. engagement with Africa declined somewhat, but bilateral assistance levels gradually rose again starting in the early-mid 1990s. While security concerns played a role in U.S. relations in Africa during the Cold War, U.S. interest in African security issues declined for a time after the Cold War. The U.S. appetite for direct military intervention in Africa's many conflicts was limited, and this notably became the case following the killing of U.S. soldiers in Somalia in 1993 during the infamous "Blackhawk down" incident. Security concerns in Africa, however, began to gain prominence in U.S. views of the region following the 1998 Al Qaeda bombings of the U.S. embassies in Kenya and Tanzania. They have remained a prominent facet of Bush Administration policy since the Al Qaeda attacks on the United States in 2001. Along with a rise in security cooperation, U.S. bilateral assistance to Africa, most notably in the healthcare sector and in the fights against the AIDS epidemic, has grown dramatically under the Bush Administration. One potential area of concern for policymakers is China's determined political courting of and growing economic support of African governments. This may lead—and in some cases has already led—them to view China as a desirable political ally and a model for development. China's policy of non-interference in states' internal affairs, especially with respect to issues of human rights and democracy may prove attractive, particularly in contrast to Western donor governments' imposition on Africans of political conditionalities in return for credit. Some Africans see such Western approaches as paternalistic, and some African states, when subjected to sustained Western policy pressure, have already turned to China. While such realignments may not be permanent, Angola's rejection of relations with the IMF in favor of access to Chinese economic ties and Zimbabwe's ties to China have been interpreted as reflecting such views. Rapidly expanding Sino-African economic cooperation and the perceived relevance to Africa of China's rapid economic development may also lead Africans to view China as a more relevant political-economic model than Western democracies. Early in the present decade, China's economic boom prompted a renewed push to accelerate the development of relations with Africa. Chinese-African economic and political ties are now rapidly burgeoning and take many forms: trade agreements, commodity acquisition and production deals, and scientific, educational, technological and—in a few cases—security cooperation. China is also offering increasing amounts of development aid to Africa. The dominant factor driving such ties is trade. Sino-African ties are underpinned by China's prodigious demand for Africa's plentiful commodities, notably oil and unprocessed metals and minerals, to supply its rapidly growing economy, and by African demand for Chinese goods and services. The People's Republic of China (PRC) uses a combination of political and economic means to protect this trade and foster bilateral ties. As a result, economic relations are not carried out on a purely commercial basis. There is a substantial amount of overlap between Chinese development aid, investments, and business deals. These are often underpinned by PRC soft loans, with terms ranging from a no-cost (i.e., grant) basis to near-market rates. PRC financing and political backing are increasingly enabling Chinese firms to attain a dominant competitive position with respect to the demands of Africa's small but often rapidly growing markets, which many view as having often been neglected by developed country businesses. China's political goals in Africa center on fostering support among African states for Beijing's political, economic and trade interests. Notable among these are long-standing efforts by China to isolate Taiwan internationally. In Africa, China has been increasingly successful in this respect; only four of 48 sub-Saharan African countries (Burkina Faso, Sao Tome, Gambia, and Swaziland) now maintain official relations with Taiwan. In large measure it pursues its international political goals by attempting to extend its influence within the United Nations (U.N.) system and other international forums, where African countries form an important potential block of allied votes. In such forums China often champions policies that it views as shared by many African countries. These include efforts to foster a more multi-polar international political system and to counter putatively disproportionate U.S. global political-economic and military influence. China also uses these forums to promote developing country interests in order to create a "new, just and rational economic order" and to influence international policy-making decisions that affect countries, such as Sudan, in which China has important interests. China is also proving attractive to many for more direct, practical purposes. With the exception of its Taiwan policy, China, unlike Western official donors, does not condition its financial offerings and political ties on improvements in governance, economic reform, or human rights conditions. Instead, it expresses strong support for state sovereignty and "non-interference" in countries' internal affairs, and stresses the mutual benefits of bilateral ties and "economic win-win cooperation." Such policies dovetail with those of many African governments, both for economic reasons and because some, like China, have periodically been targets of foreign criticism regarding undemocratic governance and human rights. There have been complex and varied reactions among analysts regarding the implications of Chinese engagement in Africa. These range from enthusiasm and guarded optimism to concern over potential Chinese strategic and economic threats to western or African interests. Some observers are concerned about the state-centric, political-commercial mode of PRC engagement in Africa; its potential negative impacts on U.S. and Western public policy goals and engagement in Africa; the competitive impact of increased PRC imports of raw materials from Africa and, to a lesser extent, Chinese competition for current and future African market demand; and the implications for U.S. political interests and influence of the PRC's undertakings in Africa. Such concerns largely stem from the fact that China's African undertakings are increasingly affected by diverse international events, politics, and policy trends, with origins both in Africa and extrinsic to it, that are of interest to Western governments and polities. Examples include international responses to the conflict in Darfur, Sudan; western support for universal good governance and fiscal transparency; and globalized economic competition. China has an ostensible policy of neutrality and non-interference with respect to countries' internal affairs and does not link provision of bilateral aid and credit to apolitical or governance performance. Critics worry that this may weaken African governments' motivation to pursue democratization, good governance, and transparency reforms, and adhere to universal norms of civic and human rights and the rule of law in Africa. There are growing concerns among some observers over the prospective impact that China's efforts to gain and ensure access to African energy and mined primary commodities might have on global energy markets. Similarly, rising Chinese investment in Africa suggests to some analysts that China presents a competitive threat to developed country investment on the continent. Many African and foreign observers are also concerned about growing PRC political clout in Africa. Sino-African bilateral investment agreements are the focus of criticism because they often fuse business, political, aid, and sometimes military considerations. These allow China to offer integrated "package" deals. These may be more attractive to African governments than those offered by western country governments, which exercise much less control over their private sectors than the PRC, and often operationally separate their aid, military, and diplomatic initiatives. In some cases, according to critics, PRC-African deals contain provisions that may conflict with international human rights, transparency, or environmental norms, or promote economic activities that do little to develop the African private sector. Other analysts, however, point to potential benefits to Africa resulting from China's involvement on the continent, which Bush Administration officials have in some cases pointed to as a positive outcome of Sino-African engagement. Many also view China's engagement in Africa as a reflection of China's legitimate pursuit of political and economic self interest. Among the most often cited positive outcomes for Africa are rising levels of Chinese investment in Africa, particularly in infrastructure; increases in African exports to China; and Chinese fulfillment of unmet African consumer demand. China is also seen as providing African countries with a new source of private credit and finance, and as spurring global commercial interest in African resources and markets. Analysts are divided over the implications Chinese engagement in Africa may have for U.S. policy, but with some exceptions, few see a trend toward direct U.S.-Chinese "soft power" competition in Africa. But some observers see emerging economic and/or political competition between the two countries. Bush Administration officials, including the President, have repeatedly stated that they do not view Chinese engagement in Africa as a threat to U.S. interests in the region. Administration officials are, however, actively monitoring China's activities in Africa, since it is widely accepted that the breadth and diversity of these endeavors may present numerous potential issues for consideration by U.S. policy makers. One area for consideration is the impact of Chinese engagement on African governments' willingness to pursue democratization, good governance, and transparency reforms, and their adherence to universal civic and human rights norms and the rule of law. Another concern may include the potential for a renewed rise in African financial indebtedness to China, fast on the heels of recent substantial U.S. and Western government write-downs of past unsustainable African debt. The prospect of increased U.S.-Chinese economic competition in Africa, notably in the oil sector and strategic metals and minerals trade, also presents national energy security policy questions. Some are concerned that China's rising textile production and export of goods to Africa are negating U.S. efforts to strengthen Africa's apparel and other manufacturing sectors through the African Growth and Opportunity Act program (AGOA), which seeks to bolster African production by providing duty-free access for diverse U.S. imports from Africa. The potential for the growth of a pro-China voting block within United Nations agencies and other multilateral organizations is also a concern for some. Africans in China make up a small proportion of all foreign students in China, and number considerably fewer than Africans studying in the U.S. But the number of African students in China is rising. By 2007, the total number of foreign students in the PRC was 195,503, of which about 5,900 (3%) were Africans. This rise reflects a PRC pledge to increase the number of and support for African students in China from 2006 onwards, specifically a pledge to increase the number of African students receiving PRC government scholarships. Most African students in China are undergraduates and masters-level students, not Ph.D. candidates, and most primarily seek education in technology and engineering, medical science, and language training. The education of most African students in China is funded by the PRC. Between 2000 and 2006, an average of about 1,200 Africans received Chinese government scholarships to study in China each year. In November 2006 during the Forum on China-Africa Cooperation (FOCAC) summit, Chinese officials pledged to double the number of such scholarships by 2011. Such a rise would substantially increase the number of African students receiving such scholarships, which totaled nearly 19,000 between the early 1950s, when China began to provide them, and 2006. Meanwhile, between 2003 and 2005, 2,808 "self-supporting" or non-PRC-financed African students were enrolled in Chinese higher education institutions. The number of "self-supporting" African students rose during the 1990s, as did the number of African students seeking postgraduate education. Two factors are seen as giving rise to this increase: increasing university development cooperation between Africa and China and the relatively low cost of living and studying in China, as compared to the West. China has educational exchange and cooperation relations with 50 African countries, and provides education capacity-building assistance to African countries. Such development activities are the focus of an ongoing FOCAC "follow-up activity" called the Sino-African Education Minister's Forum. China has reportedly deployed over 700 professional teachers to 33 African countries to aid development of higher and secondary school education since the 1950s. Such cooperation nearly doubled during the 1990s. Teachers being sent to Africa are now increasingly deployed by Chinese universities in support of university-designed training, exchange, and cooperation programs, using grant funding from the PRC's Ministry of Education and African Human Resources Development Foundation, rather than being deployed by the central government. Such programs typically support higher education instructional or management training to vocational and grade-school teacher training. Separately, China sponsored 60 or so assistance programs between the 1950s and 2006 aimed at helping develop "disadvantaged" disciplines and boosting science, technology, teaching, and research capacities in 25 African countries. Some Chinese assistance is provided for basic education; in 2006, president Hu Jintao pledged that China would build 100 rural schools in Africa by 2009. A small number of Chinese students study in Africa. Since 2000 under FOCAC, China has increased its support for vocational education in Africa, as well as for Chinese language training and short to medium term professional and applied technology training courses, both in China and Africa. This training focuses on such diverse topics as diplomacy, journalism, malaria and healthcare, solar energy, and agriculture. These activities are increasingly funded by the PRC African Human Resources Development Fund, which China set up after the adoption of the FOFAC Program for China-Africa Cooperation in Economic and Social Development in 2000. At the second FOCAC gathering in Ethiopia in 2003, China offered to train 10,000 African personnel over three years, beginning in 2004 under the aegis of the African Human Resources Development Fund. It also offered to increase scholarships for African exchange students in China. In 2004, China's ambassador to South Africa stated that China had trained 6,000 Africans in agriculture, diplomacy, medicine and other fields from 2000 through 2003 and sent over 500 experts and teachers to offer short term courses. Prior to the 2006 FOCAC Summit in Beijing, he stated that China had more than fulfilled its commitment to train10,000 African personnel, having trained 14,600. He also stated that China had deployed a youth volunteer team to work in Ethiopia, the first of several planned for various African countries, and that in 2005, China had sponsored the attendance of 4,600 Africans from 50 countries at 139 workshops held in China. At the 2006 FOCAC summit, PRC President Hu pledged that by 2009 China would deploy 100 top Chinese agricultural experts to Africa; establish 10 agricultural technology centers; build 30 hospitals; provide about $40 million in grants for anti-malaria drugs, prevention, and the construction of model treatment centers; build 100 rural schools in Africa; train 15,000 African professionals; and double the number of PRC government scholarships for African students from 2,000 per year to 4,000 per year. China has also contributed to the IMF-sponsored African Capacity Building Foundation, which supports technical aid projects and vocational courses in Africa under the Technical Cooperation Among Developing Countries (TCDC) framework of the United Nations-hosted Special Unit for South-South Cooperation. China ' s Africa Policy , a formal strategy document issued in 2006, also envisions increasing support for distance learning in Africa. China actively promotes the teaching of Chinese language and culture. There are 12 existing or soon to be completed Confucius Institutes in sub-Saharan Africa. China has also assisted several universities to create Chinese language learning centers, some dubbed "Confucius Classrooms." As of 2005, there were reportedly nearly 120 schools in 16 African countries that offered Chinese language courses, and over 8,000 African students learning Chinese. Such programs are assisted by 200 or more Chinese language teachers from China. Officials of the Chinese Communist Party, a variety of ministries, and export promotion and finance agencies regularly host guests from Africa, ranging from state leaders and government ministers to mid-level African party officials and state functionaries, and they regularly participate in exchange visits to Africa. China has initiated a program called the Overseas Youth Volunteer Program, which has been compared to a nascent PRC "Peace Corps," and this is expected to increase in size. In 2006, President Hu committed to deploy 300 PRC program volunteers to Africa by 2009. Volunteers reportedly are vetted under a very competitive screening process and are currently deployed in Ethiopia, Seychelles, and Zimbabwe. The PRC is paying increasing attention to shaping the media landscape relating to Chinese-Africa relations. In December 2007, the Xinhua News Agency launched a China African News Service (CAFS). CAFS seeks to expand coverage of Chinese and African news of mutual interest to Chinese and African audiences. The PRC State Council Information Office, in coordination with other state ministries and agencies, has held annual two-week seminars in China for African journalists since 2004. These highlight Chinese views and policies relating to Africa, teaching African participants about the Chinese media system and promoting "China-Africa exchanges and cooperation in the field of journalism" in support of "friendly cooperative" Sino-African ties. The last seminar was reportedly attended by over 40 press officers from 30 African countries. Such exchanges are a goal of China ' s Africa Policy , which proposes to facilitate ties between state agencies in China and Africa centered on exchanging strategies on ways to handle relations with domestic and foreign media. China has long deployed medical teams to Africa as part of what it calls "health diplomacy," which China views as an essential way of building citizen-to-citizen relations. China supplies drugs, medical materials and diverse other healthcare development aid for Africa. In 2006, China's envoy to South Africa stated that from 1963 to 2005, 16,000 Chinese doctors had worked in 47 African states, treating almost 240 million medical cases; that large quantities of drugs and medical equipment had been donated; and that 30 hospitals in Africa had been built with PRC assistance. In 2004, he stated that 35 PRC medical teams comprised of 880 doctors were working in 34 African countries. In late 2006, President Hu pledged that by 2009, China would build 30 hospitals; provide about $40 million in grants for anti-malaria drugs, prevention, and construction of model treatment centers in Africa. PRC medical teams reportedly deploy for two-year stints, and China's civilian medical cooperation is administered by PRC provincial health bureaus. These provincial bodies reportedly offset many program costs, such as team airfares, living stipends, and some medical supplies used by the teams. Such programs reportedly may face long-term pressures associated with declining provincial tax revenues, the health demands of PRC citizens, and the increasingly profit-based character of Chinese healthcare, which deprives the public sector of doctors willing to serve overseas. China has also sponsored various tropical disease and HIV/AIDS training sessions, such as those sponsored by the Jiangsu Institute of Parasitic Diseases. In 2007, China also offered such assistance on a multilateral basis by giving $8 million to the World Health Organization designated for Africa. The United States hosts a large number of foreign students and visitors each year, including a considerable number of Africans. Of the 582,984 international students studying in the United States in 2006/2007, 32,102 were African, representing 5.5% of the total. Of these, 61.7% were undergraduates. Diverse U.S. government agencies support and facilitate a wide variety of visits to the United States by African students, scholars, and professionals for purposes of study, research, cultural exchange, applied training, and teaching. In 2006, the total number of such visitors from Africa totaled 68,973, or 7.8% of the global total. Approximately 100 sister city relationships between African and U.S. cities and towns also support U.S.-African cultural and civic exchanges. Many U.S. publicly funded exchange activities are education-focused. One of the major vehicles for advancing educational cooperation with foreign countries is the Fulbright family of grant programs. Some Fulbright programs study abroad by U.S. graduate students, while others fund study and research by foreigners in the United States and help to develop foreign institutional capacities. In academic year 2006-2007, 246 grants, or 6.1% of the global total, went to African students, academics and professionals. (See Table 9 ) For the entire history of the Fulbright program (1949-2006), the number of grants made to Africans totaled 9,462, or 4.7% of the total. A large percentage of these were Humphrey Fellows, i.e., professionals undergoing advanced U.S. training. Another major U.S. program to provide Africans with U.S. higher education degrees was the now defunct African Graduate Fellowship Program (AFGRAD; 1963-1990), and its successor, the Advanced Training for Leadership and Skills program (ATLAS; 1991-2003). These USAID-administered programs trained over 3,200 African professionals in U.S. PhD and masters degree programs in key developmental fields and cost $366 million in 2004 dollars. In addition to promoting educational cooperation through exchange programs, the United States also provides support for higher education development in Africa. Such aid may grow. In April 2008, the Bush Administration sponsored a conference, the Higher Education Summit for Global Development, which was designed to act as a springboard for strengthening higher education institutions in developing countries, including in Africa. Several Africa-focused higher education programs are administered by USAID. A primary one is the Higher Education for Development (HED) Program of the USAID Economic Growth, Agriculture and Trade Bureau's (EGAT) Office of Education (ED). HED supports partnerships between U.S. higher education institutions and foreign ones by linking U.S. colleges or universities with developing country counterparts. Its goal is to foster the role of higher education in international development, with a focus on human and institutional capacity building. HED assistance is provided through a grant competition process. There are current or recent HED programs in 21 African countries, as well as several regional projects. Other USAID bureaus, country missions, and USAID-backed public-private alliances also administer programs that promote higher education development or do so indirectly as part of larger efforts to advance health, agricultural, or ICT development. Notable among USAID programs that aid tertiary education in Africa are several backed by the EGAT Agriculture Office (AG). It supports higher education partnerships, innovative pilot programs in collaboration with the Board for International Food and Agricultural Development (BIFAD), which advises USAID on agricultural development issues and monitors program activities. EGAT/AG also implements Collaborative Research Support Programs (CRSPs). These draw on the capacities of U.S. land grant universities and foster numerous agricultural research and development projects in Africa. EGAT/AG also sponsors the Collaborative Agricultural Biotechnology Initiative (CABIO) and the Consultative Group on International Agricultural Research (CGIAR). In addition to its dedicated assistance to higher education in Africa, since 2003 USAID has supported short and long-term training for over 680,000 Africans, including in-country, in third-countries, and in the United States. The United States supports public diplomacy and information outreach efforts in or targeting Africa in the form of American Corners, Virtual Presence Posts, Information Resource Centers, and through the broadcast and Internet presence of the Voice of America (VOA). American Corners, of which there are 77 in Africa, provide access to information about the United States in the form of published and digital media, exhibits, speakers, and the like. They are hosted by national institutions under contract with the State Department, and are often located outside of capital cities. They tend to reach younger audiences with little exposure to U.S. culture or ideals. "Virtual Presence Posts" (VPPs) are Internet sites that substitute for a U.S. government physical presence where insecure environments or funding constraints preclude them. There are three in Africa, serving northern Uganda, Somalia, and the Seychelles. Thirty-seven U.S. embassies in Africa maintain Public Diplomacy Information Resource Centers (IRCs). These are designed to provide direct, timely, authoritative information to foreign audiences in support of U.S. policy goals and to provide a point of contact between local nationals and U.S. embassy personnel. They function essentially as Internet-capable libraries, and host speakers and educational presentations. VOA broadcasts to Africa in 10 indigenous African languages as well as in English, Portuguese, and French. There are also two Regional English Language Offices in Africa, serving Southern and West Africa respectively. Peace Corps programs in 26 African countries promote both development and cultural exchanges and personal linkages. Peace Corps programs appear to foster long-term U.S. African ties. Anecdotal information suggests that a substantial number of U.S. government personnel who work on African affairs or development issues are former Peace Corps volunteers. China's political-economic goals and relations in Africa are defined in a formal document released in early 2006, entitled China ' s African Policy . It lays out a PRC goal of creating "a new type of strategic partnership with Africa" consisting of multifaceted cooperation grounded in long-standing "guiding" Chinese foreign policy principles. It explicitly conditions official relations with African governments on their adherence to the PRC's "one-China principle" vis-a-vis Taiwan, but makes no other political demands. It seeks to increase reciprocal official leadership visits and diverse lower level cooperative exchanges, and pledges PRC-African cooperation in international forums. It also seeks increased Sino-African trade, offering PRC duty-free treatment for some African exports, seeking free trade agreements in the region, and providing access to export credits for PRC investment and business activities in Africa, notably in infrastructure. It advocates enhanced trade dispute settlement, investment protection, and double taxation accords, and seeks enhanced joint business promotion efforts. It pledges PRC support for African development, especially in agriculture, raises the possibility of PRC debt cancellation for some African countries, and urges increased international debt relief and unconditional economic aid for Africa. It also seeks increased science and technology, cultural, and environmental cooperation, and offers increased Chinese human resource training and PRC scholarships for Africans, among other education support efforts. It also pledges increased medical assistance, including the dispatch of PRC medical teams to Africa (a long-standing, largely successful PRC "health diplomacy" tradition). Media, civil service, and disaster relief training are also planned. China is pursuing its policy goals in Africa both bilaterally and through the Forum on China-Africa Cooperation (FOCAC). Created in Beijing in 2000 during a summit of PRC and 43 African country leaders, FOCAC is a comprehensive effort initiated by China to build mutually beneficial economic development, trade, and political relations with Africa rooted in principles of "South-South Cooperation." Each FOCAC summit or major meeting has produced a concrete action plan for Sino-African cooperation. The PRC also uses these gatherings to offer African countries debt relief and diverse development assistance, and to sign multiple business, trade, and cooperation agreements with them. It also highlights China's record of fulfilling its past assistance pledges. The most recent FOCAC Summit took place in Beijing in November 2006. It was reportedly the largest international event ever held in China; it drew China's top leaders and 48 high-level African government delegations, including 41 heads of state. At the summit, PRC President Hu Jintao announced eight major new PRC efforts to strengthen the Sino-African "strategic partnership" under FOCAC, pledging that China would: Double its level of year 2006 assistance to Africa by 2009. Provide $3 billion in "preferential loans" and $2 billion in "preferential buyers' credits" targeted at poor African countries by 2009. Establish a China-Africa Development Fund worth an eventual $5 billion to encourage Chinese companies to invest in Africa and provide support to them. Build a headquarters for the African Union in aid of African unity and integration. Cancel all the interest-free government loans due at the end of 2005 owed by poor African countries maintaining diplomatic relations with China. Increase the number of items subject to Chinese duty-free treatment exported by poor Africa countries with diplomatic ties with China from 190 to 440. Create three to five trade and economic cooperation zones in Africa by 2009. By 2009 deploy 100 top Chinese agricultural experts to Africa; establish 10 agricultural technology centers; build 30 hospitals; provide about $40 million in grants for anti-malaria drugs, prevention, and construction of model treatment centers; deploy 300 PRC Peace Corps-like volunteers to Africa; build 100 rural schools in Africa; train 15,000 African professionals; and double the number of PRC government scholarships for African students from 2,000 to 4,000 per year. China maintains an extensive network of diplomats in Africa, many conversant in local languages. There are PRC embassies in all but the four African countries with which Taiwan has ties (apart from Somalia, where its embassy is closed for security concerns). It also has commercial counselor offices in 40 African countries and seven consulates-general in five of them. Frequent leadership exchange visits, notably including multiple trips to Africa by top PRC officials such as President Hu Jintao and Premier Wen Jiabao, bolster its diplomatic presence. China's foreign ministers have visited Africa annually since 1990. Visiting PRC political VIPs, often accompanied by large business and ministerial delegations, sign major bilateral cooperation agreements and announce large, often PRC state-financed business deals. Top African leaders make frequent reciprocal visits. Diverse lower-level exchange visits also occur, and often include training for African officials including diplomats, economic officials, business professionals, journalists, and other key decision and opinion makers. There are also exchanges between legislatures, the PRC Communist Party and African political parties, and local governments, to which China periodically provides in-kind material assistance. China is also reaching out to Africa at the continental level. China is a small contributor to the African Development Bank (AfDB), but in May 2007 it hosted the bank's annual meeting. The event, attended by Premier Wen Jiabao, featured various events highlighting PRC investment and development relations with Africa, including: China's approval of an initial $1 billion capitalization of the China Development Bank (CDB)-administered China-Africa Development Fund, which is slated to be expanded to $5 billion in total and is designed to fund PRC firm equity investments and business deals in Africa related to commodities, infrastructure, agriculture, manufacturing and industry. A pledge by China's Export-Import (ExIm) Bank to provide $20 billion in loan funding for diverse projects in Africa from 2007 through 2009. China's membership in the West African Development Bank and the CDB's signing of cooperative "framework agreements" with the East African Development Bank and the Eastern and Southern African Trade and Development Bank, among others. China has stepped up ties with the African Union (AU), attending key AU summits in 2006 and 2007. It is an observer in several African sub-regional organizations. In May 2007, after appointing its first Special Representative on African Affairs and Darfur, Liu Guijin (China's former ambassador to South Africa and Zimbabwe, and the former head of the PRC Foreign Ministry's African Affairs Department) China agreed to finance the construction of a $100-$150 million AU headquarters, fulfilling President Hu's 2006 FOCAC summit pledge. The PRC has also provided funding for the AU peacekeeping missions in Sudan's Darfur region and in Somalia, and occasionally provides some humanitarian assistance in Darfur and elsewhere. Beijing provides training in China for African military officers, technical aid related to its sale of military equipment in Africa, and other capacity-building help for African militaries, but public information on the scope and content of such activities is lacking. There are PRC military-to-military exchange accords with a reported 25 African countries. Only nine of a global total of 107 Chinese military attaché offices are located in Sub-Saharan Africa, however, and no African states have to date participated in joint military exercises with the PRC. In its China ' s African Policy paper, the PRC pledged to boost military aid and help Africa fight crime by offering judicial and police training and cooperation, and by setting up a channel for intelligence exchange targeting" non-traditional security threats," including terrorism, small arms smuggling, drug trafficking, and transnational economic crime. International peacekeeping is an emerging area of Chinese engagement in Africa. Chinese military or police personnel have been seconded to all but one of the current U.N. peacekeeping operations (PKO) in Africa. China has deployed a unit to the U.N. PKO in Darfur, Sudan. Most PRC PKO contingents are made up of military observers or functional units (e.g., engineering, transport and logistics, and medical groups). China has also donated equipment for peacekeeping purposes to the Economic Community of West African States and has aided the African Union Mission in Sudan. China has long sold arms to Africa. Apart from small arms, these exports have consisted mostly of artillery, armored personnel vehicles, naval boats, and aircraft. In recent years, arms deals with Sudan, Nigeria, countries in the Horn of Africa, and Zimbabwe, some involving military aircraft transfers, have drawn attention. From 2003-2006, China is estimated to have been the third largest exporter of arms to Africa, after Germany and Russia, having provided about 15.4% ($500 million) of a $3.3 billion total in global sales to the region. PRC military vehicles and equipment tend to be simple and rugged, making them attractive in African markets. China is reportedly a key supplier of a variety of cheap small arms in Africa, notably including generic AK-47-type assault rifles and police equipment. The United States has diplomatic relations with each of the 48 countries in sub-Saharan Africa, and maintains embassies in 43 of them. It has also recently established diplomatic ties with the African Union; the AU and the United States both maintain ambassadors who are entirely devoted to supporting their mutual relations. African countries without U.S. embassies (Comoros, Guinea-Bissau, Seychelles, Sao Tome, and Somalia) are served by U.S. embassies in neighboring countries. African countries also host regular bilateral visits by U.S. officials, but top U.S. officials tend to visit Africa less frequently than do their Chinese counterparts. However, the Assistant Secretary of State for Africa, Jendayi Frazer, and other officials of the State Department's African Affairs Bureau, travel frequently to Africa, and are extensively engaged in U.S. diplomacy aimed at conflict mediation, democracy promotion and other issues. Under both Republican and Democratic administrations, U.S. policy toward Africa has generally emphasized five policy areas: democracy-building and adherence to human rights, including conflict mitigation; socioeconomic development; trade promotion; investment; and, to a lesser extent, environmental protection and management. Since early 2006, these objectives have been integrated into the U.S. Foreign Assistance Framework, which defines the goals of U.S. engagement with Africa, as well as other world regions. It is a part of the Bush Administration's "Transformational Diplomacy" policy agenda, which endeavors to use U.S. "diplomatic power to help foreign citizens better their own lives, build their own nations, and transform their own future." Efforts to combat Africa's HIV/AIDS epidemic, authorized by the 2003 President's Emergency Plan for AIDS Relief (PEPFAR), have been a large priority as well. The United States, together with other leading western donor governments, has also prioritized African development within the context of the G8 Group of countries, which have formed an entity called the Africa Partnership Forum (APF). It is made up of key donor governments, representatives of the African Union, Africa's eight regional economic communities, and a variety of multilateral intergovernmental organizations. It monitors how effectively policy and financial commitments to African developmental goals by donor and African governments and governmental organizations are being pursued. It also looks for ways to improve or better coordinate such efforts, many of which revolved around meeting the U.N. Millennium Development Goals. Unlike China's putative policy of "non-interference" in countries' internal affairs, under the Clinton and Bush administrations, U.S. policy in Africa has increasingly tied U.S. assistance to recipient countries' performance in meeting criteria relating to economic, governance, and human and political rights benchmarks. In Africa, as elsewhere, with some exceptions, U.S. non-humanitarian bilateral assistance is suspended automatically when undemocratic changes of government take place or when countries substantially fail to repay U.S. loans. Most recent U.S. administrations, including the present one, have also emphasized the key role that trade and investment play in increasing Africa's long-term economic growth and development; reducing its need for foreign aid; and spurring democratization by empowering its people economically. U.S. trade with Africa is small, comprising in the range of 1-2% of U.S. global trade in most years, but is growing. Trade volumes are dominated by U.S. imports from Africa, but U.S. exports to Africa are also steadily growing. Just over 18% of U.S. oil comes from Africa, and oil makes up over 76% of the value of all imports from Africa. A primary vehicle for fostering trade is the African Growth and Opportunity Act (AGOA), enacted in 2000 and amended several times since. It provides duty-free treatment for most imports, and certain other trade capacity-building benefits. AGOA seeks to boost bilateral U.S.-African trade, spur African manufacturing export growth, and help integrate Africa into the global economy. It also seeks to foster African economic reform efforts, provide improved access to U.S. credit and technical expertise, and maintain a biennial high-level dialogue on trade and investment, the U.S.-sub-Saharan Africa Trade and Economic Forum. Forty African countries are AGOA-eligible. A variety of other programs also fund trade capacity building in Africa and the promotion of U.S. exports to Africa. Following the September 2001 terrorist attacks upon the United States, security and military relations began to play an increasingly important role in U.S.-Africa official relations, particularly in the areas of regional and international peacekeeping mission assistance, peacekeeper training, and bilateral counter-terrorism (CT) cooperation. This increase followed a post-Cold War decline in arms sales and security cooperation. The United States has helped mediate ends to multiple African civil wars and crises. It has assisted in the deployment of multiple regional peacekeeping missions, and it substantially funds U.N. peacekeeping missions that have in most cases been subsequently deployed. The creation and dialogue over possible modes of regional deployment of the new U.S. military Africa Command (AFRICOM) has recently played a high-profile role in U.S.-African diplomatic relations. AFRICOM is being designed to include a significant State Department and USAID component, and to foster increased coordination between U.S. military and civilian foreign policy goals, though such ends have been the focus of some criticism. AFRICOM is being designed primarily to support U.S. strategic objectives by working with African states and regional organizations to strengthen regional stability and security through military professionalization and capacity building. CT programs and an emergent set of counter-narcotics programs will also be integrated into AFRICOM's mission. China is providing an increasing amount of official development assistance (ODA, i.e., aid that is at least 25% gratis ) to Africa, but the vast majority of Chinese "assistance" to Africa consists of a large and growing amount of state-backed commercial and bilateral credit that bolsters Sino-African trade and investment ties. This makes comparisons with U.S. development assistance difficult. Much Chinese credit is "tied"—that is, its recipients must agree to use such assistance to buy or accept goods, services, or credit from China. Tied aid was long a common feature of U.S. and European aid to Africa, but with some exceptions, in recent years many Western donor governments have begun to provide most of their assistance to Africa as grants. Levels of Chinese ODA are reportedly significantly lower than those of major developed country donor governments, but this is in part due to the manner in which China offers assistance. The PRC describes a variety of grants, interest-free bilateral state loans, and concessional, low-interest and market rate loans to and from state or state-owned enterprises (SOEs) that benefit or relate to Africa as "assistance," and these resources are often merged conceptually and in practice. In addition, there is a lack of public data about them. They are therefore difficult to reliably measure and disaggregate, reportedly even for the Chinese government. There are some reports that China may develop a unified official aid structure, which would allow China to more effectively measure and assess the amounts and effectiveness of its aid. Key sources of PRC "assistance" in Africa include the state-owned Export-Import (ExIm) Bank of China, which provides official PRC bilateral concessional loans, export credits, and international loan guarantees. The Aid to Foreign Countries Department of the Ministry of Commerce (MOC) manages and executes PRC bilateral foreign aid policy, budgeting, and project activities by controlling the bidding and vetting processes for projects undertaken by PRC firms using soft loans. It also loosely regulates and aids these firms in Africa. The China Development Bank (CDB), a "development-oriented financial institution"supervised by the PRC State Council, the PRC's supreme administrative decision-making organ, administers the new China-Africa Development Fund. Functional ministries (e.g., Health, Education, Agriculture) deploy technical advisory and training teams to Africa. A variety of other finance and export agencies and provincial or urban organizations, such as chambers of commerce, and export promotion and foreign training entities, also play a role in Chinese assistance to Africa. Ministry of Foreign Affairs (MOFA) and MOC officials advise top decision-makers on African assistance policy and vet other agencies' projects. Aid policy guidance is provided by the State Council in coordination with the Communist Party's foreign affairs unit and the State Development and Planning Commission, which sets out PRC economic goals. About 30% of China's bilateral treaties signed in 2005 and 2006 were with Africa. Most relate to economic, medical, and technical cooperation, or the provision of PRC loans or aid, but others pertain to legal, tax, and diplomatic ties. China's aid programs are designed to support goals of PRC foreign policy. Large projects often consist of integrated packages of bilateral, commercial, and military aid and/or political agreements. However, aid projects reportedly also tend to be designed and managed on a country-by-country basis, largely in the absence of a common defining functional or regional policy. This somewhat piecemeal approach appears driven by the large, operationally autonomous, and sometimes rival nature of the ministries and firms that execute PRC assistance projects, and by tensions between PRC foreign policy goals and the profit-driven incentive structure of the many Chinese firms that execute many PRC bilateral projects in Africa. PRC business activities that may conflict with or undermine PRC foreign policy goals in Africa pertain to working conditions; worker safety; pay levels; competition with African firms; environmental abuses; and alleged poor quality workmanship. The PRC is making some efforts to regulate Chinese firms in Africa and avoid such practices, but these are reportedly limited by bureaucratic barriers, conflicting chains of authority, and political rivalries among PRC institutions. While PRC business and foreign policy goals may in some cases clash, in others they dovetail. PRC subsidies for SOEs, for instance, may prompt them to pursue projects that are economically inefficient, but accomplish long-term strategic PRC investment and commodity access goals. Such subsidies may allow commodity purchases at above market prices in order to guarantee supply, or foster unprofitable bids for projects that seek to curry favor for future contracts or better bilateral ties. Accurate, uniform data on PRC aid flows to Africa are not available. Educated guesses as to the total annual level of these flows range widely, in part because some try to break out ODA and non-ODA components, while others do not. Africanist scholar Deborah Brautigam reports that PRC foreign aid to Africa totaled $1.4 billion for 2007, up from about $450 million a year a decade earlier, and that in the beginning of the present decade, 44% of that aid went to Africa. She uses that figure to estimate PRC ODA for Africa at $462 million in 2006 and $625 million in 2007. She notes that President Hu's 2006 FOCAC pledge to double the PRC's year 2006 level of assistance to Africa by 2009 would raise China's grant aid to Africa to the level of $1 billion per year. However, as previously noted, much of China's assistance for Africa takes the form not of ODA but of a variety of cheap loans. Total outstanding Ex-Im loans to Africa, both concessional and non-concessional, in the infrastructure sector alone reportedly totaled $12.5 billion as of mid-2006, and have grown rapidly in recent years. Of these, a reported 80% went to Angola, Nigeria, Mozambique, Sudan, and Zimbabwe, and were heavily weighted toward infrastructure construction. In May 2007, China's State Council approved the China Development Bank's (CDB) initial $1 billion capitalization of the eventual non-ODA $5 billion China-Africa Development Fund. In early 2007, the CDB had $1 billion in current loans outstanding in Africa and was considering funding up to 30 projects in Africa, mostly in agriculture, manufacture, and infrastructure, worth about $3 billion. PRC ODA to Africa currently cannot be compared directly to ODA flows to Africa from other donors due to lack of data and because it is counted differently; China reportedly only counts subsidized bilateral loan interest, for instance, while Western donors count such loans' full face value. Direct U.S. bilateral and regional assistance to Africa has steadily risen under the Bush Administration. The United States also provides assistance to Africa indirectly, through international aid and development organizations. Bilateral assistance supports the goals and program areas outlined under the Foreign Assistance Framework (see above under section on " U.S. Relations " with Africa). The allocation of such funding by account (funding levels) and by objective and program area (percentage share) is shown in Tables 10 and 11 , below. In comparison to China, the United States provides most of its assistance to Africa in the form of conventional Official Development Assistance (ODA), rather than trade finance, export promotion or trade capacity building assistance. U.S. funding for such efforts is significantly lower than that from China, and is also much smaller than that for other types of U.S. development aid provided to Africa. Trade promotion and capacity building assistance has, however, grown steadily, from $80.8 million in 1999 to $504.8 million in 2007. Most conventional U.S. development assistance to Africa is provided by USAID, as shown in the tables below. The Bush Administration, however, has provided an increasing amount of such aid under novel foreign aid mechanisms. Two signature, multibillion dollar bilateral assistance programs proposed by the Bush Administration and authorized and funded by Congress that have had a major impact in Africa are the President's Emergency Plan for AIDS Relief (PEPFAR) and Millennium Challenge Corporation projects. PEPFAR was enacted into law in 2003 as an initiative to provide $15 billion dollars over five years to combat HIV/AIDS, tuberculosis (TB), and malaria, with the majority of funding supporting AIDS programs. PEPFAR substantially benefits Africa, the global region most severely affected by AIDS, and thus represents a very large U.S. commitment to assist Africa in the areas of disease prevention, treatment, and care. From 2004 through 2008, the Congress appropriated approximately $17.4 billion for programs coordinated under PEPFAR, the largest single bilateral healthcare assistance effort globally. Of this amount, roughly $9.7 billion supports AIDS programs in sub-Saharan Africa. A high proportion of PEPFAR AIDS funding is channeled to 15 "Focus Countries" where the AIDS disease burden is very high, and 12 of these countries are in Africa. Over 90% of PEPFAR funding in Africa goes to them. The United States also provides AIDS funding to Africa through multilateral organizations, notably the Global Fund to Fight AIDS, Tuberculosis, and Malaria. The Millennium Challenge Account (MCA), proposed by President Bush in 2002 and authorized by Congress in 2004, is managed by the Millennium Challenge Corporation (MCC). It provides assistance to developing nations that must meet eligibility requirements related to governance, investments in people, and the fostering of entrepreneurship and free markets. There are two kinds of MCC programs: compacts, which are multifaceted, benchmarked development agreements that a recipient country agrees to carry out using MCC funding; and threshold programs, which support the efforts of qualifying prospective compact countries to formulate compact proposals. Currently, the full amount of assistance to be provided in support of a multi-year compact is obligated when the compact is signed. Compacts worth a total of $3.1 billion and ranging from $109.8 million to $698.1 million each have been signed with Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Mozambique, and Tanzania. There are also threshold programs with Tanzania, Zambia, Kenya, Uganda, Niger, and São Tomé and Príncipe worth a total of $111.26 million. The MCC also funded threshold programs for several countries that now have compacts. In addition, Mauritania and Rwanda are threshold program-eligible, and Namibia and Senegal are compact assistance-eligible, but none of these countries have signed MCC assistance agreements. The United States is viewed favorably in much of Africa, according to a 2007 Pew global opinion poll and other polls. Indeed, the United States is more popular in most African countries than in most other world regions. According to the same Pew poll, however, many Africans hold highly positive views of China and of the manner in which it is spreading its influence and engaging in Africa. In most countries, respondents viewed both Chinese and U.S. influence in their countries as substantial, but in many countries, they saw that of China as growing more rapidly than that of the United States. On average among all surveyed countries, 70% saw China's influence as growing more rapidly than that of the United States. In the 2002 Pew Global Attitudes Survey, conducted in seven nations, the United States was favorably viewed by 74% of respondents. Five years later, in a 2007 survey of those same countries plus three others, it garnered a 72% favorable rating. Levels of support were divided along religious lines, with support measured in the mid-90 th percentile among Christians but with favorable/unfavorable ratings roughly evenly divided among Muslims in Nigeria and Ethiopia, Africa's two most populous countries with sizable adherents of both religions. Tanzania's large Muslim and Christian populations were divided by only 8% on this measure, and both groups generally held less favorable views of the United States than respondents in many other countries. "American ways of doing business" were viewed more favorably in Africa than in any other world region, in several cases in the range of 74% or higher. In general, African Muslims viewed the United States more favorably than Muslims in other regions. Majorities in most African countries believed that U.S. foreign policy does take the interests of countries like theirs into account. In all African countries surveyed except one (Cote d'Ivoire), support for the U.S.-led war on terror waned between 2002 and 2007, in some cases substantially, although Christian populations tended to view such efforts more favorably than Muslim ones. Opinions on whether U.S. troops should be withdrawn from Afghanistan and Iraq, however, differed substantially among countries surveyed. AIDS and infectious diseases were viewed most commonly by Africans as the leading global threat, which would indicate that substantial U.S. AIDS and heath sector assistance is likely to be viewed favorably and as highly relevant in Africa. The growing gap between the rich and poor was generally named by Africans as the second most pressing global threat, which would suggest that U.S. trade and development assistance are likely to be welcomed by Africans. Across Africa, the impact of U.S. engagement in Africa is viewed positively in most countries, but substantially more respondents see the results of China's involvement in Africa as beneficial. An average of 78% of respondents in 10 African countries viewed Chinese influence as good, while 13% viewed it as bad. By comparison, 60% saw U.S. influence as good, and 27% saw it as bad. In several countries, favorable views of China were in the range of 10% to 20% higher than favorable views of the United States. Chinese leaders have made a concerted effort to expand diplomatic and commercial relations with the Middle East and North Africa since the mid-1990s. As in other regions, growing commercial ties facilitated the development of closer political relationships between China and many of its Middle Eastern counterparts. State-owned and private Chinese firms have signed billions of dollars of construction, infrastructure, and technology contracts with regional counterparts over the last ten years, and Chinese leaders and diplomats have carefully cultivated a wider array of political relationships based on perceived mutual interests. While the United States remains the dominant external political and military actor in the Middle East, the decline in public support for U.S. policies in many Arab states and Chinese efforts to establish broad commercial linkages across the region have strengthened China's position relative to the United States in some non-official channels. Today, observers in the Middle East, Asia, the United States and Europe are increasingly referring to renewed ties between China and the Middle East as a revival of the old Silk Road, anchored by the long-term logic of Chinese demand for energy resources and desire in the Middle East for domestic and foreign investment opportunities. A shared focus on commercial development has helped stabilize these renewed ties in spite of potential political differences; as one analyst has observed, the governments of China and many of its Arab counterparts have demonstrated an "absolute lack of interest in interfering in one another's domestic policies." China's non-interference approach has provided a stark contrast to the reform-oriented and at times interventionist policies pursued by the United States since 2001. Tang Zhichao, a researcher at the China Institute of Contemporary International Relations in Beijing, has argued that "China's development model is very popular in the Middle East and [Chinese] investment has helped lessen the region's dependence on the US." As noted above, a long history of Chinese cultural and commercial interaction with the Middle East has given participants on both sides of the recent revival a rich selection of precedents and symbols to draw on when framing new relationships. The idea of a revival of the ancient Silk Road has proven to be the most popular of these symbols, but others, such as the 15 th century naval voyages to the Middle East by a Muslim Chinese imperial explorer named Zheng He, also have reemerged as common reference points. In order to build on these symbolic and historical linkages, Chinese and Arab leaders have incorporated cultural and educational programs into their broader commercial and diplomatic outreach efforts. The China-Arab Cooperation Forum (see below) has provided an umbrella for many of these programs, including Chinese efforts to train Arab managerial and technical personnel and a three-week Arab Cultural Festival that was held in Beijing and Nanjing in 2006. At the 2008 Forum ministerial meeting in Bahrain, China and its Arab counterparts announced plans to expand existing training programs and to alternate hosting arts festivals in the future. A series of follow-on conferences are planned through 2009. In addition to the educational training offered under the auspices of the Forum, China also has offered scholarships to hundreds of Arab students studying computer technology, agriculture, medicine, and social sciences. Arab governments have made similar efforts to strengthen cultural and educational links to China. Saudi Arabia has created Chinese language study programs to prepare Saudis to work in the Jizan Economic City, where planned Chinese investments in aluminum production and other industries will create thousands of new jobs (see below). Saudi Arabia also has offered loans to support Chinese government education projects. Arab television stations regularly feature Chinese documentaries, and prominent Arab television networks like Al Jazeera have signed cooperation agreements with China's Central Television network (CCTV) covering training and program sharing. The U.S. government has long supported educational programs across the Middle East. There is no single U.S. government agency or office responsible for coordinating educational outreach in the Middle East. Instead, several agencies and initiatives both at the bilateral and multilateral levels focus on education. They include the following: MEPI is managed by the State Department's Partnership Initiative Office (PI), which oversees MEPI grants to foundations and non-governmental organizations. MEPI spends approximately 25% of its overall budget (approx $75 million in FY2007) on education reform programs. Since FY2002, MEPI has distributed small grants to fund English language and early reading programs, women's literacy initiatives, student exchanges, and Arabic books for elementary school children. In general, MEPI programs tend to be relatively small with individual grants ranging from $500,000 to $5 million. Programs also tend to be focused on a regional scale rather than on one particular country. The United States Agency for International Development (USAID) supports educational development and reform programs in Iraq, Egypt, Jordan, the West Bank and Gaza Strip, Lebanon, Morocco, and Yemen. In the education sector, USAID has identified three key challenges to educational development in the Middle East and Asia: (1) poor quality of education; (2) limited access to schooling for girls; (3) inadequate relevance of the type of content taught in many schools, specifically an over-reliance on religious education. See Table 12 . According to USAID officials, the United States has helped fund the following textbook and curriculum reform programs in the Arab world: Egypt—A book program for classroom libraries in primary schools in Alexandria will be modeled as a new National Book Program. USAID also helps sponsor the production of Alam Simsim (Sesame Street), which draws an annual audience of 3.5 million children. Jordan—USAID supports 100 public kindergartens, field-tests new curriculum, and is developing an accreditation system in partnership with the government of Jordan. Yemen—Teacher and student kits for more than 540 students and 37 teachers in grades 1-9 have been developed for dissemination. Through foreign operations appropriations legislation, Congress has funded the American Schools and Hospitals Abroad program (ASHA) as part of the overall Development Assistance (DA) appropriation to USAID. According to USAID, ASHA is designed to strengthen self-sustaining schools, libraries, and medical centers that best demonstrate American ideas and practices abroad. ASHA has been providing support to institutions in the Middle East since 1957, including grants to the American University of Beirut and the American University in Cairo—two of the most prestigious higher education institutions in the region. The State Department's Bureau of Educational and Cultural Affairs, now headed by Assistant Secretary of State Goli Ameris, an Iranian American, has received additional funding in recent years for outreach programs to the Middle East. One such program, the Youth Exchange and Study (YES), was established in October 2002 to provide scholarships for secondary school students from countries with significant Muslim populations to spend up to one academic year in the United States. The Bureau also sponsors the West Bank Global Connections and Exchange Program, which assists schools in the West Bank communities of Ramallah, Bethlehem, and Hebron and brings Palestinian students to the United States to study at U.S. universities. Since the September 11, 2001, terrorist attacks, many experts have stated that the fight against terrorism cannot be won using force alone; it must be accompanied by a sophisticated public diplomacy effort that seeks to counter anti-American views commonly found in the Arab world and in Muslim-majority countries. The 9/11 Commission Report also stressed that while U.S. public diplomacy, trade and cultural exchange, and international assistance programs are necessary, ultimately, it is U.S. policies in the region that fuel anger and resentment. According to the report, "Right or wrong, it is simply a fact that American policy regarding the Israeli-Palestinian conflict and American actions in Iraq are dominant staples of popular commentary across the Arab and Muslim world." Increasingly, public debate over how best to win the "struggle of ideas"in the Arab and Muslim world has shifted away from the "means" (policy instruments) and toward the "ends" (overall direction of U.S. policy). Critics charge that U.S. efforts to highlight its outreach and assistance to Muslim societies has been overtaken by the negative Arab and Muslim reaction to alleged human rights abuses, such as at Abu Ghraib and Guantanamo Bay. Furthermore, many Arabs and Muslims feel that the United States continues to place its strategic regional interests above those of human rights and democracy by insufficiently protesting alleged abuses committed by friendly regional governments under the guise of the war on terror or regional stability. There has been a discernible shift in Administration strategy toward communicating with overseas Arab and Muslim audiences since 2005. Whereas the Administration's initial strategy following the terrorist attacks of September 11, 2001 focused on marketing "shared values" and promoting American culture, the U.S. State Department and the Broadcasting Board Governors (BBG) have focused more recently on engaging foreign audiences in a discussion and explanation of U.S. policies. This change in the U.S. approach toward public diplomacy may reflect recommendations published in numerous government and independent reports over the past several years that have chronicled the shortfalls in previous U.S. public diplomacy strategy. Critics asserted that former U.S. initiatives, such as the now-defunct "Hi" magazine, a U.S. State Department-financed monthly Arabic-language lifestyle magazine which was geared toward readers between the ages of 18 and 35, lacked depth and focused too heavily on U.S. popular culture and education, areas that are generally appreciated and respected by millions of young people in Arab and Muslim-majority countries. As overall U.S. funding for public diplomacy has increased, policymakers have redirected U.S. efforts toward confronting pan-Arab media channels, such as the Qatari government-funded Al Jazeera, which has an admitted anti-American editorial slant to its broadcasts. In 2006, Under Secretary for Public Diplomacy and Public Affairs Karen Hughes instituted new programs, such as a Rapid Response Unit to counter negative media stories about the United States in the Middle East. Under Secretary Hughes also allowed diplomats and ambassadors to appear more frequently on stations like Al Jazeera to give interviews. In her testimony before the House Appropriations Committee in April 2007, Hughes noted that the U.S. presence on Arab media had increased by 30% since late 2006. Overall, some observers have praised the new direction in U.S. public diplomacy toward the region, while arguing that much remains to be done to overcome earlier setbacks. Others continue to highlight shortcomings and call for a redesigned policy. Until the late 1990s, Chinese-Arab diplomatic relations were limited in scope, and focused on China's pursuit of diplomatic recognition, Chinese attempts to purchase advanced military technology from states such as Israel, and Middle Eastern governments' purchases of various arms systems from China. China's economic growth and subsequent turn toward more active global diplomacy heralded an expansion of political relations with states across the Middle East, as in other regions. Many analysts have sought to explain the expansion of Chinese political relations in the Middle East as a function of China's growing demand for energy resources. Chinese diplomats acknowledge their interest in developing energy linkages to the Middle East, but argue that the broadening of China's political relations in the region creates mutual benefits independent of increasing trade in energy resources. China's leaders highlight their longstanding rhetorical support for Arab and Palestinian causes and the steady growth of mutual investment in non-energy related fields as indicators of their wider interest in the region. China's diplomatic engagement with the Middle East region has grown through successive gestures, initiatives, and commitments. China's rhetorical support for nationalist causes in various regions was an established feature of its Cold War era diplomacy. During the 1990s, Chinese leaders began making stronger and more clear policy statements on controversial Middle East policy questions such as Israeli-Arab peace negotiations. Chinese leaders now frequently describe their public positions on the Israeli-Palestinian issue as being based on a belief in "the Palestinian people's just cause" and the principle of "land for peace," while endorsing international benchmarks such as the Quartet Roadmap and a two-state solution to the conflict. At times, Chinese leaders have outlined regional policy differences with the United States in sharper terms, such as then Chinese President Jiang Zemin's 2002 statements in Iran that "Beijing's policy is against strategies of force and the U.S. military presence in Central Asia and the Middle East region," and that "one of the primary issues for China is to protect developing countries from the pretensions of the United States." For the most part, however, China has sought to position itself as an honest broker on most issues, while facing challenge in balancing its interests with international expectations on issues such as the international confrontation with Iran over its uranium enrichment activities. Rhetoric aside, the Chinese government created the position of special envoy to the Middle East in 2002 to provide a sustained, high-level, and agile Chinese diplomatic presence in the region. During his three years as the first Chinese special envoy, Ambassador Wang Shijie frequently visited Israel, the Arab states, and Iran. His successor, current special envoy Ambassador Sun Bigan, also frequently visits the region and has enjoyed unprecedented access to regional leaders and multilateral summits organized by the Arab League. For example, he attended the recent Arab Summit in Damascus, which issued a resolution calling for closer relations between the Arab world and China. According to Ambassador Sun, China's special envoys have worked to create a balance in which, "generally speaking, the Arab countries show support to China on the Taiwan issue, the Tibet issue and the issue of human rights" and, "China also supports the Arab countries' sovereignty, territorial integrity and legitimate national rights." Prominent Chinese Foreign Ministry figures and members of China's national leadership have visited the region in support of agendas and initiatives involving trade, cultural exchanges, and political outreach. Leaders and ministers from the Middle East also have visited China with increasing frequency. Chinese leaders have supplemented exchanges of visits by envoys and ministers with tangible commitments of Chinese military forces to regional peacekeeping operations in Lebanon and with initiatives designed to institutionalize China-Arab cooperation and consultation. A 182-member Chinese engineer battalion deployed to southern Lebanon in April 2006 in support of the long-running United Nations Interim Force in Lebanon (UNIFIL) mission. Following the summer 2006 war between Hezbollah and Israel in which one Chinese peacekeeper was killed and several were wounded, China expanded its UNIFIL deployment, which focuses on mine and unexploded ordnance removal. The China-Arab Cooperation Forum, first proposed in 2000, was established in January 2004, at a joint press conference with China's then-Foreign Minister Li Zhaoxing and Arab League Secretary General Amr Moussa in Egypt. The Forum brings together officials from China and the member states of the Arab League, who meet to discuss opportunities for cooperation in cultural, economic, and political fields. Since 2004, three biannual ministerial meetings of the China-Arab Cooperation Forum have been held, along with a number of other associated meetings. In May 2008, Chinese Foreign Minister Yang Jiechi told other attendees at the third biannual ministerial Forum meeting in Bahrain that, "China and Arab states are facing similar challenges and opportunities," and argued that, "China and Arab states should make joint efforts to push for a new partnership and achieve peaceful and sustainable development." Israel recognized the People's Republic of China in 1950, but formal diplomatic relations were not established until 1992. Israeli sales of advanced military technology to China have challenged U.S.-Israeli defense relations several times, most notably with regard to Israel's attempt to sell the PHALCON early warning airborne radar system to China during the late 1990s. Israeli-Chinese defense relations developed on the basis of Israel's interest in using overseas defense sales to support domestic defense industries and China's interest in acquiring advanced military technology unavailable because of U.S. and European bans. The most recent confrontation over Israeli military sales to China involved secret sales and planned Israeli upgrades of the Harpy unmanned aerial drone system, and resulted in a serious, though now resolved, freeze in some U.S.-Israeli defense technology cooperation. Positive Chinese-Israeli defense relations have persisted in spite of harsh Chinese critiques of some Israeli policies and China's vocal support for Palestinian and Arab positions. China's overall approach to the Israeli-Palestinian conflict since the 1990s has called for Israel's security to be guaranteed and for a settlement to be reached on the basis of the principle of "land for peace." These positions are a significant departure from past policy, when China actively supported a variety of hard line Palestinian groups, including some that were involved in terrorism in the 1970s and 1980s. China invited Hamas government representatives, including then-Foreign Minister Mahmud al Zahar, to attend the second China-Arab Cooperation Forum in Beijing in 2006. Chinese officials meet regularly with Palestinian President Mahmoud Abbas. Iran established relations with China in 1971 under Shah Mohammed Reza Pahlavi. Chinese energy imports and Iranian purchases of Chinese missile technology have anchored bilateral relations over the years, with the latter continuing to the chagrin of U.S. officials (see below). Iran was the second largest supplier of oil to China in April 2008, shipping an average of 523,000 barrels per day, which marked a 14% increase from April 2007 and made Iran the largest Middle Eastern oil exporter to China. Chinese firms are now engaged in a range of development projects in Iran including infrastructure construction projects involving highways, industrial plants, the Tehran metro, and airport facilities. According to Chinese statistics, China-Iran trade rose 42% in annual terms to $20.589 billion in 2007. Iran is now perhaps the most significant political sticking point between the United States and China in the Middle East, as Chinese commercial interests have clashed with U.S. efforts to isolate Iran internationally and prevent further development of its uranium enrichment technology. Chinese investment in Iran's energy industry is the most significant example of this trend, as many in Congress and the Administration believe that investment in Iran's energy sector could provide the Iranian government with additional revenue generating ability that would limit the effectiveness of international financial sanctions. Several potential Chinese investments are currently under scrutiny. China's Sinopec agreed in December 2007 to a $2 billion investment agreement to develop the Yadavaran oil field in southwestern Iran. The overall purchase agreement could be worth over $100 billion. The China National Offshore Oil Corporation (CNOOC) reportedly is close to confirming a $16 billion investment agreement to develop Iran's North Pars gas field, but reports suggest that a final deal has been delayed in part by "international sensitivity." The Bush Administration has clearly and repeatedly stated U.S. concerns about the North Pars deal. China's Foreign Ministry spokesman Liu Jinchao described the reported CNOOC deal as "nothing beyond a business deal between relevant enterprises," and argued that with regard to international nonproliferation efforts, "actions against Iran should not affect or impair normal economic and energy cooperation with Iran." Speaking in China in April 2008, Iran's Deputy Foreign Minister for Economic Affairs Mohsen Talaie argued that, "Iran and China must cooperate more closely with one another and to consider it a duty to ward off the negative effects of third country's influence in their economic relations." Chinese military cooperation with Iran also has proven to be a recurring problem in U.S.-China relations. China reportedly has provided Iran with anti-ship cruise missile and ballistic missile technology along with related technical assistance. Although China agreed to halt missile cooperation with Iran in the mid-1990s, some Chinese-Iranian military cooperation on missile programs reportedly has continued, and the Administration has sanctioned Chinese firms for supporting Iran's ballistic missile development programs in recent years. The broader implications of Chinese support for Iranian missile development have come into greater focus since 2006, when the Lebanese militia and terrorist group Hezbollah reportedly fired a Chinese manufactured C-802 anti-ship missile that struck an Israeli warship off the coast of Lebanon. The presence of similar C-802 missiles along the Iranian coast remains a source of significant concern with regard to naval and oil transport security in the Persian Gulf and around the strategic Strait of Hormuz, through which tankers carrying close to 17 million barrels of oil pass every day. China and Saudi Arabia established diplomatic relations in July 1990; previously, Saudi Arabia had recognized Taiwan. During the Cold War, Saudi wariness about engagement with communist countries and Chinese views of the Saudi monarchy as reactionary prevented the development of closer political ties. Nevertheless, limited military cooperation proved mutually beneficial, most notably in the sale of approximately 36 intermediate range CSS-2 ballistic missiles to Saudi Arabia in 1987 during the Iran-Iraq war. The sale took most observers by surprise and prompted the United States to seek guarantees from Saudi Arabia regarding the storage and deployment of the missiles. Chinese-Saudi political relations have expanded since the late 1990s in an atmosphere of growing energy and commercial cooperation. In 1999, China's then-President Jiang Zemin was the first Chinese head of state to visit Saudi Arabia. King Abdullah bin Abd Al Aziz pointedly chose China as his first overseas destination as king in January 2006; Chinese President Hu Jintao subsequently visited Saudi Arabia directly after a visit to the United States in April 2006. Some observers have suggested that Chinese leaders may see ties with Saudi Arabia as beneficial to their efforts to counter terrorism and to influence developments within the Muslim populations in China's western provinces. Mutual investment has linked the Saudi and Chinese economies in new ways: the Aluminum Corporation of China (Chalco) is a leading investor in a multi-billion dollar aluminum production project in one of the Saudi Arabia's new economic cities near Jizan; China's Sinopec has drilled for natural gas in Saudi Arabia's Empty Quarter; and Saudi Aramco also has invested in a large refinery and petrochemical facility in China's Fujian province designed specifically to use sour or high-sulfur content Saudi oil. Saudi Aramco and Sinopec signed a memorandum of understanding in 2006 that calls for Saudi Aramco to provide 1 million bpd to Sinopec and its affiliates by 2010. Nevertheless, Saudi oil shipments to China in April 2008 amounted to 434,000 barrels per day, a 31% decrease over April 2007. Iraq recognized China in 1958, and during the Saddam Hussein era, China and Iraq enjoyed close political and commercial relations, supported by Chinese imports of Iraqi oil and Chinese exports of weaponry and industrial goods. During the 1990s, China often opposed the continuation and strengthening of United Nations sanctions against Iraq, and several allegations of sanctions violations by Chinese firms created challenges for U.S.-China relations during the late 1990s and the early months of President Bush's first term in 2001. In 1997, Iraq rewarded China for its support with a $1.3 billion contract to develop the Al Ahdab oil field on a production sharing basis. Although China did not act to develop the field, the contract was seen as indicative of the quid pro quo relationships Saddam sought to build with China and other international powers. China opposed the U.S.-led war in Iraq in 2003, but has not worked to undermine U.S. policy efforts since that time. Rather, China has sought to reestablish a solid relationship with the new Iraqi government; most observers argue that China is seeking to preserve and extend its access to Iraqi oil resources under the new administration. Since 2007, Chinese officials and Iraqi Oil Ministry representatives have been negotiating terms for the reactivation of China's former Al Ahdab concession. China also has agreed to forgive a substantial, but as yet undefined portion of Iraqi debt. China reportedly holds $5.8 billion in Iraqi debt. China does not publicize the total amounts of foreign assistance it gives to individual countries. Available public reports suggest that China's foreign assistance to Middle Eastern countries remains limited, particularly in comparison with the sizeable, long-established foreign assistance programs administered by the United States. As in other regions, China has provided both grant assistance and low interest loans to regional governments to support a variety of projects. The primary beneficiaries of these programs have been countries without significant oil or gas reserves, such as Jordan, although some oil exporters such as Syria have received assistance. China's assistance activities in the region are targeted toward individual training or infrastructure investment projects rather than multi-year development or military assistance programs. The projects are usually administered according to the terms of one-time agreements signed between the recipient government and China, and appear to respond to specific needs and requirements outlined by the recipient country. For example, Egypt has accepted several small low interest loans from China to facilitate textile industry development and investment promotion facilities. Jordan has accepted grant and loan assistance for small budget projects ($1-3 million) related to water infrastructure, information technology, and school equipment. Morocco has received low interest loans for dozens of public works projects, including dam construction. As noted above, China also offers training to hundreds of professionals, academics, and government officials from the Middle East in a number of fields under the auspices of the China-Arab Cooperation Forum and other outreach initiatives. In contrast, the United States remains the leading provider of foreign assistance to many governments in the Middle East, including Israel, Egypt, Jordan, and the Palestinian Authority, the largest recipients of U.S. assistance in the region. U.S. assistance programs support a wide range of development initiatives, military training programs, and reform efforts in nearly every country from Morocco to the Persian Gulf. Multi-billion dollar annual assistance programs for Egypt and Israel have supported the consolidation of the Camp David Peace Treaty since 1979. See Table 13 . China's attempts to portray itself as an honest broker with regard to several controversial international issues in the Middle East appears to be designed in part to improve its public image in the region relative to the United States. Chinese diplomacy and rhetoric does not regularly draw specific contrasts to the United States, but seeks to position China as a defender of principles of self-determination, non-interference in domestic affairs, apolitical commerce, and solidarity with nationalist causes. To the extent that some regional interest groups and populations favor these approaches, China is likely to win supporters that are unwilling to embrace the United States. Among groups and individuals that are critical of regional governments that China enthusiastically embraces or governments to whom the United States provides assistance, China is unlikely to be able to improve its image relative to the United States. Limited polling data is available to facilitate analysis of the relative views of the United States and China across the Middle East. The data included below indicates that in some countries China enjoys a relative advantage in its public image, including in some countries where U.S. assistance programs substantially exceed those of China. Future policy choices by China and the United States, particularly with regard to the U.S. military presence in Iraq, the Israeli-Palestinian conflict, and the international confrontation with Iran will likely have significant implications for the relative public images of both powers. See Table 14 . While China's economic and other elements of soft power with Latin American and Caribbean countries have grown tremendously in recent years, such U.S. linkages with the region are far greater, largely because of geographic proximity and extensive historical and cultural ties. Compared to China's relations with Southeast and Central Asia, security and strategic concerns have not played a significant role in China's relations with Latin America. China is cognizant of U.S. sensitivity over China's increasing involvement in a region traditionally viewed as in the U.S. sphere of influence. As in other regions, China-Latin America relations have deepened because of economic interests on both sides, while both China and Latin America also have a shared interest in promoting the notion of a multipolar world. Moreover, as noted below, China's competition with Taiwan for diplomatic recognition, particularly in the Caribbean and Central America, has been a major driver in its interest in the region. China's growing interest in Latin America and the Caribbean is a fairly new phenomenon that has developed over the past several years. Beginning in April 2001 with President Jiang Zemin's 13-day tour of Latin America, a succession of senior Chinese officials have visited Latin American countries to court regional governments, while Latin American leaders also have been frequent visitors in Beijing. China's primary interest in the region appears to be to gain greater access to needed resources—such as various ores, soybeans, copper, iron and steel, and oil—through increased trade and investment. Beijing's additional goal is to isolate Taiwan by luring the 12 Latin American and Caribbean nations that still maintain diplomatic relations with Taiwan (half of all nations in the world that recognized Taiwan) to shift their diplomatic recognition to China. After several years of increased Chinese engagement with Latin America, most observers have concluded that China's economic involvement with the region has not posed a threat to U.S. policy or U.S. interests in the region. In terms of economic, political, and cultural linkages, the United States has remained predominant in the region. A study that examined the U.N. voting records of several major Latin American countries—Argentina, Brazil, Chile, Mexico, and Venezuela—between 1991 and 2003 concluded that the increased Chinese trade with the region in recent years has had no discernable effect on the voting behavior of these nations. U.S. trade and investment in Latin America dwarfs that of China, while the future growth potential of such Chinese economic linkages with the region is limited by the advantages conferred to the United States by its geographic proximity to Latin America. Moreover, migration patterns to the United States from the region give the United States greater cultural ties and longer-term economic importance to the region than China. For example, remittance flows to the region amounted to almost $67 billion in 2007 (with three-quarters from the United States)—a sum greater than both foreign aid and portfolio investment flows to the region, with remittances making a significant contribution to the economies of several Caribbean and Central American nations. In its policy toward Latin America, China has been careful not to antagonize the United States, and appears to understand that the United States is sensitive to Chinese involvement in its neighborhood. China has taken a low-key approach toward the region, focusing on trade and investment opportunities that help contribute to its own economic development and managing to avoid public confrontation with the United States. Even China's relations with Venezuela are focused on oil resources rather than ideological rapport. China reportedly does not want to become a pawn in a dispute between Venezuela and the United States. Moreover, China reportedly has concerns that Venezuelan President Hugo Chávez's efforts at spreading his populist agenda to other countries in the region could unleash instability and ultimately be detrimental to Chinese trade and investment interests in the region. Nevertheless, other observers contend that China poses a potential threat to U.S. influence and interests in the region. First, some maintain that by presenting an alternative political and economic model—rapid state-sponsored economic growth and modernization alongside political authoritarianism—the PRC undermines the U.S. agenda to advance political reform, human rights and free trade in the region. According to this view, the Chinese model could help strengthen anti-democratic and anti-U.S. political leaders and actors in some countries. Second, according to some analysts, China's regional presence ultimately could have significant strategic implications for the United States in the event of a possible military conflict with China. In this scenario, China could use its human and commercial infrastructure in the region to disrupt and distract the United States in the hemisphere. According to this view, China's increased presence in the region could also provide the country with new opportunities to collect intelligence data against U.S. forces operating in the region. People-to-people contact between China and Latin American and Caribbean countries has been growing in recent years, although it is sill very small compared with widespread U.S. exchanges. In 2006, China established the first Confucius Institute in the region, in Mexico City, with the goal of promoting Chinese language and culture. There is now a second Confucius Institute in Mexico, one in Colombia, and three in Peru. There are almost 100 sister-city relationships between Chinese cites or provinces with their counterparts in 15 countries in the region. Over the past five years, China has designated 17 countries in Latin America and the Caribbean as approved destinations for Chinese citizens to travel as tourists. Such agreements allow the countries to take advantage of the increase in Chinese tourist travel worldwide, which is expected to reach 100 million tourists a year by 2020. Cuba was the first country in the region to receive such status in 2003. Since 2005, 16 more countries in the region have been so designated: Mexico; the South American countries of Argentina, Brazil, Chile, Peru, and Venezuela; the Caribbean nations of Antigua and Barbuda, the Bahamas, Barbados, Dominica, Grenada, Guyana, Jamaica, Suriname, and Trinidad and Tobago; and most recently the Central America country of Costa Rica, which switched diplomatic relations from Taiwan to the PRC in 2007. While Chinese tourism to Latin America to date has not been significant, this could change given the recent tourism agreements with the region as well as the marketing campaigns undertaken by various nations in the region to attract Chinese tourists. U.S.-government sponsored cultural and educational exchanges with the region have been going on for some time and are extensive. Between 1985 and 1996, the U.S. Agency for International Development (USAID) offered a scholarship program, the Caribbean and Latin American Scholarship Program, for more than 23,000 students from the region to receive academic or technical training in the United States. A second ongoing USAID program also began in 1985, the Cooperative Association of States for Scholarships, which has provided two-year scholarships to more than 5,000 disadvantage students and rural professionals from Central America, Haiti, and Mexico. The Fulbright Program provides for the exchange of scholars, students, teachers, and professionals, with several hundred scholarships awarded each year for students from Latin America and the Caribbean to study in the United States, and for U.S. scholars and professionals to study and teach in the region. The Bush Administration launched a Partnership for Latin American Youth in 2007 to bring non-elite students from the Latin America and the Caribbean to study in U.S. community colleges. The State Department sponsors an International Visitor Leadership Program that brings hundreds of professionals from the region to meet with their counterparts in the United States, as well as Citizen Exchanges, with three current projects funded in the region. U.S. cities and counties currently maintain sister-city relationships with 336 counterparts in 13 Latin American and Caribbean countries, with over 70% of these with cities in Mexico. In addition to government-sponsored exchanges, the United States remains a major destination for foreign students from Latin America and the Caribbean. Overall, almost 16% of the U.S. nonimmigrant visas for students and exchange visitor and their families in 2006 were from Latin America and the Caribbean, more than 183,000 visas. In terms of tourism, while China has approved many Latin American and Caribbean countries as approved tourist destinations, geographic proximity ensures that Latin American and Caribbean countries will continue to be the destination for millions of U.S. tourists each year. Language programs abound for U.S. students visiting the region, and many U.S. universities have accredited programs abroad for students to study in Latin American and Caribbean schools. There are two main drivers in China's expansion of its relations with Latin American and Caribbean countries: competition with Taiwan for diplomatic recognition, particularly in the Caribbean and Central America; and strengthened relations with resource-rich countries in the region that could help feed China's resource needs and expanding economy. PRC diplomatic overtures in Latin America also promote China's efforts to foster relations with other developing countries worldwide and further South-South cooperation. For a number of years, China, with some success, has been trying to woo countries away from recognizing Taiwan. Of the 33 independent countries in the Latin America and Caribbean region, China currently has official diplomatic relations with 21, while the remaining 12 nations currently maintain relations with Taiwan (see Table 15 ), a disproportionately large percentage compared with other regions. For decades, Taiwan was a consistent provider of financial assistance and investment in Latin America and the Caribbean in order to nurture its remaining official relationships, a policy often referred to as checkbook or dollar diplomacy. But Taipei now is hard-pressed to compete against the growing economic and diplomatic clout of China, which in recent years has stepped up its own version of checkbook diplomacy. Since 2004, three countries in the region have switched their diplomatic recognition from Taiwan to the PRC: Dominica in March 2004, Grenada in January 2005, and most recently, Costa Rica in June 2007. In late April 2008, President-elect Fernando Lugo in Paraguay announced that his government, which takes office in August, would like to establish diplomatic relations with China. China's overtures in the Caribbean experienced a setback in May 2007, when St. Lucia switched its diplomatic recognition back to Taiwan after ten years of recognizing the PRC. The diplomatic switch was related to the ouster of Prime Minister Kenny Anthony's St. Lucia Labour Party (SLP) from power in December 2006, and the election of a new government led by the United Workers Party (UWP). Taiwan's promises of assistance to the new UWP government included support for public health, education (including the provision of computers and scholarships), and development of the agricultural sector. Over the years, China has signed a variety of bilateral partnership agreements with several countries in the region in order to strengthen relations. The most politically significant of these are known as "strategic partnership agreements." To date, China has signed such agreements with Brazil (1993), Venezuela (2001), Mexico (2003), and Argentina (2004). Additional "cooperative partnership" or "friendly and cooperative partnership" agreements have been signed with Bolivia, Chile, Colombia, Cuba, Ecuador, Jamaica, and Peru. In the 1980s, China began to augment its expertise on Latin America through agreements for Chinese officials to travel to the region to study Spanish, and through the development of think tanks such as the Institute of Latin American Studies of the Chinese Academy of Social Sciences (CASS) and the Department of Studies about Latin America of the Chinese Communist Party. The PRC's ability to develop and expand contacts in the region has been facilitated by a decision by the Organization of American States (OAS) in May 2004 to accept China as a formal permanent observer in the OAS. The OAS has 35 members, including the United States and all 12 of the region's countries currently conferring diplomatic relations on Taiwan. Some 60 countries worldwide are OAS permanent observers, but Beijing has strongly objected to Taiwan's efforts to seek observer status. In addition to the OAS, China has participated in several other regional organizations. Dating back to 1975, China has often sent its observers to the annual meetings of the Agency for the Prohibition of Nuclear Weapons in Latin America and the Caribbean (OPANAL), the organization established in the aftermath of the 1967 signing of the Tlatelolco Treaty prohibiting nuclear weapons in the region. The PRC has been an observer since 1994 to the Latin American Integration Association (ALADI), a 12-member regional organization focusing on trade integration and the goal of a common market. China is a member of the East Asia-Latin American Cooperation Forum (FOCALAE), an organization first established in 2001 that brings together ministers and officials from 33 countries from the two regions for strengthening cooperation in such areas as education, science and technology, and culture. The PRC also is a member of the Asia Pacific Economic Cooperation (APEC) forum that annually brings together leaders of 21 Pacific rim nations (including Taiwan as "Chinese Taipei") as well as the Latin American nations of Chile, Mexico, and Peru. More recently, in March 2007, China signed an agreement with the Inter-American Development Bank (IDB) to formalize talks on the PRC's request to become an IDB member. The bank has launched an internal discussion on whether to accept China as a member. If accepted, China would join Japan and Korea to become the third Asian country to join the IDB. China is already a member of the Caribbean Development Bank based in Barbados. Since Chinese President Jiang Zemin visited Latin America in 2001, high-level visits by senior Chinese officials to the region have been common as have visits by Latin American heads of state to China. Chinese President Hu Jintao's visits to the region in 2004 and 2005 prompted widespread interest in both Latin America and the United States regarding China's growing presence in Latin America. President Hu plans to visit once again in November 2008, when Peru hosts the annual APEC summit. U.S. interests in Latin America and the Caribbean are diverse, and include economic, political and security concerns. Geographic proximity has ensured strong economic linkages between the United States and the region, with the United States being the major trading partner and largest source of foreign investment for most countries in the region. Free trade agreements with Mexico and Canada, Chile, Central America and the Dominican Republic (CAFTA-DR), and Peru have augmented U.S. economic linkages with the region. The region is also the largest source of migration, both legal and illegal, with geographic proximity and economic conditions in the region being major factors in the migration. Curbing the flow of illicit drugs from Mexico and South America into the United States has been a key component of U.S. relations with Latin America for almost two decades. Latin American nations, largely Venezuela and Mexico, supply the United States with over 30% of its imported crude oil. The United States maintains full diplomatic relations with 32 of the 33 independent nations in Latin America and the Caribbean. The exception is Cuba, but even here the United States and Cuba maintain Interest Sections in each other's capitals and, despite comprehensive U.S. economic sanctions on Cuba, the United States is Cuba's fourth most important import market because of the exception to the embargo that allows for the export of agricultural products to Cuba. The United States has remained engaged with Latin American and Caribbean nations since its early history when the United States proclaimed the Monroe Doctrine in 1823 warning European nations not to interfere with the newly independent nations of the Americas. The region has often been described as America's backyard, and extra-hemispheric incursions into the region have met with U.S. opposition. During the Cold War, for example, the United States confronted the Soviet Union over its attempt to install nuclear weapons in Cuba in 1962, and helped nations in the region fight Soviet and Cuban-backed insurgencies and revolutionary regimes in the 1980s. In the aftermath of the Cold War, the United States initiated a summitry process with hemispheric nations that advanced regional cooperation in a wide range of areas such as trade, energy, the environment, and anti-corruption, counternarcotics and anti-terrorism efforts. The first Summit of the Americas was held in 1994, while there have been three subsequent summits, the last in 2005 held in Argentina, and two special hemispheric summits on sustainable development and on economic, social, and political challenges facing the region. The Fifth Summit of the Americas is planned for April 2009 in Trinidad and Tobago. The OAS remains the key multilateral forum in the hemisphere, and the United States remains committed to working through the OAS to resolve regional problems and engage Latin American and Carribean nations on topic of hemispheric concerns. The United States—a key player in the OAS—contributes some 59% of regular OAS funding, and also has contributed millions for specialized OAS programs such as the Unit for the Promotion of Democracy and the Inter-American Drug Abuse Control Commission. The United States also plays a key role in international financial institutions such as the World Bank, the International Monetary Fund, and the IDB that provide considerable financial support and development financing for the region. In the aftermath of the Cold War, U.S. policy interests in Latin America and the Caribbean shifted away from security concerns and focused more on strengthened economic relations, but the September 2001 terrorist attacks in the United States resulted in security interests re-emerging as a major U.S. interest. As a result, bilateral and regional cooperation on anti-terrorism efforts have intensified. The Bush Administration has described the Caribbean region as America's third border, with events in the region having a direct impact on the homeland security of the United States. Cooperation with Mexico on border security and migration issues has also been a key component of the bilateral relationship. Despite the tensions in U.S. relations with Venezuela over the past several years, overall the United States remains fully engaged with Latin American and Caribbean nations. High-level visits are the norm between the U.S. and countries in the region. President Bush has visited the region eight times during his presidency, including six trips to Mexico and travel to nine other countries in the region. U.S. Cabinet-level and other high-levels visits to the region are common as are visits by Latin American and Caribbean heads of state and other officials to the United States. The exact level of China's foreign assistance to Latin America and the Caribbean is uncertain, but reportedly the region receives about 10% of China's foreign aid worldwide, far behind assistance that China reportedly provides to Asia and Africa. Aid to the region appears to focus on bilateral assistance rather than through regional or multilateral institutions, with the objectives of strengthening diplomatic relations and isolating Taiwan. Particularly in the Caribbean and Central America, China has used assistance in recent years as part of its checkbook diplomacy to entice countries in the region to switch their diplomatic recognition from Taiwan, while a number of countries in the region have been adept at playing the two countries against each other in order to maximize financial benefits. Chinese assistance to Dominica and Grenada was instrumental in those countries deciding to switch diplomatic recognition. Costa Rica was also rumored to have been offered substantial assistance, although Costa Rican officials maintain the prospect of increased trade and investment was the primary rationale for the switch to China. In preparation for the Cricket World Cup 2007 played in the Caribbean, China provided assistance and workers to build cricket stadiums in Antigua and Barbuda, Grenada, Jamaica, and even St. Lucia, which subsequently switched its diplomatic recognition back to Taiwan. China also had built a cricket stadium in Dominica in 2004. China also has provided assistance for housing, education (including scholarships as well as the construction of schools), health (including the construction of hospitals), and other infrastructure such as railways and highways. In recent years, China also has provided additional types of assistance to the region, including disaster assistance, debt forgiveness, and concessional loans. In the aftermath of such natural disasters as earthquakes, floods, and hurricanes, China often has responded with assistance. For example, China provided hurricane reconstruction assistance to Grenada in the aftermath of Hurricane Ivan in 2004. In August 2007, China provided support to Peru in the aftermath of a devastating earthquake in the southern part of that country. While most of China's debt forgiveness has been for low-income African countries, China announced in July 2007 that it would write off over $15 million in debt owed by Guyana, one of the poorest countries in the hemisphere. In terms of concessional loans, China's Export-Import Bank provided a $12 million loan to Jamaica in the water sector in 2000. In addition to Jamaica, China has signed concessional loan framework agreements with three other countries in the region—Suriname, Venezuela, and Trinidad and Tobago. In September 2007, China announced that it would provide about $530 million in favorable loans over three years to Chinese companies investing in the Caribbean. In November 2007, China and Venezuela agreed to establish a joint development fund (with a $4 billion contribution from China and a $2 billion contribution from Venezuela) that would be used to finance loans for infrastructure, energy, and social projects in both nations. The Chinese contribution to the fund, made in February 2008, reportedly will be paid back by Venezuela with fuel oil. While the lack of data on Chinese foreign assistance (excluding state-sponsored investments) going to the region makes it difficult to compare Chinese and U.S. assistance, it is safe to assume that U.S. assistance is far greater. Looking at 2005 statistics comparing foreign assistance levels from developed countries to Latin America and the Caribbean, the United States was by far the single largest bilateral donor to the region, accounting for 29% of the $4.6 billion in bilateral assistance. The United States maintains a variety of foreign assistance programs in Latin America and the Caribbean that are designed to achieve a variety of goals, from poverty reduction to economic growth. (See Table 16 .) Aid to the region increased during the 1960s with the Alliance for Progress, while during the 1980s aid to Central America increased as leftist insurgencies were battling governments friendly to the United States and where a leftist movement in Nicaragua had taken control of the government. Since 2000, U.S. assistance has largely focused on counternarcotics efforts, especially in the Andean region, although the Administration has requested over $1 billion in assistance for Mexico and Central America in the Mérida Initiative that would increase security cooperation to combat the threats of drug trafficking, transnational crime, and terrorism. The United States has also sponsored thousands of Peace Corps throughout Latin America and the Caribbean; there are currently some 2,300 volunteers working in 22 countries in the region. The Inter-American Foundation, an independent agency established in 1969, provides funding to nongovernmental and community-based organizations for self-help projects; currently the Foundation sponsors grassroots development project in 15 countries in the region. The Bush Administration's FY2009 foreign aid request for Latin America is for $2.05 billion, compared to an estimated $1.47 billion provided in FY2008 (not including a $550 million FY2008 supplemental request not yet acted upon) and $1.55 billion provided in FY2007. The FY2009 request reflects an increase of almost 40% over that being provided in FY2008. However, if Congress funds the $550 million FY2008 supplemental request for the Mérida Initiative for Mexico and Central America, the FY2009 request would be only slightly higher than the overall amount of $2.02 billion that would be provided in FY2008. U.S. support to counter the HIV/AIDS epidemic in the region has increased significantly in the past several years, with both Guyana and Haiti designated as focus countries under the President's Emergency Plan for AIDS Relief (PEPFAR). For FY2009, the Administration has requested $143 million in assistance to combat HIV/AIDS in the region. In addition to direct bilateral assistance, the United States also provides contributions to multilateral efforts, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria, which provides assistance to many countries in the region. Looking at the top foreign aid recipients in the region, five countries—Colombia, Mexico, Haiti, Peru, and Bolivia—account for the lion's share of U.S. assistance going to Latin America; about 73% of the FY2009 request for the region will go to these five countries (see Table 17 ). As it has been for the past eight years, Colombia is the single largest aid recipient in the region, with U.S. efforts supporting Colombia's counternarctics and counterterrorism efforts; in the FY2009 foreign aid budget request, the country would receive about $543 million or about 26% of assistance going to the region. The United States has not traditionally provided large amounts of foreign assistance to Mexico, but the FY2009 requests includes almost $501 million, accounting for about 24% of aid to the region, with almost $478 million of that under the Mérida Initiative that would increase security cooperation with Mexico to combat the threats of drug trafficking, transnational crime, and terrorism. Assistance to Haiti has increased significantly over the past several years as the United States provides support to the Préval government. The FY2009 request for Haiti is for almost $246 million, or about 12% of assistance to the region. Peru and Bolivia have received significant assistance over the past eight years under the Andean Counterdrug Initiative, now known as the Andean Counterdrug Program. In the FY2009 request, Peru would receive $103 million and Bolivia $100 million. As in many parts of the world, the image of the United States has declined in Latin America over the past several years. According to a 2007 study by the Pew Research Center, favorable views of the United States have declined in the region, with sharp declines in several countries. Among seven countries surveyed in 2007, Argentina had the lowest favorable view of the United States, just 16%, while in two countries, Bolivia and Brazil, less than half the population, 42% and 44% respectively, had favorable views of the United States. In four other countries surveyed, however, a majority of the populations had positive views of the United States: Chile, 55%; Mexico, 56%; Peru, 61%, and Venezuela, 56%. While it might seem strange to see Venezuela in this category given the poor state of U.S.-Venezuelan relations, the 2007 figure actually reflects a 33% drop from the year 2000. In Latin America's view (with the exception of Mexico), China's increasing presence in the region tends to be perceived as a promising trend rather than as something negative, in large part because China's expanding interest in the region appears to be moderate and nonconfrontational. According to one assessment, public opinion of China in Latin America and the Caribbean tends to be positive because Chinese leaders use such concepts such as growth, development, mutual benefits, and non-interference in national affairs when they speak about their aims and goals in the region, characteristics that are viewed positively in the region. For these reasons, the view of China in Latin America, as reflected in the Pew study, tends to be either favorable or mixed. Of the seven Latin American countries in the Pew study, three—Chile, Venezuela, and Peru—had favorable views of China (over 50%), while Brazil, Bolivia, Mexico, and Argentina had mixed views. China's growing economic power is viewed more positively than negatively in six of the seven countries surveyed, while in Mexico, China's growing economic power is viewed as negative and a threat to Mexico's economy by 55% of the population. The balance of opinion toward China and the United States in Latin America tend to be roughly comparable, according to the Pew study. Two exceptions are Argentina, where China is viewed much more favorably than the United States, and in Mexico, where the United States is viewed much more favorably than China. In all seven Latin American countries surveyed, the United States was viewed as being more influential than China in terms of local developments in their countries.

This report compares the People's Republic of China's (PRC) and U.S. projections of global influence, with an emphasis on non-coercive means or "soft power," and suggests ways to think about U.S. foreign policy options in light of China's emergence. Part One discusses U.S. foreign policy interests, China's rising influence, and its implications for the United States. Part Two compares the global public images of the two countries and describes PRC and U.S. uses of soft power tools, such as public diplomacy, state diplomacy, and foreign assistance. It also examines other forms of soft power such as military diplomacy, global trade and investment, and sovereign wealth funds. In Part Three, the report analyzes PRC and U.S. diplomatic and economic activities in five developing regions—Southeast Asia, Central Asia, Africa, the Middle East, and Latin America. China and the United States use tools of soft power in different ways and with varying effects. Since the mid-1990s, the PRC has adopted an increasingly active and pragmatic diplomatic approach around the world that emphasizes complementary economic interests. China's influence and image have been bolstered through its increasingly open and sophisticated diplomatic corps as well as through prominent PRC-funded infrastructure, public works, and economic investment projects in many developing countries. Meanwhile, some surveys have indicated marked declines in the U.S. international public image since 2002. Some foreign observers have criticized U.S. state diplomacy as being neglectful of smaller countries or of countries and regional issues that are not related to the global war on terrorism. According to some experts, U.S. diplomatic and foreign aid efforts have been hampered by organizational restructuring, inadequate staffing levels, and foreign policies that remain unpopular abroad. Despite China's growing influence, the United States retains significant strengths, including latent reserves of soft power, much of which lie beyond the scope of government. Furthermore, by some indicators, China's soft power has experienced some recent setbacks, while the U.S. image abroad has shown signs of a possible renewal. The United States exceeds the People's Republic of China (PRC) in global trade, although the PRC is catching up, and far surpasses China in GDP and foreign direct investment. It continues to be the dominant external political and military actor in the Middle East and political and economic influence in Latin America. The United States maintains formal alliances in Europe and Asia, and far outweighs the PRC in military spending and capabilities. The 110th Congress has held hearings and proposed measures that support U.S. public diplomacy, diplomatic efforts, and foreign aid. Relevant legislation includes the Implementing Recommendations of the 9/11 Commission Act of 2007 (P.L. 110-53) and the Public Diplomacy Resource Centers Act of 2007 (H.R. 2553). This report will not be updated.

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Article I, Section 8, of the Constitution vests in Congress the power "to declare War." Pursuant to that power, Congress has enacted 11 declarations of war during the course of American history relating to five different wars, the most recent being those that were adopted during World War II. In addition, Congress has adopted a number of authorizations for the use of military force, the most recent being the joint resolution enacted on October 16, 2002, authorizing the use of military force against Iraq. To buttress the nation's ability to prosecute a war or armed conflict, Congress has also enacted numerous statutes which confer standby authority on the President or the executive branch and are activated by the enactment of a declaration of war, the existence of a state of war, or the promulgation of a declaration of national emergency. This report examines a number of topics related to declarations of war and authorizations for the use of military force by the United States. It (1) provides historical background on each of the declarations of war and on several major authorizations for the use of force that have been enacted; (2) analyzes the implications of declarations of war and authorizations for the use of force under both international law and domestic law; (3) lists and summarizes the more than 250 standby statutory authorities that can come into effect pursuant to a declaration of war, the existence of a state of war, and/or a declaration of national emergency; (4) describes the procedures in Congress governing the consideration of declarations of war and authorizations for the use of force, including the procedures under the War Powers Resolution; and (5) sets forth in two appendices the texts of all of the declarations of war and the major authorizations for the use of force that have been enacted. The report does not address the issue of the constitutionality of presidential uses of military force absent a declaration of war or authorization for the use of force. The report will be updated as circumstances warrant. From the Washington Administration to the present, there have been 11 separate formal declarations of war against foreign nations enacted by Congress and the President, encompassing five different wars—the War of 1812 with Great Britain, the War with Mexico in 1846, the War with Spain in 1898, the First World War, and the Second World War. In each case the enactment of a formal declaration of war has been preceded by a presidential request to Congress for such an action, either in writing or in person before a joint session of Congress. In each such message requesting a war declaration, the President has cited what he deemed compelling reasons for doing so. These reasons have included armed attacks on United States territory or its citizens, and attacks on or direct threats to United States rights or interests as a sovereign nation. In the 19 th century all declarations of war were passed by the Congress in the form of a bill. In the 20 th century all declarations of war were passed by the Congress in the form of a joint resolution. In every instance the measures were adopted by majority vote in both the House and the Senate and were signed into law by the President. The last formal declaration of war was enacted on June 5, 1942, against Rumania during World War II. The circumstances of President McKinley's request for a declaration of war against Spain in 1898 stand in singular contrast to all the others. McKinley's request for a declaration of war on April 25, 1898, was approved by a voice vote of both houses of Congress on that date. His request was made after Spain had rejected a U.S. ultimatum that Spain relinquish its sovereignty over Cuba and permit Cuba to become an independent state. This ultimatum was supported by a joint resolution of Congress, signed into law on April 20, 1898, that among other things, declared Cuba to be independent, demanded that Spain withdraw its military forces from the island, and directed and authorized the President to use the U.S. Army, Navy and militia of the various states to achieve these ends. The war with Spain in 1898, in short, was not principally based on attacks on the United States but on a U.S. effort to end the Cuban insurrection against Spain, bring about Cuban independence, and restore a stable government and order on the island—outcomes that were believed by the United States to advance its interests. In the 20 th century, without exception, presidential requests for formal declarations of war by Congress were based on findings by the President that U.S. territory or sovereign rights had been attacked or threatened by a foreign nation. Although President Wilson had tried to maintain U.S. neutrality after the outbreak of the First World War, he regarded the German decision on February 1, 1917, to engage in unrestricted submarine warfare against all naval vessels in the war zone, including those of neutral states, to be an unacceptable assault on U.S. sovereign rights which the German Government had previously pledged to respect. Wilson's request to Congress for a declaration of war against Germany on April 2, 1917, stated that war had been "thrust upon the United States" by Germany's actions. Congress passed a joint resolution declaring war which the President signed on April 6, 1917. Wilson delayed requesting a war declaration against Austria-Hungary until December 4, 1917. He did so then because that state, a German ally in the war, had become an active instrument of Germany against the United States. Congress quickly passed a joint resolution declaring war which the President signed on December 7, 1917. President Franklin D. Roosevelt requested a declaration of war against Japan on December 8, 1941, because of direct military attacks by that nation against U.S. territory, military personnel and citizens in Hawaii and other outposts in the Pacific area. The House and the Senate passed the requested declaration and the President signed it into law that same day. After Germany and Italy each declared war on the United States on December 11, 1941, President Roosevelt asked Congress to respond in kind by recognizing that a state of war existed between the United States and those two nations. Congress passed separate joint resolutions declaring war on both nations which the President signed on December 11, 1941. On June 2, 1942, President Roosevelt asked that Congress declare war on Bulgaria, Hungary and Rumania, nations that were under the domination of Germany, were engaged in active military actions against the United States, and had themselves declared war on the United States. Congress passed separate joint resolutions declaring war on each of these nations. The President signed these resolutions on June 5, 1942. There is a striking similarity of language in the eight declarations of war passed by the Congress in the 20 th century. They all declare that a "state of war" exists between the United States and the other nation. With the one exception of the declaration of war against Austria-Hungary on December 7, 1917, the other seven declarations characterize the state of war as having been "thrust upon the United States" by the other nation. All eight of these 20 th century declarations of war state in identical language that the President is authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against [the 'Government' of the particular nation]; and to bring the conflict to a successful termination all of the resources of the country are hereby pledged by the Congress of the United States. The complete texts of the 11 declarations of war are set forth in Appendix A . From the Administration of President John Adams to the present, there have been various instances when legislation has been enacted authorizing the use of military force by the President instead of formally declaring war. In most cases such legislation has been preceded by a specific request by the President for such authority. During the Presidencies of John Adams and Thomas Jefferson, these Chief Executives noted in messages to Congress that congressional authorizations for use of force would be appropriate to enable the United States to protect its interests from predatory actions by foreign powers, in particular attacks on U.S. commercial vessels and persons on the high seas by France and by Tripoli. Congress responded with specific authorizations for the use of force under the President's direction in 1798 against France and in 1802 against Tripoli. In 1815 President James Madison formally requested that Congress declare war against the Regency of Algiers in response to its attacks on U.S. citizens and commerce in the Mediterranean. Congress responded with an act authorizing the President to utilize U.S. armed vessels to be used against Algerian naval attacks but did not declare war. In the period following World War II, Presidential requests for authority to use military force, when made, have usually been for broad authority to use U.S. military force in a specific region of the world in order to defend U.S. interests or friendly states as the President deems appropriate. More recently, due to an expansive interpretation of the President's constitutional authority as Commander-in-Chief of the Armed Forces and of his inherent powers to use force without congressional authorization, the President has welcomed support from the Congress in the form of legislation authorizing him to utilize U.S. military forces in a foreign conflict or engagement in support of U.S. interests, but has not taken the view that he is required to obtain such authorization. What follows is a brief overview of key legislative authorizations of the use of military force by the President from the Administration of John Adams to the present. Appendix B provides the complete text of these specific authorizations. The United States during the 1790s had remained neutral in the conflict in Europe between France and Great Britain and had only begun to develop a Navy. During the Administration of President John Adams, relations with France deteriorated as American commercial ships were frequently seized by French naval vessels. In response, in his message to Congress on May 16, 1797, President Adams argued that it would be prudent for the Congress to enact legislation that would address the actions of the French by authorizing, among other things, the use of U.S. naval vessels to defend against attacks on American shipping and citizens engaged in lawful commerce abroad. President Adams reiterated, in a message of March 19, 1798, his view of the necessity for congressional action on his recommendations for the adoption of measures to protect American seafaring citizens and commerce. Congress subsequently responded to the President's recommendations by passing legislation "more effectually to protect the Commerce and Coasts of the United States" authorizing the President to instruct commanders of U.S. armed vessels to act against any "armed vessel" found to have committed or attempting to commit "depredations on the vessels" belonging to United States citizens, and to retake any ship or vessel of United States citizens that may have been captured by non-U.S. armed vessels. The legislation was signed into law on May 28, 1798, Congress passed additional legislation, signed into law on July 9, 1798, that authorized the President to instruct commanders of U.S. Navy warships to "subdue, seize and take any armed French vessel which shall be found within the jurisdictional limits of the United States, or elsewhere, on the high seas...." The President was further granted the authority to grant special commissions to "owners of private armed ships and vessels of the United States," to permit them to lawfully subdue, seize, and capture "any armed French vessel," and to recapture U.S. vessels, goods and effects of U.S. citizens with the same authority as U.S. Navy vessels, subject to instructions given by the President. President Thomas Jefferson, in response to attacks on U.S. commercial shipping in the Mediterranean Sea by vessels under the control of the Bey of Tripoli, noted in his message to Congress of December 8, 1801, that it would be prudent for Congress to authorize the use of U.S. Navy forces to protect U.S. shipping against Tripoli, including permitting them to take offensive action against Tripolitan vessels. Congress responded by passing legislation, enacted on February 6, 1802, that authorized the President to "equip, officer, man, and employ such of the armed vessels of the United States as may be judged requisite by the President of the United States, for protecting effectually the commerce and seamen thereof on the Atlantic ocean, the Mediterranean and adjoining seas." The President was also authorized to utilize the U.S. Navy "to subdue, seize and make prize of all vessels, goods and effects belonging to the Bey of Tripoli, or his subjects ... and to cause to be done all such other acts of precaution or hostility as the state of war will justify, and may, in his opinion, require." The President was further granted the authority to grant special commissions to "owners of private armed vessels of the United States," to permit them to lawfully subdue and seize "any Tripolitan vessel, goods or effects" with the same authority as U.S. Navy vessels, subject to instructions given by the President. President James Madison, after the conclusion of a peace treaty with Great Britain ending the War of 1812, sought authority to use the U.S. Navy to take action against vessels of the ruler and Regency of Algeria that had been seizing U.S. commercial vessels in the Mediterranean area. Due to acts of "overt and direct warfare against the citizens of the United States," President Madison, on February 23, 1815, recommended that Congress declare the "existence of a state of war between the United States and the Dey and Regency of Algiers." Congress did not declare war but did pass legislation, enacted on March 3, 1815, that authorized the President to use the U.S. Navy, "as judged requisite by the President" to protect the "commerce and seamen" of the United States on the "Atlantic Ocean, the Mediterranean and adjoining seas." The President was also authorized to utilize the U.S. Navy to seize "all vessels, goods and effects belonging to the Dey of Algiers, or to his subjects ... and to cause to be done all such other acts of precaution or hostility as the state of war will justify, and may, in his opinion, require." The President was further granted the discretionary authority to grant special commissions to "owners of private armed vessels of the United States," to permit them to lawfully subdue, seize, and capture "any Algerine vessel, goods or effects" with the same authority as U.S. Navy vessels, subject to instructions given by the President. During the years after the War of 1812, there was a notable increase in the number of attacks on U.S. commercial shipping vessels in and around the Caribbean and Latin American coastal waters. Some of this was stimulated by the chaotic conditions attendant to the struggles for independence by South American colonies of Spain. Pirates attacked not only Spanish vessels in the region, but vessels of other nations generally. In response to calls for action against these predatory attacks on their vessels, American shippers petitioned Congress for action to protect them from pirates. In response, on March 3, 1819, legislation was enacted "to protect the commerce of the United States, and punish the crime of piracy." This legislation authorized the President to employ "the public armed vessels" of the United States as he deemed necessary to protect "the merchant vessels of the United States and their crews from piratical aggressions and depredations." This legislation further authorized the President to instruct the commanders of the "public armed vessels of the United States" to take various actions to combat piracy, including attacking and seizing pirates and their vessels. The legislation also authorized U.S. vessels attacked by pirates to take actions against their aggressors and seize their ships. The legislation further established penalties for those that engaged in piracy. This 1819 statute was subsequently made permanent law on January 30, 1823. It has been amended, but the current text, found in Title 33 of the United States Code , contains substantially the same language as was enacted in March of 1819. In a message to Congress on January 24, 1955, President Dwight Eisenhower, detailed a series of "provocative political and military actions" by the Chinese Communist government that he believed established a "pattern of aggressive purpose." That purpose was the "conquest of Formosa." This situation, said Eisenhower, posed a "serious danger to the security of our country and of the entire Pacific area and indeed to the peace of the world." The President believed that the U.S. should not wait for the United Nations to take steps to deal with the situation but should be prepared to use its own armed forces "to assure the security of Formosa and the Pescadores." President Eisenhower stated that authority for "some of the actions which might be required would be inherent in the authority of the Commander-in-Chief." He noted that, pending congressional action, he "would not hesitate, so far as my Constitutional powers extend, to take whatever emergency action might be forced upon us to protect the rights and security of the United States." However, he stated that a "suitable Congressional resolution would clearly and publicly establish the authority of the President as Commander-in-Chief to employ" the U.S. armed forces "promptly and effectively" as he deemed necessary to deal with the circumstances. Such a resolution would "make clear the unified and serious intentions of our Government, our Congress and our people." In response to the President's request, Congress passed legislation on January 29, 1955, that authorized the President to "employ the Armed Forces of the United States as he deems necessary for the specific purpose of securing and protecting Formosa, and the Pescadores against armed attack...." The President was also authorized to take "such other measures as he judges to be required or appropriate in assuring the defense of Formosa and the Pescadores." The resolution stated that it would expire when the President determined and reported to Congress that the "peace and security of the area is reasonably assured...." The resolution was subsequently repealed in 1974. In a special message to Congress on January 5, 1957, President Dwight D. Eisenhower requested congressional support for a program of military and economic cooperation with nations in the general area of the Middle East to "deal with the possibility of Communist aggression, direct or indirect" against nations in that region. As one component of this military and economic assistance program, President Eisenhower sought authority to employ the "armed forces of the United States to secure and protect the territorial integrity and political independence of such nations, requesting such aid, against overt armed aggression from any nation controlled by International Communism." The President emphasized that such authority would not be utilized by him "except at the desire of the nation attacked." In response, Congress passed legislation, enacted on March 9, 1957, that, among other things, authorized the President "to undertake, in the general area of the Middle East, military assistance programs with any nation or group of nations of that area desiring such assistance." The joint resolution further provided that "if the President determines the necessity thereof, the United States is prepared to use armed forces to assist any such nation or group of such nations requesting assistance against armed aggression from any country controlled by international communism: Provided, that such employment shall be consonant with the treaty obligations of the United States and with the Constitution of the United States." The President was also to report to Congress on his action under the joint resolution between January and July of each year. The joint resolution further provided that it would expire when the President determined that the "peace and security of the nations in the general area of the Middle East" was "reasonably assured" or should Congress terminate it earlier by passage of a concurrent resolution. The resolution has not been formally repealed. In the early 1960s the United States had been providing military assistance and support to the government of South Vietnam. Over time tensions, associated with the U.S. military presence in Southeast Asia and support for the South Vietnamese government, grew between the U.S. and the communist government of North Vietnam. On August 2, 1964, a U.S. destroyer, the U.S.S. Maddox, while in international waters off the coast of North Vietnam (the Gulf of Tonkin) was attacked by North Vietnamese torpedo boats. The attack was repulsed. The State Department protested to the North Vietnamese government and noted that grave consequences would follow additional offensive actions against U.S. forces. Subsequently, on August 4, further attacks by North Vietnamese vessels against U.S. destroyers were reported to Washington. President Lyndon Johnson responded on August 4 by sending U.S. military aircraft to bomb "gunboats and certain supporting facilities" in North Vietnam that had allegedly been used in the actions against U.S. naval vessels. After meeting with congressional leaders, President Johnson on August 5, 1964, formally requested a resolution of Congress that would "express the support of the Congress for all necessary action to protect our armed forces and to assist nations covered by the SEATO Treaty." Congress responded to President Johnson's request by passing a joint resolution to "promote the maintenance of international peace and security in southeast Asia." This legislation has come to be popularly known as the "Gulf of Tonkin resolution." This joint resolution, enacted on August 10, 1964, stated that "the Congress approves and supports the determination of the President, as Commander-in-Chief, to take all necessary measures to repel any armed attack against the forces of the United States and to prevent further aggression." The joint resolution further stated that "[c]onsonant with the Constitution of the United States and the Charter of the United Nations and in accordance with its obligations under the Southeast Asia Collective Defense Treaty, the United States is, therefore, prepared, as the President determines, to take all necessary steps, including the use of armed force, to assist any member or protocol state of the Southeast Asia Collective Defense Treaty requesting assistance in defense of its freedom." The joint resolution stated that it would expire whenever the President determined that the "peace and security of the area is reasonably assured" or if Congress chose to terminate it earlier by concurrent resolution. Congress repealed the resolution in 1971. On July 6, 1982, President Ronald Reagan announced he would send a small contingent of U.S. troops to participate in a multinational force for temporary peacekeeping in Lebanon. When the forces began to land on August 25, President Reagan reported this action to Congress but did not cite Section 4(a)(1) of the War Powers Resolution, and said the agreement with Lebanon ruled out any combat responsibilities. After overseeing the departure of the Palestine Liberation Organization force, the U.S. Marines in the first Multinational Force left Lebanon on September 10, 1982. The second dispatch of Marines to Lebanon began on September 20, 1982. President Reagan announced that the United States, France, and Italy had agreed to form a new multinational force to return to Lebanon for a limited period of time to help maintain order until the lawful authorities in Lebanon could discharge those duties. The action followed three events that took place after the withdrawal of the first group of U.S. Marines: the assassination of Lebanon President-elect Bashir Gemayel, the entry of Israeli forces into West Beirut, and the massacre of Palestinian civilians by Lebanese Christian militiamen. On September 29, 1982, President Reagan submitted a report to Congress that 1,200 Marines had begun to arrive in Beirut, but again he did not cite Section 4(a)(1), of the War Powers Resolution, stating that the American force would not engage in combat. As a result of incidents in which U.S. Marines were killed or wounded, there was controversy in Congress on whether the President's report should have been filed under Section 4(a)(1). In mid-1983 Congress passed the Lebanon Emergency Assistance Act of 1983 requiring statutory authorization for any substantial expansion in the number or role of U.S. Armed Forces in Lebanon. It also included a section that stated: Nothing in this section is intended to modify, limit, or suspend any of the standards and procedures prescribed by the War Powers Resolution of 1973. President Reagan reported on the Lebanon situation again on August 30, 1983, still not citing Section 4(a)(1), after fighting broke out between various factions in Lebanon and two Marines were killed. The level of fighting heightened; and as the Marine casualties increased and the action enlarged, there were more calls in Congress for invocation of the War Powers Resolution. Several Members of Congress said the situation had changed since the President's first report and introduced legislation that took various approaches. Senator Charles Mathias introduced S.J.Res. 159 stating that the time limit specified in the War Powers Resolution had begun on August 31, 1983, and authorizing the forces to remain in Lebanon for a period of 120 days after the expiration of the 60-day period. Representative Thomas Downey introduced H.J.Res. 348 directing the President to report under Section 4(a)(1) of the War Powers Resolution. Senator Robert Byrd introduced S.J.Res. 163 finding that Section 4(a)(1) of the War Powers Resolution applied to the present circumstances in Lebanon. The House Appropriations Committee approved an amendment to the continuing resolution for FY1984 ( H.J.Res. 367 ), sponsored by Representative Clarence Long, providing that after 60 days, funds could not be "obligated or expended for peacekeeping activities in Lebanon by United States Armed Forces," unless the President had submitted a report under Section 4(a)(1) of the War Powers Resolution. A similar amendment was later rejected by the full body, but it reminded the Administration of possible congressional actions. On September 20, 1983, congressional leaders and President Reagan agreed on a compromise resolution invoking Section 4(a)(1) of the War Powers Resolution and authorizing the Marines to remain for 18 months. The Multinational Force in Lebanon Resolution became the first legislation to be handled under the expedited procedures of the War Powers Resolution. On September 28 the House passed H.J.Res. 364 by a vote of 270 to 161. On September 29 the Senate passed S.J.Res. 159 by a vote of 54 to 46. The House accepted the Senate bill by a vote of 253 to 156 later the same day. The President signed the joint resolution into law on October 12, 1983. As passed, the joint resolution contained four occurrences that would terminate the authorization before eighteen months: (1) the withdrawal of all foreign forces from Lebanon, unless the President certified continued U.S. participation was required to accomplish specified purposes; (2) the assumption by the United Nations or the Government of Lebanon of the responsibilities of the Multinational Force; (3) the implementation of other effective security arrangements; or (4) the withdrawal of all other countries from participation in the Multinational Force. Congress also determined in the joint resolution that the requirements of Section 4(a)(1) of the War Powers Resolution became operative on August 29, 1983. In a statement made on signing S.J.Res. 159 on October 12, 1983, President Reagan expressed appreciation for the support for the U.S. presence and policies in Lebanon he believed were embodied in the legislation. He sharply differed, however, with various "findings, determinations, and assertions" by the Congress on certain matters. He stated his concerns about the practical problems associated with Section 4(a)(1) of the War Powers Resolution, and the wisdom and constitutionality of Section 5(b). President Reagan noted that in signing the Lebanon resolution it was important for him to state that I do not and cannot cede any of the authority vested in me under the Constitution as President and as Commander in Chief of United States Armed Forces. Nor should my signing be viewed as any acknowledgment that the President's constitutional authority can be impermissibly infringed by statute, that congressional authorization would be required if and when the period specified in section 5(b) of the War Powers Resolution might be deemed to have been triggered and the period had expired, or that section 6 of the Multinational Force in Lebanon Resolution may be interpreted to revise the constitutional authority to deploy United States Armed Forces. On August 2, 1990, Iraqi troops under the direction of President Saddam Hussein invaded Kuwait, seized its oil fields, installed a new government in Kuwait City, and moved toward the border with Saudi Arabia. A week after the invasion, on August 9, President George H.W. Bush reported to Congress "consistent with the War Powers Resolution" that he had deployed U.S. armed forces to the region prepared to take action with others to deter further Iraqi aggression. He noted that he did not believe involvement in hostilities was imminent. Throughout the rest of 1990, President Bush continued to work to establish an international coalition opposed to Iraq's aggression, while continuing to deploy additional U.S. military reinforcements into Saudi Arabia and the Persian Gulf region. By the end of the year approximately 350,000 U.S. forces had been deployed to the area. As the prospect of a war without congressional authorization increased, on November 20, 1990, Representative Ron Dellums and 44 other Democratic Members of Congress sought a judicial order enjoining the President from offensive military operations in connection with Operation Desert Shield unless he consulted with and obtained an authorization from Congress. On December 13, Judge Harold Greene of the federal district court in Washington, D.C. denied the injunction, holding that the controversy was not ripe for judicial resolution because a majority of Congress had not sought relief and the executive branch had not shown sufficient commitment to a definitive course of action. By January, 1991, President Bush had secured the support of the United Nations and an international coalition to use force, if necessary, to free Kuwait from Iraqi occupation. U.N. Resolution 678 of November 29, 1990, authorized all U.N. member states "to use all necessary means" to implement various U.N. resolutions seeking to end Iraqi occupation of Kuwait. It set a January 15, 1991 deadline for Iraq to implement fully all relevant U.N. resolutions relating to its invasion of Kuwait. On January 8, 1991, President George H.W. Bush, in a letter to the congressional leaders, requested a congressional resolution supporting the use of all necessary means to implement U.N. Security Council Resolution 678. He stated that he was "determined to do whatever is necessary to protect America's security" and that he could "think of no better way than for Congress to express its support for the President at this critical time." It is noteworthy that the President's request for a resolution was a request for congressional "support" for his undertaking in the Persian Gulf, not for "authority" to engage in the military operation. In a press conference on January 9, 1991, President Bush reinforced this distinction in response to questions about the use of force resolution being debated in Congress. He was asked whether he thought he needed the resolution, and if he lost on it would he feel bound by that decision. President Bush in response stated: "I don't think I need it.... I feel that I have the authority to fully implement the United Nations resolutions." He added that he felt that he had "the constitutional authority—many attorneys having so advised me." On January 12, 1991, both houses passed the "Authorization for Use of Military Force Against Iraq Resolution." Section 2(a) of that joint resolution authorized the President to use U.S. Armed Forces pursuant to U.N. Security Council Resolution 678 to achieve implementation of the earlier Security Council resolutions. Section 2(b) required as a precondition that the President would first have to report to Congress that the United States had used all appropriate diplomatic and other peaceful means to obtain compliance by Iraq with the Security Council resolution and that those efforts had not been successful. Section 2(c) stated that it constituted specific statutory authorization within the meaning of Section 5(b) of the War Powers Resolution. Section 3 required the President to report every 60 days on efforts to obtain compliance of Iraq with the U.N. Security Council resolution. On signing H.J.Res. 77 into law, President Bush said the following: As I made clear to congressional leaders at the outset, my request for congressional support did not, and my signing this resolution does not, constitute any change in the long-standing positions of the executive branch on either the President's constitutional authority to use the Armed Forces to defend vital U.S. interests or the constitutionality of the War Powers Resolution. He added that he was pleased that "differences on these issues between the President and many in the Congress have not prevented us from uniting in a common objective." On January16, 1991, President Bush made the determination required by P.L. 102-1 that diplomatic means had not and would not compel Iraq to withdraw from Kuwait. On January 18, he reported to Congress "consistent with the War Powers Resolution" that he had directed U.S. forces to commence combat operations on January 16. On September 11, 2001, terrorists hijacked four U.S. commercial airliners, crashing two into the twin towers of the World Trade Center in New York City, and another into the Pentagon building in Arlington, Virginia. The fourth plane crashed in Shanksville, Pennsylvania near Pittsburgh, after passengers struggled with the highjackers for control of the aircraft. The death toll from these incidents was nearly 3,000. President George W. Bush characterized these attacks as more than acts of terror. "They were acts of war," he said. He added that "freedom and democracy are under attack," and he asserted that the United States would use "all of our resources to conquer this enemy." In the days immediately after the September 11 attacks, the President consulted with the leaders of Congress on appropriate steps to take to deal with the situation confronting the United States. One of the things that emerged from discussions was the concept of a joint resolution of Congress authorizing the President to take military steps to deal with the parties responsible for the attacks on the United States. Between September 13 and 14, draft language of such a resolution was discussed and negotiated by the President's representatives and the House and Senate leadership of both parties. Other Members of both houses suggested language for consideration. On Friday, September 14, 2001, the text of a joint resolution was introduced. It was first considered and passed by the Senate in the morning of September 14, as Senate Joint Resolution 23, by a vote of 98-0. The House of Representatives passed it later that evening, by a vote of 420-1, after tabling an identical resolution, H.J.Res. 64 , and rejecting a motion to recommit by Representative John Tierney that would have had the effect, if passed and enacted, of requiring a report from the President on his actions under the resolution every 60 days. President Bush signed the measure into law on September 18, 2001. The joint resolution authorizes the President to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons. The joint resolution further states that Congress declares that this resolution is intended to "constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution." Finally, the joint resolution also states that "[n]othing in this resolution supersedes any requirement of the War Powers Resolution." A notable feature of P.L. 107-40 is that, unlike all other major legislation authorizing the use of military force by the President, this joint resolution authorizes military force against not only nations but also organizations and persons linked to the September 11, 2001, attacks on the United States. This authorization of military action against organizations and persons is unprecedented in American history, with the scope of its reach yet to be determined. The authorization of use of force against unnamed nations is more consistent with some previous instances where authority was given to act against unnamed states as appropriate when they became aggressors or took military action against the United States or its citizens. President George W. Bush in signing S.J.Res. 23 on September 18, 2001, stated that the Congress had acted "wisely, decisively, and in the finest traditions of our country." He thanked the "leadership of both houses for their role in expeditiously passing this historic joint resolution." He noted that he had had the "benefit of meaningful consultations with members of the Congress" since the September 11 attacks and that he would "continue to consult closely with them as our Nation responds to this threat to our peace and security." President Bush also asserted that S.J.Res. 23 "recognized the authority of the President under the Constitution to take action to deter and prevent acts of terrorism against the United States." He also stated that "in signing this resolution, I maintain the longstanding position of the executive branch regarding the President's constitutional authority to use force, including the Armed Forces of the United States, and regarding the constitutionality of the War Powers Resolution." The Bush Administration interpreted P.L. 107-40 broadly, to confirm the President's authority as Commander-in-Chief to conduct antiterrorism operations anywhere in the world, including within the United States. In 2004, the Supreme Court affirmed the President's powers to detain "enemy combatants" captured in Afghanistan as part of the necessary force authorized by Congress, but found that detainees could challenge their detention in federal court. In light of the Supreme Court decisions, the Bush Administration interpreted the joint resolution to authorize any measures that can be characterized as fundamental incidents of the conduct of war, even where such measures are otherwise prohibited by statute (at least so long as the statute in question contemplates a statutory exception). Thus, the Administration cited the joint resolution to support the President's power to detain persons he has deemed to be "enemy combatants" (whether citizens or aliens and without regard to the location or circumstances of their capture) and to conduct electronic surveillance of communications within the United States without following the procedures prescribed in FISA. The Supreme Court in 2006 held that P.L. 107-40 does not override the Uniform Code of Military Justice (UCMJ) as it pertains to the trial of captured combatants for violations of the law of war. In the summer of 2002, the Bush Administration made public its views regarding what it deemed a significant threat to U.S. interests and security posed by the prospect that Iraq had or was acquiring weapons of mass destruction. Senior members of the Bush Administration cited a number of violations of U.N. Security Council resolutions by Iraq regarding the obligation imposed at the end of the Gulf War in 1991 to end its chemical, biological and nuclear weapons programs. On September 4, 2002, President Bush met with congressional leadership and stated that he would seek congressional support, in the near future, for action deemed necessary to deal with the threat posed to the United States by the regime of Saddam Hussein. The President also indicated that he would speak to the United Nations shortly and set out his concerns about Iraq. On September 12, 2002, President Bush addressed the U.N. General Assembly, explaining U.S. concerns about Iraq's actions since the end of the 1991 Gulf War, including numerous instances when Iraq had violated various U.N. Security Council resolutions, including those related to disarmament. He stated that the United States would work with the U.N. Security Council to address the threat to international peace and security posed by Iraq. He emphasized, however, that if Iraq refused to fulfill its obligations to comply with U.N. Security Council resolutions, the United States would see that those resolutions were enforced. Subsequently, on September 19, 2002, the White House proposed legislation to authorize the use of military force against Iraq. This draft would have authorized the President to use military force not only against Iraq but "to restore international peace and security in the region." Subsequently introduced as S.J.Res. 45 on September 26, the Senate from October 3 to October 11 debated the desirability, necessity, and scope of the proposed legislation. The President's proposal was not formally introduced in the House. Instead, Speaker of the House Dennis Hastert and Minority Leader Richard Gephardt introduced H.J.Res. 114 on October 2, 2002, which included generally accepted modifications to the President's proposal. The House International Relations Committee reported out a slightly amended version of the joint resolution on October 7, 2002 ( H.Rept. 107-721 ). The House adopted the rule governing debate on the joint resolution ( H.Res. 474 ) on October 8, 2002; and debated the measure until October 10, when it passed H.J.Res. 114 by a vote of 296-133. Subsequently, the Senate passed the House version of H.J.Res. 114 on October 11 by a vote of 77-23, and President Bush signed the Authorization for Use of Military Force against Iraq Resolution of 2002 into law on October 16, 2002. In signing H.J.Res. 114 into law, President Bush stated that by passing this legislation Congress had demonstrated that "the United States speaks with one voice on the threat to international peace and security posed by Iraq." He added that the legislation carried an important message that "Iraq will either comply with all U.N. resolutions, rid itself of weapons of mass destruction, and ... its support for terrorists, or will be compelled to do so." While the President noted he had sought a "resolution of support" from Congress to use force against Iraq, and appreciated receiving that support, he also stated that "... my request for it did not, and my signing this resolution does not, constitute any change in the long-standing positions of the executive branch on either the President's constitutional authority to use force to deter, prevent, or respond to aggression or other threats to U.S. interests or on the constitutionality of the War Powers Resolution." President Bush went on to state that on the "important question of the threat posed by Iraq," his views and goals and those of Congress were the same. He further observed that he had extensive consultations with Congress in the past months, and that he looked forward to "continuing close consultation in the months ahead." He stated his intent to submit written reports to Congress every 60 days on matters "relevant to this resolution." The central element of P.L. 107-243 is the authorization for the President to use the armed forces of the United States "as he determines to be necessary and appropriate in order to—(1) defend the national security of the United States against the continuing threat posed by Iraq; and (2) enforce all relevant United Nations Security Council resolutions regarding Iraq." As predicates for the use of force, the statute requires the President to communicate to Congress his determination that the use of diplomatic and other peaceful means will not "adequately protect the United States ... or ... lead to enforcement of all relevant United Nations Security Council resolutions" and that the use of force is "consistent" with the battle against terrorism. Like P.L. 102-1 and P.L. 107-40 , the statute declares that it is "intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution." It also requires the President to make periodic reports to Congress "on matters relevant to this joint resolution." Finally, the statute expresses Congress's "support" for the efforts of the President to obtain "prompt and decisive action by the Security Council" to enforce Iraq's compliance with all relevant Security Council resolutions. P.L. 107-243 clearly confers broad authority on the President to use force. In contrast to P.L. 102-1 , the authority granted is not limited to the implementation of previously adopted Security Council resolutions concerning Iraq but includes "all relevant ... resolutions." Thus, it appears to have incorporated resolutions concerning Iraq that were subsequently adopted by the Security Council at least up to the expiration of the UN mandate on December 31, 2008, as well as those resolutions adopted prior to the enactment of P.L. 107-243 . The authority also appears to extend beyond compelling Iraq's disarmament to implementing the full range of concerns expressed in those resolutions. Unlike P.L. 107-40 , the President's exercise of the authority granted is not dependent upon a finding that Iraq was associated in some direct way with the September 11, 2001, attacks on the United States. Moreover, the authority conferred can be used for the broad purpose of defending "the national security of the United States against the continuing threat posed by Iraq." Nevertheless, P.L. 107-243 is narrower than P.L. 107-40 , as well as President Bush's originally proposed authorization, in that it limits the authorization for the use of force to Iraq. It also requires as a predicate for the use of force that the President determine that peaceful means cannot suffice and that the use of force against Iraq is consistent with the battle against terrorism. P.L. 107-243 further limits the force used to that which the President determines is "necessary and appropriate." Finally, as with P.L. 107-40 , the statutory authorization for use of force granted to the President in P.L. 107-243 is not dependent for its exercise upon prior authorization by the U.N. Security Council. The Bush and Obama Administrations relied on P.L. 107-243 's authorities to maintain the presence of U.S. armed forces and to conduct military operations in Iraq until the withdrawal of U.S. armed forces in December 2011. After initial invasion operations and the removal of the Saddam Hussein regime from power, U.S. military operations in Iraq continued under P.L. 107-243 authority. Both the Bush and Obama Administrations considered Iraq a continuing threat to U.S. national security interests; in addition, U.S. armed forces were enforcing relevant U.N. Security Council resolutions regarding Iraq. Relevant U.N. resolutions included the creation in 2003 of the Multinational Force in Iraq (MNF-I), of which U.S. armed forces made up the significant majority. The United Nations Security Council ultimately terminated the MNF-I on December 1, 2008. Beginning January 1, 2009, U.S. armed forces remained in Iraq pursuant to an agreement between Iraq and the United States that set the date for withdrawal of such forces on December 31, 2011. At the time of the U.S.-Iraq agreement, it was argued that the end of the U.N. mandate required a new authorization for continued U.S. military presence in Iraq, and that the agreement itself needed congressional approval either by submission to the Senate as a treaty for advice and consent, or by general legislative approval. Congress continued to provide funds for military operations in Iraq, however, and legislative efforts to repeal P.L. 107-243 or otherwise bring about an end to the U.S. military presence in Iraq did not succeed. P.L. 107-243 does not include provision for automatic termination of its use of force authorization, and Congress has not repealed the legislation. Thus P.L. 107-243 remains current U.S. law, although its continued effectiveness is questionable. Arguably, the President could rely on P.L. 107-243 to reintroduce U.S. armed forces into Iraq if he determined that Iraq once again posed a threat to U.S. national security, or in order to enforce relevant U.N. resolutions, as the legislation provides in its authorization language. Nevertheless, any presidential decision to again utilize the authority for use of military force in P.L. 107-243 would likely meet renewed resistance from some Members of Congress, as well as other observers who have argued for repeal of open-ended use of force authorizations such as this. Traditionally, peace and war have been deemed under international law to be distinctive forms of relations between states. Thus, peace has been defined as "a condition in which States maintain order and justice, solve their problems by cooperation, and eliminate violence. It is a condition in which States respect each other's sovereignty and equality, refrain from intervention and the threat or use of force and cooperate with one another in accordance with the treaties which they have concluded." War, in contrast, has been described as "a condition of armed hostility between States," "a contention, through the use of armed force, between states, undertaken for the purpose of overpowering another." War has been said to terminate or suspend the laws and customs that prevail in peacetime and to substitute for them the laws of war. Under the traditional laws of war enemy combatants can be killed, prisoners of war taken, the enemy's property seized or destroyed, enemy aliens interned, and other measures necessary to subdue the enemy and impose the will of the warring state taken. Moreover, the existence of a state of war traditionally has been deemed to terminate diplomatic and commercial relations and most of the treaty obligations existing between the warring States. A state of war also has brought into play the law of neutrality with respect to relations between the belligerent and non-belligerent States. In this traditional understanding a declaration of war has been deemed, in and of itself, to have the effect of creating a state of war and changing the relationship between the states involved from one of peace to one of war. That has been the case even if no hostilities actually occur. Some question exists as to whether international law traditionally deemed a declaration of war to be a necessary prerequisite to the existence of a state of war; but it is clear that under international law a declaration of war has been viewed as "creating the legal status of war ... [and giving] evidence that peace has been transmuted into war, and that the law of war has replaced the law of peace." Authorizations for the use of force, in contrast, have not been seen as automatically creating a state of war under international law. The U.S. Court of Claims, in construing the statutes authorizing the limited use of force against France in 1798, described how their effects differed from those that followed in the wake of a war: [Our naval vessels] might seize armed vessels only, and only those armed vessels which had already committed depredations, or those which were on our coast for the purpose of committing depredations, and they might retake an American vessel captured by such an armed vessel. This statute is a fair illustration of the class of laws enacted at this time; they directed suspension of commercial relations until the end of the next session of Congress, not indefinitely ...; they gave power to the President to apprehend the subjects of hostile nations whenever he should make "public proclamation" of war ..., and no such proclamation was made; they gave him authority to instruct our armed vessels to seize French "armed," not merchant, vessels ..., together with contingent authority to augment the army in case war should break out or in case of imminent danger of invasion.... If war existed, why authorize our armed vessels to seize French armed vessels? War itself gave that right, as well as the right to seize merchantmen which the statutes did not permit. If war existed why empower the President to apprehend foreign enemies? War itself placed that duty upon him as a necessary and inherent incident of military command. Why, if there was war, should a suspension of commercial intercourse be authorized, for what more complete suspension of that intercourse could there be than the very fact of war? There was no declaration of war; the tribunals of each country were open to the other—an impossibility were war in progress; diplomatic and commercial intercourse were admittedly suspended; but during many years there was no intercourse between England and Mexico, which were not at war; there was retaliation and reprisal, but such retaliations and reprisals have often occurred between nations at peace; there was a near approach to war, but at no time was one of the nations turned into an enemy of the other in such manner that every citizen of the one became the enemy of every citizen of the other; finally, there was not that kind of war which abrogated treaties and wiped out, at least temporarily, all pending rights and contracts, individual and national. Whether this traditional understanding of war and of the effect of a declaration of war continues to be viable is a matter of considerable dispute among scholars. The right of a state to initiate war, many contend, has been outlawed by such international agreements as the Kellogg-Briand Peace Pact and the Charter of the United Nations. In the Kellogg-Briand Peace Pact, for instance, the Parties stated that they "condemn recourse to war for the solution of international controversies, and renounce it as an instrument of national policy in their relations with one another." After World War II the Nuremberg Tribunal gave teeth to this commitment by ruling that the Pact rendered aggressive war illegal under international law and makes those who plan and wage such a war guilty of a crime. The Charter of the United Nations, in turn, states one of its purposes to be "to save succeeding generations from the scourge of war," and it requires its Members "to refrain from the threat or use of force against the territorial integrity or political independence of any State, or in any other manner inconsistent with the Purposes of the United Nations." Moreover, it provides for a system of collective security through the Security Council as the primary means of maintaining or restoring international peace and security. Both instruments, it is contended, recognize that the concept of war as a legal right of states, except in self-defense, has been superseded. (The United States, of course, is a Party not only to the Charter but also to the Pact, and it still regards the latter as continuing to be in force. ) Whether the traditional concept of war remains valid has been further complicated by the increasing participation in armed conflict of non-State actors such as insurgents, freedom fighters, and terrorists. The clarity of the consequences of a state of war in traditional international law has also become muddied in the modern era. Most States since 1945, even when engaged in armed conflict, have resisted describing the conflict as a war. States so engaged have not always automatically terminated diplomatic and commercial relationships, and the discontinuance of treaty obligations has increasingly been deemed to require a treaty-by-treaty examination. Moreover, conventions that attempt to regulate the means used to wage war, such as the Hague Conventions and other more recent agreements, and those that attempt to ameliorate the consequences of war for certain categories of persons, such as the Geneva Conventions, are deemed to apply to armed conflicts regardless of what label the Parties attach to them. A state of war still gives rise to "a mutual right to kill in battle," triggers application of the various conventions regulating the means of waging war as well as of the general principles of necessity and proportionality, and brings into play the Geneva Conventions. But its other legal consequences seemingly have become less determinate. Perhaps as a consequence of these developments, declarations of war have fallen into disuse and are virtually never issued in modern conflicts. One commentator asserts that since 1945 "[t]here are no cases of a formal declaration of war having been delivered by one state to another through diplomatic channels...." As noted above, the United States last declared war in 1942 against Rumania and has since adopted only authorizations for the use of force. Thus, declarations of war may have become anachronistic in contemporary international law. The legal right of States to engage in war has seemingly become constrained (for other than defensive purposes), and the most salient international laws regarding the means of waging war and the protection of certain categories of persons apply to the circumstance of armed conflict regardless of whether war has been declared. That circumstance can arise in the wake of an authorization to use force as well. States likely still retain a right to issue declarations of war, at least in exercising the right of self-defense; and such a declaration seemingly would still automatically create a state of war. But it is not clear that the legal consequences under international law that would flow from a declaration differ dramatically from those that occur if an armed conflict comes into being pursuant to an authorization for the use of force. Early American jurisprudence drew a distinction between general, or perfect, war and limited, or imperfect, war, and understood a declaration of war under Article I, Section 8, of the Constitution to commit the nation to a general war. Justice Washington, in Bas v. Tinghy , described the distinction as follows: It may, I believe, be safely laid down, that every contention by force between two nations, in external matters, under the authority of their respective governments, is not only war, but public war. If it be declared in form, it is called solemn , and is of the perfect kind; because one whole nation is at war with another whole nation; and all the members of the nation declaring war are authorised to commit hostilities against all the members of the other, in every place, and under every circumstance. In such a war all the members act under a general authority, and all the rights and consequences of war attach to their condition. ... [H]ostilities may subsist between two nations more confined in its nature and extent; being limited as to places, persons, and things; and this is more properly termed imperfect war ; because not solemn, and because those who are authorised to commit hostilities, act under special authority, and can go no farther than to the extent of their commission. Still, however, it is public war , because it is an external contention, by force, between some of the members of the two nations, authorised by the legitimate powers. Justice Chase, more simply, stated: "Congress is empowered to declare a general war, or congress may wage a limited war; limited in place, in objects, and in time." Thus, at least in the 18 th and 19 th centuries, authorizations for the use of force were understood to be included within Congress's power to declare war and to have narrower legal consequences than declarations of war. Declarations were reserved for general war against particular countries and empowered the President "to use the whole land and naval force of the United States" (United Kingdom in 1812), "to employ the militia, naval, and military forces of the United States" (Mexico in 1846), or "to use the entire land and naval forces of the United States" (Spain in 1898) to prosecute the war. Authorizations, in contrast, allowed the President to use the American navy against the vessels of France, the Bey of Tripoli, and the Dey of Algiers, or against piracy generally. In the modern era authorizations have sometimes been quite broad ; and some have, arguably, been equivalent in scope to a declaration of war. But the domestic legal consequences that flow from such authorizations still are substantially more limited than those that would flow from a declaration of war. Both declarations of war and authorizations for the use of force have the effect of eliminating the time limits otherwise imposed on the President's use of the armed forces under the War Powers Resolution; and both may legitimate the killing of foreign officials that might otherwise be prohibited by the executive order on assassinations. The capture of enemy combatants on the battlefield and their detention until hostilities have subsided is implied in an authorization to use ground forces, just as it would be included in a formal declaration of war. But a declaration of war automatically brings into effect a number of statutes that confer special powers on the President and the Executive Branch, especially concerning measures that have domestic effect. A declaration, for instance, activates statutes that empower the President to interdict all trade with the enemy, order manufacturing plants to produce armaments and seize them if they refuse, control transportation systems in order to give the military priority use, and command communications systems to give priority to the military. A declaration triggers the Alien Enemy Act, which gives the President substantial discretionary authority over nationals of an enemy state who are in the United States. It activates special authorities to use electronic surveillance for purposes of gathering foreign intelligence information without a court order under the Foreign Intelligence Surveillance Act. It automatically extends enlistments in the armed forces until the end of the war, can make the Coast Guard part of the Navy, gives the President substantial discretion over the appointment and reappointment of commanders, and allows the military priority use of the natural resources on the public lands and the continental shelf. An authorization for the use of force does not automatically trigger any of these standby statutory authorities. Some of them can come into effect if a state of war in fact comes into being after an authorization for the use of force is enacted; and the great majority of them, including many of the most sweeping ones, can be activated if the President chooses to issue a proclamation of a national emergency. But an authorization for the use of force, in itself and in contrast to a declaration of war, does not trigger any of these standby authorities. On the other hand, the authorization to use force in response to the terrorist attacks of 2001 has been asserted as legal authority for executive actions in the domestic context, the validity of which remains unresolved. The executive branch asserted that the authorization permits detention without trial of persons arrested in the United States on suspicion of Al Qaeda related terrorism, which it regarded as bolstered by the Supreme Court's Hamdi decision finding the detention of enemy combatants captured in Afghanistan to be authorized as "a fundamental incident of waging war." While there is limited authority to support military trials of enemy soldiers captured within the United States, in previous wars the Alien Enemy Act would likely have been the chief means of interning suspected enemies domestically. Under the executive branch view, the authorization to use force could be construed as broader than a declaration of war in that it is seen to authorize detention powers without any of the few rules or restrictions specified in the Alien Enemy Act, and to authorize the detention of U.S. citizens as an exception to the Non-Detention Act. Similarly, the executive branch argued that the authorization to use force must also be read to permit the conduct of certain types of electronic surveillance outside of the strictures of the Foreign Intelligence Surveillance Act, even though that act provides for only a two-week exception triggered by a declaration of war. Accordingly, it is possible that any similarly broad authorization to use force may be read to authorize any power that may properly be regarded as "a fundamental incident of waging war" under the circumstances, at least as implied exceptions to statutes that admit of statutory exception. The following subsections give an overview of some of the more salient domestic legal consequences of a declaration of war or authorization for the use of force. They are followed by a section setting forth a detailed list of the standby statutory authorities that can be triggered by a declaration of war, a state or war, and/or a proclamation of national emergency. Both a declaration of war and an authorization for the use of force have significant implications with respect to the War Powers Resolution (WPR). The WPR was enacted over President Nixon's veto in 1973 purportedly to restore a congressional role in authorizing the use of force that was thought by many to have been lost in the Cold War and the Vietnam War. To that end the WPR mandates that the President consult with the Congress "in every possible instance" prior to introducing U.S. armed forces into hostilities and regularly afterwards. Section 4(a) of the WPR further requires the President, "in the absence of a declaration of war," to report to Congress within 48 hours in any case in which United States Armed Forces are introduced— (1) into hostilities or into situations where imminent involvement in hostilities is clearly indicated by the circumstances; (2) into the territory, airspace or waters of a foreign nation, while equipped for combat, except for deployments which relate solely to supply, replacement, repair, or training of such forces; or (3) in numbers which substantially enlarge United States Armed Forces equipped for combat already located in a foreign nation. Section 5(b) of the Resolution, in turn, requires that if a report has been submitted or was required to be submitted under Section 4(a)(1) above, the President shall terminate the involvement of U.S. forces unless Congress (1) has declared war or has enacted a specific authorization for such use of United States Armed Forces; (2) has extended by law such sixty-day period, or (3) is physically unable to meet as a result of an armed attack upon the United States. Thus, congressional enactment of either a declaration of war or an authorization for the use of force pursuant to Section 5(b) has the effect of tolling the 60-90 day withdrawal mandate of the WPR. Each of the last three authorizations for the use of force enacted—the 1991 Gulf War authorization, the September 18, 2001, authorization with respect to terrorist attacks, and the October 16, 2002, authorization with respect to Iraq—have explicitly stated that they constitute the authorization required by Section 5(b) of the WPR. Each, in other words, has tolled the 60-90 day limitation that the WPR otherwise would impose on the use of military force by the President. All three authorizations have further specified that "[n]othing in this resolution supersedes any requirement of the War Powers Resolution." That appears to mean that the consultation and reporting requirements of the WPR still apply. Two related statutes, the Trading With the Enemy Act (TWEA) and the International Emergency Economic Powers Act (IEEPA), grant the President extraordinary powers to control foreign-owned property and foreign trade transactions with designated countries under certain exceptional circumstances. TWEA comes into effect upon a declaration of war or the existence of a state of war, while IEEPA is triggered solely by a presidential declaration of national emergency. Neither statute is triggered by an authorization for the use of force (unless, in the case of TWEA, the authorization eventually leads to the existence of a state of war). IEEPA is the authority most commonly invoked to freeze or block the assets of foreign states, companies, or individuals located within the jurisdiction of the United States. Until 1977 the broad range of economic authorities granted by TWEA could be exercised both in times of war and in times of national emergency. However, in 1977 Congress limited the prospective application of TWEA to times of declared or undeclared war only and enacted IEEPA to apply during times of a national emergency declared by the President. Under TWEA the President may (A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and (B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest, by any person, or with respect to any property, subject to the jurisdiction of the United States; and any property or interest of any foreign country or national thereof shall vest, when, as, and upon the terms, directed by the President, in such agency or person as may be designated from time to time by the President, and upon such terms and conditions as the President may prescribe such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States.... IEEPA replicates many of TWEA's powers to regulate international transactions, but it does not include TWEA authorities relative to purely domestic transactions, the regulation of bullion, and seizure of records. It also does not contain TWEA's general authority to take title to foreign assets. But Congress did amend IEEPA in the "USA PATRIOT Act" in 2001 to authorize the President to confiscate and take title to any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that he determines has planned, authorized, aided or engaged in ... hostilities or attacks against the United States.... Congress further amended both IEEPA and TWEA in the "Terrorism Risk Insurance Act of 2002" to provide that the assets of foreign terrorist states that have been frozen in the U.S. pursuant to either statute may be used to satisfy certain civil judgments against them. As noted, IEEPA is triggered solely by a declaration of national emergency, while TWEA applies in time of war. Thus, TWEA is not dependent upon a declaration of war, but it can be triggered by such a declaration. Neither appears to be triggered by an authorization for the use of force, unless and until, in the case of TWEA, a state of war actually develops. As noted, a declaration of war gives the President full authority over trade relations with the enemy. Other statutes triggered by a declaration give the President the authority to order plants to convert to the production of armaments and to seize those that refuse to do so, to take control of the Tennessee Valley Authority in order to manufacture explosives or for other military purposes, to assume control of transportation systems for military purposes, to condemn land for military uses, to have the right of first refusal over natural resources, and to take control of communications facilities. It also gives the President full power over agricultural exports. An authorization for the use of force, in itself, does not trigger any of these authorities. First enacted in 1798, the Alien Enemy Act broadly authorizes the President to deport, detain, or otherwise condition the stay of alien enemies in the U.S. in cases of "declared war" or "any invasion or predatory incursion ... perpetrated, attempted, or threatened against the territory of the United States by any foreign nation or government...." The act implements the internationally recognized right of every nation to protect itself during times of war from individuals whose primary allegiance lies with a hostile foreign power. Given this premise, the Supreme Court has observed that "[e]xecutive power over enemy aliens, undelayed and unhampered by litigation, has been deemed, throughout our history, essential to war-time security." The President must publicly proclaim the event that gives rise to activation of the act and make regulations regarding the treatment of those aliens. But once he does so, his power to "apprehend, restrain, secure, and remove" enemy aliens extends to all "natives, citizens, denizens, or subjects of the hostile nation or government, being of the age of fourteen years and upward, who shall be in the United States and not actually naturalized." The President may intern or remove enemy aliens or set lesser restraints on them, and may adopt any "regulations which are found necessary in the premises and for the public safety." Thus, President Woodrow Wilson, for example, barred alien enemies during World War I from possessing firearms and explosives, coming within a half a mile of a military facility or munitions factory, residing in certain areas, possessing certain communications equipment, and publishing certain types of materials. President Franklin D. Roosevelt authorized similar restrictions during World War II and, additionally, set up over 100 community hearing boards to make internment recommendations to the Attorney General. The procedural rights of aliens who are subject to the Alien Enemy Act are drastically restricted compared with those that aliens otherwise enjoy, including hearing rights under the removal provisions of the Immigration and Nationality Act. The scope of judicial review is equally circumscribed. Among the few rights recognized under the act, alien enemies subjected to removal may, if not chargeable with "actual hostility" or other crime against public safety, be entitled to the time allowed by applicable treaty or order to wind up his or her affairs here. A very limited right to judicial review under a petition for a writ of habeas corpus also is recognized. Generally, however, the power of the President to control alien enemies under the act is extraordinary. As noted, the act does not appear to be triggered solely by an authorization for the use of force. There are a number of civilian federal criminal law provisions that apply explicitly to specified conduct in time of war. They do not appear to distinguish between circumstances involving a declaration of war and other situations in which a state of war may exist absent a declaration of war, although courts (and Congress) have in some cases construed "time of war" or "at war" to require a formal declaration by Congress. Thus, these statutes may be triggered by a declaration of war, but they also may apply in circumstances where a state of war is deemed to exist. Consequently, these criminal prohibitions do not appear to be triggered by an authorization for the use of force, unless and until a state of war develops. These statutes include, for example: (a) 18 U.S.C.A. Section 443 (willful secreting, mutilating, obliterating or destroying records of a war contractor, that is, a holder of a prime or subcontract connected with or related to the prosecution of a war); (b) 18 U.S.C.A. Section 757 (procuring the escape of a prisoner of war held by the United States or any of its allies or the escape of an apprehended or interned enemy alien held by the United States or its allies; aiding or assisting such escape or assisting the prisoner of war or enemy alien after his escape; or attempting or conspiring to do any of the above); (c) 18 U.S.C.A. Section 792 (harboring or concealing persons known or believed to have committed or to be about to commit an offense under 18 U.S.C. §§793 or 794); (d) 18 U.S.C.A. Section 793 (gathering, transmitting or losing information related to the national defense with the intent or reason to believe that it is to be used to the injury of the United States or to the benefit of a foreign nation. Includes, among other things, such actions with respect to information on any place in which any vessel, aircraft, arms, munitions, or other materials or instruments for use in time of war are being prepared, repaired, stored, or are the subject of research or development; or with respect to any prohibited place so designated by the President by proclamation in time or war or in case of national emergency in which anything for the use of the Army, Navy, or Air Force is being prepared, constructed, or stored); (e) 18 U.S.C.A. Section 794 (gathering or delivering information relating to the national defense with the intent or reason to believe that it is to be used to the injury of the United States or to the advantage of a foreign nation. Subsection (b) deals with recording, publishing, or communicating or attempting to elicit information regarding movements, numbers, condition or disposition of Armed Forces, ships, aircraft or war materials, with the intent that the information be communicated to the enemy in time of war. It also covers communicating to the enemy in time of war information on plans or conduct of naval or military operations or defense measures.) (f) 18 U.S.C.A. Section 1038 (making a false statement, with intent to convey false or misleading information, about the death, injury, capture, or disappearance of a member of the Armed Forces of the United States during a war or armed conflict in which the United States is engaged); (g) 18 U.S.C.A. Section 1091 (genocide in time of peace or in time of war); (h) 18 U.S.C.A. Section 1653 (aliens who are found and taken on the sea making war against the United States or engaging in piracy against U.S. vessels or property); (i) 18 U.S.C.A. Section 2153 (when the United States is at war or when a national emergency has been declared, willful destruction of war material, war premises, or war utilities, with intent or reason to believe that such actions may injure, interfere with, or obstruct the United States or associate nations in their war or defense activities; and conspiracy to do so); (j) 18 U.S.C.A. Section 2154 (in times of war or national emergency, willfully producing defective war material, war premises, or war utilities with intent to injure, interfere with, or obstruct the war or defense activities of the United States or associate nations); (k) 18 U.S.C.A. Section 2381 and U.S. Constitution, Art. 3, Sec. 3, Cl. 1 (while owing allegiance to the United States, levying war against the United States or adhering to its enemies, giving them aid and comfort. Constitution requires confession in open court or testimony of two witnesses to the same overt act to convict for treason); (l) 18 U.S.C.A. Section 2382 (misprision of treason); (m) 18 U.S.C.A. Section 2384 (seditious conspiracy to overthrow or destroy by force the Government of the United States or to levy war against the United States); (n) 18 U.S.C.A. Section 2388 (willfully engaging in certain activities in time of war with intent to adversely affect armed forces of the United States or to obstruct enlistment or recruitment; conspiracy to do so; harboring a person knowing or having reason to believe that the person has engaged in such conduct); (o) 18 U.S.C.A. Section 2389 (recruiting soldiers or sailors within U.S. jurisdiction to engage in armed hostilities against the United States); and (p) 18 U.S.C.A. Section 2441 (war crimes). It should also be noted that other federal and state criminal law provisions, which do not draw distinctions between conduct in time of war and at other times, also apply during wartime. For example, 18 U.S.C.A. Section 175 prohibits knowing development, stockpiling, acquisition, possession or retention of any biological agent, toxin, or delivery system for use as a weapon, or knowing assistance to a foreign state to do so. 18 U.S.C.A. Section 229, with certain exceptions, prohibits similar conduct with respect to chemical weapons. 18 U.S.C.A. Section 831 prohibits specific transactions or actions involving nuclear materials, while 42 U.S.C.A. Section 2284 deals with sabotage of nuclear facilities or fuel. 18 U.S.C.A. Section 2332a prohibits certain uses of weapons of mass destruction. Other explosives offenses are covered in 18 U.S.C.A. Section 844. Hostage-taking is addressed in 18 U.S.C.A. Section 1203, while kidnapping is covered by 18 U.S.C.A. Section 1201. 18 U.S.C.A. Section 1116 deals with murder or manslaughter of foreign officials, official guests, or internationally protected persons. 18 U.S.C.A. Section 1114 addresses the murder or attempted murder of federal officers and employees, including members of the uniformed services, while they are engaged in or on account of the performance of official duties. It also covers murder or attempted murder of any person assisting an officer or employee of the United States in the performance of those duties or on account of that assistance. Statutes of limitations, which preclude prosecutions after a specific amount of time has lapsed (typically five years), may also be affected during wartime. When the United States "is at war" or Congress has authorized the use of military force within the meaning of the War Powers Resolution, the Wartime Suspension of Limitations Act ("Suspension Act"), codified at 18 U.S.C. Section 3287, extends the statute of limitations for the prosecution of certain crimes against the United States for five years beyond the termination of hostilities. Originally enacted during World War II, the Suspension Act previously extended the statute of limitations in relevant cases until three years after the end of hostilities only "when the United States is at war." One court had construed this language to refer only to a war declared by Congress, and held that the 1990-91 Persian Gulf conflict, although authorized by Congress, did not qualify. Apparently also construing the phrase "is at war" to mean pursuant to a declaration of war, Congress amended the provision in 2008 to trigger its application also upon the enactment of an authorization to use military force "as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544 (b))." (The military counterpart to the provision, found in 10 U.S.C. §843(f), was not amended. It continues to suspend the applicable statute of limitations for three years beyond the end of hostilities, and applies "when the United States is at war.") There are other criminal law provisions applicable to the military in the Uniform Code of Military Justice, 10 U.S.C.A. Sections801 et seq. Some of these provisions apply specifically in times of war. These will be treated separately in the subsequent section of this report on " Military Personnel ." The Foreign Intelligence Surveillance Act (FISA), as amended, in pertinent part, authorizes electronic surveillance, physical searches, and the use of pen registers and trap and trace devices to gather foreign intelligence information and sets out the procedures and circumstances under which each of these investigative tools may be used. In the event of a declaration of war, FISA authorizes the use of each of these investigative tools to gather foreign intelligence for up to 15 days without a court order. For electronic surveillance subsequent to a declaration of war, FISA provides, at 50 U.S.C.A. Section 1811, that: Notwithstanding any other law, the President, through the Attorney General, may authorize electronic surveillance without a court order under this subchapter to acquire foreign intelligence information for a period not to exceed fifteen calendar days following a declaration of war by the Congress. In the context of physical searches, 50 U.S.C.A. Section 1829 includes language similar to that in Section 1811: Notwithstanding any other provision of law, the President, through the Attorney General, may authorize physical searches without a court order under this subchapter to acquire foreign intelligence information for a period not to exceed 15 calendar days following a declaration of war by the Congress. For pen registers and trap and trace devices, 50 U.S.C.A. Section 1844 provides that: Notwithstanding any other provision of law, the President, through the Attorney General, may authorize the use of a pen register or trap and trace device without a court order under this subchapter to acquire foreign intelligence information for a period not to exceed 15 calendar days following a declaration of war by Congress. None of these provisions appears to be triggered by an authorization for the use of force or the existence of a state of war under any authority other than a congressional declaration of war. In addition to the foregoing provisions, FISA has been amended to authorize the use of these investigative tools without a court order for foreign intelligence purposes in "emergency" circumstances as determined by the Attorney General. To do so the Attorney General must (1) find that an emergency exists, (2) determine that the factual basis for the issuance of an order to approve such surveillance, physical search, or pen register or trap and trace device also exists, (3) advise a judge of the U.S. Foreign Intelligence Surveillance Court (FISC) that a decision to use the emergency authority has been made, and (4) apply to the FISC judge so notified for a court order as soon as practicable (but no later than within 72 hours in the case of an electronic surveillance or physical search or 48 hours in the case of a pen register or trap and trace device). These provisions do not expressly address the question of whether such emergency procedures might be triggered either by an authorization for the use of force or by a congressional declaration of war. However, depending upon the circumstances involved, these emergency powers, or other provisions within FISA, might be utilized. As noted in the foregoing discussion of criminal law, 18 U.S.C.A. Section 1116 makes it a crime to kill or attempt to kill a "foreign official, official guest, or internationally protected person." The term "foreign official" includes, among others, a Chief of State or the political equivalent thereof while he or she is in the United States. "Internationally protected person" covers, among others, a Chief of State or the political equivalent thereof, whenever such person is in a country other than his or her own. This criminal provision does not apply to the killing or attempted killing of an internationally protected person in his or her own country. The United States courts may exercise jurisdiction over the killing or attempted killing of internationally protected persons in violation of 18 U.S.C. Section 1116 committed outside the United States where the victim is a representative, officer, employee or agent of the United States; where a perpetrator is a U.S. national; or where an offender is later found in the United States. In addition, Part 2.11 of Executive Order 12333 forbids any person employed by or acting on behalf of the United States Government from engaging in, or conspiring to engage in, assassination. Part 2.12 of that executive order further prohibits any agency of the Intelligence Community from participating in or requesting any person to undertake activities forbidden by the order. The executive order does not define "assassination," nor does either the criminal statute or the executive order specifically address the applicability of the prohibition to an armed conflict in which the U.S. is engaged. However, in times of war, the targeting of an enemy's command and control structures may be regarded as strategically important, is lawful under international law, likely is not intended to be barred by E.O. 12333, and does not appear to be covered by 18 U.S.C. Section 1116. Hence, a declaration of war, because it creates a state of war regardless of whether actual hostilities have occurred, arguably creates a situation where such an act is not prohibited by domestic law. Less clear is the effect of an authorization for the use of force. Once a state of war comes into existence following such an authorization, then the legal situation appears to be the same as with a declaration. But prior to that development, the legal effect of an authorization for the use of force on the assassination ban appears somewhat ambiguous. An executive order may be revoked by the President through another executive order. To the extent that an executive order is issued pursuant to authority granted by statute, Congress may repeal it or terminate the underlying statutory authority upon which it rests. The assassination ban is part of an executive order issued by President Reagan in 1981 under both statutory and constitutional authority. The order does not indicate the nature of the authority underlying the assassination ban in particular. If one were to argue that a statutory basis for the ban exists, then one might contend that an authorization for a use of force would, by implication, modify the ban or repeal it with respect to the context in which the use of force was authorized. Conversely, declarations of war or authorizations for the use of force do not appear to have any particular consequences for the broad authorities conferred by the Defense Production Act of 1950 (DPA), as amended. The DPA was first enacted in 1950 to mobilize the nation's productive capacity after the outbreak of the Korean War. It currently plays a key role in enabling the United States to maintain a national defense/military readiness capability that will support a rapid and effective response to any threat to U.S. national security, including "an attack on the United States." The DPA has been reauthorized and amended a number of times, most recently in 2009. The original 1950 act contained seven titles, four of which were rescinded in 1953. Currently, three titles of the DPA are in effect, and they are due to expire on September 30, 2014, unless renewed. The authorities contained in the act are not triggered by any particular event but are continuously available "to ensure the national defense preparedness, which is essential to national security...." This title provides the President with the authority to require the priority performance of defense contracts and to allocate scarce critical and strategic materials essential to the national defense. This authority may also be extended to support the military requirements of allied nations when such extension is in the U.S. national defense interest. Priority contract performance, especially as implemented with respect to industrial resources, is intended to ensure sources of supply and timely delivery of required items for defense purposes. The post-Cold War use of this authority includes the 1990-1991 operations in the Persian Gulf (Desert Shield/Storm). During this operation, such items as computer and communications equipment, Global Positioning System receivers, chemical warfare protective clothing, and medical supplies were urgently required by both U.S. and Allied nation forces. More recently, DPA authority has been used to ensure timely delivery of critically needed items to support the deployment of U.S. and NATO troops in Bosnia and nearby areas and the availability of natural gas in California's energy crisis in December, 2000, and January, 2001. Title I contains a section that prohibits the President from exercising his priorities and allocations authority unless he makes certain findings supporting the need for such action. Additional sections provide the President with authority relating to the hoarding of designated materials, penalties for the violation of any provision of Title I, small business preferences, etc. This title is used only in cases where domestic sources are required and domestic firms cannot, or will not, act on their own to meet a national defense production need. Because private firms may be reluctant to invest in production capabilities for a new material unless a near-term demand for the material is relatively certain, Title III authorizes the use of financial incentives to expand defense-related productive capacity of critical components, critical technology items, and industrial resources "essential to the national defense." These financial incentives include loan guarantees, direct federal loans, purchases, purchase guarantees, and installation of equipment in contractor facilities. The authorities conferred in this title become broader in times of a national emergency declared by the President or Congress. This title includes various provisions with relevance to defense industrial preparedness. Examples include (a) Section 708, which authorizes the President to provide antitrust defenses to private firms participating in voluntary agreements aimed at solving production and distribution problems involving national defense preparedness; (b) Section 710, which establishes a National Defense Executive Reserve (NDER) composed of recognized experts from various segments of the private sector and government (except full-time federal) employees for training for possible employment in the federal government in the event of an emergency; and (c) Section 721, a provision popularly known as the "Exon-Florio Amendment," which authorizes the President to suspend or prohibit the acquisition, merger, or takeover of a domestic firm by a foreign firm if such action would threaten to impair national security. Another domestic legal issue implicated by declarations of war and authorizations for the use of force is their effect, if any, on insurance contracts, particularly with respect to clauses that exclude coverage for "acts of war." The overwhelming characterization of the events of September 11, 2001, as an "act of war" by public officials, sovereigns, international organizations, and the media, for instance, caused concern that insurance companies and the courts would interpret so-called "war risk" exclusion clauses in the pertinent insurance contracts to deny claims related to the attacks. However, even a declaration of war by Congress does not appear to have an authoritative effect upon the construction of material terms contained in private contracts. The intent of the parties, not the description of Congress, is what is most relevant to understanding whether the events of September 11 or any future terrorist attacks constitute "acts of war" within the meaning of private contracts, and it is not uncommon for such exclusion clauses in insurance contracts to be given narrow constructions in order to allow recovery to the insured. In the leading case in this area, Pan American World Airways, Incorporated v. Aetna Casualty and Surety Company, a jet was hijacked and destroyed by political dissidents in the Middle East. "Notwithstanding the obvious political overtones of the event," the court ruled that "the hijacking was too contained to come under the war or insurrection exclusion." A rule of causation and a rule of identity informed this conclusion. According to the Pan Am decision, when a court interprets an insurance policy excluding from coverage any injuries "caused by" a certain class of conditions, "the causation inquiry stops at the efficient physical cause of the loss; it does not trace events back to their metaphysical beginnings." In the Pan Am case, the court examined contract language excluding from coverage losses caused by a "military or usurped power" and stated that an act causing such a loss "must be at least that of a de facto government." On the facts of the case, the court then found that the terrorist organization that highjacked the Pan Am airplane "was not a de facto government in the sky over London when the 747 was taken" and held that the exclusion clause, therefore, did not apply. This issue will not likely arise with respect to any future acts of terrorism on U.S. territory. In the aftermath of September 11, 2001, Congress enacted the Terrorism Risk Insurance Act to ensure the availability of commercial insurance coverage for losses due to acts of terrorism. A number of provisions of the U.S. Code concern crimes under the Uniform Code of Military Justice, the activation of the reserves, the role of the Coast Guard, tax benefits for military personnel, and disability and death as the result of combat duty. None appear necessarily to require a declaration of war to be applicable, but a declaration can trigger their application. Various crimes defined under the Uniform Code of Military Justice ("UCMJ," 10 U.S.C.A. §§801 et seq. ) occur either primarily or exclusively in the context of states of hostilities (e.g., "misbehavior before the enemy" under Section 899; "subordinate compelling surrender" under Section 900; "improper use of countersign" under Section 901; "forcing a safeguard" under Section 902; "aiding the enemy" under Section 904; "misconduct as prisoner" under Section 905; and rules concerning "spies" under Section 906). Several of these crimes either only occur or occur in aggravated form "in time of war." The Manual for Courts Martial sets out Rules for Court Martial. Rule 103(19) defines the expression "time of war," as follows: For purpose [ sic ] of ... implementing the applicable paragraphs of Parts IV and V of this Manual only, "time of war" means a period of war declared by Congress or the factual determination by the President that the existence of hostilities warrants a finding that a "time of war" exists for purposes of ... Parts IV and V of this manual. Thus, a congressional declaration is not indispensable to prosecutions of these crimes but can trigger their application. They do not appear to be triggered by an authorization for the use of force unless a state of war develops. In the absence of a presidential or congressional declaration, military courts have applied a variety of pragmatic tests to determine whether a "time of war" existed in connection with specific offenses. For some offenses, the statutes of limitations may be tolled in "time of war." When the United States is "at war," the statute of limitations on offenses involving fraud against the United States or offenses committed in connection with U.S. property or procurement of contracts related to the prosecution of the war is suspended until three years after the termination of hostilities (10 U.S.C.A. Section 843(f)). These provisions have been held to apply during hostilities that were initiated without a declaration of war or congressional authorization to use force. The jurisdiction of the military expands during time of war. Prior to 2006, the UCMJ permitted trial by court-martial of "persons serving with or accompanying an armed force in the field" in time of war (10 U.S.C.A. §802(a)(10)).When faced with the court-martial of civilians, courts interpreted the phrase "in time of war" to mean only during wars declared by Congress. However, Congress amended 10 U.S.C.A. Section 802(a)(10) to extend military jurisdiction in "time of declared war or a contingency operation." The provision has reportedly resulted in one conviction of a civilian contractor in Iraq, a non-U.S. citizen whose Iraqi citizenship precluded jurisdiction under the Military Extraterritorial Jurisdiction Act. In time of war or conditions of martial law, military commissions may provide a special venue for trying persons not otherwise subject to the UCMJ. Military jurisdiction expands during war to cover civilians accused of violating Sections 904 or 906 (aiding the enemy and spying), as well as other "offenders or offenses that by ... the law of war may be tried by military commissions, provost courts, or other military tribunals" (§821), at least insofar as the Constitution permits. The Military Commissions Act of 2009, chapter 47A of Title 10, U.S. Code , permits the trial by military commission of "alien unprivileged enemy belligerents" suspected of committing violations against the law of war or "other offenses triable by military commission." The commissions may try such persons for offenses committed "before, on, or after September 11, 2001," without any requirement for the authorization for the use of force in response to the terrorist attacks of that date to have been in effect at the time the offense was committed. The definition of "unprivileged enemy belligerent" is restricted to those who engaged in or substantially supported hostilities against the United States or its coalition partners, except that those who were members of Al Qaeda at the time of the offense need not have such a connection to hostilities. Thus, offenses defined by or under the jurisdiction of the Military Commissions Act do not depend on a declaration of war or authorization to use force. Chapter 1209 of title 10 of the United States Code (10 U.S.C.A. §§12301 et seq. ) relates generally to activation of reserve forces. The Ready Reserve forces include members of the Army National Guard and the Air National Guard (see 10 U.S.C.A. §10145(b)). The authority conferred under Sections 12302 through 12304 can be exercised without a congressional declaration of war or national emergency; but those sections only allow reserve forces to be called to active duty for fixed statutory periods (i.e., up to 24 consecutive months under Sections 12302 and 12303 and up to 270 days under Section 12304). By contrast, the authority conferred under Section 12301 can be exercised "[i]n time of war or of national emergency declared by Congress" and allows reserve forces to be called to active duty "for the duration of the war or national emergency and for six months thereafter." The Standby Reserve (as distinguished from the Ready Reserve and Selected Reserve forces) can only be called to active service under the authority conferred by section 12301 (see Section 12306). While the Retired Reserve can be called to active service for up to 12 months under 10 U.S.C.A. Section 688, it can be called to service "for the duration" under the authority conferred by Section 12301 (see Section 12307). So-called "stop loss" authority is conferred under Section 12305. This authority allows the President, whenever persons are called to active service under Sections 12301, 12302, or 12304, to "suspend any provision of law relating to promotion, retirement, or separation" with respect to any member of the armed forces who the President determines is essential to the national security of the United States. This means that, when persons have been called to active service under the authority conferred by Section 12301 "for the duration" of a war or national emergency declared by Congress, otherwise applicable rules concerning promotions, retirements, and separations may not apply. Moreover, under Section 671a, the "period of active service" of any servicemember is extended to six months beyond the duration of any war in which the United States is engaged, unless the Secretary concerned terminates the period at an earlier date. Thus, for all of these sections, a declaration of war is not a necessary predicate, but it can trigger the application of Section 12301 and related provisions. Reemployment rights for reservists called to active duty available under the Uniformed Services Employment and Reemployment Rights Act (USERRA, 38 U.S.C.A. §§4301 et seq. ) and benefits available through the Servicemembers Civil Relief Act (50 U.S.C.A. App. §§501—596) do not require a declaration of war, but depend generally on the authority under which the call to active duty was made, and may vary according to whether service was rendered during a period of war. Section 3 of title 14 of the United States Code specifies that "[u]pon the declaration of war if Congress so directs in the declaration or when the President directs, the Coast Guard shall operate as a service in the Navy...." Thus, a congressional declaration of war is not indispensable to bring the Coast Guard under the control of the Navy, but it would have that effect. There are several provisions of the Internal Revenue Code which apply to taxpayers involved directly or indirectly with war. A congressional declaration of war is not needed to render any of these provisions applicable. Perhaps the most significant relevant provision of the Internal Revenue Code is Section 112 under which some or all of the pay received by members of the uniformed services for active service in a combat zone is excluded from gross income (i.e., is received tax-free). The same exemption applies to military pay received by service members hospitalized due to injuries sustained while serving in a combat zone, subject to a two-year limitation. The term "combat zone" is specially defined for purposes of this rule and means an area so designated by the President of the United States in an Executive Order, and such an Executive Order must be issued to make the tax exemption apply. No reference is made in this provision to any declaration by Congress of the existence of a state of war and, by its express terms, it applied to service in the Korean and Vietnam conflicts. The pay of POWs and those listed as "missing in action" is also exempt (see (IRC §112(d)). In addition, pay received tax-free because of IRC Section 112 is exempt from federal income-tax withholding under IRC Section 3401(a)(1). Qualified military benefits are exempt from tax under IRC Section 134, and these include bonus payments made by a state or its political subdivision to a current or former member of the Armed Forces, or to his or her dependents, by reason of service in a combat zone designated under Section 112. Due dates for filing returns and for paying taxes, according to IRC Section 7508, are deferred for members of the uniformed services serving in a combat zone designated by the President for purposes of IRC Section 112. Telephone calls originating from combat zones designated under IRC Section 112 are exempt from the federal excise tax that would otherwise apply (see IRC §4253(d)). The so-called "additional estate tax" does not apply in the case of the estate of a member of the Armed Forces who is killed in action in a combat zone designated under IRC Section 112 or who dies as a result of wounds, disease, or injury suffered in such a combat zone (see IRC §2201). An exemption from federal income tax for the current taxable year and any prior taxable year ending on or after the first day of service in a combat zone and the preceding taxable year is allowed under IRC Section 692 for a member of the Armed Forces who dies in a combat zone designated under IRC Section 112 or who dies as a result of wounds, disease, or injury suffered in such a combat zone. In addition, any unpaid taxes owed at the time of death will be forgiven. A similar exemption is also allowed in the case of a civilian federal employee killed in any military action involving the United States (see IRC §692). Special rules for spouses of persons who become missing in action also appear in the Code (see IRC §§2(a)(3) and 6013). Subchapter II of chapter 11 of title 38 of the United States Code (38 U.S.C. §§1110 et seq. ) relates to "wartime disability compensation." Relevant disability must result from personal injury suffered or disease contracted in the line of duty in active military, naval, or air service "during a period of war." Thus, there is no explicit requirement of a congressional declaration of war. On the other hand, such a declaration would obviously assure that the particular period of hostilities in question is indeed a period of war. Some other veterans' benefits depend on whether the person seeking benefits served during a period of war. Chapter 13 of title 38 of the United States Code (38 U.S.C.A. §§1301 et seq. ) relates to service-connected deaths. Compensation in connection with such deaths is accorded without regard to whether or not they occurred during or as a result of a war declared by Congress. Rules under 38 U.S.C.A. Section 2402 relating to the eligibility of members of the Armed Forces who die while on active duty to be buried in national cemeteries (including Arlington National Cemetery) and other rules concerning burial benefits are not contingent on a congressional declaration of war. Under ordinary circumstances the President exercises the powers conferred on him by the Constitution and by statutes enacted by Congress. As noted in the preceding section, in extraordinary circumstances a number of additional statutory powers may become available; and his Constitutional powers are likely to be given a generous interpretation by the courts. The standby statutory authorities potentially available to the President and the executive branch number in the hundreds. Some are triggered by a declaration of war, some by the existence of a state of war (and, thus, also by a declaration of war), and some pursuant to a declaration or the existence of national emergency. Most can be triggered by one or more of the foregoing circumstances. None of these special authorities appears to be triggered by an authorization for the use of force (unless and until it leads to a state of war). With respect to those statutes that are triggered by the existence of a national emergency or of a state or time of war, the determination of whether such a condition exists would be made in the first instance by the executive branch, unless the statute provides otherwise. Those authorities that require a declaration of national emergency as a predicate for coming into effect are not automatically activated by such a declaration. National emergency powers can be exercised only pursuant to the strictures of the National Emergencies Act. In addition to requiring that the President publicly declare a national emergency, that act requires that he specify the emergency statutory authorities that he intends to use prior to their use and that he publish that information in the Federal Register and report it to Congress. (On September 14, 2001, President Bush, for example, took this step by issuing a "Declaration of National Emergency by Reason of Certain Terrorist Attacks" and specifying 10 statutory authorities that he intended to use. ) Moreover, the act provides that Congress can terminate a declared emergency at any time by joint resolution and that, in any event, the emergency declaration and any statutory powers activated pursuant to it expire after one year unless the President specifically renews the declaration. The following subsections identify the standby authorities that become available to the President and the executive branch upon (1) a declaration of war, (2) the existence of a state of war, and (3) pursuant to a declaration of national emergency. It is important to emphasize that a declaration of war activates not only the statutes listed in the first subsection but also—because a declaration of war automatically creates a state of war—those listed in the second section. The latter statutes are listed separately because they can come into effect even if a declaration of war is never adopted. Within each subsection, the statutes are listed generally in the order in which they appear in the U.S. Code . The lists exclude the statutes detailed above concerning criminal law and taxes as well as the disaster relief authorities contained in the "Robert T. Stafford Disaster Relief and Emergency Assistance Act." Many of following provisions can be triggered by circumstances other than a declaration of war. But all would come into effect upon enactment of a declaration of war: 2 U.S.C.A. Section 198(b)—provides that the rule mandating that Congress adjourn sine die by July 31 of each year unless each House adopts a concurrent resolution, "shall not be applicable in any year if on July 31 of such year a state of war exists pursuant to a declaration of war by the Congress." 2 U.S.C.A. Section 641—provides that the requirement that amendments to a reconciliation bill not increase budget outlays or decrease budget outlay reductions, revenues, or revenue increases unless they include offsetting budget outlay reductions or revenue increases does not apply "if a declaration of war by the Congress is in effect." 2 U.S.C.A. Section 642(a)—provides that the requirement making bills, amendments, motions, and conference reports which provide new budget authority that would exceed what Congress has set forth in the concurrent resolution on the budget for that fiscal year or that would reduce revenues below what has been set forth in that concurrent resolution out of order in the House does not apply "when a declaration of war by the Congress is in effect." 2 U.S.C.A. Section 643(b)(2)—provides that the requirement making any bill, amendment, motion, or conference report that exceeds the discretionary spending limits set forth in 2 U.S.C.A. App. 901(c) out of order in the Senate does not apply "if a declaration of war by the Congress is in effect or a joint resolution pursuant to section 258 of the Balanced Budget and Emergency Deficit Control Act of 1985 [2 U.S.C.A. §907a] has been enacted." 2 U.S.C.A. Section 907a(b-c)—states that sequestration reports and orders and certain other requirements of the Budget Act are precluded or suspended "upon the enactment of a declaration of war" but that the sequestration procedures are restored "effective with the first fiscal year that begins in the session after the state of war is concluded by Senate ratification of the necessary treaties...." 7 U.S.C.A. Section 5712(c)—allows the President to prohibit or curtail the export of any agricultural commodity "during a period for which the President has declared a national emergency or for which the Congress has declared war." 10 U.S.C.A. Section 123b—provides that the President may waive the statutory ceiling placed on the number of members of the armed forces who may be stationed abroad in any fiscal year "if the President declares an emergency" and that the ceiling "does not apply in the event of a declaration of war or an armed attack on any member nation of the North Atlantic Treaty Organization, Japan, the Republic of Korea, or any other ally of the United States." 10 U.S.C.A. Section 802(a)—subjects "persons serving with or accompanying an armed force in the field ... in time of declared war or a contingency operation" to the Uniform Code of Military Justice. 10 U.S.C.A. Section 2350j(e)(3)(A)—allows the Secretary of Defense to carry out a military construction project financed by contributions from designated countries or regional organizations without prior explanation and justification to Congress if the project is necessary to support the armed forces "by reason of a declaration of war, or a declaration by the President of a national emergency pursuant to the National Emergencies Act that is in force at the time of the commencement of the project." 10 U.S.C.A. Section 2662(g)—provides that the congressional notice and wait provisions governing certain real property transactions by the Secretary of a military department and by the GSA for the Department of Defense do not apply, inter alia , if the transaction results from "a declaration of war ... or a declaration of a national emergency by the President pursuant to the National Emergencies Act." 10 U.S.C.A. Section 2808(a)—provides that the Secretary of Defense and the Secretaries of the military departments, with his authorization, may "without regard to any other provision of law" undertake military construction projects "not otherwise authorized by law" if necessary to support the use of the armed forces "in the event of a declaration of war or the declaration by the President of a national emergency under the National Emergencies Act that requires use of the armed forces." 10 U.S.C.A. Section 12311—provision for the Secretaries of the military departments to permit a member of a reserve component to serve on active duty for a period of five years does not apply "in time of war declared by Congress." 10 U.S.C.A. Section 12521—provides that the Ready Reserve Mobilization Income Insurance Program includes in "covered service" any period of more than 30days on active duty in support of forces activated "during a period of war declared by Congress or a period of national emergency declared by the President or Congress." 14 U.S.C.A. Section 3—provides that the Coast Guard shall operate as a service in the Navy "upon the declaration of war if Congress so directs in the declaration or when the President directs...." 14 U.S.C.A. Section 661—provides that the President may, if there is in effect a declaration of war or national emergency at the end of any fiscal year, suspend any end-strength limitation prescribed by law for any military or civilian component of the Coast Guard for a period not to exceed 6 months after the end of the war or national emergency. 14 U.S.C.A. Section 724—provides that the President may, if there is in effect a declaration of war or national emergency at the end of any fiscal year, suspend any end-strength limitation prescribed by law for the number of officers in the Coast Guard Reserve for a period not to exceed 6 months after the end of the war or national emergency. 15 U.S.C.A. Section 636(n)—provides for the deferral of the repayment of interest and principal on direct loans by the SBA to a member of a reserve component who is ordered to active duty during a "period of military conflict," defined to mean "a period of war declared by Congress [or] a period of national emergency declared by the Congress or the President...." 22 U.S.C.A. Section 7203—provides that the prohibition in the "Trade Sanctions Reform and Export Enhancement Act of 2000" barring the President from imposing new unilateral agricultural or medical sanctions without the approval of Congress does not apply with respect to the imposition of such a sanction against a foreign country or entity "(A) pursuant to a declaration of war against the country or entity; (B) pursuant to specific statutory authorization for the use of the Armed Forces of the United States against the country or entity; (C) against which the Armed Forces of the United States are involved in hostilities; or (D) where imminent involvement by the Armed Forces of the United States in hostilities against the country or entity is clearly indicated by the circumstances...." 24 U.S.C.A. Section 412—provides that "persons who ... served in a war theater during a time of war declared by Congress" are eligible to become residents of an Armed Forces Retirement Home. 28 U.S.C.A. Section 2416(d)—provides that, for the purpose of computing the time limitation periods for commencing court actions brought by the United States, "there shall be excluded all periods during which... the United States is in a state of war declared pursuant to Article I, Section 8, of the Constitution of the United States." 28 U.S.C.A. Section 2680(j)—exempts claims against the United States "arising out of the combatant activities of the military or naval forces, or the Coast Guard, during time of war" from the jurisdiction of courts. 33 U.S.C.A. Section 2293—authorizes the Secretary of the Army, "in the event of a declaration of war or a declaration by the President of a national emergency in accordance with the National Emergencies Act that requires or may require use of the Armed Forces," to terminate or defer Army civil works projects that he determines are not essential to the national defense and to apply the resources to projects that are essential. 42 U.S.C.A. Section 2138—authorizes the Nuclear Regulatory Commission to suspend any licenses it has granted relating to the production or use of special nuclear material, to order the recapture of any such material, and to order the operation of any such facility, "if the Commission finds it necessary to the common defense and security ... whenever the Congress declares that a state of war or national emergency exists." 50 U.S.C.A. Section 21—authorizes the President to "apprehend, restrain, secure, and remove" alien enemies ... whenever there is a declared war between the United States and any foreign nation or government, or any invasion or predatory incursion is perpetrated, attempted, or threatened against the territory of the United States by any foreign nation or government, and the President makes public proclamation of the event." 50 U.S.C.A. Section 98f(a)(2)—authorizes any person designated by the President, "(1) at any time the President determines the release of such materials is required for purposes of the national defense or (2) in time of war declared by the Congress or during a national emergency," to use, sell, or otherwise dispose of materials in the National Defense Stockpile that the designee determines are "required for purposes of the national defense." 50 U.S.C.A. Section 832—authorizes the Secretary of Defense, "[d]uring any period of war declared by the Congress, or during any period when the Secretary determines that a national disaster exists, or in [other] exceptional cases …," may authorize the employment, assignment or detail of personnel to the Agency and grant them temporary access to classified information pending the completion of a full field investigation, if he determines that "such action is clearly consistent with the national security." 50 U.S.C.A. Section 1515—authorizes the President to suspend the provisions of law governing the production, transportation, location, testing, and disposal of lethal chemical and biological warfare agents "during the period of any war declared by Congress and during the period of any national emergency declared by Congress or by the President." 50 U.S.C.A. Section 1641—requires the President, "when the President declares a national emergency, or Congress declares war," to maintain a file and index of all significant orders issued during such emergency or war, to transmit such orders to the Congress, and to report to Congress each six months on the total expenditures during that period that are attributable to the exercise of emergency authorities conferred by such declaration. 50 U.S.C.A. Section 1811—provides that notwithstanding any other law, the President may authorize electronic surveillance without a court order under FISA "to acquire foreign intelligence information for a period not to exceed fifteen calendar days following a declaration of war by the Congress." 50 U.S.C.A. Section 1829—provides that notwithstanding any other law, the President may authorize physical searches without a court order under FISA "to acquire foreign intelligence information for a period not to exceed 15 calendar days following a declaration of war by the Congress." 50 U.S.C.A. Section 1844—provides that notwithstanding any other provision of law, the President may authorize the use of a pen register or trap and trace device without a court order under FISA "to acquire foreign intelligence information for a period not to exceed 15 calendar days following a declaration of war by Congress." 50 U.S.C.A. App. Section 454(a)—provides that the President can vary the specified standards for physical and mental fitness of inductees into the armed forces "except in time of war or national emergency declared by the Congress"; that those who voluntarily enlist cannot have their enlistment extended without their consent "until after a declaration of war or national emergency by the Congress"; and that various exceptions from requirements of service in the reserves or from orders to active duty without consent do not apply "in time of war or national emergency declared by Congress." 50 U.S.C.A. App. Section 456—provides that various exceptions to liability for induction into the armed forces for veterans of World War II and members of the Reserves and the National Guard do not apply "after a declaration of war or national emergency made by the Congress" and that the exception for those who have had a close relative killed in the line of duty does not apply "during the period of a war or a national emergency declared by Congress." In addition to the statutes that are explicitly triggered by a declaration of war, a number come into the effect if a state of war, or period of war, or simply "war" exists. Because a declaration of war automatically creates a state of war, these authorities also are triggered by the enactment of a declaration of war. But they can come into effect even if no declaration of war is adopted. As is the case with respect to many of the statutes in the foregoing subsection, many of these statutes can also be triggered pursuant to a declaration of national emergency, and at least one comes into play if Congress has enacted a specific authorization for the use of the Armed Forces. The statutes are set forth in the order in which they appear in the U.S. Code : 5 U.S.C.A. Section 551(1)—excludes "military authority exercised in the field in time of war or in occupied territory" from the definition of "agency" for purposes of general administrative procedure. 5 U.S.C.A. Section 701(b)—excludes "military authority exercised in the field in time of war or in occupied territory" from the definition of "agency" for purposes of judicial review of administrative procedure. 5 U.S.C.A. Section 5335(b)—requires that step increases mandated for federal civil service employees be preserved for those employees whose civilian service is interrupted by "service with the armed forces or by service in essential non-Government civilian employment during a period of war or national emergency." 5 U.S.C.A. Section 5343(e)(3)—requires that step increases mandated for federal prevailing rate employees be preserved for those employees whose civilian service is interrupted by "service with the armed forces or by service in essential non-Government civilian employment during a period of war or national emergency." 5 U.S.C.A. Section 8114(e)(3)—prohibits accounting for "bonus or pay for particularly hazardous service in time of war" when computing pay to compensate government employees for work injuries. 5 U.S.C.A. Section 8332(g)—provides that a civil service employee who leaves his civilian position to serve in the military "during the period of a war, or of a national emergency as proclaimed by the President or declared by Congress" is deemed not to be separated from his civil service position for purposes of determining his or her creditable service for retirement purposes, unless the military service extends beyond 5 years. 8 U.S.C.A. Section 1182(a)(8)—provides that any person "who has departed from or who has remained outside the United States to avoid or evade training or service in the armed forces in time of war or a period declared by the President to be a national emergency" is ineligible to receive a visa and inadmissible into the United States, and is thus ineligible for citizenship. 8 U.S.C.A. Section 1231(b)(2)—provides that when the Attorney General decides that it is "impracticable, inadvisable, inconvenient, or impossible" to remove an alien to the country where the alien is a citizen or subject because the "United States is at war," the alien may be removed to the "country that is host to a government in exile of the country of which the alien is a citizen or subject" or to "a country... that is very near to the country that is host to a government in exile of the country of which the alien is a citizen or subject" or to "a country ... that is very near to the country of which the alien is a citizen or subject." 8 U.S.C.A. Section 1425—makes any person who deserted or shall desert the armed forces or left the United States with the intent to avoid the draft at "any time during which the United States has been or shall be at war" ineligible to become a naturalized citizen of the United States. 8 U.S.C.A. Section 1438—authorizes the Attorney General to naturalize former United States citizens who lost citizenship by serving "in the military, air, or naval forces of any country at war with a country with which the United States was at war after December 7, 1941, and before September 2, 1945." 8 U.S.C.A. Section 1442(a)—authorizes the Attorney General to naturalize an alien from a country with which the United States is at war after the alien's loyalty to the United States is established if the alien's application for naturalization was "pending at the beginning of the state of war and the applicant is otherwise entitled to admission to citizenship." 8 U.S.C.A. Section 1455(d)—prohibits the Attorney General from charging or collecting a naturalization fee "during the time when the United States is at war" from an alien in the military, air, or naval service of the United States for filing an application for naturalization or issuing a certificate of naturalization upon admission to citizenship. 8 U.S.C.A. Section 1481(a)(3) and (6)—provides that a person who is a national of the United States whether by birth or naturalization shall lose his nationality by serving in the armed forces of a foreign state "if such armed forces are engaged in hostilities against the United States" and by voluntarily making "a formal written renunciation of nationality ... whenever the United States shall be in a state of war" and the Attorney General approves such renunciation as "not contrary to the interests of national defense." 10 U.S.C.A. Section 123—authorizes the President to "suspend the operation of any provision of law relating to the promotion, involuntary retirement, or separation of commissioned officers of the Army, Navy, Air Force, Marine Corps, or Coast Guard Reserve ... in time of war, or of a national emergency declared by Congress or the President" until one year after the war or national emergency terminates. 10 U.S.C.A. Section 123a—authorizes the President to defer any end-strength limitation prescribed by law for any military or civilian component of the armed forces if "there is in effect a war or national emergency" until six months after the war or national emergency terminates. 10 U.S.C.A. Section 152(a)—provides that "in time of war there is no limit on the number of reappointments" the President may make of the same person to the two-year position of Chairman of the Joint Chiefs of Staff. 10 U.S.C.A. Section 154(a)—provides that "in time of war there is no limit on the number of reappointments" the President may make of the same person to the two-year position of Vice Chairman of the Joint Chiefs of Staff. 10 U.S.C.A. Section 155(f)(4)—lifts the four-year limitation on the tours of duty of officers assigned or detailed to duty on the Joint Staff of the Joint Chiefs of Staff "in time of war; or during a national emergency declared by the President or Congress." 10 U.S.C.A. Section 194(e)—lifts the caps on the number of armed forces and civilian employees that can be assigned or detailed to permanent duty in management headquarters activities or otherwise in the Defense Agencies and DOD Field Activities "in time of war; or during a national emergency declared by the President or Congress." 10 U.S.C.A. Section 351—authorizes the President to "arm, have armed, or allow to be armed" any watercraft or aircraft used as a means of transportation "on, over, or under water" during a "war and at any other time when the President determines that the security of the United States is threatened by the application, or the imminent danger of application, of physical force by any foreign government or agency against the United States, its citizens, the property of its citizens, or their commercial interests." 10 U.S.C.A. Section 519—provides that "in time of war or of national emergency declared by Congress" enlistments in the armed forces shall be for the duration of the war or emergency plus six months. 10 U.S.C.A. Section 527—allows the President to suspend the limitations placed on the number of general officers in the Army, Air Force, and Marines and of flag officers in the Navy, and the number of such officers who may be designated in various ranks, "in time of war, or of national emergency declared by Congress or the President" until up to one year after the war or national emergency terminates. 10 U.S.C.A. Section 603—allows the President to appoint "any qualified person" to any officer grade in the Army, Navy, Air Force, and Marines up to major general or rear admiral "in time of war, or of national emergency declared by the Congress or the President" for up to 2 years or 6 months after the war or national emergency has terminated, whichever occurs first. 10 U.S.C.A. Section 620(d)—allows the Secretary of a military department to exclude a reserve officer ordered to active duty "during a war or national emergency" from the active duty roster of officers. 10 U.S.C.A. Section 671—provides that "in time of war or a national emergency declared by Congress or the President" basic training may not be less than 12 weeks (except for certain health care professionals). 10 U.S.C.A. Section 688(f)—waives the 12-month limitation on the period for which retired members of the armed forces can be recalled to active duty and the prohibition on recalling certain categories of retired officers to active duty "in time of war or of national emergency declared by Congress or the President." 10 U.S.C.A. Section 690(c)—waives the limitation on the number of retired general officers and flag officers who may be on active duty at any one time "in time of war or of national emergency declared by Congress or the President." 10 U.S.C.A. Section 708(d)—allows the Secretary of a military department to cancel a leave of absence granted for educational purposes "in time of war, or of national emergency declared by Congress or the President." 10 U.S.C.A. Section 712—allows the President to detail members of the armed forces to any foreign country he deems advisable to assist in military matters "during a war or a declared national emergency." 10 U.S.C.A. Section 772(e)—authorizes a person not on active duty who served honorably "in time of war" in the Army, Navy, Air Force, or Marine Corps to bear the title, and, "when authorized by regulations prescribed by the President," wear the uniform, of the "highest grade held by him during that war." 10 U.S.C.A. Section 843—provides that a person charged with "absence without leave or missing movement in time of war," or with murder or rape, or any offense punishable by death, may be tried and punished at any time without limitation and that a person charged with an "offense the trial of which in time of war is certified to the President by the Secretary concerned to be detrimental to the prosecution of the war or inimical to the national security" may be tried and punished up to "six months after the termination of hostilities as proclaimed by the President or by a joint resolution of Congress." 10 U.S.C.A. Section 843(f)—when the United States is "at war," suspends the statute of limitations until three years after the termination of hostilities for offenses under the UCMJ that involve fraud against the United States, as well as those committed "in connection the acquisition, care, handling, custody, control, or disposition of any [U.S.] real or personal property," or committed "in connection with the negotiation, procurement, award, performance, payment, interim financing, cancellation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war, or with any disposition of termination inventory by any war contractor or Government agency." 10 U.S.C.A. Section 871(b)—allows the Secretary of a military department to commute a court-martial sentence of dismissal to a reduction in grade "in time of war or national emergency." 10 U.S.C.A. Section 885(c)—provides that any person found guilty of desertion or attempt to desert the armed forces shall be punished, "if the offense is committed in time of war," by death or "such other punishment as a court-martial may direct." 10 U.S.C.A. Section 890—provides that any member of the armed forces who "willfully disobeys a lawful command of his superior commissioned officer" shall be punished, "if the offense is committed in time of war," by death or "such other punishment as a court-martial may direct." 10 U.S.C.A. Section 901—provides that any person subject to the UCMJ who "in time of war discloses the parole or countersign to any person not entitled to receive it" or who gives to another who is entitled to receive and use the parole or countersign a "different parole or countersign from that which, to his knowledge, he was authorized and required to give," shall be punished by death or such other punishment as a court-martial may direct. 10 U.S.C.A. Section 905—provides that any person subject to the UCMJ who, "while in the hands of the enemy in time of war," acts to the detriment of other prisoners to receive favorable treatment or maltreats his fellow prisoners without justifiable cause shall be punished as a court-martial may direct. 10 U.S.C.A. Section 906—provides that "any person who in time of war is found lurking as a spy or acting as a spy" with respect to the armed forces or defense entities shall be tried by a court-martial and, if convicted, be punished by death. 10 U.S.C.A. Section 913—provides that any sentinel or look-out who is found drunk or sleeping at his post, or who leaves it before he is relieved, shall be punished by death if the offense is committed "in time of war" and by such other punishment as a court-martial may direct at other times. 10 U.S.C.A. Section 978(e)—allows the President to suspend the requirement that persons seeking to enlist in the armed forces be tested for drug and alcohol use and dependency "in time of war, or time of emergency declared by Congress or the President." 10 U.S.C.A. Section 1104(d)—provides that members of the armed forces on active duty "during and immediately following a period of war, or during and immediately following a national emergency involving the use of the armed forces in armed conflict" may receive health-care services from the Department of Veterans Affairs. 10 U.S.C.A. Section 1161(a)—provides that no commissioned officer may be dismissed from any armed force except by sentence of a general court-martial, in commutation of a sentence of a general court-martial, or "in time of war, by order of the President." 10 U.S.C.A. Sections1201(b) and 1203(b)—provides that the Secretary of a military department may allow a member of his armed force to retire on disability even though the disability is less than 30 percent under the standard schedule of rating disabilities used by the Department of Veterans Affairs if the member has at least 20 years of service and the disability was incurred "in line of duty in time of war or national emergency." 10 U.S.C.A. Section 1491(e)—allows the Secretary of Defense to waive the requirement that a funeral honors detail be provided for the funeral of any veteran if "necessary ... to meet the requirements of war, national emergency, or a contingency operation or other military requirements." 10 U.S.C.A. Section 1580—allows the Secretary of Defense or of the military department concerned to designate any employee of DOD as an emergency essential employee if they provide immediate support to combat operations in a combat zone "in connection with a war, a national emergency declared by Congress or the President, or the commencement of combat operations of the armed forces in the zone." 10 U.S.C.A. Section 2208—allows the Secretary of Defense to waive the requirement that Congress be given written notification of the advance billing of a customer of a working-capital fund "during a period of war or national emergency." 10 U.S.C.A. Section 2366(c)—authorizes the President to suspend the operation of any provision related to the survivability testing and lethality testing required before full-scale production of any major systems and munitions programs "in time of war or mobilization." 10 U.S.C.A. Section 2457(b)—states as policy the dispersal of manufacturing facilities and standardization of equipment among North Atlantic Treaty Organization members to "minimize potential economic hardship to parties to the agreements and increase the survivability, in time of war." 10 U.S.C.A. Section 2461(e)—provides that the conditions and prerequisites to the privatization of a DOD commercial or industrial type function do "not apply during war or during a period of national emergency declared by the President or Congress." 10 U.S.C.A. Section 2538—authorizes the President, through the head of any department, to seize any plant that is "equipped to manufacture, or that in the opinion of the head of that department is capable of being readily transformed into a plant for manufacturing, arms or ammunition, parts thereof, or necessary supplies for the armed forces" and to manufacture products at such plant "in time of war or when war is imminent," if the head of the plant refuses to cooperate with an order for arms or supplies. 10 U.S.C.A. Section 2539—provides that the Secretary of Defense may maintain a list of privately owned plants in the United States that have a capacity "sufficient to warrant conversion into ammunition plants in time of war or when war is imminent," and may obtain complete information as to the equipment of each of those plants. 10 U.S.C.A. Section 2552—provides that the Secretary of a military department may lend equipment under the jurisdiction of that department that is on hand, and that can be temporarily spared, to "any organization formed by the American National Red Cross that needs it for instruction and practice for the purpose of aiding the Army, Navy, or Air Force in time of war." 10 U.S.C.A. Section 2632—allows the Secretary of a military department to provide transportation for employees working in a private plant that is manufacturing material for that department "during a war or a national emergency declared by Congress or the President." 10 U.S.C.A. Section 2644—authorizes the Secretary of Defense in "time of war" to take possession and assume control of all or part of any system of transportation to transport troops, war material, and equipment, or "for other purposes related to the emergency." 10 U.S.C.A. Section 2663(b)—provides that, "in time of war or when war is imminent," the United States may, immediately upon the filing of a petition for condemnation, acquire any interest in land, including temporary use, needed for the site, construction, or operation of fortifications, coast defenses, or military training camps, the construction and operation of plants for the production of nitrate and other compounds and the manufacture of explosives or other munitions of war, or the development and transmission of power for the operation of these production plants. 10 U.S.C.A. Section 2733(b)—extends the time that a claim brought against the United States for damage to or loss of real property, damage to or loss of personal property, or personal injury or death caused by an officer, employee, or a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard that arose in "time of war or armed conflict, or if such a war or conflict intervened," from two years after it accrues to two years after the war or armed conflict is terminated. 10 U.S.C.A. Section 2734(b)—limits claims "in the case of a national of a country at war with the United States, or of any ally of that country," to those in which the claims commission or local military commander determines the claimant is friendly to the United States. 10 U.S.C.A. Section 3014(f)(4)—provides that the ceilings on the number of members of the armed forces, civilians, officers, and general officers that may be assigned or detailed for duty in the Office of the Secretary of the Army and on the Army Staff "do not apply in time of war or during a national emergency declared by the President or Congress." 10 U.S.C.A. Section 3033(a)(1)—allows the President to reappoint a Chief of Staff of the Army for an additional term of four years "in time of war or during a national emergency declared by Congress." 10 U.S.C.A. Section 3063(b)—allows the Secretary of the Army to discontinue or consolidate the basic branches of the Army designated by statute "for the duration of any war, or of any national emergency declared by Congress." 10 U.S.C.A. Section 3691—provides that officers of the Army who have aeronautical ratings as observers may be rated as flying officers in "time of war." 10 U.S.C.A. Section 4780(a)—authorizes the Secretary of the Army to acquire by lease any building, or part of a building, in the District of Columbia that may be needed for military purposes in "time of war or when war is imminent." 10 U.S.C.A. Section 5014(f)(4)—provides that the ceilings on the number of members of the armed forces, civilians, officers, and general and flag officers that may be assigned or detailed for duty in the Office of the Secretary of the Navy, the Office of the Chief of Naval Operations, and the Headquarters Marine Corps "do not apply in time of war or during a national emergency declared by the President or Congress." 10 U.S.C.A. Section 5033—allows the President to reappoint a Chief of Naval Operations for an additional term of four years "in time of war or during a national emergency declared by Congress." 10 U.S.C.A. Section 5043—allows the President to reappoint a Commandant of the Marine Corps for an additional term of four years "in time of war or national emergency declared by Congress." 10 U.S.C.A. Section 5133(c)—provides that "except in time of war, any officer of a staff corps who has served as a chief of bureau for a full term is exempt from sea duty." 10 U.S.C.A. Section 5450—provides that the limitation to ten on the number of retired flag officers who may be on active duty at any one time in the Regular Navy does not apply "in time of war or national emergency." 10 U.S.C.A. Section 5451—authorizes the President to suspend any provision of the "preceding sections" during a war or national emergency. (The only relevant preceding section that has not been repealed has its own exception for war or national emergency.) 10 U.S.C.A. Section 5540(b)—provides that, "except in time of war," each member of the Navy and Marine Corps who is serving on a naval vessel, whose term of enlistment has expired, and who desires to return to the United States but is retained by a senior officer "as essential to the public interest," is entitled to an increase in basic pay of 25 percent. 10 U.S.C.A. Section 6408—provides that "No officer who holds the grade of warrant officer, W–1, may be dismissed from the Navy or the Marine Corps except in time of war, by order of the President." 10 U.S.C.A. Section 6485—provides that members of the Fleet Reserve and Fleet Marine Corps Reserve may be ordered to active duty "in time of war or national emergency declared by Congress, for the duration of the war or national emergency and for six months thereafter, (and) in time of national emergency declared by the President...." 10 U.S.C.A. Section 6486—provides that the Secretary of the Navy may not release a member of the Fleet Reserve or the Fleet Marine Corps Reserve from active duty "in time of war or national emergency declared by Congress or by the President" unless certain conditions are met. 10 U.S.C.A. Section 6911(b)—provides that "except in time of war or emergency declared by Congress," 20 percent of the aviation cadets procured in each fiscal year shall be procured from qualified enlisted members of the Regular Navy and the Regular Marine Corps. 10 U.S.C.A. Section 6972—provides that the crypt and window spaces of the Naval Academy Chapel may be used only for memorials to officers of the Navy who have successfully commanded a fleet or squadron in battle or who have "received the thanks of Congress for conspicuously distinguished services in time of war." 10 U.S.C.A. Section 7224—authorizes the Secretary of the Navy to designate persons who can be transported and subsisted on naval vessels at government expense "in time of war or during a national emergency declared by the President." 10 U.S.C.A. Section 7225—provides that the Secretary of the Navy shall prescribe a suitable flag to be known as the Navy Reserve flag to be flown by a seagoing merchant vessel designated by the Secretary as "suitable for service as a naval auxiliary in time of war." 10 U.S.C.A. Section 7226—provides that the Secretary of the Navy shall prescribe a suitable pennant to be known as the Naval Reserve yacht pennant to be flown by a yacht or similar vessel if "the vessel has been designated by the Secretary, under such regulations as he prescribes, as suitable for service as a naval auxiliary in time of war." 10 U.S.C.A. Section 7722—provides that "whenever in time of war" the Secretary of the Navy certifies to a court, or to a judge of a court, that the prosecution of a suit would tend to endanger the security of naval operations in the war, or would tend to interfere with those operations, all further proceedings in the suit shall be stayed. 10 U.S.C.A. Section 7724—provides that, "if in time of war, with respect to any claim against the United States on which a suit would lie," the Secretary of the Navy certifies to the court in which proceedings are pending for the taking of certain depositions, that the proceedings would tend to endanger or interfere with the security of the United States, "then the proceedings may not be started or, if they have been started, they shall, when the certificate is filed, be stayed." The Secretary may extend or shorten such a stay by filing a new certificate. 10 U.S.C.A. Section 7725. 10 U.S.C.A. Section 8014(f)(4)—provides that the ceilings on the number of members of the armed forces, civilians, officers, and general officers that can be assigned or detailed for duty in the Office of the Secretary of the Air Force do not apply "in time of war or during a national emergency declared by the President or Congress." 10 U.S.C.A. Section 8033(a)(1)—allows the President to reappoint the Chief of Staff of the Air Force for an additional term of four years "in time of war or during a national emergency declared by Congress." 10 U.S.C.A. Section 8257(d)—provides that, "except in time of war or of emergency declared by Congress," at least 20 percent of the aviation cadets designated in each fiscal year shall be selected from members of the Regular Air Force or the Regular Army who are eligible and qualified. 10 U.S.C.A. Section 8691—provides that officers of the Air Force who have aeronautical ratings as observers may be rated as flying officers in "time of war." 10 U.S.C.A. Section 9773(c)—provides that in selecting sites for air bases and depots and in determining the alteration or enlargement of existing air bases or depots, the Secretary of the Air Force shall consider the need "to permit, in time of peace, training and effective planning in each strategic area for the use and expansion of commercial, municipal, and private flying installations in time of war." 10 U.S.C.A. Section 9780(a)—authorizes the Secretary of the Army to acquire by lease any building, or part of a building, in the District of Columbia that may be needed for military purposes in "time of war or when war is imminent." 10 U.S.C.A. Section 10102—states the purpose of the reserves to be "to provide trained units and qualified persons available for active duty in the armed forces, in time of war or national emergency, and at such other times as the national security may require." 10 U.S.C.A. Section 12006—allows the President, "in time of war, or of national emergency," to suspend the statutory ceilings placed on the number of reserve commissioned officers, reserve general officers, and rear admirals in the Army, Navy, Air Force, and Marine Corps reserves for up to one year beyond the end of the war or national emergency, notwithstanding the earlier termination date prescribed by the National Emergencies Act. 10 U.S.C.A. Section 12103—extends enlistments in the reserves that are in effect "at the beginning of a war or of a national emergency declared by Congress," or that are entered into during such a war or emergency, and that would otherwise expire, until six months after the war or emergency has ended, unless earlier terminated by the Secretary concerned. 10 U.S.C.A. Section 12243—allows the President to suspend any law relating to the promotion or mandatory retirement or separation of permanent reserve warrant officers "in time of war, or of emergency declared after May 29, 1954, by Congress or the President." 10 U.S.C.A. Section 12301—allows the Secretary of a military department, "in time of war or of national emergency declared by Congress, or when otherwise authorized by law," to order any reserve unit or member to active duty without their consent for the duration of the war or emergency and up to six months thereafter, and allows reserves on inactive or retired status to be called up if those on active status or in the inactive National Guard are insufficient. 10 U.S.C.A. Section 12311—provides that if an agreement between the Secretary and a member of the reserves specifying a set term of active duty expires "during a war or during a national emergency declared by Congress or the President," the Reserve may be kept on active duty without his consent. 10 U.S.C.A. Section 12313—limits the discretion of the Secretary concerned to release a Reserve from active duty "in time of war or of national emergency declared by Congress or the President...." 10 U.S.C.A. Section 12316—provides that a Reserve who is called up "for a period of more than 30 days in time of war or national emergency" and who is otherwise entitled to a pension, retired or retainer pay, or disability compensation shall receive either that compensation, if it is greater, or the pay and allowances prescribed for the duty he is performing. 10 U.S.C.A. Section 14317—provides that reserve officers not on the active-duty list when ordered to active duty "in time of war or national emergency" may be considered for promotion by a mandatory or special selection board; or in the case of an officer who "is serving on active duty in support of a contingency operation, by a vacancy promotion board." 10 U.S.C.A. Section 16163—provides educational assistance to reservists who "served on active duty in support of a contingency operation for 90 consecutive days or more" after September 11, 2001, and to members of the National Guard who "performed full time National Guard duty under section 502 (f) of title 32 for 90 consecutive days or more when authorized by the President or Secretary of Defense for the purpose of responding to a national emergency declared by the President and supported by Federal funds." 10 U.S.C.A. Section 16201—provides that the Secretary of each military department may provide financial assistance to persons in training for degrees in medicine or dentistry or other health professions specialties "critically needed in wartime" in exchange for a commitment to subsequent service in the Ready Reserve, including the possibility of being ordered to active duty "in time of war or national emergency." 10 U.S.C.A. Section 18235—bars the Secretary of Defense from disposing or allowing the use of facilities for the reserves in any manner that would interfere with their use "in time of war or national emergency, by other units of the armed forces or by the United States for any other purpose." 10 U.S.C.A. Section 18236—bars a state from disposing or allowing the use of facilities constructed for the reserves with the help of a federal grant in any manner that would interfere with their use "in time of war or national emergency, by other units of the armed forces or by the United States for any other purpose." 19 U.S.C.A. Section 2293(i) (temporarily added by P.L. 111-5 , extended to January 21, 2014, by P.L. 112-40 )—authorizes waivers of requirements for receiving trade readjustment allowances and related benefits for adversely affected workers who are reservists and were called to active duty under 32 U.S.C.A. Section 502(f). 12 U.S.C.A. Section 95a—authorizes the President, "during the time of war ... through any agency that he may designate," to investigate, regulate, or prohibit, any transactions in foreign exchange, or transactions "involving any property in which any foreign country or a national thereof has any interest." 14 U.S.C.A. Section 2—provides that the Coast Guard "shall maintain a state of readiness to function as a specialized service in the Navy in time of war, including the fulfillment of Maritime Defense Zone responsibilities." 14 U.S.C.A. Section 275—allows the President, "in time of war, or of national emergency declared by the President or Congress," to suspend any section of this chapter with respect to the selection, promotion, or involuntary separation of Coast Guard officers and to promote to the next higher grade any officer serving on active duty in the grade of ensign or above and any warrant officer serving on active duty in a grade below chief warrant officer, until up to six months after the end of the war or national emergency. 14 U.S.C.A. Section 331—allows the Secretary to order any regular officer of the Coast Guard on the retired list to active duty "in time of war or national emergency." 14 U.S.C.A. Section 359—allows the Commandant to order any enlisted member of the Coast Guard on the retired list to active duty "in times of war or national emergency." 14 U.S.C.A. Section 367—allows an enlisted member of the Coast Guard to be detained beyond the term of his enlistment "during a period of war or national emergency as proclaimed by the President, and, in the interest of national defense," for up to six months after the end of the war or emergency. 14 U.S.C.A. Section 371—requires that at least 20 percent of the aviation cadets procured in each fiscal year be qualified enlisted members of the Coast Guard, "except in time of war or national emergency." 14 U.S.C.A. Section 508—provides that any "person who is convicted by court martial for desertion from the Coast Guard in time of war" and is consequently dismissed or dishonorably discharged, shall afterwards not be enlisted, appointed or commissioned in any military or naval service under the United States "unless he is restored to duty in time of war." 14 U.S.C.A. Section 636—allows commissioned and warrant officers of the Coast Guard to perform all of the functions of a notary public "in time of war or national emergency." 14 U.S.C.A. Section 652—provides that legal changes lifting restrictions on the Navy "for the duration of a war or national emergency proclaimed by the President," including those regarding procurement and personnel, shall automatically apply to the Coast Guard. 14 U.S.C.A. Section 660(a)—allows the Secretary to provide transportation to and from work for persons employed by a private plant manufacturing material for the Coast Guard "during a war or during a national emergency declared by Congress or the President." 14 U.S.C.A. Section 722—allows the President to suspend any part of the subchapter concerning commissioned officers in the Coast Guard Reserve "in time of war or national emergency declared by Congress." 16 U.S.C.A. Section 824a(c)—allows the Federal Energy Regulatory Commission to order the temporary connection of electric energy facilities and such generation, delivery, interchange, or transmission of electric energy as in its judgment will best meet the emergency and serve the public interest "during the continuance of any war in which the United States is engaged, or whenever the Commission determines that an emergency exists by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy, or of fuel or water for generating facilities, or other causes." 16 U.S.C.A. Section 831d(g)—directs the Tennessee Valley Authority to maintain a plant "for the production of explosives in the event of war or a national emergency" unless Congress releases it from the obligation. 16 U.S.C.A. Section 831s—reserves to the government the right, "in case of war or national emergency," to take control of the TVA "for the purpose of manufacturing explosives or for other war purposes." 18 U.S.C. Section 3287—whenever the United States is at war or Congress has authorized the use of force, suspends the statute of limitations with respect to prosecution of fraud against the United States or certain crimes related to U.S. real or personal property, as well as offenses committed in relation to contracts or purchase orders related to the use of the U.S. armed forces, until five years after the end of hostilities as proclaimed by the President or Congress by concurrent resolution. 19 U.S.C.A. Section 1318—allows the Secretary of the Treasury, "whenever the President shall by proclamation declare an emergency to exist by reason of a state of war, or otherwise," to have additional time to perform any act prescribed by the Tariff Act of 1930, as amended, and to permit the import of food, clothing, and medical supplies for use in emergency relief work free of duty. (This function was transferred to the Secretary of Commerce, to be exercised in consultation with the Secretary of the Treasury, under Reorganization Plan No. 3 of 1979, 19 U.S.C.A. §2171 note, and therefore does not appear to be subject to delegation to the Secretary of Homeland Security pursuant to 6 U.S.C.A. §212.) 20 U.S.C.A. Section 1098bb—authorizes the Secretary of Education to waive or modify statutory and regulatory provisions applicable to student financial aid programs as he deems necessary "in connection with a war or other military operation or national emergency" for the relief of an "affected individual" as defined in 20 U.S.C.A. Section 1098ee(2) to mean one who is "serving on active duty during a war or other military operation or national emergency [declared by the President]" or "is performing qualifying National Guard duty during a war or other military operation or national emergency," among other things. 22 U.S.C.A. Section 441—provides that when the President finds that there exists "a state of war between foreign states," the President shall issue a proclamation naming the states involved and shall revoke such proclamation when the "state of war ... shall have ceased." As a result of such a proclamation, it becomes illegal for persons within the United States to conduct financial transactions with the warring parties, unless the United States is "at war." 22 U.S.C.A. Section 447. 22 U.S.C.A. Section 1623—provides that a commission authorized to settle international claims "shall have jurisdiction to receive, examine, adjudicate, and render a final decision" with respect to claims between the United States government and a foreign government "exclusive of governments against which the United States declared the existence of a state of war during World War II." 22 U.S.C.A. Section 1974—provisions protecting U.S. vessels from seizure by a foreign country do not apply with respect to a "seizure made by a country at war with the United States." 22 U.S.C.A. Section 4056(f)—deems that a member of the Foreign Service who has left the Service to enter military service "during a period of war, or national emergency proclaimed by the President or declared by the Congress" has not, for retirement benefit purposes, left the Service unless more than 5 years expire. 31 U.S.C.A. Section 3522(b)(3)—extends the time for the armed forces to submit accounts to the Comptroller General from the usual 60 days to 90 days "during a war or national emergency and for 18 months after the war or emergency ends." 31 U.S.C.A. Section 3726—excludes a "time of war" from the three-year deadline for federal agencies to file claims with the Administrator of General Services related to transportation or freight forwarding or to deduct from amounts subsequently owed to carriers or freight forwarders the amount paid on a bill in excess of the allowable rates. 31 U.S.C.A. Section 3727—allows a contract with DOD, the General Services Administration, and the Department of Energy to provide, or to be changed without consideration to provide, that a future payment under a contract to an assignee is not subject to reduction or setoff "during a war or national emergency proclaimed by the President or declared by law and ended by proclamation or law." 32 U.S.C.A. Section 104—authorizes the President, in time of peace, to detail a commissioned officer of the Regular Army to perform the duties of chief of staff for each fully organized division of the Army National Guard in order "to insure prompt mobilization of the National Guard in time of war or other emergency." 32 U.S.C.A. Section 111—permits the President to suspend various statutory provisions relating to federal recognition of promotions in the Army and Air National Guard "in time of war, or of emergency declared by Congress." 32 U.S.C.A. Section 703(b)—provides that "in time of actual or threatened war, the United States may requisition for military use" supplies and military publications bought by a state or territory "for cash, at cost plus transportation" from the Army or Air Force. 32 U.S.C.A. Section 715(b)—provides that "in time of war or armed conflict or if such a war or armed conflict intervenes within two years after it accrues, and if good cause is shown," the time within which a claim against the United States for property loss, personal injury or death caused by the National Guard must be filed is extended from two years from the time the claim accrued to "two years after the war or armed conflict is terminated." 33 U.S.C.A. Section 854a-1—provides that the laws that pertain to the temporary appointment or advancement of commissioned officers "in time of war or national emergency" in the Navy shall also apply to personnel in National Oceanic and Atmospheric Administration (NOAA)., subject to a few limitations. 33 U.S.C.A. Section 3030—provides that the laws that pertain to the temporary appointment or advancement of commissioned officers "in time of war or national emergency" in the Navy shall also apply to officers of the NOAA, subject to a few limitations. 33 U.S.C.A. Section 3033—allows the President, "in time of emergency declared by the President or by the Congress, and in time of war," to suspend all or any part of the laws pertaining to the promotion of commissioned officers in the NOAA. 33 U.S.C.A. Section 3063—provides that the Secretaries of Defense and Commerce shall prescribe regulations governing the duties to be performed by NOAA "in time of war" and providing for the cooperation of NOAA with the military departments "in time of peace in preparation for its duties in time of war." 33 U.S.C.A. Section 1902—states that provisions applying pollution control standards derived from the MARPOL Protocol to warships, naval auxiliaries, and vessels owned by the United States, other than submersibles, shall not apply "during time of war or a declared national emergency." 33 U.S.C.A. Section 2503—lifts the prohibition on the ocean dumping of potentially infectious medical waste by public vessels "during time of war or a declared national emergency." 35 U.S.C.A. Section 181—provides that an order by the Commissioner of Patents that a patent or patent application be kept secret for national security reasons, which otherwise must be renewed each year, shall remain in effect "during a time when the United States is at war" and for one year following the cessation of hostilities and "during a national emergency declared by the President" and for six months thereafter. 37 U.S.C.A. Section 202—entitles an officer in the Coast Guard who holds a permanent appointment as rear admiral (lower half) on the retired list, and who "in time of war or national emergency has served satisfactorily on active duty for two years in that grade or in a higher grade," to the pay of a rear admiral when on active duty. 37 U.S.C.A. Section 301(d)—provides that "in time of war, the President may suspend the payment of incentive pay" to members of a uniformed service for certain hazardous duties. 37 U.S.C.A. Section 301a(c)—provides that "in time of war, the President may suspend the payment of aviation career incentive pay" to members of a uniformed service. 37 U.S.C.A. Section 304(e)—provides that "in time of war, the President may suspend the payment of diving duty pay" to members of a uniformed service. 37 U.S.C.A. Section 477(d)—provides that the exceptions to the prohibition on members of the uniformed services receiving more than one dislocation allowance a year "does not apply in time of national emergency or in time of war." 37 U.S.C.A. Section 901—provides that "in time of war, an officer of an armed force who is serving with troops operating against an enemy and who exercises, under assignment in orders issued by competent authority, a command above that pertaining to his grade," is entitled to the pay and allowances "appropriate to the command so exercised." 37 U.S.C.A. Section 909—authorizes the continuation of special pay or incentive pay for members of the armed forces who are involuntarily retained on duty under Sections123 or 12305 of Title 10 unless "in time of war" the President suspends the authority under which the special pay or incentive pay was given. 38 U.S.C.A. Section 8111A—authorizes the Secretary of the Department of Veterans Affairs to provide hospital care, nursing home care, and medical services to members of the Armed Forces on active duty "during and immediately following a period of war, or a period of national emergency declared by the President or the Congress that involves the use of the Armed Forces in armed conflict." 38 U.S.C.A. Section 4303(16))—includes within the definition of "uniformed services" for purposes of entitlement to the reemployment and other rights protected by the statute "the Armed Forces, the Army National Guard and the Air National Guard ..., the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or national emergency." 38 U.S.C.A. Section 4312(c))—limits the reemployment rights of those absent from their jobs because of service in the uniformed service to five years unless a longer absence is because the individual, inter alia , was "ordered to or retained on active duty (other than for training) under any provision of law because of a war or national emergency declared by the President or Congress, as determined by the Secretary concerned." 40 U.S.C.A. Section 1310—authorizes the President to sell war supplies, materials, and equipment, and the buildings, plants, and equipment necessary for their production, "to any foreign State or Government, engaged in war against any Government with which the United States is at war." 40 U.S.C.A. Section 8722(b)(2)—excludes from the consultation procedures mandated for federal and D.C. agencies with the National Capital Planning Commission for construction projects in D.C. "structures erected by the Department of Defense during wartime or national emergency within existing military, naval, or Air Force reservations, except that the appropriate defense agency shall consult with the Commission as to any developments which materially affect traffic or require coordinated planning of the surrounding area." 41 U.S.C.A. Section 1710(e)—provides that requirement for public-private competition prior to the conversion of an agency function to contractor performance do not apply "during war or during a period of national emergency declared by the President or Congress." 42 U.S.C.A. Section 211(k)—allows commissioned officers in the Regular Corps of the Public Health Service to be recommended for promotion to any higher grade in their category, including the director grade, whether or not a vacancy exists in such grade, "in time of war or of national emergency proclaimed by the President." 42 U.S.C.A. Section 213—provides that commissioned officers of the Public Health Service and their surviving beneficiaries shall, "with respect to active service performed by such officers ... in time of war" be entitled to all rights, privileges, immunities, and benefits now or hereafter provided "under any law of the United States in the case of commissioned officers of the Army or their surviving beneficiaries on account of active military service, except retired pay and uniform allowances." 42 U.S.C.A. Section 217—authorizes the President to use the Public Health Service, "in time of war, or of emergency proclaimed by the President ... in such manner as shall in his judgment promote the public interest" and, "in time of war, or of emergency involving the national defense proclaimed by the President," to declare the commissioned corps of the Service to be a military service constituting a branch of the land and naval forces of the United States subject to the Uniform Code of Military Justice. 42 U.S.C.A. Section 266—authorizes the Surgeon General, on recommendation of the National Advisory Health Council, to "provide by regulations for the apprehension and examination, in time of war," of any individual reasonably believed to be infected with a disease that is the "probable source of infection to members of the armed forces of the United States or to individuals engaged in the production or transportation of arms, munitions, ships, food, clothing, or other supplies for the armed forces." 42 U.S.C.A. Section 2165—authorizes the commission that controls information on atomic energy development in the United States "during the state of war or period of national disaster due to enemy attack to employ individuals and to permit individuals access to Restricted Data prior to completion of a security investigation report ... " 43 U.S.C.A. Section 155—states that the provisions of the Engle Act governing the use of the public lands of the United States by the Department of Defense for defense purposes shall not apply "in time of war or national emergency hereafter declared by the President or Congress." 43 U.S.C.A. Section 1314 (b)—gives the United States, "in time of war or when necessary for national defense," the right of first refusal to purchase any portion of lands and natural resources which are "specifically recognized, confirmed, established, and vested in and assigned to the respective States and others." 43 U.S.C.A. Section 1341(b)—provides that, "in time of war," the United States shall have the right of first refusal to purchase at the market price all or any portion of "any mineral produced from the outer Continental Shelf." 43 U.S.C.A. Section 1341(c)—allows the Secretary of the Interior to suspend leases on the outer Continental Shelf, on the recommendation of the Secretary of Defense, "during a state of war or national emergency declared by the Congress or the President of the United States after August 7, 1953." 43 U.S.C.A. Section 1353 (f)—clarifies that "nothing in this section" related to the federal purchase and disposition of oil and gas shall prohibit the right of the United States to purchase any oil or gas produced on the outer Continental Shelf "in time of war." 44 U.S.C.A. Section 3311—provides that "during a state of war between the United States and another nation, or when hostile action by a foreign power appears imminent," the head of an agency may authorize the destruction of records in his legal custody "situated in a military or naval establishment, ship, or other depository outside the territorial limits of continental United States." 46 U.S.C.A. Section 5116—provides that a person causing or allowing the alteration, concealment, or removal of an official mark placed on a vessel by the government, "except to make a lawful change or to escape enemy capture in time of war," commits a class A misdemeanor. 46 U.S.C.A. Section 7113—provides that a licensed master, mate, pilot, or engineer of a vessel propelled by machinery or carrying hazardous liquid cargoes in bulk is not "liable to draft in time of war, except for performing duties authorized by the license." 46 U.S.C.A. Section 52101—provides reemployment rights for certain merchant seamen subject to certification by the Secretary of Transportation, inter alia , that the individual was employed on a vessel "that is owned, chartered, or controlled by the United States and used by the United States for a war, armed conflict, national emergency, or maritime mobilization need...." 46 U.S.C.A. Section 53107—requires the Secretary of Transportation to include in each operating agreement with merchant security fleet contractors an Emergency Preparedness Agreement providing that, "upon a request by the Secretary of Defense during time of war or national emergency, or whenever determined by the Secretary of Defense to be necessary for national security or contingency operation ..., a contractor for a vessel covered by an operating agreement under this chapter shall make available commercial transportation resources (including services)." 46 U.S.C.A. Section 53902—provides that government war risk insurance may be provided to vessels only on the condition that the vessel will be available to the government "in time of war or national emergency." 46 U.S.C.A. App. Section 56102—prohibits, "when the United States is at war or during any national emergency, the existence of which is declared by proclamation of the President," the transfer of any vessel or shipyard to non-citizens without the approval of the Secretary of Transportation. 46 U.S.C.A. Section 60311—exempts hospital ships in the ports of the United States "in time of war," from all tonnage taxes, light money, and pilotage charges in the ports of the United States" if the vessel is covered by a certain treaty. 47 U.S.C.A. Section 308—allows the Federal Communications Commission to waive the requirement of a formal written application for construction permits and station licenses, and modifications and renewals thereof, "during a national emergency proclaimed by the President or declared by Congress and during the continuance of any war in which the United States is engaged and when such action is necessary for the national defense or security or otherwise in furtherance of the war effort." 47 U.S.C.A. Section 606—authorizes the President, "during the continuance of a war in which the United States is engaged," to direct that communications carriers give preference or priority to "such communications as in his judgment may be essential to the national defense and security"; to use the armed forces to prevent any obstruction of interstate or foreign communication by radio or wire "during any war in which the United States is engaged"; to suspend or amend all rules and regulations governing wire communications; to close any facility or station for wire communication; and to authorize the use or control of any such facility by the government "upon proclamation ... that there exists a state or threat of war involving the United States." 49 U.S.C.A. Section 11124(a)—authorizes the President, "during time of war or threatened war," to direct the Transportation Board to "give preference or priority to the movement of certain traffic" and to direct all rail carriers within the Board's jurisdiction to "adopt every means within their control to facilitate and expedite" military traffic. 50 U.S.C.A. Section 82—authorizes the President, in time of war, to place orders for ships, modify or cancel existing contracts, require the owner or occupier of a ship or material manufacturing factory to supply specified articles, and to take over for use or operation by the government any factory, regardless of the existence of contract or agreement. 50 U.S.C.A. Section 191—authorizes the Secretary of Transportation, "whenever the President by proclamation or Executive order declares a national emergency to exist by reason of actual or threatened war, insurrection, invasion, or disturbance or threatened disturbance of the international relations of the United States," to adopt rules and regulations governing the anchorage and movement of all vessels, foreign and domestic, in the territorial waters of the United States and, if necessary, to take possession of such vessels; and also authorizes the President, "whenever the President finds that the security of the United States is endangered by reason of actual or threatened war, or invasion, or insurrection or subversive activity, or of disturbances or threatened disturbances of the international relations of the United States," to take steps to safeguard all vessels, harbors, ports, and waterfront facilities in the United States against destruction, loss, or injury. 50 U.S.C.A. Section 404(b)—provides that one function of the Director of the Federal Emergency Management Agency is to advise the President about programs for the "effective use in time of war of the Nation's natural and industrial resources for military and civilian needs, for the maintenance and stabilization of the civilian economy in time of war, and for the adjustment of such economy to war needs and conditions, policies for unifying, in time of war, the activities of Federal agencies and departments engaged in or concerned with production, procurement, distribution, or transportation of military or civilian supplies, materials, and products, and the relationship between potential supplies of, and potential requirements for, manpower, resources, and productive facilities in time of war." 50 U.S.C.A. Section 2083—provides that a participant in the CIA retirement plan who, "during the period of any war or of any national emergency as proclaimed by the President or declared by the Congress," leaves to enter military service shall not be deemed as separated from the agency for purposes of the retirement plan unless the military service extends beyond five years. 50 U.S.C.A. Section 1702—authorizes the President, "when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, [to] confiscate any property, subject to the jurisdiction of the United States." 50 U.S.C.A. App. Section 2—defines "the beginning of the war ," for purposes of the "Trading with the Enemy Act of 1917," as "midnight ending the day on which Congress has declared, or shall declare war or the existence of a state of war." 50 U.S.C.A. App. Section 5(b)—provides extensive authority to the President, "during the time of war ... through any agency that he may designate," to regulate economic transactions with foreign countries and nationals, including the power to block any enemy property within the jurisdiction of the United States and to vest title to that property in the United States. 50 U.S.C.A. App. Section 9—authorizes the President, "in time of war or during any national emergency declared by the President," to sell foreign assets frozen under TWEA notwithstanding the existence of a suit by a person claiming that the property was improperly frozen or that he is otherwise legally entitled to the property if "the interest and welfare of the United States require the sale...." 50 U.S.C.A. App. Section 10—provides that any citizen or corporation of the United States or corporation desiring to "manufacture, or cause to be manufactured, a machine, manufacture, composition of matter, or design, or to carry on, or to use any trade-mark, print, label or cause to be carried on, a process under any patent or copyrighted matter owned or controlled by an enemy or ally of enemy at any time during the existence of a state of war" may apply to the President for a license. 50 U.S.C.A. App. Section 38—provides that any person in the United States may legally donate and deliver any article intended to be used solely to relieve human suffering to persons in a country with which the United States was at war "at any time after the date of cessation of hostilities." 50 U.S.C.A. App. Section 460(e)—provides that the statutory ceiling on the number of armed forces personnel who may be assigned to the Selective Service System does not apply "during a time of war or a national emergency declared by Congress or the President" and mandates that the System be maintained as an active standby organization capable of immediate operation "in the event of a national emergency." As noted, many of the statutes in the previous two subsections can also be triggered not only by a declaration of war or the existence of a state of war but also by a declaration of national emergency. There are, in addition, a number of statutes that can be triggered only upon a declaration of national emergency or the existence of such an emergency. These standby authorities do not automatically come into effect upon the issuance of a declaration of national emergency but only in conformity with the procedures set forth in the National Emergencies Act. The statutes, listed generally in the order in which they appear in the U.S. Code Annotated , include the following: 5 U.S.C.A. Section 3326—allows retired members of the armed forces to be appointed to civil service positions in the Department of Defense for 180 days after their retirement if "a state of national emergency exists." 5 U.S.C.A. Section 5303—allows the President, "because of national emergency or serious economic conditions affecting the general welfare," to alter the annual adjustment in pay schedules that would otherwise be effective. 5 U.S.C.A. Section 5304a—allows the President, "because of national emergency or serious economic conditions affecting the general welfare," to alter the locality-based comparability pay increases that would otherwise be effective. 7 U.S.C.A. Section 1332(c)—requires the Secretary of Agriculture to increase or terminate a national marketing quota for wheat in case of "a national emergency or ... a material increase in the demand for wheat." (Note: This authority was suspended from 1996 to 2002., 7 U.S.C.A. Section 7301(a), and from 2002 to 2007, 7 U.S.C.A. Section 7992(a)(1).For earlier suspensions, see note to 7 U.S.C.A. §1332.) 7 U.S.C.A. Section 1371(b)—requires the Secretary of Agriculture to increase or terminate a national marketing quota or acreage allotment for cotton or rice, if necessary to meet "a national emergency or ... a material increase in export demand." 7 U.S.C.A. Section 1444(e)(4)—allows the Secretary of Agriculture to require a set-aside of cropland if he determines that the "total supply of agricultural commodities will, in the absence of such a set-aside, be excessive taking into account the need for an adequate carryover to maintain reasonable and stable supplies and prices and to meet a national emergency." 7 U.S.C.A. Section 1444(h)(5)(A)(i)—allows the Secretary of Agriculture to limit the acreage planted to extra long staple cotton if he determines that the "total supply of extra long staple cotton, in the absence of such limitation, will be excessive taking into account the need for an adequate carryover to maintain reasonable and stable prices and to meet a national emergency." 7 U.S.C.A. Section 1736y(3)—declares it to be the policy of the United States that the export of agricultural commodities and products should not be prohibited or limited except "in time of a national emergency declared by the President under the Export Administration Act (50 App. U.S.C.A. §§2401 et seq.). 7 U.S.C.A. Section 1743(a)(6)—allows the Commodity Credit Corporation to dispose of commodity set-asides "in accordance with the directions of the President ... to meet any national emergency declared by the President." 7 U.S.C. Section 1982—provides relief from certain agricultural loan obligations for reservists mobilized under any "provision of law during a war or during a national emergency declared by the President or Congress." 7 U.S.C.A. Section 4208(b)—provides that the policies stated in the "Farmland Protection Policy Act (7 U.S.C.A. §§4201-4208) do not apply "to the acquisition or use of farmland for national defense purposes during a national emergency." 10 U.S.C.A. Section 1064—authorizes members of the National Guard called to duty during a federally declared disaster or "a national emergency declared by the President or Congress" to use commissary stores and MWR retail facilities. 10 U.S.C.A. Section 1076a—permits the Secretary of Defense, during a "national emergency declared by the President or Congress," to waive the charges otherwise payable by a member of the Selected Reserve of the Ready Reserve or a member of the Individual Ready Reserve for dental insurance coverage if necessary to ensure readiness for deployment. 10 U.S.C.A. Section 2304—allows the Secretaries of the military departments and the Department of Transportation as well as the Administrator of NASA to exclude a particular source from a competitive procurement procedure or to solicit bids only from particular sources when it would be in the interest of national defense in having a facility, producer, manufacturer, or other supplier "available for furnishing the property or service in case of a national emergency or industrial mobilization." 10 U.S.C.A. Section 4025—prescribes that "during a national emergency declared by the President" the regular working hours of laborers producing military supplies or munitions for the Army are 8 hours a day and 40 hours a week, but allows these limits to be exceeded under regulations prescribed by the Secretary of the Army. 10 U.S.C.A. Section 9025—provides that "during a national emergency declared by the President" the working hours of laborers and mechanics employed by the Department of the Air Force are 8 hours a day and 40 hours a week but allows the Secretary of the Air Force to alter these hours by regulation. 10 U.S.C.A. Section 12302—allows the Secretary of a military department, "in time of national emergency declared by the President after January 1, 1953, or when otherwise authorized by law," to order any member or unit of the Ready Reserve to active duty without their consent for up to 24 months. 16 U.S.C.A. Section 440—allows Fort McHenry to be closed "in case of a national emergency" and to be used for military purposes "during the period of the emergency." 19 U.S.C.A. Section 1318(b)—authorizes the Secretary of the Treasury, "when necessary to respond to a national emergency declared under the National Emergencies Act," to temporarily eliminate, consolidate, or relocate any office of the Customs Service, modify its hours of service or services rendered, and "take any other action necessary to respond directly to the national emergency...." (This authority may be delegated to the Secretary of Homeland Security pursuant to 6 U.S.C.A. §212.) 20 U.S.C.A. Section 79—directs that Barro Colorado Island in Gatun Lake in the Canal Zone be left in its natural state for scientific observation and investigation "except in the event of declared national emergency." 22 U.S.C.A. Section 2318(a)—authorizes the President, if "an unforeseen emergency exists which requires immediate military assistance to a foreign country or international organization" to provide up to $100 million in defense articles and services apart from the authority of the Arms Export Control Act but only upon notice to Congress. 22 U.S.C.A. Section 4103(c)—allows the President to suspend any statutory provision relating to labor-management relations in the Foreign Service "if the President determines in writing that the suspension is necessary in the interest of national security because of an emergency." 23 U.S.C.A. Section 127(h)—permits the Secretary of Transportation to waive vehicle weight limits on the portion of Interstate Route 95 in Maine between Augusta and Bangor for the purpose of making bulk shipments of jet fuel to the air National Guard Base at the Bangor International Airport "during a period of national emergency." 33 U.S.C.A. Section 3061—authorizes the President, "whenever in his judgment a sufficient national emergency exists," to transfer such vessels, equipment, stations, and commissioned officers of NOAA to a military department "as he may deem in the best interests of the country." 37 U.S.C.A. Section 1009(e)—permits the President to provide for alternative pay adjustments if he considers the formula otherwise required by law to be inappropriate because of "national emergency or serious economic conditions affecting the general welfare," provided a plan for such alternative adjustment is submitted to Congress by September 1 of the preceding year. 38 U.S.C.A. Section 1721—authorizes the Secretary of the Department of Veterans Affairs to prescribe rules for good conduct by those receiving services in Department facilities "during a period of national emergency (other than a period of war or an emergency described in section 8111A of [title 38])." 40 U.S.C.A. Section 3147—allows the President to suspend the requirements of the Davis-Bacon Act mandating that laborers and mechanics on federal and D.C. construction and public works projects be paid prevailing wages "in the event of a national emergency." 40 U.S.C.A. Section 545—allows GSA to negotiate disposal and contracts for disposal of surplus property without first seeking public bids "but subject to obtaining such competition as is feasible under the circumstances, if necessary in the public interest during the period of a national emergency declared by the President or the Congress...." 40 U.S.C.A. Section 905—allows GSA to waive the procedures otherwise applicable to the disposal or acquisition of real property in urban areas "during any period of national emergency proclaimed by the President." 41 U.S.C.A. Section 3304)—authorizes executive agencies to use noncompetitive procurement procedures if "it is necessary to award the contract to a particular source or sources in order (A) to maintain a facility, producer, manufacturer, or other supplier available for furnishing property or services in case of a national emergency or to achieve industrial mobilization...." 42 U.S.C.A. Section 204—establishes in the Public Health Service a Reserve Corps "for the purpose of securing a reserve for duty in the Service in time of national emergency," which is to "be available and ready for involuntary calls to active duty during national emergencies and public health crises, similar to the uniformed service reserve personnel." 42 U.S.C.A. Section 1320b-5—authorizes the Secretary of Health and Human Services to waive or modify certain requirements of Medicare, Medicaid, State Children's Health Insurance programs, and the Health Insurance Portability and Accountability Act, related to certification or licensing of health care providers, sanctions related to physician referrals, deadlines and other penalties, in response to an emergency declared by the President pursuant to the National Emergencies Act. 42 U.S.C.A. Section 300ff-83—authorizes the Secretary of Health and Human Services to waive requirements with respect to certain Human Immunodeficiency Virus programs during an emergency or disaster declared by the President pursuant to the National Emergencies Act, among other authorities. 42 U.S.C.A. Section 1712—bars employees of contractors of the U.S. providing services outside of the U.S. who suffer injury or death from a war hazard from receiving compensation if they have been "convicted in a court of competent jurisdiction of any subversive act against the United States or any of its allies, committed after the declaration by the President on May 27, 1941, of the national emergency...." 42 U.S.C.A. Section 4625(c)(3)—waives the requirement in the Uniform Relocation Assistance Act that a person displaced from their dwelling by a project of a federal agency or one undertaken with federal financial assistance not be required to move until afforded a reasonable opportunity to relocate to a comparable dwelling in the case of "a national emergency declared by the President." 42 U.S.C.A. Section 6393(a)(2)(A)—waives the requirement that a minimum of 30 days be allowed for comment on proposed rules and regulations to implement the domestic supply availability and standby energy authorities of the Energy Policy and Conservation Act "if the President finds that such waiver is necessary to act expeditiously during an emergency affecting the national security of the United States." 46 U.S.C.A. Section 7507—permits the Secretary of the department in which the Coast Guard is operating to extend a license of certificate of registry for not more than one year in response to a national emergency or natural disaster. 46 U.S.C.A. Section 8103(h)(1)—allows the President to suspend the citizenship requirements that otherwise apply to the officers and seamen on documented vessels of the U.S. "during a proclaimed national emergency." 46 U.S.C.A. Section 8301(d)—allows the Secretary of the Department in which the Coast Guard is operating to suspend the requirements relating to the number of licensed individuals that vessels subject to inspection must have "during a national emergency proclaimed by the President." 46 U.S.C.A. Section 57521—permits the Secretary of Transportation to terminate any charter of DOT vessels "whenever the President shall proclaim that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President." 46 U.S.C.A. Section 56301—authorizes the Secretary of Transportation to requisition or purchase any vessel or other watercraft owned by citizens of the United States "whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President" and to transfer the possession or control of any such vessel or watercraft to any other department or agency of the government. 49 U.S.C.A. Section 114—gives the Under Secretary of Transportation responsible for the Transportation Security Administration the authority "during a national emergency" to coordinate all domestic transportation and oversee the transportation-related responsibilities of other non-military federal departments and agencies but states that this authority "shall not supersede" the authority of other federal departments and agencies related to transportation. 49 U.S.C.A. Section 40101 note, as added by P.L. 107-71 , Section 127 (November 19, 2001)—authorizes the Secretary of Transportation "during a national emergency affecting air transportation or intrastate air transportation" to grant complete or partial waivers from restrictions that would otherwise apply regarding the carriage by aircraft of freight, mail, emergency medical supplies, personnel, or patients. 49 U.S.C.A. Section 47152(5)—provides that the United States, "during a national emergency declared by the President or Congress," is entitled to use, control, or possess any part of a public airport that is on surplus property donated by the government. 50 U.S.C.A. Section 196—provides that at any time vessels can be requisitioned under 46 U.S.C.A. Section 1242, supra , which can come into effect "whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President," the President may also purchase or requisition merchant vessels not owned by U.S. citizens and lying idle in U.S. waters "which the President finds necessary to the national defense." 50 U.S.C.A. Section 1435—provides that the President's authority to modify defense contracts in order to "facilitate the national defense" without regard to other provisions of law regarding the making, performance, amendment, or modification of contracts is effective "only during a national emergency declared by Congress or the President" and for six months after the termination thereof. 50 U.S.C.A. Section 1631—requires the President, whenever he "declares a national emergency," to specify in the declaration or by subsequent executive orders published in the Federal Register and transmitted to Congress which emergency statutory authorities he or other officers will exercise, prior to their exercise. 50 U.S.C.A. Section 1701—authorizes the President to exercise the extensive powers with respect to the property of, and economic transactions with, a foreign country or entity granted by the International Emergency Economic Powers Act (IEEPA) "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat." 50 U.S.C.A. Section 1702—exempts from any economic embargo imposed under IEEPA donations of articles such as food, clothing, and medicine intended to relieve human suffering unless the President determines, inter alia , that such donations "would seriously impair his ability to deal with any national emergency declared under section 1701 of this title." 50 U.S.C.A. Section 1706—provides that foreign assets frozen pursuant to IEEPA may remain frozen beyond the date of the termination of the national emergency if necessary "on account of claims involving such country or its nationals." 50 U.S.C.A. App. Section 2091(a)(2)—provides that certain conditions that are prerequisite to the President's exercise of the authority under Title III to provide guarantees for the financing of contracts or other operations deemed necessary for the "procurement of materials or performance of services for the national defense" do not apply "during periods of national emergency declared by Congress or the President." 50 U.S.C.A. App. Section 2091(d)(1)(B)—provides that the aggregate ceiling of $50 million on the total amount of financing guarantees that can be outstanding under Title III and certain other conditions may be waived "during a period of national emergency declared by the Congress or the President." 50 U.S.C.A. App. Section 2092—provides that certain Presidential determinations that are prerequisite to the making of direct federal loans under Title III for the expansion of productive capacity and supply for the national defense do not apply and that the aggregate ceiling of $50 million on such loans and certain other procedural requirements may be waived "during periods of national emergency declared by the Congress or the President." 50 U.S.C.A. App. Section 2093—provides that a number of conditions and prerequisites to the exercise of the authority under Title III to expand the productive capacity and supply of private industry for national defense purposes by means of purchase and resale of an industrial resource, a critical technology item, or a critical and strategic raw material may be waived "during periods of national emergency declared by the Congress or the President." The following section discusses how Congress would act on a joint resolution or bill to declare war or authorize the use of force if the House and Senate were to consider that measure under the regular procedures of each house. It also describes how a measure declaring war or authorizing the use of force would be considered under the procedures contained in the War Powers Resolution of 1973. The Senate's published precedents do not suggest that a measure proposing to declare war or authorize the use of force, if considered outside the framework of the War Powers Resolution, would be immune from the potentially laborious process to which other bills and joint resolutions are subject (except those that benefit from special expedited procedures under rule-making statutes). For example, a joint resolution declaring war or authorizing the use of force presumably would not be eligible for immediate floor consideration at the time it is introduced, and it presumably would be subject to possible delays resulting from the Senators' exercise of their right to debate at length. Similarly, the precedents of the House apparently do not grant privilege to a joint resolution declaring war or authorizing the use of force either under the "leave to report" authority that House rules and precedents give to certain House committees or as a question of the privileges of the House. Concerning the latter, former House Parliamentarian Wm. Holmes Brown has observed that "Rule IX [on questions of privilege] is concerned not with the privileges of the Congress as a legislative branch, but only with the privileges of the House itself." Thus, neither the enumeration of legislative powers in Article I, sec. 8 of the Constitution nor the prohibition of that article against any withdrawal from the Treasury except by enactment of an appropriation renders a measure purporting to exercise or limit those powers a question of the privileges of the House. Because a joint resolution declaring war or authorizing the use of force proposes to exercise a constitutional power of "the Congress as a legislative branch," not of the House alone, it would seem, therefore, not to qualify as a question of privilege. If so, the House would consider the joint resolution according to its established procedures for dealing with other legislative measures, unless the proposed declaration or authorization were to be considered under the terms of the War Powers Resolution. Congress has adopted eight declarations of war during the 20 th century—two at the outset of U.S. involvement in World War I and six in the course of World War II. House and Senate consideration of the initial declarations in each of these wars is illustrative of the process that Congress followed. On both occasions, the House and Senate acted to declare war in response to urgent presidential requests made personally before joint sessions of Congress. In light of the importance that most Members attached to these requests, it is not surprising that, in both cases, the two houses acted on the joint resolutions quickly and without following all their regular legislative procedures. By way of illustration, the following is a brief summary of how the House and Senate considered the initial joint resolutions to declare war in 1917 and 1941. Congress convened on April 2, 1917, and on that evening, President Wilson addressed both houses to request that Congress declare war against Germany. Immediately after the President's address, Senator Martin introduced S.J.Res. 1, to declare war, which was referred to the Committee on Foreign Relations. Also on April 2, Representative Flood introduced a companion resolution, H.J.Res 24, which was referred to the Committee on Foreign Affairs. The Senate committee reported S.J.Res. 1 with an amendment on the following day. Senator LaFollette objected to a unanimous consent request that the Senate consider the measure immediately. Consequently, the joint resolution had to lie over for a day, pursuant to paragraph 4(a) of Senate Rule XVII. On April 4, the Senate agreed by unanimous consent to consider the joint resolution, agreed to the committee amendment, and, after considerable debate, passed the joint resolution by a roll call vote of 82-6. The House committee reported H.J.Res. 24 on April 4, and the House then agreed, by unanimous consent, to consider the measure on the following day "under the general rules of the House." Because the joint resolution, once reported, was placed on the Union Calendar, "the general rules of the House" required that it be considered in Committee of the Whole. Consequently, when the House convened on April 5, Representative Flood moved that the House resolve into Committee of the Whole to consider H.J.Res. 24. Before the House agreed to his motion, however, it also agreed to Representative Flood's unanimous consent request that the House instead consider S.J.Res. 1, which the Senate already had passed. After much debate, and after rejecting two amendments in Committee of the Whole and a motion to recommit with instructions in the House, the House passed S.J. Res. 1 by a roll call vote of 373-50. On December 8, 1941, President Franklin D. Roosevelt addressed a joint session of Congress and asked for a declaration of war against Japan. Immediately after the joint session ended, the Senate reconvened and, following a live quorum call, Senator Connolly introduced a joint resolution declaring war. At Senator Connolly's request, and by unanimous consent, the Senate agreed to consider the joint resolution immediately, without committee consideration. Within minutes, and after brief statements by Senators Connolly and Vandenberg, the Senate passed the joint resolution by a roll call vote of 82-0. Also immediately after the President's address, the House acted by considering and agreeing to Representative McCormack's motion to suspend the rules and pass H.J.Res. 254, which Representative McCormack introduced at that time. December 8 being a Monday, suspension motions were in order on that day. Immediately after the House passed H.J.Res. 254 by a roll call vote of 388-1, the House received a message from the Senate that it already had passed its joint resolution, now numbered S.J. Res. 116. The House then agreed to Representative McCormack's unanimous consent request that the House take the Senate joint resolution from the Speaker's table and agree to it. This action was necessary in order for both houses to pass the same measure, making it eligible to be presented to the President for his signature. Enactment of the War Powers Resolution in November 1973 created special expedited procedures by which the House and Senate can act on joint resolutions or bills to declare war or authorize the use of force, if those measures are considered in accordance with the other, related provisions of that law. These expedited procedures were enacted into law as part of the War Powers Resolution as an exercise of the constitutional rule-making powers of the House and Senate. Article I of the Constitution empowers each house to set its own rules. When Congress enacts into law provisions that affect only the internal operations of the House or Senate, or both, those provisions are known as rule-making provisions of law that are enacted pursuant to this grant of power under Article I. Such rule-making provisions have exactly the same force and effect as provisions contained in the Standing Rules of the House and Senate. Consequently, the house to which certain rule-making provisions apply may enforce, ignore, waive, suspend, supplement, or amend them by its own unilateral action, as it sees fit. For example, the House could adopt a special rule, or the Senate could agree to a unanimous consent request, that would supersede some or all of the procedures described here. Section 4(a) of the War Powers Resolution directs the President to submit a report to Congress within 48 hours after U.S. armed forces are introduced "into hostilities or into situations where imminent involvement in hostilities is clearly indicated by the circumstances." Section 5(a) provides for the receipt and for the referral to committee of any such presidential report. Under Section 5(b), the President is required to terminate use of the armed forces within 60 calendar days (90 days in some circumstances) after submitting his report unless Congress takes any one of several actions. One of these actions is to declare war; another is to "enact a specific authorization for such use of United States Armed Forces" as an alternative to declaring war. Under another section of the War Powers Resolution, Congress can also adopt a bill or joint resolution at any time requiring the President to remove the armed forces unless a declaration of war or statutory authorization has been enacted. Section 6 of the War Powers Resolution contains the expedited, or "fast-track," procedures that were included in the law to enable the House and Senate to act within the 60 calendar-day period on a bill or joint resolution contemplated by Section 5(b). If, under Section 6(a), such a measure is introduced at least 30 calendar days before the end of the 60-day period, the measure is referred to the House Foreign Affairs Committee or the Senate Foreign Relations Committee, as the case may be. That committee is required to report one such measure, with its recommendations, not later than 24 calendar days before the end of the 60-day period. This provision suggests that the committee can report the measure with the committee's proposed amendments, if any. The subsection also provides that its provisions are to govern "unless such House shall otherwise determine by the yeas and nays." In other words, the House or Senate can, by a rollcall vote decided by a simple majority, release its committee from the obligation to report a measure proposing to declare war or to take some other action enumerated in Section 5(b). If the House or Senate committee does report, it is not required to report the measure favorably. Instead, it may report it unfavorably or without recommendation. But what if either the Senate or House committee fails to report a covered bill or joint resolution within the time permitted? The Senate Parliamentarian has stated that the Senate Foreign Relations Committee would be automatically discharged if it failed to report as required by this subsection. The House Parliamentarian has stated that, should the House Foreign Affairs Committee fail to report in a timely manner, a privileged motion to discharge that committee would be in order on the House floor. Section 6(b) governs initial House and Senate floor consideration of a joint resolution reported from committee pursuant to Section 6(a). Under Section 6(b), the bill or joint resolution, once reported (or once the committee is discharged), "shall become the pending business" of the House or Senate, as the case may be. By making a covered measure the pending business on the House or Senate floor, the War Powers Resolution evidently makes the measure privileged for floor consideration in the House (without the need for the Rules Committee to report a special rule for that purpose), or obviates the need for a motion (that usually is debatable) to proceed to the measure's consideration in the Senate. Because Section 6(b) contains no provisions to the contrary, the measure presumably would be amendable on the floor of either house to the same extent as any other bill or joint resolution that house considers, or could be tabled. Section 6(b) goes on to require that the House or Senate vote on final passage of the measure within three calendar days after having become the pending business, "unless such House shall otherwise determine by yeas and nays." The effect of this subsection probably is more significant for the Senate than the House, because it is designed to preclude a filibuster on the Senate floor. In addition, the last provision of the subsection evidently gives either house options to adjust the timing and length of floor consideration by adopting any of several conceivable motions by rollcall vote. For example, either house might agree by motion to postpone consideration of the measure to a date certain. Alternatively, either house might dispose of the measure by a rollcall vote in favor of a motion to table or recommit it or to postpone its consideration indefinitely. Under the same authority, the House or Senate also might be able to shorten the debate to less than three calendar days or to extend the time for debate. Sections 6(c) and 6(d) address the process for the House and Senate to reach agreement when each has passed a measure covered by Section 5(b). In summary, Section 6(c) provides for expedited committee and floor action in one house on a covered measure that the other house already has passed. Finally, Section 6(d) states that if a conference is necessary to reach a compromise between House and Senate versions of a covered measure, the conferees are to be appointed "promptly," the conferees are to report in either agreement or disagreement within specified time periods, and the two houses are to act on the conference report before the end of the 60-day period. These last two subsections raise the problem that no rules or rule-making statute can compel the House and Senate to reach agreement. All that expedited procedures can do is to require that the conferees report, and that the House and Senate act on their report, by a time certain. The War Powers Resolution cannot ensure that both houses will agree on the same position by the end of the 60-day period. If the two houses were unable to agree by the end of the 60 days, that situation presumably would be reflected in (1) votes by one or both houses to reject a conference report in agreement, or (2) votes by both houses to agree to a conference report in disagreement (in other words, votes in each house to accept the report of the conferees that they were unable to reach agreement within the time allotted them). In either case, there is nothing in the statute that would preclude the two houses from appointing a new conference committee that might present a new conference report in agreement at some later date. However, a conference report filed in the Senate after the expiration of the 60-day period might well be subject to extended debate because, presumably, consideration of the report no longer would be governed by Section 6. Instead, the report would be considered under the Senate's regular procedures. Appendix A. Texts of Formal Declarations of War by the United States War with Great Britain 1812 (Act of June 18, 1812, ch. 102, 2 Stat 755) CHAP. CII.— An Act declaring War between the United Kingdom of Great Britain and Ireland and the dependencies thereof, and the United States of America and their territories. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled , That war be and the same is hereby declared to exist between the United Kingdom of Great Britain and Ireland and the dependencies thereof, and the United States of America and their territories; and that the President of the United States is hereby authorized to use the whole land and naval force of the United States to carry the same into effect, and to issue to private armed vessels of the United States commissions or letters of marque and general reprisal, in such form as he shall think proper, and under the seal of the United States, against the vessels, goods, and effects of the government of the said United Kingdom of Great Britain and Ireland, and the subjects thereof. APPROVED, June 18, 1812. [Terminated by Treaty of Ghent, entered into force Feb. 17, 1815. 8 Stat. 218, Treaty Series 109.] War with Mexico 1846 (Act of May 13, 1846, ch. 16, 9 Stat. 9) CHAP. XVI.— An Act providing for the Prosecution of the existing War between the United States and the Republic of Mexico . Whereas, by the act of the Republic of Mexico, a state of war exists between that Government and the United States: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled , That, for the purpose of enabling the government of the United States to prosecute said war to a speedy and successful termination, the President be, and he is hereby, authorized to employ the militia, naval, and military forces of the United States, and to call for and accept the services of any number of volunteers, not exceeding fifty thousand, who may offer their services, either as cavalry, artillery, infantry, or riflemen, to serve twelve months after they shall have arrived at the place of rendezvous, or to the end of the war, unless sooner discharged, according to the time for which they shall have been mustered into service; and that the sum of ten millions of dollars, out of any moneys in the treasury, or to come into the treasury, not otherwise appropriated, be, and the same is hereby, appropriated for the purpose of carrying the provisions of this act into effect. SEC. 2. And be it further enacted , That the militia, when called into the service of the United States by virtue of this act, or any other act, may, if in the opinion of the President of the United States the public interest requires it, be compelled to serve for a term not exceeding six months after their arrival at the place of rendezvous, in any one year, unless sooner discharged. SEC. 3. And be it further enacted , That the said volunteers shall furnish their own clothes, and if cavalry, their own horses and horse equipments; and when mustered into service shall be armed at the expense of the United States. SEC. 4. And be it further enacted , That said volunteers shall, when called into actual service, and while remaining therein, be subject to the rules and articles of war, and shall be, in all respects except as to clothing and pay, placed on the same footing with similar corps of the United States army; and in lieu of clothing every non-commissioned officer and private in any company, who may thus offer himself, shall be entitled, when called into actual service, to receive in money a sum equal to the cost of clothing of a non-commissioned officer or private (as the case may be) in the regular troops of the United States. SEC 5. And be it further enacted , That the said volunteers so offering their services shall be accepted by the President in companies, battalions, squadrons, and regiments, whose officers shall be appointed in the manner prescribed by law in the several States and Territories to which such companies, battalions, squadrons, and regiments, shall respectively belong. SEC. 6. And be it further enacted , That the President of the United States be, and he is hereby, authorized to organize companies so tendering their service into battalions or squadrons, battalions and squadrons into regiments, regiments into brigades, and brigades into divisions, as soon as the number of volunteers shall render such organization, in his judgment, expedient; and the President shall, if necessary, apportion the staff, field, and general officers among the respective States and Territories from which the volunteers shall tender their services as he may deem proper. SEC 7. And be it further enacted , That the volunteers who may be received into the service of the United States by virtue of the provisions of this act, and who shall be wounded or otherwise disabled in the service, shall be entitled to all the benefit which may be conferred on persons wounded in the service of the United States. SEC 8. And be it further enacted , That the President of the United States be, and he is hereby, authorized forthwith to complete all the public armed vessels now authorized by law, and to purchase or charter, arm, equip, and man, such merchant vessels and steam boats as, upon examination, may be found fit, or easily converted into armed vessels fit for the public service, and in such number as he may deem necessary for the protection of the seaboard, lake coast, and the general defense of the country. SEC. 9. And be it further enacted , That whenever the militia or volunteers are called and received into the service of the United States, under the provisions of this act, they shall have the organization of the army of the United States, and shall have the same pay and allowances; and all mounted privates, non-commissioned officers, musicians, and artificers, shall be allowed 40 cents per day for the use and risk of their horses, except of horses actually killed in action; and if any mounted volunteer, private, non-commissioned officer, musician, or artificer, shall not keep himself provided with a serviceable horse, the said volunteer shall serve on foot. APPROVED, May 13, 1846. [Terminated by Treaty of Guadalupe Hidalgo, entered into force May 30, 1848. 9 Stat. 922, Treaty Series 207.] War with Spain 1898 (Act of April 25, 1898, ch. 189, 30 Stat. 364) CHAP. 189.—An Act Declaring that war exists between the United States of America and the Kingdom of Spain. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled , First. That war be, and the same is hereby, declared to exist, and that war has existed since the twenty-first day of April, anno Domini eighteen hundred and ninety-eight, including said day, between the United States of America and the Kingdom of Spain. Second. That the President of the United States be, and he hereby is, directed and empowered to use the entire land and naval forces of the United States, and to call into the actual service of the United States the militia of the several States, to such extent as may be necessary to carry this Act into effect. APPROVED, April 25, 1898. [Terminated by Treaty of Paris, entered into force April 11, 1899. 30 Stat. 1754, Treaty Series 343.] War with Germany 1917 (Act of April 6, 1917, ch. 1, 40 Stat. 1) CHAP. 1.—Joint Resolution Declaring that a state of war exists between the Imperial German Government and the Government and the people of the United States and making provision to prosecute the same. Whereas the Imperial German Government has committed repeated acts of war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Imperial German Government which has thus been thrust upon the United States is hereby formally declared; and that the President be, and he is hereby, authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial German Government; and to bring the conflict to a successful termination all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, April 6, 1917. [Terminated by Act of July 2, 1921, [S.J.Res. 16] ch. 40, 42 Stat. 105 which declared the state of war between the U.S. and Germany to be at an end. Recognized by Treaty on Establishment of Friendly Relations, entered into force November 11, 1921. 42 Stat. 1939, Treaty Series 658.] War with Austria-Hungary 1917 (Act of December 7, 1917, ch. 1, 40 Stat. 429) CHAP. 1— Joint Resolution Declaring that a state of war exists between the Imperial and Royal Austro-Hungarian Government and the Government and the people of the United States, and making provision to prosecute the same. Whereas the Imperial and Royal Austro-Hungarian Government has committed repeated acts of war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That a state of war is hereby declared to exist between the United States of America and the Imperial and Royal Austro-Hungarian Government; and that the President be, and he is hereby, authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial and Royal Austro-Hungarian Government; and to bring the conflict to a successful termination all the resources of the country are hereby pledged by the Congress of the United States. APPROVED, December 7, 1917. [Terminated by Act of July 2, 1921, [S.J. Res. 16] ch. 40, 42 Stat. 105 which declared the state of war between the U.S. and Austria, a successor state and government to the Austro-Hungarian monarchy, to be at an end. 42 Stat. 105. This was recognized by a Treaty on Establishment of Friendly Relations, entered into force November 8, 1921. 42 Stat. 1939, Treaty Series 658. The Act of July 2, 1921, also declared the state of war between the U.S. and Hungary, a successor state and government to the Austro-Hungarian monarchy, to be at an end. This was recognized by a Treaty on Establishing Friendly Relations, entered into force December 17, 1921. 42 Stat. 1951, Treaty Series 660.] War with Japan 1941 (Act of December 8, 1941, ch. 561, 55 Stat. 795) [Chapter 561] JOINT RESOLUTION Declaring that a state of war exists between the Imperial Government of Japan and the Government and the people of the United States and making provisions to prosecute the same. Whereas the Imperial Government of Japan has committed unprovoked acts of war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Imperial Government of Japan which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial Government of Japan; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, December 8, 1941, 4:10 p.m., E.S.T. [Terminated by Treaty of Peace with Japan, entered into force April 28, 1952. 3 UST 3169, TIAS 2490.] War with Germany 1941 (Act of December 11, 1941, ch. 564, 55 Stat. 796) [CHAPTER 564] JOINT RESOLUTION Declaring that a state of war exists between the Government of Germany and the Government and the people of the United States and making provision to prosecute the same. Whereas the Government of Germany has formally declared war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Government of Germany which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Government of Germany; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, December 11, 1941, 3:05 p.m., E.S.T. [Terminated by [H.J.Res. 289] Act of October 19, 1951, ch. 519, 65 Stat. 451] War with Italy 1941 (Act of December 11, 1941, ch. 565, 55 Stat. 797) [CHAPTER 565] JOINT RESOLUTION Declaring that a state of war exists between the Government of Italy and the Government and the people of the United States and making provision to prosecute the same. Whereas the Government of Italy has formally declared war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Government of Italy which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Government of Italy; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, December 11, 1941, 3:06 p.m., E.S.T. [Terminated by Treaty of Peace with Italy, entered into force September 15, 1947. 4 UST 311, 61 Stat. 1245.] War With Bulgaria 1942 (Act of June 5, 1942, ch. 323, 56 Stat. 307) [CHAPTER 323] JOINT RESOLUTION Declaring that a state of war exists between the Government of Bulgaria and the Government and the people of the United States and making provisions to prosecute the same. Whereas the Government of Bulgaria has formally declared war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Government of Bulgaria which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Government of Bulgaria; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, June 5, 1942. [Terminated by Treaty of Peace with Bulgaria, entered into force September 15, 1947. 4 UST 429, 61 Stat. 1915.] War with Hungary 1942 (Act of June 5, 1942, ch. 324, 56 Stat. 307) [CHAPTER 324] JOINT RESOLUTION Declaring that a state of war exists between the Government of Hungary and the Government and the people of the United States and making provisions to prosecute the same. Whereas the Government of Hungary has formally declared war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Government of Hungary which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Government of Hungary; and, to bring the conflict to a successful termination all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, June 5, 1942. [Terminated by Treaty of Peace with Hungary, entered into force September 15, 1947. 4 UST 453, 61 Stat. 2065.] War with Rumania 1942 (Act of June 5, 1942, ch. 325, 56 Stat. 307) [CHAPTER 325] JOINT RESOLUTION Declaring that a state of war exists between the Government of Rumania and the Government and the people of the United States and making provisions to prosecute the same. Whereas the Government of Rumania has formally declared war against the Government and the people of the United States of America: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the state of war between the United States and the Government of Rumania which has thus been thrust upon the United States is hereby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Government of Rumania; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States. APPROVED, June 5, 1942. [Terminated by Treaty of Peace with Rumania, entered into force September 15, 1947. 4 UST 403, 61 Stat. 1757.] Appendix B. Texts of Key Authorizations of Use of Force Protection of the Commerce and Coasts of the United States (Act of May 28, 1798, ch. 48, 1 Stat. 561) CHAP. XLVIII.— An Act more effectually to protect the Commerce and Coasts of the United States . Whereas armed vessels sailing under authority or pretence [ sic ] of authority from the Republic of France, have committed depredations on the commerce of the United States, and have recently captured the vessels and property of citizens thereof, on and near the coasts, in violation of the law of nations, and treaties between the United States and the French nation. Therefore: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it shall be lawful for the President of the United States, and he is hereby authorized to instruct and direct the commanders of the armed vessels belonging to the United States to seize, take and bring into any port of the United States, to be proceeded against according to the laws of nations, any such armed vessel which shall have committed or which shall be found hovering on the coasts of the United States, for the purpose of committing depredations on the vessels belonging to citizens thereof;—and also to retake any ship or vessel, of any citizen or citizens of the United States which may have been captured by any such armed vessel. APPROVED, May 28, 1798. Protection of the Commerce of the United States (Act of July 9, 1798, ch. 68, 1 Stat. 578) CHAP. LXVIII.— An Act further to protect the Commerce of the United States . SECTION 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled , That the President of the United States shall be, and he is hereby authorized to instruct the commanders of the public armed vessels which are, or which shall be employed in the service of the United States, to subdue, seize and take any armed French vessel, which shall be found within the jurisdictional limits of the United States, or elsewhere, on the high seas, and such captured vessel, with her apparel, guns and appurtenances, and the goods or effects which shall be found on board the same, being French property, shall be brought within some port of the United States, and shall be duly proceeded against and condemned as forfeited; and shall accrue and be distributed, as by law is or shall be provided respecting the captures which shall be made by the public armed vessels of the United States. SEC. 2. And be it further enacted , That the President of the United States shall be, and he is hereby authorized to grant to the owners of private armed ships and vessels of the United States, who shall make application thereof, special commissions in the form which he shall direct, and under the seal of the United States; and such private armed vessels, when duly commissioned, as aforesaid, shall have the same license and authority for the subduing, seizing and capturing any armed French vessel, and for the recapture of the vessels, goods and effects of the people of the United States, as the public armed vessels of the United States may by law have; and shall be, in like manner, subject to such instructions as shall be ordered by the President of the United States, for the regulation of their conduct. And the commissions which shall be granted, as aforesaid, shall be revocable at the pleasure of the President of the United States. SEC. 3. Provided, and be it further enacted , That every person intending to set forth and employ an armed vessel, and applying for a commission, as aforesaid, shall produce in writing the name, and a suitable description of the tonnage and force of the vessel, and the name and place of residence of each owner concerned therein, the number of the crew and the name of the commander, and the two officers next in rank appointed for such vessel; which writing shall be signed by the person or persons making such application, and filed with the Secretary of State, or shall be delivered to any other officer or person who shall be employed to deliver out such commissions, to be by him transmitted to the Secretary of State. SEC. 4. And provided, and be it further enacted , That before any commission, as aforesaid, shall be issued, the owner or owners of the ship or vessel for which the same shall be requested, and the commander thereof, for the time being, shall give bond to the United States, with at least two responsible sureties, not interested in such vessel, in the penal sum of seven thousand dollars; or if such vessel be provided with more than one hundred and fifty men, then in the penal sum of fourteen thousand dollars; with condition that the owners, and officers, and crews who shall be employed on board of such commissioned vessel, shall and will observe the treaties and laws of the United States and the instructions which shall be given them for the regulation of their conduct: And will satisfy all damages and injuries which shall be done or committed contrary to the tenor thereof, by such vessel, during her commission, and to deliver up the same when revoked by the President of the United States. SEC. 5. And be it further enacted , That all armed French vessels, together with their apparel, guns and appurtenances, and any goods or effects which shall be found on board the same, being French property, and which shall be captured by any private armed vessel or vessels of the United States, duly commissioned, as aforesaid, shall be forfeited, and shall accrue to the owners thereof, and the officers and crews by whom such captures shall be made; and on due condemnation had, shall be distributed according to any agreement which shall be between them; or in failure of such agreement, then by the discretion of the court before whom such condemnation shall be. SEC. 6. And be it further enacted , That all vessels, goods and effects, the property of any citizen of the United States, or person resident therein, which shall be recaptured, as aforesaid, shall be restored to the lawful owners, upon payment by them, respectively, of a just and reasonable salvage, to be determined by the mutual agreement of the parties concerned, or by the decree of any court of the United States having maritime jurisdiction according to the nature of each case: Provided , that such allowance shall not be less than one eighth, or exceeding one half of the full value of such recapture, without any deduction. And such salvage shall be distributed to and among the owners, officers and crews of the private armed vessel or vessels entitled thereto, according to any agreement which shall be between them; or in case of no agreement, then by the decree of the court who shall determine upon such salvage. SEC. 7. And be it further enacted , That before breaking bulk of any vessel which shall be captured, as aforesaid, or other disposal or conversion thereof, or of any articles which shall be found on board the same, such capture shall be brought into some port of the United States, and shall be libelled and proceeded against before the district court of the same district; and if after a due course of proceedings, such capture shall be decreed as forfeited in the district court, or in the circuit court of the same district, in the case of any appeal duly allowed, the same shall be delivered to the owners and captors concerned therein, or shall be publicly sold by the marshal of the same court, as shall be finally decreed and ordered by the court. And the same court, who shall have final jurisdiction of any libel or complaint of any capture, as aforesaid, shall and may decree restitution, in whole or in part, when the capture and restraint shall have been made without just cause, as aforesaid; and if made without probable cause, or otherwise unreasonably, may order and decree damages and costs to the party injured, and for which the owners, officers and crews of the private armed vessel or vessels by which such unjust capture shall have been made, and also such vessel or vessels shall be answerable and liable. SEC. 8. And be it further enacted , That all French persons and others, who shall be found acting on board any French armed vessel, which shall be captured, or on board of any vessel of the United States, which shall be captured, or on board of any vessel of the United States, which shall be recaptured, as aforesaid, shall be reported to the collector of the port in which they shall first arrive, and shall be delivered to the custody of the marshal, or of some civil or military officer of the United States, or of any state in or near such port; who shall take charge for their safe keeping and support, at the expense of the United States. APPROVED, July 9, 1798. Protection of the Commerce and Seamen of the United States Against the Tripolitan Cruisers (Act of February 6, 1802, ch. 4, 2 Stat.129) CHAP. IV.— An Act for the protection of the Commerce and Seamen of the United States , against the Tripolitan Cruisers. Whereas the regency of Tripoli, on the coast of Barbary, has commenced a predatory warfare against the United States: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled , That it shall be lawful fully to equip, officer, man, and employ such of the armed vessels of the United States as may be judged requisite by the President of the United States, for protecting effectually the commerce and seamen thereof on the Atlantic ocean, the Mediterranean and adjoining seas. SEC. 2. And be it further enacted , That it shall be lawful for the President of the United States to instruct the commanders of the respective public vessels aforesaid, to subdue, seize and make prize of all vessels, goods, and effects, belonging to the Bey of Tripoli, or to his subjects, and to bring or send the same into port, to be proceeded against, and distributed according to the law; and also to cause to be done all such other acts of precaution or hostility as the state of war will justify, and may, in his opinion, require. SEC. 3. And be it further enacted , That on the application of, the owners of private armed vessels of the United States, the President of the United States may grant to them special commissions, in the form which he shall direct, under the seal of the United States; and such private armed vessels, when so commissioned, shall have the like authority for subduing, seizing, taking, and bringing into port, any Tripolitan vessel, goods or effects, as the before-mentioned public armed vessels may by law have; and shall therein be subject to the instruction which may be given by the President of the United States for the regulation of their conduct; and their commissions shall be revocable at his pleasure. Provided , that before any commission shall be granted, as aforesaid, the owner or owners of the vessel for which the same may be requested, and the commander thereof, for the time being, shall give bond to the United States, with at least two responsible sureties, not interested in such vessel, in the penal sum of seven thousand dollars; or, if such vessel be provided with more than one hundred and fifty men, in the penal sum of fourteen thousand dollars, with condition for observing the treaties and laws of the United States, and the instructions which may be given, as aforesaid; and also, for satisfying all damages and injuries which shall be done, contrary to the tenor thereof, by such commissioned vessel; and for delivering up the commission, when revoked by the President of the United States. SEC. 4. And be if further enacted , That any Tripolitan vessel, goods or effects, which shall be so captured and brought into port, by any private armed vessel of the United States, duly commissioned, as aforesaid, may be adjudged good prize, and thereupon shall accrue to the owners and officers, and men of the capturing vessel, and shall be distributed according to the agreement which shall have been made between them, or, in failure of such agreement, according to the discretion of the court having cognizance of the capture. SEC. 5. And be it further enacted , That the seamen may be engaged to serve in the navy of the United States for a period not exceeding two years; but the President may discharge the same sooner, if in his judgment, their services may be dispensed with. APPROVED, February 6, 1802. [Repealed by P.L. 1028, 84 th Congress, 2d Sess (August 10, 1956); 70A Stat. 644, sec. 53(b)] Protection of the Commerce and Seamen of the United States Against the Algerine Cruisers (Act of March 3, 1815, ch. 90, 3 Stat. 230) CHAP. XC.— An Act for the protection of the commerce of the United States against the Algerine cruisers. Whereas the Dey of Algiers, on the coast of Barbary, has commenced a predatory warfare against the United States— Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled , That it shall be lawful fully to equip, officer, man and employ such of the armed vessels of the United States as may be judged requisite by the President of the United States for protecting effectually the commerce and seamen thereof on the Atlantic Ocean, the Mediterranean and adjoining seas. SEC. 2. And be it further enacted , That it shall be lawful for the President of the United States to instruct the commanders of the respective public vessels aforesaid, to subdue, seize, and make prize of all vessels, goods and effects of or belonging to the Dey of Algiers, or to his subjects, and to bring or send the same into port, to be proceeded against and distributed according to law; and, also, to cause to be done all such other acts of precaution or hostility, as the state of war will justify, and may in his opinion require. SEC. 3. And be it further enacted , That on the application of the owners of private armed vessels of the United States, the President of the United States may grant them special commissions in the form which he shall direct under the seal of the United States; and such private armed vessels, when so commissioned, shall have the like authority for subduing, seizing, taking and bringing into port any Algerine vessel, goods or effects, as the before-mentioned public armed vessels may by law have; and shall therein be subject to the instructions which may be given by the President of the United States for the regulation of their conduct; and their commissions shall be revokable at his pleasure. Provided , That before any commission shall be granted as aforesaid, the owner or owners of the vessels of which the same may be requested, and the commander thereof for the time being shall give bond to the United States, with at least two responsible sureties, not interested in such vessel, in the penal sum of seven thousand dollars, or if such vessel be provided with more than one hundred and fifty men, in the penal sum of fourteen thousand dollars, with condition for observing the treaties and laws of the United States, and the instructions which may be given as aforesaid, and also for satisfying all damages and injuries which shall be done contrary to the tenor thereof by such commissioned vessel, and for delivering up the commission when revoked by the President of the United States. SEC. 4. And be if further enacted , That any Algerine vessel, goods, or effects which may be so captured and brought into port, by any private armed vessel, of the United States, duly commissioned as aforesaid, may be adjudged good prize, and thereupon shall accrue to the owners, and officers, and men of the capturing vessel, and shall be distributed according to the agreement which shall have been made between them, or, in failure of such agreement, according to the discretion [of] the court having cognisance of the capture. APPROVED, March 3, 1815. [Repealed by P.L. 1028, 84 th Congress, 2d Sess (August 10, 1956); 70A Stat. 644, sec. 53(b)] Suppression of Piracy (33 U.S.C. §§381-387. R.S.§§4293-4299. R.S.§4293, 4294, and 4295 are derived from the Acts of March 3, 1819, ch. 77, 3 Stat. 510 and 512; January 30, 1823, 3 Stat. 513, ch. 7, 3 Stat. 721. R.S.§4296 is derived from the Acts of March 3, 1819, ch. 77, 3 Stat. 513; January 30, 1823, ch. 7, 3 Stat. 721; August 5, 1861, ch. 48, 12 Stat. 314. R.S.§§4297, 4298, and 4299 are derived from the Act of August 5, 1861, ch. 48, 12 Stat. 315.) TITLE 33. CHAPTER 7. Section 381. Use of public vessels to suppress piracy The President is authorized to employ so many of the public armed vessels as in his judgement the service may require, with suitable instructions to the commanders thereof, in protecting the merchant vessels of the United States and their crews from piratical aggressions and depredations. Section 382. Seizure of piratical vessels generally The President is authorized to instruct the commanders of the public armed vessels of the United States to subdue, seize, take, and send into any port of the United States, any armed vessel or boat, or any vessel or boat, the crew whereof shall be armed, and which shall have attempted or committed any piratical aggression, search, restraint, depredation, or seizure, upon any vessel of the United States, or of the citizens thereof, or upon any other vessel; and also to retake any vessel of the United States, or its citizens, which may have been unlawfully captured upon the high seas. Section 383. Resistance of pirates by merchant vessels The commander and crew of any merchant vessel of the United States, owned wholly, or in part, by a citizen thereof, may oppose and defend against any aggression, search, restraint, depredation, or seizure, which shall be attempted upon such vessel, or upon any other vessel so owned, by the commander or crew of any armed vessel whatsoever, not being a public armed vessel of some nation in amity with the United States, and may subdue and capture the same; and may also retake any vessel so owned which may have been captured by the commander or crew of any such armed vessel, and send the same into any port of the United States. Section 384. Condemnation of piratical vessels Whenever any vessel, which shall have been built, purchased, fitted out in whole or in part, or held for the purpose of being employed in the commission of any piratical aggression, search, restraint, depredation, or seizure, or in the commission of any other act of piracy as defined by the law of nations, or from which any piratical aggression, search, restraint, depredation, or seizure shall have been first attempted or made, is captured and brought into or captured in any port of the United States, the same shall be adjudged and condemned to their use, and that of the captors after due process and trial in any court having admiralty jurisdiction, and which shall be holden for the district into which such captured vessel shall be brought; and the same court shall thereupon order a sale and distribution thereof accordingly, and at its discretion. Section 385. Seizure and condemnation of vessels fitted out for piracy Any vessel built, purchased, fitted out in whole or in part, or held for the purpose of being employed in the commission of any piratical aggression, search, restraint, depredation, or seizure, or in the commission of any other act of piracy, as defined by the law of nations, shall be liable to be captured and brought into any port of the United States if found upon the high seas, or to be seized if found in any port or place within the United States, whether the same shall have actually sailed upon any piratical expedition or not, and whether any act of piracy shall have been committed or attempted upon or from such vessel or not; and any such vessel may be adjudged and condemned, if captured by a vessel authorized as hereinafter mentioned [33 USCS §386] to the use of the United States, and to that of the captors, and if seized by a collector [the Secretary of the Treasury], surveyor or marshal, then to the use of the United States. Section 386. Commissioning private vessels for seizure of piratical vessels The President is authorized to instruct the commanders of the public armed vessels of the United States, and to authorize the commanders of any other armed vessels sailing under the authority of any letters of marque and reprisal granted by Congress, or the commanders of any other suitable vessels, to subdue, seize, take, and, if on the high seas, to send into any port of the United States, any vessel or boat built, purchased, fitted out, or held as mentioned in the preceding section [33 USCS §385]. Section 387. Duties of officers of customs and marshals as to seizure The collectors of the several ports of entry [the Secretary of the Treasury] the surveyors of the several ports of delivery [the Secretary of the Treasury] and the marshals of the several judicial districts within the United States, shall seize any vessel or boat built, purchased, fitted out, or held as mentioned in section forty-two hundred and ninety-seven [33 USCS §385], which may be found within their respective ports or districts, and to cause the same to be proceeded against and disposed of as provided by that section. Authorization for the President To Employ the Armed Forces of the United States for Protecting the Security of Formosa, the Pescadores, and Related Positions and Territories of That Area (Act of January 29, 1955, ch.4, 69 Stat. 7. [H.J.Res. 159, P.L. 84-4]) P.L. 4 , CHAPTER 4—Joint Resolution authorizing the President to employ the Armed Forces of the United States for protecting the security of Formosa, the Pescadores and related positions and territories of that area. Whereas the primary purpose of the United States, in its relations with all other nations, is to develop and sustain a just and enduring peace for all; and Whereas certain territories in the West Pacific under the jurisdiction of the Republic of China are now under armed attack, and threats and declarations have been and are being made by the Chinese Communists that such armed attack is in aid of and in preparation for armed attack on Formosa and the Pescadores, Whereas such armed attack if continued would gravely endanger the peace and security of the West Pacific Area and particularly of Formosa and the Pescadores; and Whereas the secure possession by friendly governments of the Western Pacific Island chain, of which Formosa is a part, is essential to the vital interests of the United States and all friendly nations in or bordering upon the Pacific Ocean; and Whereas the President of the United States on January 6, 1955, submitted to the Senate for its advice and consent to ratification a Mutual Defense Treaty between the United States of America and the Republic of China, which recognizes that an armed attack in the West Pacific area directed against territories, therein described, in the region of Formosa and the Pescadores, would be dangerous to the peace and safety of the parties to the treaty: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the President of the United States be and he hereby is authorized to employ the Armed Forces of the United States as he deems necessary for the specific purpose of securing and protecting Formosa, and the Pescadores against armed attack, this authority to include the securing and protection of such related positions and territories of that area now in friendly hands and the taking of such other measures as he judges to be required or appropriate in assuring the defense of Formosa and the Pescadores. This resolution shall expire when the President shall determine that the peace and security of the area is reasonably assured by international conditions created by action of the United States or otherwise, and shall so report to the Congress. APPROVED, January 29, 1955, 8:42 a.m. [Repealed by P.L. 93-475 [ S. 3473 ] October 26, 1975. 88 Stat. 1439] Promotion of Peace and Stability in the Middle East (P.L. 85-7, 71 Stat. 5, March 9, 1957 [H.J.Res. 117]) P.L. 85-7— Joint Resolution, To promote peace and stability in the Middle East . Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the President be and hereby is authorized to cooperate with and assist any nation or group of nations in the general area of the Middle East desiring such assistance in the development of economic strength dedicated to the maintenance of national independence. SEC. 2. The President is authorized to undertake, in the general area of the Middle East, military assistance programs with any nation or group of nations of that area desiring such assistance. Furthermore, the United States regards as vital to the national interest and world peace the preservation of the independence and integrity of the nations of the Middle East. To this end, if the President determines the necessity thereof, the United States is prepared to use armed forces to assist any such nation or group of such nations requesting assistance against armed aggression from any country controlled by international communism: Provided , That such employment shall be consonant with the treaty obligations of the United States and with the Constitution of the United States. SEC. 3. The President is hereby authorized to use during the balance of fiscal year 1957 for economic and military assistance under this joint resolution not to exceed $200,000,000 from any appropriation now available for carrying out the provisions for the Mutual Security Act of 1954, as amended, in accord with the provisions of such Act: Provided , That, whenever the President determines it to be important to the security of the United States, such use may be under the authority of section 401 (a) of the Mutual Security Act of 1954, as amended (except that the provisions of section 105 (a) thereof shall not be waived), and without regard to the provisions of section 105 of the Mutual Security Appropriation Act, 1957: Provided further , That obligations incurred in carrying out the purposes of the first sentence of section 2 of this joint resolution shall be paid only out of appropriations for military assistance, and obligations incurred in carrying out the purposes of the first section of this joint resolution shall be paid only out of appropriations other than those for military assistance. This authorization is in addition to other existing authorizations with respect to the use of such appropriations. None of the additional authorization contained in this section shall be used until fifteen days after the Committee on Foreign Relations of the Senate, the Committee on Foreign Affairs of the House of Representatives, the Committees on Appropriations of the Senate and the House of Representatives and, when military assistance is involved, the Committees on Armed Services of the Senate and the House of Representatives have been furnished a report showing the object of the proposed use, the country for the benefit of which such use is intended, and the particular appropriation or appropriations for carrying out the provisions of the Mutual Security Act of 1954, as amended, from which the funds are proposed to be derived: Provided , That funds available under this section during the balance of fiscal year 1957 shall, in the case of any such report submitted during the last fifteen days of the fiscal year, remain available for use under this section for the purposes stated in such report for a period of twenty days following the date of submission of such report. Nothing contained in this joint resolution shall be construed as itself authorizing the appropriation of additional funds for the purpose of carrying out the provisions of the first section or of the first sentence of section 2 of this joint resolution. SEC. 4. The President should continue to furnish facilities and military assistance, within the provisions of applicable law and established policies, to the United Nations Emergency Force in the Middle East, with a view to maintaining the truce in that region. SEC. 5. The President shall within the months of January and July of each year report to the Congress his action hereunder. SEC. 6. This joint resolution shall expire when the President shall determine that the peace and security of the nations in the general area of the Middle East are reasonably assured by international conditions created by action of the United Nations or otherwise except that it may be terminated earlier by a concurrent resolution of the two houses of Congress. APPROVED, March 9, 1957. Maintenance of International Peace and Security in Southeast Asia (P.L. 88-408, 78 Stat. 384, August 10, 1964 [H.J.Res. 11450]) P.L. 88-408, 78 Stat.—Joint Resolution, To promote the maintenance of international peace and security in southeast Asia. Whereas naval units of the Communist regime in Vietnam, in violation of the principles of the Charter of the United Nations and of international law, have deliberately and repeatedly attacked the United States naval vessels lawfully present in international waters, and have thereby created a serious threat to international peace; and Whereas these attacks are part of a deliberate and systematic campaign of aggression that the Communist regime in North Vietnam has been waging against its neighbors and the nations joined with them in the collective defense of their freedom; and Whereas the United States is assisting the peoples of southeast Asia to protect their freedom and has no territorial, military or political ambitions in that area, but desires only that these peoples should be left in peace to work out their own destinies in their own way: Now, therefore, be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , That the Congress approves and supports the determination of the President, as Commander in Chief, to take all necessary measures to repel any armed attack against the forces of the United States and to prevent further aggression. SEC. 2. The United States regards as vital to its national interest and to world peace the maintenance of international peace and security in southeast Asia. Consonant with the Constitution of the United States and the Charter of the United Nations and in accordance with its obligations under the Southeast Asia Collective Defense Treaty, the United States is, therefore, prepared, as the President determines, to take all necessary steps, including the use of armed force, to assist any member or protocol state of the Southeast Asia Collective Defense Treaty requesting assistance in defense of its freedom. SEC. 3. This resolution shall expire when the President shall determine that the peace and security of the area is reasonably assured by international conditions created by action of the United Nations or otherwise, except that it may be terminated earlier by concurrent resolution of the Congress. APPROVED, August 10, 1964 [Repealed by P.L. 91-672 [H.R. 15628] January 12, 1971. 84 Stat. 2053] Multinational Force in Lebanon ( P.L. 98-119 , 97 Stat. 805, October 12, 1983 [ S.J.Res. 159 ]) P.L. 98-119 , 97 Stat. 805— Joint Resolution providing statutory authorization under the War Powers Resolution for continued United States participation in the multinational peacekeeping force in Lebanon in order to obtain withdrawal of all foreign forces from Lebanon. Resolved by the Senate and House of Representatives of the United States of America in Congress assembled , SHORT TITLE SECTION 1. This joint resolution may be cited as the "Multinational Force in Lebanon Resolution." FINDINGS AND PURPOSE SEC. 2. (a) The Congress finds that— (1) the removal of all foreign forces from Lebanon is an essential United States foreign policy objective in the Middle East; (2) in order to restore full control by the Government of Lebanon over its own territory, the United States is currently participating in the multinational peacekeeping force (hereafter in this resolution referred to as the "Multinational Force in Lebanon") which was established in accordance with the exchange of letters between the Governments of the United States and Lebanon dated September 25, 1982; (3) the Multinational Force in Lebanon better enables the Government of Lebanon to establish its unity, independence, and territorial integrity; (4) progress toward national political reconciliation in Lebanon is necessary; and (5) United States Armed Forces participating in the Multinational Force in Lebanon are now in hostilities requiring authorization of their continued presence under the War Powers Resolution. (b) The Congress determines that the requirements of section 4(a)(1) of the War Powers Resolution became operative on August 29, 1983. Consistent with section 5(b) of the War Powers Resolution, the purpose of this joint resolution is to authorize the continued participation of the United States Armed forces in the Multinational Force in Lebanon. (c) The Congress intends this joint resolution to constitute the necessary specific statutory authorization under the War Powers Resolution for continued participation by United States Armed Forces in the Multinational Force in Lebanon. AUTHORIZATION FOR CONTINUED PARTICIPATION OF UNITED STATES ARMED FORCES IN THE MULTINATIONAL FORCE IN LEBANON SEC. 3. The President is authorized, for purposes of section 5(b) of the War Powers Resolution, to continue participation by United States Armed Forces in the Multinational Force in Lebanon, subject to the provisions of section 6 of this joint resolution. Such participation shall be limited to performance of the functions, and shall be subject to the limitations, specified in the agreement establishing the Multinational Force in Lebanon as set forth in the exchange of letters between the Governments of the United States and Lebanon dated September 25, 1982, except that this shall not preclude such protective measures as may be necessary to ensure the safety of the Multinational Force in Lebanon. REPORTS TO THE CONGRESS SEC. 4. As required by section 4(c) of the War Powers Resolution, the President shall report periodically to the Congress with respect to the situation in Lebanon, but in no event shall he report less often than once every three months. In addition to providing the information required by that section on the status, scope, and duration of hostilities involving the Unites States Armed Forces, such reports shall describe in detail— (1) the activities being performed by the Multinational Force in Lebanon; (2) the present composition of the Multinational Force in Lebanon, including a description of the responsibilities and deployment of the armed forces of each participating country; (3) the results of efforts to reduce and eventually eliminate the Multinational Force in Lebanon; (4) how continued United States participation in the Multinational Force in Lebanon is advancing United States foreign policy interests in the Middle East; and (5) what progress has occurred toward national political reconciliation among all Lebanese groups. STATEMENTS OF POLICY SEC. 5. (a) The Congress declares that the participation of the armed forces of other countries in the Multinational Force in Lebanon is essential to maintain the international character of the peacekeeping function in Lebanon. (b) The Congress believes that it should continue to be the policy of the United States to promote continuing discussions with Israel, Syria, and Lebanon with the objective of bringing about the withdrawal of all foreign troops from Lebanon and establishing an environment which will permit the Lebanese Armed Forces to carry out their responsibilities in the Beirut area. (c) It is the sense of the Congress that, not later than one year after the date of enactment of this joint resolution and at least once a year thereafter, the United States should discuss with the other members of the Security Council of the United Nations the establishment of a United Nations peacekeeping force to assume the responsibilities of the Multinational Force in Lebanon. An analysis of the implications of the response to such discussions for the continuation of the Multinational Force in Lebanon shall be included in the reports required under paragraph (3) of section 4 of this resolution. DURATION OF AUTHORIZATION FOR UNITED STATES PARTICIPATION IN THE MULTINATIONAL FORCE IN LEBANON SEC. 6. The participation of United States Armed Forces in the Multinational Force in Lebanon shall be authorized for purposes of the War Powers Resolution until the end of the eighteen-month period beginning on the date of enactment of this resolution unless the Congress extends such authorization, except that such authorization shall terminate sooner upon the occurrence of any one of the following: (1) the withdrawal of all foreign forces from Lebanon, unless the President determines and certifies to the Congress that continued United States Armed Forces participation in the Multinational Force in Lebanon is required after such withdrawal in order to accomplish the purposes specified in the September 25, 1982, exchange of letters providing for the establishment of the Multinational Force in Lebanon; or (2) the assumption by the United Nations or the Government of Lebanon of the responsibilities of the Multinational Force in Lebanon; or (3) the implementation of other effective security arrangements in the area; or (4) the withdrawal of all other countries from participation in the Multinational Force in Lebanon. INTERPRETATION OF THIS RESOLUTION SEC. 7. (a) Nothing in this joint resolution shall preclude the President from withdrawing United States Armed Forces participation in the Multinational Force in Lebanon if circumstances warrant, and nothing in this joint resolution shall preclude the Congress by joint resolution from directing such a withdrawal. (b) Nothing in this joint resolution modifies, limits or supersedes any provision of the War Powers Resolution or the requirement of section 4(a) of the Lebanon Emergency Assistance Act of 1983, relating to congressional authorization for any substantial expansion in the number or role of United States Armed Forces in Lebanon. CONGRESSIONAL PRIORITY PROCEDURES FOR AMENDMENTS SEC. 8. (a) Any joint resolution or bill introduced to amend or repeal this Act shall be referred to the Committee on Foreign Affairs of the House of Representatives or the Committee on Foreign Relations of the Senate, as the case may be. Such joint resolution or bill shall be considered by such committee within fifteen calendar days and may be reported out, together with its recommendations, unless such House shall otherwise determine pursuant to its rules. (b) Any joint resolution or bill so reported shall become the pending business of the House in question (in the case of the Senate the time for debate shall be equally divided between the proponents and the opponents) and shall be voted on within three calendar days thereafter, unless such House shall otherwise determine by the yeas and nays. (c) Such a joint resolution or bill passed by one House shall be referred to the committee of the other House named in subsection (a) and shall be reported out by such committee together with its recommendations within fifteen calendar days and shall thereupon become the pending business of such House and shall be voted upon within three calendar days, unless such House shall otherwise determine by the yeas and nays. (d) In the case of any disagreement between the two houses of Congress with respect to a joint resolution or bill passed by both houses, conferees shall be promptly appointed and the committee of conference shall make and file a report with respect to such joint resolution within six calendar days after the legislation is referred to the committee of conference. Notwithstanding any rule in either House concerning the printing of conference reports in the Record or concerning any delay in the consideration of such reports, such report shall be acted on by both houses not later than six calendar days after the conference report is filed. In the event the conferees are unable to agree within forty-eight hours, they shall report back to the respective houses in disagreement. APPROVED, October 12, 1983. Authorization of the Use of U.S. Armed Forces Pursuant to U.N. Security Council Resolution 678 with Respect to Iraq ( P.L. 102-1 , 105 Stat. 3, January 14, 1991 [H.J.Res. 77]) P.L. 102-1 , 105 Stat. 3— To authorize the use of United States Armed Forces pursuant to United Nations Security Council Resolution 678 . Whereas the Government of Iraq without provocation invaded and occupied the territory of Kuwait on August 2, 1990; Whereas both the House of Representatives (in H.J.Res. 658 of the 101 st Congress) and the Senate (in S.Con.Res. 147 of the 101 st Congress) have condemned Iraq's invasion of Kuwait and declared their support for international action to reverse Iraq's aggression; Whereas, Iraq's conventional, chemical, biological, and nuclear weapons and ballistic missile programs and its demonstrated willingness to use weapons of mass destruction pose a grave threat to world peace; Whereas the international community has demanded that Iraq withdraw unconditionally and immediately from Kuwait and that Kuwait's independence and legitimate government be restored; Whereas the United Nations Security Council repeatedly affirmed the inherent right of individual or collective self-defense in response to the armed attack by Iraq against Kuwait in accordance with Article 51 of the United Nations Charter; Whereas, in the absence of full compliance by Iraq with its resolutions, the United Nations Security Council in Resolution 678 has authorized member states of the United Nations to use all necessary means after January 15, 1991, to uphold and implement all relevant Security Council resolutions and to restore international peace and security to the area; and Whereas Iraq has persisted in its illegal occupation of, and brutal aggression against Kuwait: Now, therefore, be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This joint resolution may be cited as the "Authorization for Use of Military Force Against Iraq Resolution." SEC. 2. AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES. (a) AUTHORIZATION.—The President is authorized, subject to subsection (b), to use United States Armed Forces pursuant to United Nations Security Council Resolution 678 (1990) in order to achieve implementation of Security Council Resolutions 660, 661, 662, 664, 665, 666, 667, 669, 670, 674, and 677. (b) REQUIREMENT FOR DETERMINATION THAT USE OF MILITARY FORCE IS NECESSARY.—Before exercising the authority granted in subsection (a), the President shall make available to the Speaker of the House of Representatives and the President pro tempore of the Senate his determination that— (1) the United States has used all appropriate diplomatic and other peaceful means to obtain compliance by Iraq with the United Nations Security Council resolution cited in subsection (a); and (2) that those efforts have not been and would not be successful in obtaining such compliance. (c) WAR POWERS RESOLUTION REQUIREMENTS.— (1) SPECIFIC STATUTORY AUTHORIZATION.—Consistent with section 8(a)(1) of the War Powers Resolution, the Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution. (2) APPLICABILITY OF OTHER REQUIREMENTS.—Nothing in this resolution supersedes any requirement of the War Powers Resolution. SEC. 3. REPORTS TO CONGRESS. At least once every 60 days, the President shall submit to the Congress a summary on the status of efforts to obtain compliance by Iraq with the resolutions adopted by the United Nations Security Council in response to Iraq's aggression. APPROVED, January 14, 1991. Authorization of the Use of U.S. Armed Forces Against Those Responsible for the Recent Attacks Launched Against the United States ( P.L. 107-40 , 115 Stat. 224, September 18, 2001 [S. J. Res. 23]) To authorize the use of United States Armed Forces against those responsible for the recent attacks launched against the United States . Whereas, on September 11, 2001, acts of treacherous violence were committed against the United States and its citizens, and Whereas, such acts render it both necessary and appropriate that the United States exercise its rights to self-defense and to protect United States citizens both at home and abroad, and Whereas, in light of the threat to the national security and foreign policy of the United States posed by these grave acts of violence, and Whereas, such acts continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States, Whereas the President has authority under the Constitution to take action to deter and prevent acts of international terrorism against the United States. Resolved by the Senate and the House of Representatives of the United States of America in Congress assembled. SECTION 1. SHORT TITLE This joint resolution may be cited as the "Authorization for Use of Military Force" SECTION 2. AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES (a) That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons. (b) War Powers Resolution Requirements (1) SPECIFIC STATUTORY AUTHORIZATION - Consistent with section 8(a)(1) of the War Powers Resolution, the Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution. (2) APPLICABILITY OF OTHER REQUIREMENTS - Nothing in this resolution supercedes any requirement of the War Powers Resolution. APPROVED, September 18, 2001. Authorization of the Use of Force Against Iraq Resolution of 2002 ( P.L. 107-243 , 116 Stat. 1498, October 16, 2002 [ H.J.Res. 114 ]) To authorize the use of United States Armed Forces against Iraq . Whereas in 1990 in response to Iraq's war of aggression against and illegal occupation of Kuwait, the United States forged a coalition of nations to liberate Kuwait and its people in order to defend the national security of the United States and enforce United Nations Security Council resolutions relating to Iraq; Whereas after the liberation of Kuwait in 1991, Iraq entered into a United Nations sponsored cease-fire agreement pursuant to which Iraq unequivocally agreed, among other things, to eliminate its nuclear, biological, and chemical weapons programs and the means to deliver and develop them, and to end its support for international terrorism; Whereas the efforts of international weapons inspectors, United States intelligence agencies, and Iraqi defectors led to the discovery that Iraq had large stockpiles of chemical weapons and a large scale biological weapons program, and that Iraq had an advanced nuclear weapons development program that was much closer to producing a nuclear weapon than intelligence reporting had previously indicated; Whereas Iraq, in direct and flagrant violation of the cease-fire, attempted to thwart the efforts of weapons inspectors to identify and destroy Iraq's weapons of mass destruction stockpiles and development capabilities, which finally resulted in the withdrawal of inspectors from Iraq on October 31, 1998; Whereas in P.L. 105-235 (August 14, 1998), Congress concluded that Iraq's continuing weapons of mass destruction programs threatened vital United States interests and international peace and security, declared Iraq to be in "material and unacceptable breach of its international obligations" and urged the President "to take appropriate action, in accordance with the Constitution and relevant laws of the United States, to bring Iraq into compliance with its international obligations"; Whereas Iraq both poses a continuing threat to the national security of the United States and international peace and security in the Persian Gulf region and remains in material and unacceptable breach of its international obligations by, among other things, continuing to possess and develop a significant chemical and biological weapons capability, actively seeking a nuclear weapons capability, and supporting and harboring terrorist organizations; Whereas Iraq persists in violating resolution of the United Nations Security Council by continuing to engage in brutal repression of its civilian population thereby threatening international peace and security in the region, by refusing to release, repatriate, or account for non-Iraqi citizens wrongfully detained by Iraq, including an American serviceman, and by failing to return property wrongfully seized by Iraq from Kuwait; Whereas the current Iraqi regime has demonstrated its capability and willingness to use weapons of mass destruction against other nations and its own people; Whereas the current Iraqi regime has demonstrated its continuing hostility toward, and willingness to attack, the United States, including by attempting in 1993 to assassinate former President Bush and by firing on many thousands of occasions on United States and Coalition Armed Forces engaged in enforcing the resolutions of the United Nations Security Council; Whereas members of al Qaida, an organization bearing responsibility for attacks on the United States, its citizens, and interests, including the attacks that occurred on September 11, 2001, are known to be in Iraq; Whereas Iraq continues to aid and harbor other international terrorist organizations, including organizations that threaten the lives and safety of United States citizens; Whereas the attacks on the United States of September 11, 2001, underscored the gravity of the threat posed by the acquisition of weapons of mass destruction by international terrorist organizations; Whereas Iraq's demonstrated capability and willingness to use weapons of mass destruction, the risk that the current Iraqi regime will either employ those weapons to launch a surprise attack against the United States or its Armed Forces or provide them to international terrorists who would do so, and the extreme magnitude of harm that would result to the United States and its citizens from such an attack, combine to justify action by the United States to defend itself; Whereas United Nations Security Council Resolution 678 (1990) authorizes the use of all necessary means to enforce United Nations Security Council Resolution 660 (1990) and subsequent relevant resolutions and to compel Iraq to cease certain activities that threaten international peace and security, including the development of weapons of mass destruction and refusal or obstruction of United Nations weapons inspections in violation of United Nations Security Council Resolution 687 (1991), repression of its civilian population in violation of United Nations Security Council Resolution 688 (1991), and threatening its neighbors or United Nations operations in Iraq in violation of United Nations Security Council Resolution 949 (1994); Whereas in the Authorization for Use of Military Force Against Iraq Resolution ( P.L. 102-1 ), Congress has authorized the President "to use United States Armed Forces pursuant to United Nations Security Council Resolution 678 (1990) in order to achieve implementation of Security Council Resolution 660, 661, 662, 664, 665, 666, 667, 669, 670, 674, and 677"; Whereas in December 1991, Congress expressed its sense that it "supports the use of all necessary means to achieve the goals of United Nations Security Council Resolution 687 as being consistent with the Authorization of Use of Military Force Against Iraq Resolution ( P.L. 102-1 )," that Iraq's repression of its civilian population violates United Nations Security Council Resolution 688 and "constitutes a continuing threat to the peace, security, and stability of the Persian Gulf region," and that Congress, "supports the use of all necessary means to achieve the goals of United Nations Security Council Resolution 688"; Whereas the Iraq Liberation Act of 1998 ( P.L. 105-338 ) expressed the sense of Congress that it should be the policy of the United States to support efforts to remove from power the current Iraqi regime and promote the emergence of a democratic government to replace that regime; Whereas on September 12, 2002, President Bush committed the United States to "work with the United Nations Security Council to meet our common challenge" posed by Iraq and to "work for the necessary resolutions," while also making clear that "the Security Council resolutions will be enforced, and the just demands of peace and security will be met, or action will be unavoidable"; Whereas the United States is determined to prosecute the war on terrorism and Iraq's ongoing support for international terrorist groups combined with its development of weapons of mass destruction in direct violation of its obligations under the 1991 cease-fire and other United Nations Security Council resolutions make clear that it is in the national security interests of the United States and in furtherance of the war on terrorism that all relevant United Nations Security Council resolutions be enforced, including through the use of force if necessary; Whereas Congress has taken steps to pursue vigorously the war on terrorism through the provision of authorities and funding requested by the President to take the necessary actions against international terrorists and terrorist organizations, including those nations, organizations, or persons who planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such persons or organizations; Whereas the President and Congress are determined to continue to take all appropriate actions against international terrorists and terrorist organizations, including those nations, organizations, or persons who planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such persons or organizations; Whereas the President has authority under the Constitution to take action in order to deter and prevent acts of international terrorism against the United States, as Congress recognized in the joint resolution on Authorization for Use of Military Force ( P.L. 107-40 ); and Whereas it is in the national security interests of the United States to restore international peace and security to the Persian Gulf region: Now, therefore, be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This joint resolution may be cited as the "Authorization for Use of Military Force Against Iraq Resolution of 2002." SEC. 2. SUPPORT FOR UNITED STATES DIPLOMATIC EFFORTS. The Congress of the United States supports the efforts by the President to— (1) strictly enforce through the United Nations Security Council all relevant Security Council resolutions regarding Iraq and encourages him in those efforts; and (2) obtain prompt and decisive action by the Security Council to ensure that Iraq abandons its strategy of delay, evasion and noncompliance and promptly and strictly complies with all relevant Security Council resolutions regarding Iraq. SEC. 3. AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES. (a) Authorization.—The President is authorized to use the Armed Forces of the United States as he determines to be necessary and appropriate in order to— (1) defend the national security of the United States against the continuing threat posed by Iraq; and (2) enforce all relevant United Nations Security Council resolutions regarding Iraq. (b) Presidential Determination.—In connection with the exercise of the authority granted in subsection (a) to use force the President shall, prior to such exercise or as soon thereafter as may be feasible, but no later than 48 hours after exercising such authority, make available to the Speaker of the House of Representatives and the President pro tempore of the Senate his determination that— (1) reliance by the United States on further diplomatic or other peaceful means alone either (A) will not adequately protect the national security of the United States against the continuing threat posed by Iraq or (B) is not likely to lead to enforcement of all relevant United Nations Security Council resolutions regarding Iraq; and (2) acting pursuant to this joint resolution is consistent with the United States and other countries continuing to take the necessary actions against international terrorist and terrorist organizations, including those nations, organizations, or persons who planned, authorized, committed or aided the terrorist attacks that occurred on September 11, 2001. (c) War Powers Resolution Requirements.— (1) Specific statutory authorization.—Consistent with section 8(a)(1) of the War Powers Resolution, the Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution. (2) Applicability of other requirements.—Nothing in this joint resolution supersedes any requirement of the War Powers Resolution. SEC. 4. REPORTS TO CONGRESS. (a) Reports.—The President shall, at least once every 60 days, submit to the Congress a report on matters relevant to this joint resolution, including actions taken pursuant to the exercise of authority granted in section 3 and the status of planning for efforts that are expected to be required after such actions are completed, including those actions described in section 7 of the Iraq Liberation Act of 1998 ( P.L. 105-338 ). (b) Single Consolidated Report.—To the extent that the submission of any report described in subsection (a) coincides with the submission of any other report on matters relevant to this joint resolution otherwise required to be submitted to Congress pursuant to the reporting requirements of the War Powers Resolution ( P.L. 93-148 ), all such reports may be submitted as a single consolidated report to the Congress. (c) Rule of Construction.—To the extent that the information required by section 3 of the Authorization for Use of Military Force Against Iraq Resolution ( P.L. 102-1 ) is included in the report required by this section, such report shall be considered as meeting the requirements of section 3 of such resolution. APPROVED, October 16, 2002.

From the Washington Administration to the present, Congress and the President have enacted 11 separate formal declarations of war against foreign nations in five different wars. Each declaration has been preceded by a presidential request either in writing or in person before a joint session of Congress. The reasons cited in justification for the requests have included armed attacks on United States territory or its citizens and threats to United States rights or interests as a sovereign nation. Congress and the President have also enacted authorizations for the use of force rather than formal declarations of war. Such measures have generally authorized the use of force against either a named country or unnamed hostile nations in a given region. In most cases, the President has requested the authority, but Congress has sometimes given the President less than what he asked for. Not all authorizations for the use of force have resulted in actual combat. Both declarations and authorizations require the signature of the President in order to become law. In contrast to an authorization, a declaration of war in itself creates a state of war under international law and legitimates the killing of enemy combatants, the seizure of enemy property, and the apprehension of enemy aliens. While a formal declaration was once deemed a necessary legal prerequisite to war and was thought to terminate diplomatic and commercial relations and most treaties between the combatants, declarations have fallen into disuse since World War II. The laws of war, such as the Hague and Geneva Conventions, apply to circumstances of armed conflict whether or not a formal declaration or authorization was issued. With respect to domestic law, a declaration of war automatically triggers many standby statutory authorities conferring special powers on the President with respect to the military, foreign trade, transportation, communications, manufacturing, alien enemies, etc. In contrast, no standby authorities appear to be triggered automatically by an authorization for the use of force, although the executive branch has argued, with varying success, that the authorization to use force in response to the terrorist attacks of 2001 provided a statutory exception to certain statutory prohibitions. Most statutory standby authorities do not expressly require a declaration of war to be actualized but can be triggered by a declaration of national emergency or simply by the existence of a state of war; however, courts have sometimes construed the word "war" in a statute as implying a formal declaration, leading Congress to enact clarifying amendments in two cases. Declarations of war and authorizations for the use of force waive the time limitations otherwise applicable to the use of force imposed by the War Powers Resolution. This report provides historical background on the enactment of declarations of war and authorizations for the use of force and analyzes their legal effects under international and domestic law. It also sets forth their texts in two appendices. The report includes an extensive listing and summary of statutes that are triggered by a declaration of war, a declaration of national emergency, and/or the existence of a state of war. The report concludes with a summary of the congressional procedures applicable to the enactment of a declaration of war or authorization for the use of force and to measures under the War Powers Resolution. The report will be updated as circumstances warrant.

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On March 23, 2010, President Obama signed into law comprehensive health care reform legislation, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as passed by the Senate on December 24, 2009, and by the House of Representatives on March 21, 2010. The act contains numerous provisions affecting Medicare payments, payment rules, covered benefits, and the delivery of care. On March 30, 2010, the President signed into law H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010 (the Reconciliation Act, or HCERA; P.L. 111-152), as passed by both the Senate and the House on March 25, 2010. The Reconciliation Act makes changes to a number of Medicare-related provisions in PPACA and adds several new provisions. The Medicare and Medicaid Extenders Act of 2010 (the Extenders Act, P.L. 111-309), signed into law on December 15, 2010, also modified certain PPACA provisions affecting Medicare. Prior to the enactment of the health care reform legislation, CBO estimated that total mandatory annual expenditures for Medicare would grow from $501 billion in 2009 to $943 billion in 2019. Cumulative spending for FY2010 to FY2019 was expected to exceed $7 trillion. CBO estimates on the Medicare-related provisions in PPACA and the Reconciliation Act indicate that absent interaction effects, net reductions in Medicare direct spending will reach close to $400 billion over the FY2010-FY2019 period. PPACA includes 10 titles. This report discusses selected provisions in Titles II, III, IV, V, VI, IX, and X in PPACA concerning payment and program modifications to Medicare's fee-for-service program, the Medicare Advantage (MA), and outpatient prescription drug programs; efforts to reform Medicare's payment methods; program integrity changes to address fraud, waste, and abuse; and other miscellaneous Medicare changes. Provisions that modify Medicare's graduate medical education payments to teaching hospitals, some quality measurement efforts, and other public health initiatives are not covered in this report. The Reconciliation Act includes two titles. The first title contains provisions related to health care and revenues. Subtitle B of Title I contains provisions that modify provisions in PPACA related to Medicare fee-for-service, Medicare Advantage, and Medicare outpatient prescription drug programs. Subtitle D contains provisions related to reducing waste, fraud, and abuse in Medicare. Subtitle E contains revenue related provisions including a provision that makes changes to the Medicare tax provision in PPACA. The second title includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education. This report also addresses how the Reconciliation Act changed, or added to, Medicare-related provisions in PPACA. The Extenders Act contains two titles. The first title contains a number of provisions that extend certain provisions in PPACA. The second title contains additional provisions that modify or repeal several PPACA provisions related to Medicare. The body of this report begins with a discussion of the financial impact on the Medicare program by PPACA and the Reconciliation Act as estimated by CBO (the CBO score), then provides an overview of Medicare changes by provider type and program, followed by a brief discussion of the changes to address efficiencies and quality in Medicare, efforts to address long-term Medicare financing, and program integrity changes. Appendix A provides an overview of the majority of Medicare-related provisions in PPACA, the Reconciliation Act, and the Extenders Act, including a brief description of the law prior to enactment, a description of the provision, and where possible, the associated CBO score for each provision. Title X provisions of PPACA and provisions added by the Reconciliation Act are incorporated within the subject appropriate titles. Appendix B contains a timeline for provider payment update reductions including productivity adjustments (described in " Payment Rate Changes Affecting Medicare Fee-for-Service Providers "). Appendix C contains a timeline of the effective, start, or due dates of the Medicare provisions described in this report. A glossary of common acronyms used in body of the report and in the timeline appears in Appendix D . On March 20, 2010, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued cost estimates of PPACA as amended by the Reconciliation Act. Their analyses provide estimates of the direct spending and revenue effects of the combined pieces of legislation. CBO estimates that the provisions in PPACA as amended by the Reconciliation Act that affect the Medicare, Medicaid, the State Children's Health Insurance Program (CHIP) and other federal programs will reduce direct spending by $511 billion over the FY2010-FY2019 period. Medicare direct spending (absent interaction effects) accounts for approximately $400 billion of the reduction. Total Medicare reductions in direct spending over the 10-year period are estimated to be about $465 billion, but these reductions are offset by Medicare payment increases of close to $65 billion. Medicare-related provisions in the Extenders Act that modify or extend a number of provisions in PPACA are estimated to cost an additional $1.9 billion through FY2020. Estimates of annual Medicare spending from FY2010 through FY2019 under PPACA and the Reconciliation Act, and under prior law ("baseline") are illustrated in Figure 1 . As noted by CBO, the provisions that are expected to result in the largest savings include the following: Permanent reductions in the annual updates to Medicare's fee-for-service payment rates (other than physicians' services) will account for an estimated budgetary savings of $196.3 billion over 10 years. Tying maximum payment rates in the Medicare Advantage program closer to spending in fee-for-service Medicare (or below that level) will account for an estimated $135 billion in savings (before interactions) over 10 years. Reducing Medicare payments to hospitals that serve a large number of low-income patients, known as disproportionate share (DSH) hospitals, is expected to decrease expenditures by about $22 billion. Modifying the high-income adjustment for Part B premiums is projected to save $25 billion over 10 years. Creating an Independent Payment Advisory Board to make changes in Medicare payment rates is expected to save approximately $16 billion over 10 years. Additionally, a new Hospital Insurance tax on taxable wages over $200,000 per year for single filers ($250,000 for joint filers) is expected to raise $87 billion from FY2013 through FY2019, and a new tax on investment income is projected to raise an additional $123 billion over 10 years. CBO estimates that Medicare spending under health care reform legislation will increase more slowly over the next 20 years compared to the past 20 years—a 6% average annual rate compared to the prior 8%. CBO notes, however, that the estimates are subject to uncertainty. For example, the savings rate assumed that the sustainable growth rate (SGR) mechanism that constrains Medicare physician payment rates would go back into effect in 2010; at the time the estimate was made, physicians were facing an approximate 21% cut in payments. The longer-term projections also assume that the Independent Payment Advisory Board established by PPACA will be effective in reducing costs. CBO was not able to determine whether the reduction in the growth rate would be achieved through greater efficiencies in the delivery of health care or if the payment reductions would lead to lower quality of care. Medicare is a federal program that pays for covered health services for most persons 65 years of age and older and for most permanently disabled individuals under the age of 65. It consists of four parts, each responsible for paying for different benefits, subject to different eligibility criteria and financing mechanisms. Under traditional Medicare, Part A and Part B services are typically paid on a fee-for-service basis (each service or group of services provided to a patient is reimbursed through a separate payment) using different prospective payment systems (PPS) or fee schedules. Certain other services are paid on the basis of reasonable costs or reasonable charges. In general, each year, the Centers for Medicare and Medicaid Services (CMS) issues regulations to set Medicare's payment rates to specific providers, physicians, practitioners and suppliers for the upcoming year. For instance, the program provides for annual updates of Medicare payments to reflect inflation and other factors. In some cases, these updates are linked to the consumer price index for all urban consumers (CPI-U) or to a provider-specific market basket (MB) index, which measures the change in the price of goods and services purchased by the provider to produce a unit of output. While CMS implements the payment methods through detailed rule-making, typically, the basic parameters for setting these payments, including updates over time, have been established by Congress. In March of each year, the Medicare Payment Advisory Commission (MedPAC) makes payment update recommendations concerning Medicare's different fee-for-service payment systems to Congress. To do so, MedPAC staff first examines the adequacy of the Medicare payments for efficient providers in the current year and then assesses how provider costs are likely to change in the upcoming year, including scheduled policy changes that will affect Medicare's payment rates. As stated by MedPAC, Medicare's payment systems should encourage efficiency, and Medicare providers can achieve efficiency gains similar to the economy at large. This policy target links Medicare's expectations for efficiency improvements to the productivity gains achieved by firms and workers who pay taxes that fund Medicare. The amount, if any, of MedPAC's update recommendations will depend on its overall assessment of the circumstances of a given set of providers in any year. To differing extents, MedPAC's analyses and recommendations have shaped provisions in PPACA and the Reconciliation Act; that influence is noted in this report wherever applicable. Part A provides coverage for inpatient hospital services, post-hospital skilled nursing facility (SNF) services, post-hospital home health services, and hospice care, subject to certain conditions and limitations. Approximately 20% of beneficiaries enrolled in Part A use these services during any year. CBO estimated that about $223 billion was spent on Part A benefits in 2008, an amount that, prior to PPACA, was projected to increase to $435.2 billion in 2019. In part because of its sheer size, provisions reducing Part A spending comprise a significant proportion of the savings attributed to this legislation either through constraining payment updates or by other payment changes. Generally, the provisions of PPACA and the Reconciliation Act affecting Medicare's payments to acute care hospitals will constrain payment increases to these hospitals, restructure payments to address treatment inefficiencies, and then reshape Medicare's disproportionate share hospital (DSH) hospital subsidies. Also, the exception that permits physicians with ownership interests in a hospital to refer Medicare and Medicaid patients to that hospital will be eliminated for new physician-owned hospitals or those that did not meet certain criteria. Specifically, PPACA will adjust Medicare's annual payment updates to Part A hospitals to account for economy-wide productivity increases for cost savings (along with certain other reductions), which is estimated to reduce Medicare spending significantly over 10 years. Under prior law, the market basket component of the physician update or the Medicare economic index (MEI) was adjusted to exclude productivity gains. The PPACA provision for adjusting payment updates for Part A hospitals will use the same measure of productivity improvement, the 10-year moving average of all-factory productivity, included in the MEI. These estimated savings include the reduction for outpatient and inpatient services for all hospitals; the savings from extending this policy to only acute care hospitals were not separately identified. Since 1986, an increasing number of acute care hospitals have received additional payments under Medicare's inpatient prospective payment system (IPPS) because they serve a disproportionate share of low-income patients. The justification for this subsidy has changed over time. Originally, the DSH adjustment was intended to compensate hospitals for their higher Medicare costs associated with the provision of services to a large proportion of low-income patients. Now, the adjustment is considered as a way to protect access to care for Medicare beneficiaries. PPACA as amended by the Reconciliation Act will reduce hospitals' DSH payments starting in FY2014 equal to 25% of what otherwise would be made, a payment that represents the empirically justified amount as determined by MedPAC in its March 2007 Report to Congress . Acute care hospitals will be paid additional amounts, which will depend on the difference in the hospital's DSH payments under PPACA, the difference in the percentage change in the uninsured under-65 population from 2012, and the percentage of uncompensated care provided by the hospital (relative to all acute care hospitals). CBO has estimated that this policy will save $22.1 billion from FY2015 to FY2019. Medicare covers nursing home services for beneficiaries who require skilled nursing care and/or rehabilitation services following a hospitalization of at least three consecutive days. The Balanced Budget Act of 1997 (BBA 97, P.L. 105-33) required the Secretary to establish a prospective payment system (PPS) for SNF care to be phased in over three years, beginning in 1998. Under the PPS, SNFs receive a daily payment that covers all the services provided that day, including room and board, nursing, therapy, and drugs, as well as an estimate of capital-related costs. Any profits are retained by the SNF, and any losses must be absorbed by the SNF. The daily base payment is based on 1995 costs that have been increased for inflation and vary by urban or rural location. A portion of these daily payments is further adjusted for variations in area wages, using the hospital wage index, to account for geographic variation in wages. SNF per diem PPS payments are also adjusted to include a temporary 128% increase for any SNF residents who are HIV-positive or have AIDS. Section 1888(e) of the Social Security Act requires that the base payments be adjusted each year by the SNF MB update—that is, the measure of inflation of goods and services used by SNFs. In its March 2009 Report , MedPAC found that Medicare payments to SNFs overall were adequate and recommended that the market basket update for 2010 be eliminated. According to the CMS final rule for FY2010, published on August 11, 2009, the market basket update for FY2010 was 2.2 percentage points. In addition, CMS described how it would establish a revised case-mix classification methodology (Resource Utilization Group–Version Four; RUG-IV) and implementation schedule for FY2011 (starting October 1, 2010), reflecting updated staff time measurement data derived from the recently completed Staff Time and Resource Intensity Verification (STRIVE) project, among other things. According to CMS, these revisions to the case-mix were intended to correct for changes made for FY2006, in which changes that were intended to better account for the resources used in the care of medically complex patients resulted in payments exceeding budget neutrality estimates. The FY2010 final rule also describes changes to the RUG system for measuring and billing therapy given to Medicare SNF patients on a concurrent basis. Concurrent therapy is the practice of a professional therapist working with multiple patients at the same time, each of whom is receiving different treatments. Prior to FY2010, SNFs were allowed to bill for concurrent therapy as individual therapy time for each patient. The FY2010 final rule required SNFs to instead calculate the therapy minutes allocated to each individual and to report only those minutes on the MDS 3.0 for billing purposes. The FY2010 final rule also describes changes to billing for the following high-cost staff-intensive services: ventilator/respirator, tracheostomy, suctioning, IV medications, and transfusions. Prior to the implementation of the new law, the RUG billing system took into account the costs of these services when furnished within the prior 14 days, regardless of whether they were furnished prior to a patient's admission. According to CMS, the inclusion of these expenditures in the RUG billing system was intended to serve as a proxy for the higher-cost medically complex services delivered to certain categories of SNF residents. More recent analysis by CMS showed this to be a poor proxy for medical complexity. As a result, the FY2010 rule modified this look-back period to include only services delivered after admission to a SNF. PPACA makes three significant changes to the SNF PPS. First, starting in FY2012, all SNF market-basket annual updates will be subject to a productivity adjustment. Second, the new law required the Secretary to implement the change specified in the FY2010 final rule to therapy that is furnished on a concurrent basis. Third, PPACA required the Secretary to implement the changes to the look-back period described in the FY2010 final rule to ensure that only those services furnished after admission to a SNF are used as factors in determining a SNF case mix classification. Home health agencies (HHAs) are paid under a prospective payment system (PPS), which covers skilled nursing, therapy, medical social services, aide visits, medical supplies, and other services. Durable medical equipment is not included in the home health PPS. The base payment amount for the national standardized 60-day episode rate is increased annually by an update factor that is determined, in part, by the projected increase in the home health market basket (MB) index. This index measures the changes in the costs of goods and services purchased by HHAs. HHAs are currently required to submit to the Secretary health care quality data. An HHA that does not submit the required quality data will receive an update of the MB minus two percentage points for that fiscal year. In its March 2009 Report , MedPAC explained that payments to HHAs have exceeded costs by a wide margin since the PPS was implemented in 2000. Further, the continuing entry of new HHAs into Medicare, combined with adequate access to capital, suggested that HHAs were not generally at risk for becoming insolvent, and were receiving adequate, or more than adequate, payment. As a result, MedPAC recommended that the MB increase for 2010 be eliminated and that the payment coding changes scheduled by the Secretary be accelerated. Further, MedPAC recommended that HHA rates be rebased to better reflect the average costs of care. The final rule for calendar year (CY) 2010 reported that the home health (HH) MB would increase by 2.0% for that year. In addition, in an effort to address potential fraud and abuse in the use of HH outlier payments, the final rule also implemented a cap on outlier payments (i.e., payments for unusually costly 60-day episodes of care) at 10% of total payments per HHA, and no more than 2.5% of total aggregate PPS payments for all of HH. In CY2008, CMS made refinements to the home health PPS to try to improve payment efficiencies. Specifically, the Secretary made changes to the home health agency (HHA) case-mix index to account for the relative resource utilization of different patients. These changes modified the coding or classification of different units of service that do not reflect real changes in case-mix. As a result, the national prospective 60-day episode payment rate was adjusted downward by 2.75% for CY2008, by 2.75% for each year of CY2009 and CY2010, and by 2.71% for CY2011. The final CMS rule for CY2010 maintained the 2.75% reduction to the HH PPS rates for CY2010. The final rule also required the submission of OASIS (home health patient assessment tool) data by HHAs to the Secretary as a condition for payment, and began implementing a new version of OASIS, OASIS-C January 1, 2010. Several provisions in PPACA impact HH payments, some of which reflect MedPAC's recommendations. For example, one provision reduces the HH MB update by 1.0 percentage point in 2011, 2012, and 2013, and all HH MB annual updates will be subject to a productivity adjustment starting in 2015. With these changes to the market basket updates, the rate of growth in payments to HHAs will likely slow and could even fall below zero. Another provision in PPACA requires the Secretary to rebase home health payments, starting in CY2014, by a percentage considered appropriate by the Secretary to, among other things, reflect the number, mix and level of intensity of HH services in an episode, and the average cost of providing care. Any such adjustments that would result will be required to be made before the annual payment updates are applied for that year. A four-year phase-in, ending in 2017, will be provided for, in equal increments that cannot exceed 3.5% of applicable amounts for each year. The Secretary is also required to reduce the standard home health resource group (HHRG) amounts such that the aggregate reduction in payments will equal 5% of total HHA PPS payments for a period. And, similar to the CMS final rule for CY2010, the total amount of additional payments for outliers may not exceed 2.5% of the total HHA PPS payments in a given fiscal year. Also similar to the CMS final rule, starting in CY2011 the Secretary is required to establish a provider-specific annual cap of 10% of revenues that a HH agency may be reimbursed in a given year from outlier payments. For visits ending on or after Apri1 1, 2010, and before January 1, 2016, the Secretary is directed to provide for a 3% add-on payment for HH providers serving rural areas. PPACA, the Reconciliation Act, and the Extenders Act make several changes to the Medicare program that have the potential to affect physicians and how they practice in ways both small and large, immediately and over time. While some of the provisions will have clear and direct consequences, for instance by altering physician reimbursement right away, others have the potential to influence how physicians might practice in the future by changing the incentives to encourage improvements in the organization and delivery of care. The most immediate and direct modifications include extensions of several existing demonstration programs and payment policies as well as some modifications to the Medicare fee schedule. Among the extensions of Medicare initiatives that affect physicians are the gainsharing demonstration, the extension of the work geographic index floor and revisions to the practice expense geographic adjustment under the Medicare physician fee schedule, the payment for the technical component of certain physician pathology services, and the extension of the mental health add-on to the physician fee schedule. In addition, PPACA modifies the equipment utilization factor assumption used to determine payment for advanced imaging services, creates a new demonstration project to pay for certain complex diagnostic laboratory tests, and modifies the Medicare payment for certain bone density tests. Additional provisions have impacts for physicians that will be felt in the years to come. PPACA extends the Medicare Physician Quality and Reporting Initiative (PQRI) incentive payments through 2014 and implements an incentive (penalty) for providers who do not report quality measures beginning in 2015, while also providing for an additional bonus to physicians who meet the requirements of a continuous assessment program (the Maintenance of Certification Program, MOCP) as well as a subsequent penalty for those who do not meet the standards in the future. PPACA requires new types of reports and data analysis under the Physician Feedback Program established under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) including the development of an episode grouper that combines separate but clinically related items and services into an episode of care payment for an individual, as appropriate, and the provision of reports to physicians that compare patterns of resource use of each physician to the patterns of other peer physicians. Information on Medicare physicians will be reported publicly on a new Physician Compare website to be established by CMS no later than January 1, 2011, which will eventually include information on physician performance. PPACA also gives the Secretary (through CMS) additional flexibility to be able to review and adjust potentially misvalued codes under the physician fee schedule, establishes floors for some Medicare payments for providers who practice in states that meet the definition of a "Frontier State," and creates a new bonus payment for evaluation and management and certain general surgery services for five years beginning January 1, 2011, with the intent to expand access to primary care and general surgery services The final category of PPACA and the Reconciliation Act provisions affecting physicians has the potential to change fundamental aspects of how physicians organize, practice, and deliver care in the future. Some of these provisions create new structures and entities, like the CMS Center for Medicare and Medicaid Innovation or the Patient-Centered Outcomes Research Institute (PCORI), while others seek to develop alternatives to traditional fee-for-service payment, such as the National Pilot Program on Payment Bundling, the shared savings program (including the accountable care organization, or ACO, model), or the value-based payment modifier under the physician fee schedule. The PCORI, combined with the efforts and experiences with the alternative payment models, could generate new information about how alternative treatments affect patient outcomes as well as evidence to support how different payment methods might alter the incentives for providers and the outcomes for patients. The Innovation Center would then have the authority and flexibility to adopt new payment alternatives, so long as certain criteria were met—for instance, maintaining quality while reducing expenditures, or improving quality without increasing expenditures. In the long run, these provisions combined have the potential to be the most substantial of the PPACA and the Reconciliation Act modifications affecting physicians and related providers. All of these changes are described in more detail in Appendix A . Medicare Advantage (MA) is an alternative way for beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. Payments to MA plans are determined by comparing a plan's cost of providing required Medicare benefits (bid) to the maximum amount Medicare will pay for those benefits in each area (benchmark). If a plan bid is below the benchmark, the plan is paid its bid plus a rebate equal to 75% of the difference between the bid and the benchmark. If a plan bids above the benchmark, the plan is paid the benchmark and must charge each enrollee a premium equal to the difference between the bid and the benchmark. Rebates must be used to provide benefits not covered under original Medicare. Historically, Congress has increased the benchmark amounts through statutorily specified formulas, in part, to encourage plan participation in all areas of the country. As a result, the benchmark amounts in some counties are higher than the average cost of original fee-for-service (FFS) Medicare. Benchmarks currently range from about 100% to over 150% of FFS costs. PPACA, as modified by the Reconciliation Act, changed how the maximum possible payment to MA plans is determined, in addition to other payment and administrative changes. Starting in 2012, PPACA phases in benchmarks calculated as a percentage of per capita FFS Medicare spending. County benchmarks will be set at either 95%, 100%, 107.5%, or 115% of FFS spending, with a higher percentages applied to counties with the lowest FFS spending. The phase-in will take place over two to six years. This change in the calculation of MA benchmarks would lead to reductions in many benchmarks. However, PPACA increases benchmarks based on plan quality, with higher increases for (qualifying) quality plans in qualifying areas. Starting in 2012, plans with at least a 4-star rating on a 5-star quality rating scale will receive an increase in their benchmark. New plans or plans with low enrollment may also qualify for a benchmark increase. PPACA also varies plan rebates based on quality, with new rebates set at 50% to 70% of the difference between the plan bid and the benchmark. In addition, PPACA requires the Secretary to apply a coding intensity adjustment to plan payments after 2010. In general, MA plan payments are risk-adjusted to account for the variation in the cost of providing care. Risk adjustment is designed to compensate plans for the increased cost of treating older and sicker beneficiaries, and thus discourage plans from preferential enrollment of healthier individuals. The Deficit Reduction Act of 2005 (P.L. 109-171, DRA) required the Secretary to adjust for patterns of diagnosis coding differences between MA plans and providers under parts A and B of Medicare for plan payments in 2008, 2009, and 2010. PPACA requires the Secretary to conduct further analyses on the differences in coding patterns and adjust for those differences after 2010. It specifies minimum coding intensity adjustments starting in 2014. CBO estimated the provisions changing MA plan payments will save $135.6 billion over the FY2010-FY2019 period. CBO also estimates that the changes will result in reduced MA enrollment and plan subsidies for extra benefits. Specifically, by 2019, estimated MA enrollment will be down by 35% (or 4.8 million) from its current 2019 estimate of 13.9 million enrollees nationwide. Average subsidies of extra benefits not covered under Medicare in 2019 are expected to decrease to an estimated $67 per month, down from a 2019-estimated amount of $135 per month. (Current average subsidies of extra benefits are approximately $87 per month). The impact of payment change provisions will likely vary by geography and will depend, in part, on market competition and plan quality. PPACA makes additional changes to the Medicare Advantage program that are expected to result in costs or savings of less than $1.0 billion over the 10-year period (2010-2019), as estimated by CBO. Each of these provisions is explained in detail in Appendix A . In January 2011, the Medicare prescription drug program began its sixth year of operation. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173) created this voluntary outpatient prescription drug benefit under a new Medicare Part D, effective January 1, 2006. At that time, Medicare replaced Medicaid as the primary source of drug coverage for beneficiaries covered under both programs (called dual eligibles). Prescription drug coverage is provided through private prescription drug plans (PDPs), which offer only prescription drug coverage, or through Medicare Advantage prescription drug plans (MA-PDs), which offer prescription drug coverage that is integrated with the health care coverage they provide to Medicare beneficiaries under Part C. Medicare's payments to plans are determined through a competitive bidding process, and enrollee premiums are tied to plan bids. Plans bear some risk for their enrollees' drug spending. Medicare law sets out a defined standard benefit structure under the Part D benefit. In 2011, the standard benefit includes a $310 deductible and then 25% coinsurance until the enrollee reaches $2,840 in total covered drug spending. After this initial coverage limit is reached, there is a gap in coverage in which the enrollee is responsible for the full cost of the drugs (often called the doughnut hole) until total costs hit the catastrophic threshold, $6,447.50 in 2011. Individuals with incomes below 150% of the federal poverty level and with limited assets are eligible for the low-income subsidy (LIS). The LIS reduces beneficiaries' out-of-pocket spending by paying for all or some of the Part D monthly premium and annual deductible, and limits drug copayments to a nominal amount. PPACA and the Reconciliation Act made several changes to the Medicare Part D program that impact beneficiary premiums and out-of-pocket costs. Specifically, PPACA increases Part D premiums for higher income enrollees; the income thresholds are to be set at the same level and in the same manner as those used to establish Part B premiums. Also, starting in 2011, consistent with a voluntary agreement with the pharmaceutical industry, Part D enrollees will be provided discounts of 50% for brand-name drugs during the coverage gap. In addition, the Reconciliation Act provided a rebate of $250 to enrollees who entered the coverage gap in 2010 and phases out the Part D doughnut hole by gradually reducing the cost-sharing during the coverage gap for both brand-name and generic drugs until it equals 25% of the negotiated price of the drug in 2020 (similar to cost-sharing under the initial coverage limit). The Reconciliation Act also reduces the rate of growth of the coverage gap from 2014 through 2019. CBO estimates that the closure of the coverage gap, taking into account the manufacturer brand-name discount, will cost $42.6 billion over 10 years. PPACA also contains several provisions designed to improve access to and availability of LIS plans. For example, the redetermination of LIS eligibility subsequent to the death of a spouse is to be postponed for a year, and cost-sharing is eliminated for individuals receiving care under a Medicaid home and community based waiver who would otherwise require care in a medical institution or a facility. PPACA also makes changes to the methodology used to determine which plans are eligible to enroll low-income beneficiaries so that more plans could qualify and thus reduce the number of low-income beneficiaries who need to change plans from year to year. Additional funding is also provided for outreach and assistance for low-income programs. The CBO cost estimate for the changes to the low-income subsidy program in PPACA is $2.4 billion over 10 years. PPACA also includes a number of provisions aimed at expanding consumer protections for Part D enrollees. For example, the Secretary is required to develop and maintain a centralized system to handle complaints regarding Medicare Advantage and Part D plans or their sponsors. In addition, Part D plans will be required to use a single, uniform exceptions and appeals process. By statute, Medicare is prohibited from interfering in the practice of medicine or the manner in which medical services are provided. As such, Medicare pays for virtually all covered products and services if they are determined to be medically necessary. However, there is growing evidence that some services provided to Medicare beneficiaries are not medically indicated or are unnecessary. In addition, differences in local practice patterns have resulted in substantial differences in expenditures per beneficiary across geographic areas, but with no measurable differences in health status. In June of each year, MedPAC issues a report to Congress that examines systemic issues affecting the Medicare program and makes recommendations to increase Medicare's value, to promote its efficiency, to increase payment accuracy, and/or to realign Medicare's payment incentives. For instance, MedPAC has concluded that Medicare's fee-for-service reimbursement system rewards excessive care and does not encourage service coordination or quality care. Several provisions in PPACA are consistent with MedPAC recommendations to provide adequate incentives to produce appropriate, high-quality care at an efficient price. For example, a provision in PPACA requires the establishment of a national, voluntary pilot program that will bundle payments for physician and hospital as well as post-acute care services with the goal of improving patient care and reducing spending. Another provision establishes rewards for accountable care organizations that meet quality-of-care targets and reduce costs per patient relative to a spending benchmark with a share of the savings they achieve for the Medicare program. CBO estimates that this shared savings program will save Medicare $4.9 billion over FY2010-2019. In addition, under Medicare's IPPS, acute care hospitals normally receive a full payment for patient admissions even if the readmission is preventable and related to the initial admission, the result of inadequate discharge planning at the treating hospital, or results from inadequate post-discharge care coordination. PPACA, consistent with MedPAC recommendations, adjusts payments for hospitals paid under the IPPS based on the dollar value of each hospital's percentage of potentially preventable Medicare readmissions for three conditions. The Secretary of the Department of Health and Human Services has the authority to expand the policy to include additional conditions in future years. CBO estimates that this provision will save $7.1 billion over FY2010-2019. Another provision in PPACA will also subject some hospitals to a payment penalty under Medicare for certain high-cost and common health conditions acquired in the hospital. CBO estimates that this provision will result in savings of $1.4 billion over the next 10 years. PPACA also requires the creation of a Center for Medicare and Medicaid Innovation within CMS. The purpose of the center will be to research, develop, test, and expand innovative payment and delivery arrangements to improve the quality and reduce the cost of care provided to patients. Successful models could be expanded nationally. CBO estimates that this provision will lead to an additional savings of $1.3 billion over 10 years. Medicare's financial operations are accounted for through two trust funds, the Hospital Insurance (HI) trust fund and the Supplementary Medical Insurance (SMI) trust fund, which are maintained by the Department of the Treasury. The primary source of income credited to the HI trust fund, which finances Medicare Part A, is payroll taxes paid by employees and employers; each pays a tax of 1.45% on earnings. The trust fund is an accounting mechanism; there is no actual transfer of money into and out of the fund; rather, income to the trust fund is credited to the fund in the form of interest-bearing government securities. As long as the trust fund has a balance, the Treasury Department is authorized to make payments for it from the U.S. Treasury. The 2009 report of the Medicare Board of Trustees, however, projected that the HI trust fund would become insolvent in 2017. If the HI trust fund were to become insolvent, Congress would face a decision of whether and how to ensure the continued funding of Medicare Part A, as there is currently no statutory mechanism that allows for general fund transfers to cover HI expenditures that exceed payroll tax income and trust fund account balances. Medicare Parts B and D are financed primarily through a combination of monthly premiums paid by current enrollees and general revenues. Income from these sources is credited to the SMI trust fund. Because the SMI trust fund is funded by annually adjusted premiums and general revenue transfers, it is kept in balance and does not face depletion. Growth in SMI expenditures will, however, require significant increases in beneficiary premiums and general revenue over time. In addition to provisions that reduce annual updates to certain Medicare fee-for-service payment rates, PPACA contains several other provisions to address Medicare's financial challenges. For example, PPACA includes a provision to establish an Independent Payment Advisory Board to reduce the rate of growth in Medicare spending. Beginning in 2013, if the Chief Actuary of the Centers for Medicare & Medicaid Services (OACT) makes a determination that the projected per capita growth rate under Medicare exceeds certain spending targets in the second year following the determination, the Board is required to develop a proposal containing recommendations to reduce that per capita growth rate for submission the following year. The Board will be subject to strict fiscal and policy criteria in developing its recommendations, including limitations on the types of providers it can target between years 2015 through 2019. Recommendations made by the Board are to be implemented automatically absent congressional action. CBO estimates that this provision will save $15.5 billion between 2015 and 2019. PPACA will also impose an additional tax of 0.9% on high-income workers with wages over $200,000 for single filers and $250,000 for joint filers effective for taxable years after December 31, 2012. The Reconciliation Act imposes a tax on unearned income, starting after December 31, 2012. The Joint Committee on Taxation estimates that these new taxes will raise approximately $210 billion between 2013 and 2019. Another provision in PPACA freezes the income thresholds used to determine which beneficiaries are subject to higher Part B premium rates at 2010 levels through 2019. Over time, this freeze will result in a larger number of beneficiaries paying the higher premiums. CBO estimates that this provision will save the Medicare program $25 billion over 10 years. In addition, as previously noted, PPACA requires high-income Part D prescription drug program enrollees to pay higher premiums. CBO estimates that this will lead to savings of close to $11 billion over 10 years. In an analysis of PPACA, prior to amendment by the Reconciliation Act, CBO estimated that the legislation would reduce net Part A outlays by $245 billion over FY2010-FY2019. As a result of cost reductions and additional revenues raised through increased payroll taxes, CBO estimated that the HI trust fund would increase by $385 billion over the 2010-2019 period, and have a balance of about $170 billion at the end of FY2019. CBO noted, however, that the trust fund balance would still be declining, and that the HI trust fund would become insolvent a few years after 2019. In a separate analysis, the Medicare Boards of Trustees estimates that the combination of lower Part A costs and higher tax revenues in PPACA, as amended by the Reconciliation Act, will postpone the depletion of HI trust fund assets until 2029. CBO and the CMS Office of the Actuary both caution against combining trust fund accounting conventions with budget accounting rules. Reductions in Medicare expenditures can be used to extend the solvency of the HI trust fund or used to offset costs associated with expansion of health insurance coverage; using both accounting methods at the same time would result in double-counting a large share of those savings. Health care fraud costs the nation billions of dollars annually. Although the actual amount of money lost to fraud is unknown, the estimates range from as much as 3% of all health care expenditures to as much as 10%. As health care expenditures continue to rise, developing new and innovative approaches to fight fraud in both public and private health insurance programs become increasingly important. As the agency responsible for administering Medicare, CMS conducts a variety of activities designed to prevent, detect, and investigate health care fraud. These activities are referred to as program integrity activities. CMS shares responsibility for combating health care fraud with the Department of Health and Human Services Office of the Inspector General (OIG), the Department of Justice (DOJ), and the Federal Bureau of Investigation (FBI). The OIG is an independent unit within HHS that has the primary responsibility for detecting health care fraud and abuse in federal health care programs. The FBI conducts complex fraud investigations related to both private and public health care programs, and the OIG, FBI, and CMS refer suspected cases of fraud to the DOJ for prosecution. In general, the anti-fraud provisions contained in PPACA and the Reconciliation Act target CMS's program integrity activities, the HHS OIG and DOJ enforcement efforts, and funding for anti-fraud activities. In the area of program integrity, the legislation provides the Secretary with the authority to impose certain enhanced oversight and screening measures (i.e., licensure checks, background checks, and site visits) on providers and suppliers enrolling in Medicare, Medicaid, and CHIP. To pay for these screening measures, the legislation requires that institutional providers pay an enrollment fee. Other program integrity measures include requiring Medicare, Medicaid, and CHIP providers to implement compliance programs, providing the Secretary with enhanced authority to suspend provider payments, clarifying access to payment and claims data by law enforcement agencies, and expanding Medicare's Recovery Audit Contractor (RAC) program to Medicaid and Medicare Parts C and D. In the area of enforcement, the legislation introduces new civil monetary penalties (CMPs) for certain types of infractions, including falsifying information on provider enrollment applications and delaying investigations and audits by the OIG. The legislation also enhances the Secretary's authority to impose penalties on MA plans for violating the terms of their contract. Practices such as enrolling individuals into new MA plans or transferring individuals from one plan to another without consent will be subject to sanctions imposed by the Secretary. Finally, PPACA increases funding for the Health Care Fraud and Abuse Control (HCFAC) program by $10 million annually for fiscal years 2011 through 2020, and the Reconciliation Act provides an additional $250 million for the period FY2011 through FY2016. Similar to other purchasers of health care, Medicare spending has been growing much faster than the general economy, and concerns about Medicare's long-term sustainability continue to intensify. Studies by CBO, MedPAC, and others attribute most of the cost growth to the development and increasing utilization of new treatments and other forms of medical technology. Although Medicare will have the additional challenge of higher enrollment associated with aging baby boomers, CBO estimates that most of the expected increase will result from growth in per capita costs rather than from the aging of the population. PPACA and the Reconciliation Act contain provisions designed to reduce direct Medicare program spending by approximately $400 billion over the next 10 years through adjustments in payments to certain types of providers, by equalizing payment rates between Medicare Advantage and fee-for-service Medicare, and by increasing efficiencies in the way that health services are paid for and delivered. There are differing views, however, about whether and to what extent Medicare savings should be used as offsets to fund the expansion of health care coverage, or whether these funds are more appropriately directed at strengthening the program's future financial standing. In addition, both CBO and the CMS Office of the Actuary caution that certain payment reductions may not be sustainable in the long term, and could possibly result in diminished quality of care and/or reduce access to needed services. Appendix A. Selected Medicare Provisions in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 This appendix provides an overview of the majority of Medicare-related provisions in PPACA and the Reconciliation Act, including a brief description of the law prior to enactment, a description of the provision and, where possible, the associated CBO score for each provision. The provisions are organized by the titles of PPACA (unless otherwise noted, the section numbers refer to PPACA provisions). Title X provisions of PPACA and Reconciliation Act provisions have been incorporated within the appropriate titles. Additionally, changes made by the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309) are noted within the affected sections. The section number and topic of Medicare-related sections that have been omitted from this appendix are included in footnotes to the immediately preceding provision. Title II—Role of Public Programs Subtitle K—Protections for American Indians and Alaska Natives Sec. 2902. Elimination of Sunset For Reimbursement for All Medicare Part B Services Furnished By Certain Indian Hospitals and Clinics. Medicare covers specified Part B services provided by, or at the direction of, a hospital or ambulatory care clinic (whether provider-based or free-standing) that is operated by the Indian Health Service (IHS) and Indian tribe (IT) or a tribal organization (TO). These services include physician services, health practitioners (physician assistants, nurse anesthetists, certified nurse-midwives, clinical social workers, clinical psychologists, and registered dietitians or nutrition professionals) and outpatient physical therapy services provided by physical or occupational therapists. Section 630 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173) instituted a five-year expansion of the items and services covered under Medicare Part B when furnished in, or at the direction of, IHS, IT, or TO hospitals or ambulatory care clinics, applying to items and services furnished on or after January 1, 2005. The current five-year reimbursement extension will expire on January 1, 2010. The provision amends SSA Sec. 1880(e) (1) (A) to extend the period for which IHS, IT, and TO services are reimbursed by Medicare Part B indefinitely, beginning January 1, 2010. The CBO score is $0.1 billion for FY2010-FY2014 and is $0.2 billion for FY2010-FY2019. Title III—Improving the Quality and Efficiency of Health Care Subtitle A—Transforming the Health Care Delivery System Part I—Linking Payment to Quality Outcomes Under the Medicare Program Sec. 3001 as modified by Sec. 10335. Hospital Value-Based Purchasing Program. Since FY2005, acute care hospitals that submit required quality data have received higher payments than those hospitals that do not submit such information under Medicare's Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program (often referred to as the hospital pay-for-reporting program or P4P program). There are 46 quality measures collected in the RHQDAPU program that impact the FY2011 payment update. Individual hospital performance on specific quality measures and on certain conditions is available on Hospital Compare available on the CMS website. In November, 2007, CMS released a mandated report on the implementation of a Medicare hospital value-based purchasing (VBP) program, which recommends expanding the RQHDAPU program in order to financially reward hospitals differentially for performance; public reporting of performance would be a key component as well. Under PPACA, starting for discharges on October 1, 2012, hospitals will receive value-based incentive payments from Medicare. The first year of the VBP program will be a data collection/performance year. Beginning in FY2013, hospital payments will be adjusted based on performance under the VBP program. Certain hospitals will be excluded in a fiscal year: those that are subject to payment reductions associated with reporting required quality data in that fiscal year; those that have been cited for deficiencies that pose immediate jeopardy to their patients; and those for which there are not sufficient number of measures or cases that apply to the hospital for a performance period. Acute-care hospitals in Maryland paid under their state specific Medicare system will be exempt if an annual report documents that a similar state program achieves at least comparable patient outcomes and cost savings. The Secretary is to select measures other than measures of readmissions for the hospital VBP program from those used in the RHQDAPU program. In FY2013, the measures are to cover at least five specified conditions. For discharges occurring during FY2014 and subsequently, the Secretary is to ensure that measures would include appropriate efficiency measures, such as adjusted Medicare spending per beneficiary. The Secretary is required to establish VBP performance standards, including levels of achievement and improvement, and a methodology for assessing the total performance of each hospital. The performance standards are to be announced no later than 60 days prior to the beginning of the period. Hospitals with the highest scores will receive the largest VBP payments. There will not be a minimum performance standard in determining the performance score for any hospital. Hospitals that meet or exceed the established standards for a performance period are to receive an increased base operating diagnosis-related group (DRG) payment for each discharge in the fiscal year. Starting in FY2013, the Secretary is to fund the VBP incentive payments by reducing the base operating DRG payments for each hospital's discharges in a fiscal year by an applicable percentage. These reductions will apply to all hospitals. The applicable percentage is 1.0% in FY2013; 1.25% in FY2014; 1.5% in FY2015; 1.75% in FY2016; and 2.0% in FY2017 and in subsequent years. Certain adjustments within Medicare's inpatient hospital payment system, such as those for outliers, indirect medical education, disproportionate share hospital and low volume, will not be affected. Certain payments to sole community hospitals and Medicare dependent hospitals (for FY2012 and FY2013) will also not be affected. Individual hospital performance on each specific quality measure, on each condition or procedure, and on total performance are all to be publicly reported. A process is to be established that allows hospitals to appeal their performance assessment and score; these appeals are to be resolved in a timely manner. There will be no judicial or administrative review of certain aspects of the VBP program. The Secretary is to consult with small rural and urban hospitals on the application of the VBP program to such hospitals. The RHAQDPU program is also to be modified. The Secretary will be able to require hospitals to submit data on measures that are not used for the determination of VBP payments. Effective for FY2013 payments, the Secretary is required to provide for appropriate risk adjustment for quality measures for outcomes of care. These measures are to be validated appropriately. The Government Accountability Office (GAO) is required to conduct a study of the VBP program with an interim report to Congress due by October 1, 2015, and a final report due by July 1, 2017. The Secretary is also required to conduct a study of the VBP with a report to Congress due by January 1, 2016. No later than two years from enactment, three-year, budget neutral VBP demonstration projects are to be established in critical access hospitals (CAHs) and in hospitals excluded from VBP because of an insufficient volume; reports on the demonstration projects are due to Congress no later than 18 months after completion of the projects. The CBO score is $0.0 billion for FY2010-FY2014 and is $0.0 billion for FY2010-FY2019. Sec. 3002 as modified by Sec. 10327. Improvements to the Physician Quality Reporting System. The Tax Relief and Health Care Act of 2006 (TRHCA, P.L. 109-432) required the establishment of a physician quality reporting system that would include an incentive payment to eligible professionals who satisfactorily report data on quality measures, based on a percentage of the allowed Medicare charges for all such covered professional services. CMS named this program the Physician Quality Reporting Initiative (PQRI). The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) made this program permanent and extended the bonuses through 2010; the incentive payment was increased from 1.5% of total allowable charges under the physician fee schedule in 2007 and 2008 to 2% in 2009 and 2010. PPACA extends PQRI incentive payments through 2014 and implements an incentive (penalty) for providers who do not report quality measures beginning in 2015. Eligible professionals who successfully report in 2010 are to receive a 1% bonus in 2011; those who successfully report in 2011, 2012, and 2013 will receive a 0.5% bonus in 2012, 2013, and 2014, respectively. An additional 0.5% incentive payment will be available in years 2011 through 2014 for eligible professionals who also meet the requirements of a Maintenance of Certification Program (MOCP), defined as a continuous assessment program that "advances quality and lifelong learning and self-assessment of board certified specialty physicians" by focusing on the competencies of patient care, medical knowledge, practice-based learning, interpersonal and communication skills and professionalism. MOCPs will require the physician to (1) maintain a valid, unrestricted medical license in the United States, (2) participate in educational and self-assessment programs that require an assessment of what was learned, (3) demonstrate, through a formalized, secure examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective specialty, and (4) successfully complete the MOCP practice assessment. These eligible professionals will be required to participate in and successfully complete a qualified MOCP practice assessment more frequently than is required to qualify for or maintain board certification status. The MOCP is to submit information to the Secretary on behalf of the eligible professional that the professional has successfully met the program criteria and on the survey of patient experience with care, if requested. The provision authorizes the Secretary to incorporate participation and successful completion in a MCOP into the composite of measure of quality of care furnished pursuant to the physician fee schedule payment modifier. Subsequently, eligible professionals who failed to participate successfully in the program would face a 1.5% payment penalty in 2015, and a 2% payment penalty in 2016 and in subsequent years. The incentive payments and adjustments in payment will be based on the allowed charges for all covered services furnished by the eligible professional, based on the applicable percentage of the fee schedule amount. The provision also requires CMS to develop a plan to integrate the PQRI program with the standards for meaningful use of certified electronic health records as created in the American Recovery and Reinvestment Act of 2009. CBO estimates that the provision would cost $600 million over FY2010-FY2014 and $300 million over FY2010-2019; savings will accrue beginning in 2016 and in subsequent years. Sec. 3003. Improvements to the Physician Feedback Program. MedPAC, GAO and others have recently recommended providing information to physicians on their resource use. MedPAC asserts that physicians would be able to assess their practice styles, evaluate whether they tend to use more resources than their peers or what evidence-based research (if available) recommends, and revise practice styles as appropriate. MedPAC notes that in certain instances, the private sector use of feedback has led to a small downward trend in resource use. The GAO noted that certain public and private health care purchasers routinely evaluate physicians in their networks using measures of efficiency and other factors and that the purchasers it studied linked their evaluation results to a range of incentives to encourage efficiency. MIPPA established a physician feedback program with the intent to improve efficiency and to control costs. Under the Physician Feedback Program, the Secretary will use Medicare claims data to provide confidential reports to physicians that measure the resources involved in furnishing care to Medicare beneficiaries. The resources to be considered in this program may be measured on an episode basis, on a per capita basis, or on both an episode and a per capita basis. The GAO will conduct a study of the Physician Feedback Program, including the implementation of the Program, and will submit a report to Congress by March 1, 2011, containing the results of the study, together with recommendations for such legislation and administrative action as the Comptroller General determines appropriate. This PPACA provision requires new types of reports and data analysis under the Physician Feedback Program. Not later than January 1, 2012, the Secretary is to develop an episode grouper that combines separate but clinically related items and services into an episode of care for an individual, as appropriate. Beginning with 2012, the Secretary will also be required to provide reports to physicians that compare patterns of resource use of the individual physician to such patterns of other physicians. In preparing these reports, the Secretary is to establish methodologies as appropriate to (i) attribute episodes of care, in whole or in part, to physicians, (ii) identify appropriate physicians for purposes of comparison, and (iii) aggregate episodes of care attributed to a physician into a composite measure per individual. In preparing these reports, the Secretary is required to make appropriate adjustments, including adjustments (i) to account for differences in socioeconomic and demographic characteristics, ethnicity, and health status of individuals, and (ii) to eliminate the effect of geographic adjustments in payment rates. CBO estimates that this provision will have no effect on spending over the 5-year or 10-year budget window. Sec. 3004. Quality Reporting for Long-term Care Hospitals, Inpatient Rehabilitation Hospitals and Hospice Programs. Under current law, inpatient rehabilitation facilities (IRFs), long term care hospitals (LTCHs) and hospices are not required to report quality data to the Centers for Medicare and Medicaid Services (CMS). Medicare pays for inpatient care provided by IRFs and LTCHs, and for hospices, using different prospective payment systems (PPS). Each PPS is updated annually using a market basket (MB) index which measures the estimated change in the price of goods and services purchased by the provider to produce a unit of output. Under this provision of PPACA, the Secretary is directed to establish quality reporting programs for LTCHs, IRFs, and hospices. Starting in rate year (RY) 2014, LTCHs will be required to submit data on specified quality measures. This requirement will start in FY2014 for IRFs and hospices. Entities that do not comply will have a reduction in their annual update of 2 percentage points. The reduction could result in an annual update that is less than 0.0 which would result in a basis of payment that is lower than in the preceding year. Any reduction is not to affect payments in subsequent years. The required measures affecting these payments are to be published no later than October 1, 2012. The providers will be able to review the data prior to being publically available. The CBO score is $0 for FY2010-FY2014 and -$0.1 billion for FY2010-FY2019. Sec. 3005. Quality Reporting for PPS-Exempt Cancer Hospitals. Eleven cancer hospitals are exempt from the Medicare inpatient prospective payment system (IPPS) used to pay inpatient hospital services provided by acute care hospitals. As part of these exemptions, these facilities are paid on a reasonable cost basis for providing inpatient services, subject to certain payment limitations and incentives. Currently, there are no quality reporting requirements for these hospitals. Under this provision, the Secretary is directed to establish quality reporting programs for IPPS-exempt cancer hospitals starting FY2014. These measures are to be published no later than October 1, 2012. The providers will be able to review the data prior to being publically available. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019 Sec. 3006 as modified by Sec. 10301. Plans for a Value-Based Purchasing Program for Skilled Nursing Facilities (SNFs), Home Health Agencies (HHAs), and Ambulatory Surgical Centers (ASCs). Under this provision, the Secretary of the Department of Health and Human Services (HHS) is required to develop three plans (for HHAs, SNFs, and ASCs) to implement Medicare value-based purchasing programs and submit them to Congress no later than January 1, 2011, for ASCs, and no later than October 1, 2011, for HHAs and SNFs. These plans are required to consider the following: (1) the ongoing development, selection, and modification process of measures, to the extent feasible and practicable, of all dimensions of quality and efficiency; (2) the reporting, collection, and validation of quality data; (3) the structure of value-based payment adjustments, including the determination of thresholds or improvements in quality that would substantiate a payment adjustment; (4) methods for the public disclosure of information on performance; and (5) other issues determined appropriate by the Secretary. In developing this plan, the Secretary is required to consult with relevant affected parties and consider experience with such demonstrations that the Secretary determines are relevant to the value-based purchasing program. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3007. Value-Based Payment Modifier Under the Physician Fee Schedule. Under this provision, the Secretary of HHS is required to establish and apply a separate, budget-neutral payment modifier to the Medicare physician fee schedule. The separate payment modifier is to be based on the relative quality and cost of the care provided by physicians or physician groups. Quality of care is to be evaluated on a composite of risk-adjusted measures of quality established by the Secretary, such as measures that reflect health outcomes. Costs, defined as expenditures per individual, are to be evaluated based on a composite of appropriate measures of costs established by the Secretary that eliminate the effect of geographic adjustments in payment rates and take into account risk factors (such as socioeconomic and demographic characteristics, ethnicity, and health status of individuals) and other factors determined appropriate by the Secretary. By January 1, 2012, the Secretary is required to publish the specific measures of quality and cost, the specific dates for implementation of the payment adjustment, and the proposed prospective performance period. The Secretary is to begin implementing the value-based payment adjustment in the 2013 rulemaking process. During the performance period, which begins in 2014, the Secretary is to provide information to physicians about the value of care they provide, as reflected by the measures of relative quality and cost. The Secretary will be required to apply the payment modifier for items and services furnished beginning on January 1, 2015, for specific physicians and groups of physicians the Secretary determines appropriate, and not later than January 1, 2017, for all physicians and groups of physicians. The Secretary is to apply the payment modifier in a manner that promotes systems-based care and takes into account the special circumstances of physicians or groups of physicians in rural areas and other underserved communities. CBO estimates that this provision will have no effect on spending over the 5-year or 10-year budget window. Sec. 3008. Payment Adjustment for Conditions Acquired in Hospitals. Medicare pays acute care hospitals using the inpatient prospective payment system (IPPS), where each patient is classified into a Medicare severity adjusted diagnosis-related group (MS-DRG). Generally, except for outlier cases, a hospital receives a predetermined amount for a given MS-DRG regardless of the services provided to a patient. In some instances, Medicare patients may be assigned to a different MS-DRG with a higher payment rate based on secondary diagnoses. Starting October 1, 2008, hospitals did not receive additional Medicare payment for complications that were acquired during a patient's hospital stay for certain select conditions. These hospital acquired conditions (HACs) are: (1) high cost, high volume, or both; (2) identified though a secondary diagnosis that will result in the assignment to a different, higher paid MS-DRG; and (3) reasonably preventable through the application of evidence-based guidelines. Under this provision, starting for discharges during FY2015, acute care hospitals in the top quartile of national, risk-adjusted hospital acquired condition (HAC) rates for an applicable period in a fiscal year are to receive 99% of their otherwise applicable payment. Acute care hospitals in Maryland paid under their state specific Medicare system will be exempt if an annual report documents that a similar state program achieves at least comparable quality outcomes and cost savings. Prior to FY2015, the hospitals are to receive confidential reports with respect to their HAC conditions which will be made publicly available on the Hospital Compare Internet website after the hospital has the opportunity to review and correct the data. There will be no administrative or judicial review of certain aspects of the program. The Secretary is required to submit a report to Congress by January 1, 2012, with recommendations with respect to expanding Medicare's HAC payment policy to other facilities, including IRFs, LTCHs, hospital outpatient departments, inpatient psychiatric facilities, cancer hospitals, skilled nursing facilities, ambulatory surgery centers and health clinics. The CBO score is $0.0 billion for FY2010-FY2014 and -$1.4 billion for FY2010-FY2019. Sec. 10322 Quality Reporting for Psychiatric Hospitals. Under current law, psychiatric hospitals are not required to report quality data to CMS. Medicare pays for inpatient care provided by inpatient psychiatric facilities (IPFs) using a unique prospective payment system (PPS) with annual payment increases based on a market basket (MB) index which measures the estimated change in the price of goods and services purchased by the provider to produce a unit of output. Under this provision, the Secretary is directed to establish quality reporting programs for IPFs starting in rate year 2014 (July 1, 2013). Entities that do not comply will have a reduction in their annual update of 2 percentage points. The reduction could result in an annual update that is less than 0.0 which would lower payments from the preceding year. Any reduction is not applied to payments in subsequent years. The measures will be endorsed by a consensus organization under contract to develop quality measures to the extent practicable and feasible; unendorsed measures may be adopted if endorsed measures have been considered. The required measures affecting these payments are to be published no later than October 1, 2012. The providers will be able to review the data prior to being publically available. The quality data will be published on the Internet website of CMS. CBO did not separately score this provision . Sec. 10326. Pilot Testing Pay-For-Performance Programs for Certain Medicare Providers. Under this provision, no later than January 1, 2016, a pilot pay-for-performance program is to be established for IPFs, LTCHs, IRFs, IPPS-exempt cancer hospitals, and hospice programs. Medicare requirements and those in Title XI and Title XVIII of the SSA are to be waived as necessary. Payments under this section for each provider type will be established so that spending will not be increased. The Secretary will be able to expand the duration and scope of the pilot project at any point after January 1, 2018, if the Secretary determines that such expansion would reduce Medicare spending without reducing quality of care or improve the quality of care and reduce spending. The Chief Actuary of CMS is to certify that an expansion would reduce Medicare spending. Finally, the Secretary is required to determine that an expansion would not deny or limit the coverage or provision of Medicare benefits. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 10331. Public Reporting of Performance Information . SSA §1848(m)(5)(G) requires the Secretary to post on the CMS Internet website a list of eligible professionals who satisfactorily submitted data on quality measures as part of the Physician Quality Reporting Initiative (PQRI). In addition, Sec. 131(d) of the Medicare Improvements for Patients and Providers Act of 2008 requires the Secretary to develop a plan to transition to a value-based purchasing program for payment under the Medicare program for covered professional services. Not later than May 1, 2010, the Secretary is required to submit a report to Congress containing the plan and recommendations for legislative and administrative action. This section of PPACA requires the Secretary, not later than January 1, 2011, to develop a Physician Compare Internet website with information on physicians enrolled in the Medicare program. In addition, the Secretary is required, not later than January 1, 2013, to implement a plan for making publicly available information on physician performance through Physician Compare. The section requires the Secretary to, in developing and implementing this plan, include (1) processes to assure that data made public is statistically valid and reliable; (2) processes by which providers whose performance is being publicly reported to have an opportunity to review individual results prior to publication; (3) processes to assure that the implementation of the plan provide a robust and accurate portrayal of a physician's performance; (4) data that reflects the care provided to all patients seen by physicians to the extent such information would provide a more accurate portrayal of physician performance; (5) processes to ensure appropriate attribution of care; (6) processes to ensure timely statistical performance feedback is provided to physicians; and (7) implementation of computer and data systems by CMS that support valid, reliable and accurate public reporting activities authorized under this section. The section also requires the Secretary, in developing the plan under this section, to consider the plan to transition to a value-based purchasing program for physicians and other practitioners developed under Sec. 131 of MIPPA. The Secretary is required to submit to Congress a report on the Physician Compare Internet website, including information on the plans to collect and publish data on physician quality and efficiency. Finally, the Secretary will be allowed to establish a demonstration program to provide financial incentives to Medicare beneficiaries who are furnished services by high quality physicians. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Part III—Encouraging Development of New Patient Care Models Sec. 3021 as modified by Sec. 10306. Establishment of Center for Medicare and Medicaid Innovation Within CMS. The Social Security Amendments of 1967, as amended by the Social Security Amendments of 1972, provide the Secretary with broad authority to develop and engage in experiments and demonstrations to test new approaches to paying providers, delivering health care services, or providing benefits to beneficiaries participating in federal health care programs. All demonstrations are required to be budget neutral and be approved by the Office of Management and Budget (OMB) prior to implementation. Scope. This provision requires the Secretary, no later than January 1, 2011, to establish a Center for Medicare and Medicaid Innovation (CMI) within CMS. The purpose of the CMI is to test innovative payment and service delivery models to reduce program expenditures under Medicare, Medicaid, and CHIP while preserving or enhancing the quality of care furnished to individuals under such titles. In selecting these models, the Secretary is also required to give preference to models that improve the coordination, quality, and efficiency of health care services. In carrying out its functions, the Secretary is required to consult with relevant federal agencies and experts in medicine and health care management. Testing (Phase I). The Secretary is required to select models that address a defined population with poor clinical outcomes or avoidable expenditures. The provision provides the Secretary with the authority to limit testing to certain geographic areas and select demonstration models that address a variety of themes, including medical homes, coordinated care, alternative payment mechanisms, HIT, medication management, patient education, integrated care for dual-eligibles, care for cancer patients, post-acute care, chronic care management, telehealth, and collaboration among mixed provider types. The Secretary will not have to require, as a condition for testing, that the model be budget neutral initially with respect to expenditures. When selecting models, the Secretary is authorized to consider additional factors such as whether the model includes a process for managing patient care plans, places the applicable individual at the center of the care team, utilizes technology, and demonstrates effective linkage with other private and public sector payers, among other elements. Evaluation. The Secretary is required to conduct an evaluation of each model tested and make the evaluations publicly available in a timely fashion. Evaluations are required to include an analysis of (1) the quality of care furnished under the model, including the measurement of patient-level outcomes and patient-centeredness criteria as determined by the Secretary, and (2) the changes in spending. The Secretary may require States and other entities participating in the demonstrations to collect and report information necessary to evaluate these models. Termination Authority. The provision requires the Secretary to terminate or modify demonstrations that do not meet one of three conditions: (1) improve quality without increasing spending; (2) reduce spending without reducing quality; or (3) improve quality and reduce spending. Expansion Authority (Phase II). Taking into account the results of an evaluation, the Secretary has the authority to expand the duration and scope of a demonstration, including nationwide, if the Secretary determines that an expansion would: (1) reduce spending without reducing quality or improve quality without increasing spending; (2) the CMS Office of the Actuary certifies that an expansion would reduce (or not increase) net program spending under applicable titles; and (3) not deny or limit coverage. Waiver Authority. The provision grants the Secretary the authority to waive requirements of Titles XI, Titles XVIII, and sections 1902(a)(1), 1902(a)(13), and 1902(m)(2)(A)(iii) as necessary to conduct these demonstrations. The provision also exempts the testing, evaluation, and expansion of demonstrations from Chapter 35 of title 44, the Paperwork Reduction Act (PRA), which requires federal agencies to receive OMB approval for each collection of information request. Funding. The provision appropriates $5 million for the design, implementation, and evaluation of models for FY2010; $10 billion for the activities under this section for the years 2011 through 2019; and $10 billion for the activities initiated under this section for each subsequent 10-year fiscal period beginning with 2020. Amounts are available until expended. The provision requires that no less than $25 million be allocated to design, implement, and evaluate the specific models identified in this provision. Oversight. Beginning in 2012, the Secretary will be required to submit to Congress, at least once every other year, a report on the activities performed by the CMI. Reports are required to include a description of the demonstrations, the number of participants, the amount of payments made on behalf of these participants, models chosen for expansion, and evaluation results. Reports are also required to include recommendations for legislative action to facilitate the development and expansion of such models nationwide. The CBO score is $0.7 billion for FY2010-FY2014 and -$1.3 billion for FY2010-FY2019. Sec. 3022 as modified by Sec. 10307. Medicare Shared Savings Program. In April 2005, CMS initiated the Physician Group Practice (PGP) demonstration, which offers 10 large practices the opportunity to earn performance payments for improving the quality and cost-efficiency of health care delivered to Medicare fee-for-service beneficiaries. Accountable care organizations (ACOs) would go beyond the PGP model, which is based on physician groups, to include additional providers. The provision allows groups of providers who voluntarily meet certain statutory criteria, including quality measurements, to be recognized as ACOs and be eligible to share in the cost-savings they achieve for the Medicare program. Beginning no later than Jan. 1, 2012, this shared savings program will enable eligible ACOs to qualify for an annual incentive bonus if they achieve a threshold savings amount, established by the Secretary, for total per beneficiary spending under Medicare Parts A and B for those beneficiaries assigned to the ACO. An eligible ACO is defined as a group of providers and suppliers who have an established mechanism for joint decision making, and are required to participate in the shared savings program for a minimum of three years, among other requirements. An ACO includes practitioners (physicians, regardless of specialty; nurse practitioners; physician assistants; and clinical nurse specialists) in group practice arrangements; networks of practices; and partnerships or joint-venture arrangements between hospitals and practitioners, among others. In each year of the three-year agreement period, an ACO will be eligible for a shared savings payment only if the estimated average per capita Medicare expenditures for Parts A and B services, adjusted for beneficiary characteristics is at least the specified percentage below the applicable benchmark. This appropriate percentage is to account for the normal variation in expenditures based on the number of beneficiaries assigned to the ACO. The ACO's benchmark for each agreement period is to be based on the most recent available three years of per beneficiary Part A and B spending for its assigned beneficiaries. This benchmark will be adjusted for beneficiary characteristics and updated by the projected absolute growth in national per capital expenditures for Part A and B FFS Medicare services, as estimated by the Secretary. The benchmark will be reset at the start of each agreement period. Subject to attaining quality performance standards, an ACO will receive a percentage of the difference between the estimated average per capita Medicare expenditures in a year, adjusted for beneficiary characteristics, under the ACO and the ACO's benchmark. The remainder of the difference will be retained by the program. The Secretary is to establish limits on the total amount of shared savings that may be paid to an ACO. The Secretary may use a partial capitation model or other payment models. Under the partial capitation model, a qualifying ACO would be at financial risk for some, but not all, of the Part A and B items and services. The Secretary may limit participation in this model in highly integrated systems capable of bearing risk. Also, spending under this model cannot result in greater spending than would otherwise be expended if the model were not implemented. To earn the incentive payment, the organization is to submit data pertaining to quality and fulfill certain quality requirements related to clinical processes and outcomes, patient and caregiver experience of care, and utilization measures. The Secretary has the authority to adjust the savings thresholds to account for the varying sizes of participating ACOs. If the Secretary determines that an ACO has taken steps to avoid at-risk patients in order to reduce the likelihood of increasing costs, the Secretary is authorized to impose an appropriate sanction, including terminating agreements with participating ACOs. The CBO score is -$0.5 billion for FY2010-FY2014 and -$4.9 billion for FY2010-FY2019. Sec. 3023 as modified by Sec. 10308. National Pilot Program on Payment Bundling. As Medicare beneficiaries with complex health conditions and multiple co-morbidities move between hospital stays and a range of post-acute care providers, Medicare makes separate payments to each provider for covered services. The Medicare Payment Advisory Commission (MedPAC), among others, has suggested that Medicare test new incentives and payment models to encourage providers to better coordinate across patients' episodes of care and to evaluate the full spectrum of care a patient may receive during these episodes. Under this provision, no later than January 1, 2013, the Secretary is required to establish, test and evaluate alternative payment methodologies for Medicare services through a five-year, national, voluntary pilot program. This program is to be designed to provide incentives for providers to coordinate patient care across the continuum and to be jointly accountable for an entire episode of care around a hospitalization. An episode of care is the full period that a patient stays in a hospital plus the first 30 days following discharge. The Secretary will be able to expand the duration and scope of the pilot after January 1, 2016, if the Secretary, with certification from the Chief Actuary of CMS, determines that such expansion would reduce Medicare spending without reducing quality of care, among other things. The Secretary is required to develop provider payment methods that could include bundled payments and bids from entities for episodes of care. The bundled payment is to comprehensively cover the costs of applicable services, and other appropriate services, including acute care inpatient services; physicians' services delivered in and outside of an acute care hospital setting; outpatient hospital services including emergency department services; post-acute care services, including HH services, skilled nursing services, inpatient rehabilitation services; inpatient hospital services furnished by a LTCH; among others. Participating beneficiaries are to be entitled, to or enrolled in, Medicare Part A and enrolled for benefits under Medicare Part B. Beneficiaries cannot be enrolled in Medicare Advantage or a Program for All-Inclusive Care for the Elderly (PACE). Beneficiaries can have one or more of 10 conditions selected by the Secretary. The payment methodology is also to include payment for services, such as care coordination, medication reconciliation, discharge planning and transitional care services, and other patient-centered activities, as determined appropriate by the Secretary. Payments for items and services cannot result in spending more than would otherwise be expended for such entities if the pilot program were not implemented. No later than three years after implementation, the Secretary is required to submit to Congress a final evaluation of this program. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3024. Independence at Home Demonstration Program. The Secretary is required to conduct a Medicare demonstration program, beginning no later than January 1, 2012, to test a payment incentive and service delivery model that uses physician- and nurse practitioner-directed home-based primary care teams designed to reduce expenditures and improve health outcomes in the provision of items and services to certain chronically ill Medicare beneficiaries. The Secretary is to enter into agreements with qualifying independence at home medical practices, legal entities comprised of an individual physician or nurse practitioner or group of physicians and nurse practitioners that provide care as part of a team that includes physicians, nurses, physician assistants, pharmacists, and other health and social services staff, as appropriate. These practice staff are to have experience providing home-based primary care services to applicable beneficiaries. Practice staff are also required to make in-home visits, and be available 24 hours per day, 7 days per week to implement care plans tailored to the individual beneficiary's chronic conditions and designed to reduce expenditures and improve health outcomes in the provision of items and services to applicable beneficiaries. The Secretary is required to establish a methodology for sharing savings with independence at home medical practices that have expenditures below an annual target spending level. The annual spending target (established by the Secretary) will be the amount the Secretary estimates would have been spent in the absence of the demonstration, for items and services covered under Medicare parts A and B provided to applicable beneficiaries. Subject to performance on quality measures, qualifying practices will be eligible to receive incentive payments if actual annual expenditures for applicable beneficiaries are less than the estimated spending target. Incentive payments are to be equal to a portion (as determined by the Secretary) of the amount by which actual expenditures (including incentive payments) are estimated to be less than 5% less than the estimated annual spending target. Agreements with practices under the program cannot cover more than a three-year period. The Secretary is required to conduct an independent evaluation of the demonstration and submit to Congress a final report on the demonstration's best practices and the impact of the pilot program on coordination of care, expenditures under this provision, access to services, and the quality of health care services provided to applicable beneficiaries. The Secretary will also be required to submit a plan, no later than January 1, 2016, for expanding the program if the Secretary determines that such expansion would result in improving or not reducing the quality of patient care and reducing spending under this provision. The provision appropriates to the CMS Program Management Account $5 million for each of fiscal years 2010 through 2015 to administer the demonstration program. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3025 as modified by Sec. 10309. Hospital Readmissions Reduction Program. Medicare pays for inpatient care provided by acute care hospitals using an inpatient prospective payment system (IPPS) where each patient is assigned to a MS-DRG and paid based on an estimate of the average resources needed to care for a patient with specific diagnoses. Certain atypical cases may qualify for additional outlier payments. Certain hospitals receive additional indirect medical education (IME) payments because of their status as a teaching hospital, because they qualify for disproportionate share hospital (DSH) payments or because they treat a small number (or low volume) of Medicare patients. Certain types of hospitals that qualify as sole community hospitals (SCHs) or Medicare dependent hospitals (MDHs) receive additional hospital specific payments. Medicare pays for inpatient services provided by acute care hospitals in Maryland using a state specific reimbursement system established under a waiver. Medicare pays for inpatient services in other types of hospitals such as inpatient rehabilitation facilities (IRFs), inpatient psychiatric facilities (IPFs), children's hospitals, and long-term care hospitals using different reimbursement systems. According to Medicare Payment Advisory Commission's (MedPAC), in 2005, 6.2% of acute care hospitalizations of Medicare beneficiaries resulted in readmission within 7 days and 17.6% of hospitalizations resulted in readmission within 30 days. The 17.6% of hospital readmission accounted for $15 billion in Medicare spending. Under this provision, starting for discharges on October 1, 2012, the Secretary is to establish a hospital readmissions reduction program for certain potentially preventable Medicare inpatient hospital readmissions covering 3 conditions with high volume or high rate (or both). Medicare's base operating DRG payment amounts will be reduced by an adjustment factor. Certain components of Medicare hospital payments will be exempt from these payment reductions, including outlier, IME, DSH, and low volume payments. Hospital specific payments made to SCHs and MDHs will be exempt in FY2012 and FY2013 as well. Acute care hospitals in Maryland will be exempt from these payment adjustments if a comparable state program achieves the same or higher patient outcomes and cost savings. The adjustment factor for a hospital in a fiscal year is to be the greater of (1) a floor adjustment factor equal to a reduced percentage of the discharge payment or (2) a ratio involving excess readmissions payments for the applicable fiscal year. The floor adjustment factor will be 0.99 of the discharge payments in FY2013, 0.98 of the discharge in FY2014, 0.97 in FY2015 and in subsequent fiscal years. The ratio involving excess readmissions payments is to equal 1 minus the ratio of the aggregate payments for excess readmissions for the hospital divided by the aggregate payments for all discharges. (Each component of this formula is specified in the provision.) Excess readmissions includes readmissions over an established minimum number for the specific applicable condition within a certain period for a hospital. An applicable condition is defined as a condition or procedure that represents high volume (above a minimum threshold) or high expenditures for Medicare or meets other specified criteria that also satisfies certain measures of readmissions (that have been endorsed by a consensus-based entity with a performance measurement contract under Section 1890 of the Social Security Act). Readmissions do not include those readmissions that are unrelated to the prior discharge, such as a planned readmission or a transfer to another hospital. Beginning in FY2015, the number of applicable conditions are to be expanded beyond the initial 3 conditions to 4 additional conditions that were identified by MedPAC in its June, 2007, Report to Congress and other appropriate conditions. These additional conditions do not necessarily need to be endorsed by a consensus based organization as long as due consideration has been given to such endorsed or adopted measures. Readmission information for acute care hospitals is to be made publically available after a hospital has the opportunity to review and correct the data prior to being made public. No judicial and administrative review will be permitted for certain aspects of the readmission program. Readmission data for all patients is to be submitted by acute care hospitals, IRFs, IPFs, children's hospitals, and LTCHs and be made publically available after appropriate review. The required data is to be able to be submitted by a state or other appropriate entity rather than by each hospital. No later than two years after enactment, a program to improve readmission rates through the use of patient safety organizations is to be established for eligible hospitals. Eligible hospitals are those with historically high rates of risk adjusted readmissions that have not taken appropriate steps to reduce readmissions and improve patient safety. Eligible hospitals and patient safety organizations will be required to report on the processes used to improve readmission rates and resulting impact on such readmissions. The CBO score is -$0.5 billion for FY2010-FY2014 and -$7.1 billion for FY2010-FY2019. Sec. 3026. Community-Based Care Transitions Program. The provision establishes a five-year Community Care Transitions Program under Medicare beginning January 1, 2011. Under this program, the Secretary is to fund eligible hospitals (with high admission rates, as defined under section 3025 of this bill) and certain community-based organizations (that provide transition services across a continuum of care through arrangements with certain hospitals and whose governing body includes sufficient representation of multiple health care stakeholders) that furnish improved care transition services to high-risk Medicare beneficiaries. High-risk Medicare beneficiaries refer to beneficiaries who have attained a minimum hierarchical condition category score, as determined by the Secretary, based on a diagnosis of multiple chronic conditions or other risk factors associated with a hospital readmission or substandard transition into post-hospitalizations. Such diagnoses or risk factors could include cognitive impairment, depression, or a history of multiple readmissions. Applications by community-based organizations and hospitals to participate in this program will be required to propose at least one care transition intervention, other than discharge planning, such as initiating care transition services for targeted high-risk beneficiaries no later than 24 hours prior to the hospital discharge; arranging timely post-discharge follow-up to educate patients and, as appropriate, the primary caregiver, about responding to health symptoms that may indicate additional health problems or a deteriorating condition; among others. In selecting participating entities, the Secretary will be required to prioritize those entities that participate in a program administered by the Administration on Aging or provide services to medically underserved populations, small communities, and rural areas. A total of $500 million is to be transferred by the Secretary from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund for this program. The Secretary has the authority to continue or expand the scope and duration of the program if it were determined that quality of care would improve and projected Medicare spending could be reduced. The CBO score is $0.3 billion for FY2010-FY2014 and $0.5 billion for FY2010-FY2019. Sec. 3027. Extension of Gainsharing Demonstration. Certain gainsharing demonstrations to evaluate arrangements between hospitals and physicians have been authorized. CMS is currently operating two projects, each consisting of one hospital in New York and West Virginia. Although authorized to begin on January 1, 2007, the project began on October 1, 2008, and was scheduled to end on December 31, 2009. The Secretary was required to submit mandated reports by certain due dates. The project was appropriated $6 million in FY2006 to be available for expenditure through FY2010. Under this provision of PPACA, the authority to conduct the gainsharing demonstration project in operation as of October 1, 2008, will be extended until September 30, 2011. The due date of the required interim report is extended from December 1, 2008, to March 31, 2011, with the final report due on March 31, 2013. An additional $1.6 million is to be appropriated in FY2010; all appropriations are available through FY2014 or until expended. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Subtitle B—Improving Medicare for Patients and Providers Part I—Ensuring Beneficiary Access to Physician Care and Other Services Sec. 3101. Increase in the Physician Payment Update removed by Sec. 10310. 43 Sec. 3102, as modified by Sec. 1108 of the Reconciliation Act, and further modified by Sec. 103 of the Extenders Act. Extension of the Work Geographic Index Floor and Revisions to the Practice Expense Geographic Adjustment Under the Medicare Physician Fee Schedule. The Medicare fee schedule is adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices—known as Geographic Practice Cost Indices (GPCIs)—that reflect how each area compares to the national average in a "market basket" of goods. A value of 1.00 represents an average across all areas. A series of bills set a temporary floor value of 1.00 on the physician work index beginning January 2004; most recently, Section 134 of the MIPPA extended the application of this floor when calculating Medicare physician reimbursement through December, 2009. The other geographic indices (for practice expense and medical malpractice) were not modified by these acts. This provision, as modified, provides a short extension of the floor and introduces a new methodology to determine the practice expense GPCI. First, the PPACA provision extended the 1.00 floor for the geographic index for physician work for an additional year through December 31, 2010, with the Extenders Act adding an additional year through December 31, 2011. Second, the provision directs the Secretary to adjust the practice expense GPCI for 2010 and 2011 to reflect 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e., a blend of 1/2 local and 1/2 national) instead of the full difference under current law. Relief applies only to areas with a practice expense GPCI less than 1.0. The provision holds harmless any areas negatively impacted by the adjustment. The provision directs the Secretary to analyze current methods of establishing practice expense geographic adjustments under the physician fee schedule (PE GPCI) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different Medicare payment localities. Based on the analysis and evaluation, the Secretary is to make appropriate adjustments to the PE GPCI to ensure accurate geographic adjustments across payment areas, no later than January 1, 2012. Adjustments made in 2012 are to be made without regard to the adjustments made in 2010 and 2011. If the Secretary has not completed the required analysis and evaluation and made appropriate adjustments in the Medicare Physician Fee Schedule rule for 2012 (or subsequent year), the 2011 payment rule would remain in effect. CBO estimates that the PPACA provision will cost a total of $2.2 billion over FY2010-FY2012 with no further impact over the remaining years of the 10-year budget window. CBO estimates the Extenders Act provision will cost $0.5 billion for FY2011-FY2012. Sec. 3103, as modified by Sec. 104 of the Extenders Act. Extension of Exceptions Process for Medicare Therapy Caps. Current law places two annual per beneficiary payment limits for all outpatient therapy services provided by non-hospital providers. For 2009, the annual limit on the allowed amount for outpatient physical therapy and speech-language pathology combined is $1,840, and there is a separate limit for occupational therapy of $1,840. The Secretary was required to implement an exceptions process for 2006, 2007, and the first half of 2008 for cases in which the provision of additional therapy services was determined to be medically necessary. Section 141 of MIPPA extended the exceptions process for therapy caps through December 31, 2009. The Temporary Extension Act of 2010, H.R. 4691 extended the exceptions process through March 31, 2010. This provision of PPACA extended the exceptions process for therapy caps through December 31, 2010, while Section 104 of the Medicare and Medicaid Extenders Act of 2010 extends the exceptions process another year through December 31, 2011. CBO estimates that the PPACA provision will cost a total of $800 million over FY2010-FY2011, with no additional impact over the remaining years of the 10-year budget window. CBO estimates that the Extenders Act provision will cost a total of $0.9 billion for FY2011-FY2012. Sec. 3104, as modified by Sec. 105 of the Extenders Act. Extension of Payment for Technical Component of Certain Physician Pathology Services. In 1999, the Health Care Financing Administration, (now the Centers for Medicare and Medicaid Services or CMS), proposed terminating an exception to a payment rule that had permitted laboratories to receive direct payment from Medicare when providing technical pathology services that had been outsourced by certain hospitals. This exception has been extended through legislation at various times including the Medicare Modernization Act of 2003 (MMA, P.L. 108-173) which extended the provision until January 1, 2010. PPACA extended the provision until January 1, 2011, and the Extenders Act furthers the extension through December 31, 2011. CBO estimates that the PPACA provision will cost $100 million in 2010, with negligible or zero costs in future years, while the Extenders Act provision will cost $0.1 billion in FY2011. Sec. 3105, as modified by Sec. 10311, and further modified by Sec. 106 of the Extenders Act . Extension of Ambulance Add-ons. Bonus payments were established for ground ambulance services furnished on or after July 1, 2004, and before January 1, 2010, that originate in a qualified rural area. The qualified rural areas are those with the lowest population densities that collectively represent a total of 25% of the population. Subsequently, the Medicare rate for ground ambulance services otherwise established for the year was increased an additional 3% for rural ambulance services and 2% for other areas for the period July 1, 2008, through December 31, 2009. Areas designated as rural on December 31, 2006, are treated as rural for purposes of payments for air ambulance services during this period as well. The PPACA provision extended the bonus payments and the increased ground ambulance payments until January 1, 2011. The provision to pay certain urban air ambulance services as rural was extended until January 1, 2011, as well. Section 106 of Extenders Act extends these ambulance payment provisions an additional year through December 31, 2011. The CBO score for the PPACA provision is $0.1 billion for FY2010-FY2014 and $0.1 billion for FY2010-FY2019. CBO estimates the Extenders provision will cost $0.1 billion for FY2011-FY2012. Sec. 3106, as modified by 10312. Extension of Certain Payment Rules for Long-term Care Hospital Services and of Moratorium on the Establishment of Certain Hospitals and Facilities. Long-term care hospitals (LTCHs) are designed to provide extended medical and rehabilitative care for patients who are clinically complex and have multiple acute or chronic conditions. LTCHs that are distinct part units of other hospitals are not explicitly permitted by the Medicare statute. Over time, however, the LTCH industry has evolved to include co-located hospitals-within-hospitals (HwHs) or satellite facilities in addition to traditional freestanding facilities. CMS has implemented additional organizational requirements on these LTCHs, in an attempt to ensure that these are separate entities. Certain LTCHs (grandfathered HwHs) have been exempted from the requirements. Starting October 1, 2004, CMS established limits on the number of discharged Medicare patients that an HwHs and satellite LTCHs (except grandfathered LTCHs) can admit and be paid as independent LTCHs; after that threshold has been reached, generally, the LTCH will receive a substantially lower payment for subsequent patient admissions who have been discharged from the host hospital. Starting July 1, 2007, CMS extended this payment policy to other types of LTCHs, including grandfathered entities. Congress provided for a three-year moratorium on the application of this payment policy for certain LTCHs starting December 29, 2007. Effective for the first cost reporting period beginning on or after October 1, 2002, LTCHs are paid according to a prospective payment system (PPS), subject to a five-year transition period. By statute, total payments under LTCH-PPS must be equal to the amount that would have been paid if the PPS had not been implemented in the initial year of implementation. CMS proposed to review LTCH payments and make a one-time prospective adjustment to the LTCH PPS to correct for any errors in the original budget neutrality calculations. The same moratorium was applied to this policy. The LTCH-PPS includes certain case level adjustments for short stay and interrupted stay cases. CMS adopted a very short-stay outlier payment policy starting July 1, 2007, to reduce payments for patients who have lengths of stay that are less than or equal to one standard deviation from the geometric average length-of-stay of the same MS-DRG under the IPPS. The same moratorium was applied to this policy. Finally, a three-year moratorium on new LTCHs, including HwHs and satellite facilities, and on the increase of hospital beds in existing LTCHs was established. This PPACA provision extends the existing three-year moratoriums for two years until December 29, 2012. The CBO score is $0.2 billion for FY2010-FY2014 and $0.2 billion for FY2010-FY2019. Sec. 3107, as modified by Sec. 107 of the Extenders Act . Extension of Physician Fee Schedule Mental Health Add-On. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) increased payments for certain Medicare mental health services by 5% beginning on July 1, 2008, and ending on December 31, 2009. This PPACA provision extended the add-on payment provision through December 31, 2010; the Extenders Act preserves this add-on payment through December 31, 2011. The CBO score is $0.0 billion for FY2010-FY2019 for the PPACA provision and $100 million over FY2011-FY2012 for the Extenders Act provision. Sec. 3108. Permitting Physician Assistants to Order Post-Hospital Extended Care Services. In a skilled nursing facility (SNF), Medicare law allows physicians, as well as nurse practitioners and clinical nurse specialists who do not have a direct or indirect employment relationship with a SNF, but who are working in collaboration with a physician, to certify the need for post-hospital extended care services for purposes of Medicare payment. Section 20.2.1 of Chapter 8 of the Medicare Benefit Policy Manual defines post-hospital extended care services as services provided as an extension of care for a condition for which the individual received inpatient hospital services. Extended care services are considered "post-hospital" if they are initiated within 30 days after discharge from a hospital stay that included at least three consecutive days of medically necessary inpatient hospital care. This PPACA provision allows a physician assistant who does not have a direct or indirect employment relationship with a SNF, but who is working in collaboration with a physician, to certify the need for post-hospital extended care services for Medicare payment purposes, beginning on or after January 1, 2011. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3109. Exemption of Certain Pharmacies from Accreditation Requirements. MMA required the Secretary to establish and implement quality standards for suppliers of durable medical equipment, prosthetics and supplies (DMEPOS) under Part B of Medicare. MIPPA required DMEPOS suppliers to prove their compliance with the quality standards by being accredited by October 1, 2009; P.L. 111-72 extended the deadline for pharmacies to obtain accreditation to before January 1, 2010. In general, MIPPA exempted specified eligible professionals from having to comply with the accreditation requirements. Pharmacists and pharmacies are not exempted from the accreditation requirements. PPACA extends to January 1, 2011, the accreditation deadline for all pharmacies not participating in competitive bidding. Effective January 1, 2011, PPACA exempts certain pharmacies from the accreditation requirements, although all pharmacies will still be required to meet accreditation requirements to qualify for competitive bidding. A pharmacy will be exempt from the accreditation requirements if the pharmacy (1) submits an attestation that its total Medicare DMEPOS billings represent less than 5% of total pharmacy sales for the previous three-year period, or other period as specified by the Secretary; (2) submits an attestation that it has been enrolled as a provider of DMEPOS under Medicare for at least five years with no final adverse determinations against it for the past five years; and (3) is willing to submit documentation to the Secretary (based on a random sample of pharmacies) that would allow the Secretary to verify the above information. The documentation is to consist of an accountant certification or filing of tax returns by the pharmacy. However, PPACA allows the Secretary to create a more appropriate alternative accreditation requirement and apply the alternative requirement to all pharmacies. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3110, as modified by Sec. 201 of the Extenders Act. Part B Special Enrollment Period for Disabled Tricare Beneficiaries. TRICARE, the health care plan under the Department of Defense (DOD) that covers members of the uniformed services, their families and survivors, was extended to Medicare-eligible military retirees, their Medicare-eligible spouses and dependent children and Medicare-eligible widow/widowers by the Floyd D. Spence National Defense Authorization Act of 2001 (P.L. 106-398). This law authorized a program known as TRICARE For Life (TFL) which acts as a secondary payer to Medicare and provides supplemental coverage to TRICARE-eligible beneficiaries who are entitled to Medicare Part A based on age, disability or end stage renal disease (ESRD). In order to participate in TFL, these TRICARE-eligible beneficiaries must enroll in and pay premiums for Medicare Part B. Under present law (10 U.S.C. 1086(d)), TRICARE-eligible beneficiaries who are entitled to Medicare Part A based on age, disability or ESRD, but decline Part B, lose eligibility for TRICARE benefits. Additionally, individuals who choose not to enroll in Medicare Part B upon becoming eligible may elect to do so later during an annual enrollment period; however, the Medicare Part B late enrollment penalty, would apply. Veterans' advocacy groups have reported that many beneficiaries are not aware that their TRICARE coverage is dependent upon Part B enrollment. This provision creates a twelve-month special enrollment period (SEP) for military retirees, their spouses (including widows/ widowers) and dependent children, who are otherwise eligible for TRICARE and entitled to Medicare Part A based on disability or ESRD, but who have declined Part B. This twelve-month special enrollment period (SEP) will be available to individuals once in their lifetime and begin on the day after the last day of the initial enrollment period. Individuals will also have the option of choosing Part B coverage retroactive to the first month after the initial enrollment period. The late enrollment penalty will not apply to individuals who enroll during the SEP. The Secretary of Defense is required to identify and notify individuals of their eligibility for the SEP; the Secretary of Health and Human Services and the Commissioner for Social Security are to support these efforts. This provision is effective on the date of enactment. Section 201 of the Extenders Act clarified that the modification would apply to elections made on and after the date of the enactment of PPACA. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3111. Payment for Bone Density Tests. Dual energy X-ray absorptiometry (DXA) machines are used to measure bone mass to identify individuals who may have or be at risk of having osteoporosis. For those individuals who are eligible, Medicare will pay for a bone density study once every two years, or more frequently if the procedure is determined to be medically necessary. As reported by CMS and MedPAC, spending for imaging services reimbursed under the Medicare physician fee schedule grew rapidly between 2003 and 2005. The Deficit Reduction Act of 2005 (DRA; P.L. 109-171) capped reimbursement of the technical component for x-ray and imaging services at the lesser rate of the hospital outpatient rate or the physician fee schedule. Additionally, CMS implemented a new methodology for determining resource-based practice expense payments for all services that has led to reductions in the professional component reimbursement. It is estimated that reimbursement rates for DXA services have been reduced by more than half since 2006. This provision sets payments for DXA at 70% of the 2006 reimbursement rates for these services in 2010 and 2011. The provision also directs the Secretary to arrange with the Institute of Medicine of the National Academies to study and report to the Secretary and Congress on the ramifications of Medicare reimbursement reductions for DXA on beneficiary access to bone mass measurement benefits. CBO estimates that this provision will cost $0.1 billion in each of FY2010 and FY2011. Sec. 3112, as modified by Sec. 207 of the Extenders Act. Revision to the Medicare Improvement Fund. Section 188 of MIPPA established the Medicare Improvement Fund (MIF), available to the Secretary to make improvements under the original fee-for-service program under Parts A and B for Medicare beneficiaries. Under prior law, $20.7 billion was available for services furnished during FY2014 and $550 million was available for FY2015. The PPACA provision eliminated the FY2014 MIF funding, and the FY2015 funding was reduced to $275 million by Section 207 of the Extenders Act. The CBO score for the PPACA provision is -$20.7 billion for FY2014-FY2015, and -$0.3 billion for FY2015-FY2016 for the Extenders Act provision. Sec. 3113. Treatment of Certain Complex Diagnostic Laboratory Tests. Currently, Medicare reimbursement for diagnostic laboratory tests performed on specimens collected from a hospital patient is included in the hospital payment (DRG or outpatient PPS). The provision requires the establishment of a demonstration project under Medicare Part B that will make separate payments to laboratories for complex diagnostic laboratory tests provided to Medicare beneficiaries. The term ''complex diagnostic laboratory test'' means a diagnostic laboratory test that is (1) an analysis of gene protein expression, topographic genotyping, or a cancer chemotherapy sensitivity assay; (2) determined by the Secretary to be a laboratory test for which there is not an alternative test having equivalent performance characteristics; (3) billed using a Health Care Procedure Coding System (HCPCS) code other than a not otherwise classified code; (4) approved or cleared by the Food and Drug Administration or is covered under the Medicare program; and (5) described in section 1861(s)(3) of the Social Security Act (42 U.S.C. 1395x(s)(3)). The term "separate payment" means direct payment to a laboratory (including a hospital-based or independent laboratory) that performs a complex diagnostic laboratory test on a specimen collected from a hospital patient if the test is performed after the hospitalization and if a separate Medicare payment would not otherwise be made. The demonstration project is to run for a two-year period beginning on July 1, 2011, so long as the cost of the demonstration program does not exceed $100 million. Not later than two years after the completion of the demonstration project, the Secretary is required to submit a report to Congress that includes (1) an assessment of the impact of the demonstration project on access to care, quality of care, health outcomes, and expenditures or savings to the Medicare program, and (2) such recommendations as the Secretary would determine to be appropriate. CBO estimates that this provision will cost a total of $100 million over the next 5 years with no additional impact over the remaining years of the 10-year budget window. Sec. 3114. Improved Access for Certified Nurse-Midwife Services. Section 1833 of the SSA provides for Medicare payments for services received by covered individuals. For certified nurse-midwife services, the amount required to be paid is 80% of the lesser of either (1) the actual charge for the services, or (2) the amount determined by a fee schedule established by the Secretary. The fee schedule is not allowed to exceed 65% of the prevailing charge that would be allowed for the same services performed by a physician. This provision amends Section 1833 by adding that for services provided on or after January 1, 2011, the fee schedule for certified-midwife services will not be allowed to exceed 100% of the fee schedule amount provided under Section 1848 for the same service performed by a physician. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 10323. Medicare Coverage for Individuals Exposed to Environmental Health Hazards. To be eligible for Medicare, one must be (1) 65 years or older and eligible to receive Social Security; or (2) under 65, permanently disabled, and have received Social Security disability insurance payments for at least two years; or (3) have Amyotrophic Lateral Sclerosis (ALS-Lou Gehrig's disease); or (4) have end-stage renal disease (ESRD). This provision will provide Medicare coverage and medical screening services to certain individuals exposed to environmental health hazards. An individual with one or more specified lung diseases or types of cancer who lived for 6 months during a specified period prior to diagnosis in an area subject to a public health emergency declaration by the Environmental Protection Agency (EPA) as of June 17, 2009, is to be deemed entitled to benefits under Part A and eligible to enroll in Part B. The Secretary is required to establish a pilot program, with appropriate reimbursement methodologies, to provide comprehensive, coordinated, and cost-effective care to such individuals who enroll in Part B. Further, the Secretary has the authority to so deem any other individual diagnosed with an illness caused by an environmental hazard to which an EPA emergency declaration applies who lived for 6 months in the affected area during a period determined by the Secretary. There is to be appropriated $23 million for the period FY2010 through FY2014, and $20 million for each 5-fiscal year period thereafter, to carry out the screening and public information dissemination program. The CBO score is $0.1 billion for FY2010-FY2014 and $0.3 billion for FY2010-FY2019 . Sec. 10336. GAO Study and Report on Medicare Beneficiary Access to High-Quality Dialysis Services The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) requires the Secretary to implement a bundled payment system, making a single payment for Medicare renal dialysis services, to be phased in over four years beginning January 1, 2011. The bundled payment will include (1) items and services included in the composite rate as of December 31, 2010; (2) erythropoiesis stimulating agents for the treatment of ESRD; (3) injectable biologicals and medications that were paid for separately under Part B, (before bundling) and any oral equivalent to such medications; and (4) diagnostic laboratory tests and other items and services furnished to individuals for the treatment of ESRD. This section of PPACA requires the Comptroller General to conduct a study and submit a report, within a year of enactment, on the impact on Medicare beneficiary access to high-quality dialysis services of including specified oral drugs that are furnished to beneficiaries for the treatment of ESRD and included in the ESRD bundled prospective payment system. The study is to include an analysis of (1) the ability of providers of services and renal dialysis facilities to furnish specified oral drugs; (2) the ability of providers of services and renal dialysis facilities to comply with applicable State laws, such as State pharmacy licensure requirements in order to furnish such drugs; (3) whether appropriate quality measures exist to safeguard care for Medicare beneficiaries being furnished specified oral drugs by providers of services and renal dialysis facilities; and (4) other areas determined appropriate by the Comptroller General. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Part II—Rural Protections Sec. 3121, as modified by Sec. 108 of the Extenders Act. Extension of Outpatient Hold Harmless Provision. Small rural hospitals (with no more than 100 beds) that are not sole community hospitals (SCHs) can receive additional Medicare payments if their outpatient payments under the prospective payment system are less than under the prior hospital outpatient department (HOPD) reimbursement system. For calendar year (CY) 2006, these hospitals received 95% of the difference between payments under the prospective payment system and those that would have been made under the prior reimbursement system. The hospitals received 90% of the difference in CY2007 and 85% of the difference in CY2008 and CY2009. Sole community hospitals with not more than 100 beds received 85% of the payment difference for covered HOPD services furnished on or after January 1, 2009, and before January 1, 2010. The provision establishes that small rural hospitals are to receive 85% of the payment difference in CY2010. SCHs with not more than 100 beds will receive 85% of the payment difference in CY2010. The 100-bed limitation for SCHs is removed so that all SCHs are receiving 85% of the payment difference in CY2010. Section 108 of the Extenders Act extends the outpatient hold harmless provisions for an additional year through December 31, 2011. The CBO score for the PPACA provision is $0.2 billion for FY2010-FY2014 and $0.2 billion for FY2010-FY2019. CBO estimates the Extenders Act provision will cost $0.1 billion for FY2011-FY2012. Sec. 3122, as modified by Sec. 109 of the Extenders Act. Extension of Medicare Reasonable Costs Payments for Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital Patients in Certain Rural Areas. Generally, hospitals that provide clinical diagnostic laboratory services under Part B are reimbursed using a fee schedule. Hospitals with under 50 beds in qualified rural areas (certain rural areas with low population densities) receive 100% of reasonable cost reimbursement for the clinical diagnostic laboratories covered under Part B that are provided as outpatient hospital services. Reasonable cost reimbursement for laboratory services provided by these hospitals ended July 1, 2008. Under this provision, reasonable cost reimbursement for clinical diagnostic laboratory service for qualifying rural hospitals with under 50 beds were reinstated from July 1, 2010, and extended for one year, ending July 1, 2011. Section 109 of the Extenders Act extends the reasonable cost payments for these laboratory tests for an additional year ending July 1, 2012. The CBO score for the PPACA provision is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. CBO estimates the Extenders Act provision will cost between -$50 million and $50 million for FY2011-FY2013. Sec. 3123 as modified by Sec. 10313. Extension of the Rural Community Hospital Demonstration Program. CMS is conducting a five-year Rural Community Hospital Demonstration Program to test the feasibility and advisability of reasonable cost reimbursement for small rural hospitals (those with fewer than 51 beds) in low population density areas. No more than 15 hospitals can participate in the demonstration. Currently, there are 10 hospitals participating in the program. This provision extends the demonstration program for an additional five years, expands the maximum number of participating hospitals to 30 for that period, and specifies that the 20 states with low population densities will participate in the demonstration project. The Secretary is to provide for the continued participation for those hospitals that are in the demonstration at the end of the initial five-year period during the five-year extension unless the hospital elects to discontinue such participation. Participants will receive the reasonable cost for discharges occurring in the first cost reporting period beginning on or after the first day of the five-year extension. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3124. Extension of the Medicare-Dependent Hospital (MDH) Program. Medicare dependent hospitals (MDHs) are small rural hospitals with a high proportion of patients who are Medicare beneficiaries. Specifically, the hospitals have at least 60% of acute inpatient days or discharges attributable to Medicare in FY1987 or in 2 of the 3 most recently audited cost reporting periods. As specified in regulation, they cannot be a sole community hospital and must have 100 or fewer beds. MDHs receive special treatment, including higher payments, under Medicare's inpatient prospective payment system. The sunset date for the MDH classification has been periodically extended by legislation and was set to expire September 30, 2011. Under this provision, the MDH classification is extended one year, until September 30, 2012. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3125 as modified by 10314. Temporary Improvements to the Medicare Inpatient Hospital Payment Adjustment for Low-Volume Hospitals. Under Medicare's inpatient prospective payment system (IPPS), certain low-volume hospitals receive a payment adjustment to account for their higher costs per discharge. A low-volume hospital is defined as an acute care hospital that is located more than 25 road miles from another comparable hospital and that has less than 800 total discharges during the fiscal year. The Secretary is required to determine an appropriate percentage increase for these low-volume hospitals based on the empirical relationship between the standardized cost-per-case for such hospitals and their total discharges to account for the additional incremental costs (if any) that are associated with such number of discharges. The low-volume adjustment is limited to no more than 25%. Accordingly, under regulations, qualifying hospitals (those located more than 25 road miles from another comparable hospital) with less than 200 total discharges receive a 25% payment increase for every Medicare discharge. Under this provision, a temporary adjustment that would increase payment in FY2011 and FY2012 for certain low-volume hospitals will be created. A low volume hospital could be located more than 15 road miles from another comparable hospital and have 1,600 discharges of individuals entitled to or enrolled for Medicare Part A benefits. The Secretary is to determine the applicable percentage increase using a continuous linear sliding scale ranging from 25% for low-volume hospitals with 200 or fewer discharges of individuals with Medicare Part A benefits to no adjustment for hospitals with greater than 1,600 discharges of individuals with Medicare Part A benefits. The CBO score is $0.0 billion for FY2010-FY2014 and $0.3 billion for FY2010-FY2019. Sec. 3126. Improvements to the Demonstration Project on Community Health Integration Models in Certain Rural Counties. A demonstration project to allow eligible entities to develop and test new models for the delivery of health care services in eligible counties has been authorized. Those eligible to participate in the demonstration project are limited to certain entities in States with at least 65% of its counties in the State with 6 or fewer residents per square mile. Based on these criteria, the Secretary is instructed to select up to 4 states to participate in the demonstration program, and within those states, up to 6 counties. For a county to be eligible to participate, it must have 6 or fewer residents per square mile and contain a critical access hospital (CAH) that furnished one or more of specified services (home health, hospice, or rural health clinic) and had a daily inpatient census of 5 or less as of date of enactment; skilled nursing facility services must be available in the eligible county. The three-year demonstration project is to begin on October 1, 2009, and be done in a budget neutral manner. This section of PPACA eliminates the limit of 6 eligible counties that may participate in the demonstration project within the qualifying states. Rural health clinic services will no longer be one of specified CAH services. Rural health clinic services are removed from the definition of other essential services and replaced with physician services. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3127. MedPAC Study on Adequacy of Medicare Payments for Health Care Providers Serving in Rural Areas. Under this provision, MedPAC is required to review payment adequacy for rural health care providers and suppliers serving the Medicare program and provide a report to Congress by January 1, 2011. MedPAC is to analyze rural payment adjustments, beneficiaries' access to care in rural communities, adequacy of Medicare payments to rural providers and suppliers, and quality of care in rural areas, and submit a report to Congress by January 1, 2011. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3128. Technical Correction Related to Critical Access Hospital Services. Critical Access Hospitals (CAHs) are limited-service rural facilities that meet certain distance criteria; offer 24-hour emergency care; have no more than 25 acute care inpatient beds and have a 96-hour average length of stay. Generally, a rural hospital designated as a CAH receives 101% reasonable, cost based reimbursement for inpatient and outpatient care rendered to Medicare beneficiaries. A CAH may elect an all-inclusive outpatient payment which is equal to a 101% of reasonable costs for facility services plus 115% of the Medicare physician fee schedule payment for professional services when the physician or practitioner has reassigned his or her billing rights to the CAH. As part of its FY2010 rulemaking process, starting October 1, 2009, CMS will lower the facility component of the all-inclusive, elective payment method from 101% to 100% of the CAH's reasonable costs; the payment for professional services will remain at 115% of the fee schedule amount. Medicare pays for ambulance services provided by a CAH or by an entity owned and operated by a CAH at 100% of reasonable costs, but only if CAH or the entity is the only supplier or provider of ambulance services with a 35-mile drive of the CAH or the entity. Under this provision, Medicare will pay the facility component of the all-inclusive elective CAH payment for outpatient services at 101% of reasonable costs. Medicare will pay for qualifying ambulance services provided by a CAH or by an entity owned and operated by a CAH at 101% of reasonable cost. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3129. Extension of and Revisions to Medicare Rural Hospital Flexibility Program. One component of the Medicare Rural Hospital Flexibility Program is a grant program (FLEX grants) that is administered by the Health Resources and Services Administration (HRSA). Under this program, Flex grants may be awarded to States and to small rural hospital for certain purposes. There are certain limitations imposed on the use of grant funds for administrative expenses, both at the state and Federal level. The FLEX grant program is authorized at $55 million for each fiscal year from 2009 and 2010 and the new rural mental health and other services grants would be authorized at $55 million for each of fiscal years 2009 and 2010. Under this provision, the FLEX grant program will be extended two years until 2012. Starting January 1, 2010, grant funding will be available to be used to assist small rural hospitals to participate in delivery system reforms made by this legislation. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 10324. Protections for Frontier States. Under this provision, starting for discharges on October 1, 2010, the area wage index of a hospital located in a frontier state (where 50% of the counties have less than six people per square mile) will be no less than one. This will not apply to states where hospitals receive an adjustment to their non-labor related share. This provision will not be applied on a budget neutral basis. The same provisions will apply to covered HOPD services furnished after January 1, 2011, in frontier states. A floor of one on the practice expense index will be established for physician services in these frontier states for physician services on or after January 1, 2011. The CBO score is $0.8 billion for FY2010-FY2014 and $2.0 billion for FY2010-FY2019. Part III—Improving Payment Accuracy Sec. 3131 as modified by Sec. 10315. Payment Adjustments for Home Health Care. Home health agencies (HHAs) are paid under a prospective payment system (PPS) that provides payments based on 60-day episodes of care for beneficiaries, subject to several adjustments. The base payment amount of the PPS is adjusted for differences in the care needs of patients (case mix) using "HH resource groups" (HHRGs) and outlier adjustments (to account for extraordinarily costly patients), among other adjustments. Presently, there is no difference between urban and rural base payment amounts. In CY2008, refinements to the Medicare HH PPS included, among other changes, a reduction in the payment rate for four years (to continue through CY2011) to adjust for increases in case mix that are related to changes in coding instead of increased patient severity of illness. The final CMS rule for CY2010 continues with the 2.75% reduction to the HH PPS rates for CY2010. This reduction is consistent with the CMS proposed and final rules for CY2008 explaining that changes to calculations of case mix would result in a four-year adjustment to payment rates, including an adjustment downward for 60-day episode of care of 2.75% for CYs 2008, 2009, and 2010, and 2.71% for CY2011. Among other things, the final rule also implements a cap on outlier payments (i.e., payments for unusually costly 60-day episodes of care) at 10% of total payments per HHA, and no more than 2.5% of total aggregate PPS payments for all of HH. Under PPACA, starting in CY2014, the Secretary will be required to rebase home health payments by a percentage considered appropriate by the Secretary to, among other things, reflect the number, mix and level of intensity of HH services in an episode, and the average cost of providing care. In doing so, the Secretary may consider the differences between HH agencies in regards to hospital-based and freestanding providers; for-profit and non-profit providers; and resource costs between urban and rural providers. Any adjustments that result must be made before the annual payment updates are applied for that year. A four-year phase-in, ending in 2017, will be implemented, in equal increments; each increment may not exceed 3.5% of the HH PPS base payment amount as of the date of enactment. Regarding payments, the Secretary is required to reduce the standard HHRG amounts such that the aggregate reduction in payments will equal 5% of total PPS payments for a period. And, similar to the CMS final rule for CY2010, the total amount of additional payments for outliers may not exceed 2.5% of the total PPS payments in a given fiscal year (or calendar year). Also similar to the CMS final rule, starting in CY2011 the Secretary is required to establish a provider-specific annual cap of 10% of revenues that a HH agency may be reimbursed in a given year from outlier payments. For visits ending on or after Apri1 1, 2010, and before January 1, 2016, the Secretary is directed to provide for a 3% add-on payment for HH providers serving rural areas. The provision also requires MedPAC to conduct a study on the implementation of the HH payment adjustment under the rebasing, including an analysis of its impact on access to care, quality outcomes, the number of HH agencies, rural agencies, urban agencies, for-profit agencies, and nonprofit agencies. MedPAC must submit to Congress a report on this study, together with recommendations for legislation and administrative action no later than January 1, 2015. No later than March 1, 2014, the Secretary is required to submit a study (after consulting with appropriate stakeholders) to Congress on HH agency costs involved with providing ongoing access to care to low-income Medicare beneficiaries or beneficiaries in medically underserved areas, and in treating beneficiaries with varying levels of severity of illness. In conducting the study, the Secretary could analyze methods to potentially revise the home health PPS to account for costs related to patient severity of illness or improvements in beneficiary access to care. Examples may include (1) payment adjustments for services involving additional or fewer resources; (2) changes reflecting resources involved in providing HH services to low-income Medicare beneficiaries or those residing in medically underserved areas; (3) ways outlier payments may be revised to reflect costs of treating Medicare beneficiaries with high levels of severity of illness; and (4) other issues determined appropriate by the Secretary. In conducting the study, the Secretary could also analyze operational issues involved with potential implementation of revisions to the home health payment system, including impacts on both home health agencies and administrative and systems issues for CMS. It could also, among other factors, evaluate whether additional research is needed. Taking into account this study's results, the Secretary may provide for a four-year demonstration, beginning no later than January 1, 2015, to test whether payment adjustments for HH services would substantially improve access to care for patients with high severity of illness, or low income or underserved Medicare beneficiaries. The Secretary may not reduce standard PPS amounts to offset any increase in payments from the demonstration during that or subsequent periods. The Secretary will also be required to conduct an evaluation of the project, and submit a report to Congress, by a date specified by the Secretary. The Secretary is to provide for the transfer from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund, in the proportion as the Secretary determines appropriate, of $500 million for the period of fiscal years 2015 through 2018. Such funds are to be made available for the study, as well as for the design, implementation, and evaluation of the demonstration. Amounts are available until expended. The CBO score is -$4.2 billion for FY2010-FY2014 and -$39.7 billion for FY2010-FY2019 and includes the effect of Sec. 3401 related to a productivity adjustment. Sec. 3132. Hospice Reform. For a person to be considered terminally ill for eligibility purposes for Medicare's hospice benefit, the beneficiary's attending physician and the medical director of the hospice (or physician member of the hospice team) must certify that the individual has a life expectancy of six months or less. The medical director or physician member of the hospice team must recertify that the beneficiary is terminally ill at the beginning of each 90- or 60-day eligibility period. Medicare payments to hospices are predetermined fixed daily amounts for each case, and are based on one of four prospectively determined units of payment, which correspond to four different levels of care (i.e., routine home care, continuous home care, inpatient respite care, and general inpatient care). Under the provision, Secretary is required to begin, by January 1, 2011, collecting additional data and information needed to revise payments for hospice care. Not earlier than October 1, 2013, the Secretary will be required to, by rulemaking, implement budget neutral revisions to the methodology for determining hospice payments for routine home care and other services that could include per diem payments to hospices reflecting differences in resources used or additional payments (end-of-episode payment) reflecting resource intensity of services provided at the end of episode, among others. In addition, the provision requires the Secretary to impose new requirements on hospice providers that participate in Medicare, including requiring, on or after January 1, 2011, that (1) a hospice physician or advanced practice nurse have a face-to-face encounter with the individual regarding eligibility and recertification and attest that hospice visits are made; and (2) stays in excess of 180 days, that meet certain conditions, be medically reviewed by CMS or its contractors. The CBO score is $0.0 for FY2010-FY2014 and -0.1 billion for FY2010-FY2019. Sec. 3133 as modified by Sec. 10316 of PPACA, and by Sec. 1041 of the Reconciliation Act. Improvement to Medicare Disproportionate Share Hospital (DSH) Payments. Medicare's disproportionate share hospital (DSH) adjustment was included in the inpatient prospective payment system (IPPS) in 1986 on the premise that low-income patients are more costly to treat and those acute care hospitals serving a large number of such patients would be likely to have higher costs for their Medicare patients than would otherwise similar institutions. Over time, as the formulas for Medicare's DSH adjustment have been changed, the justification for the higher payments has evolved and the adjustment is viewed as a way to insure access to hospital care. Medicare's DSH payments are distributed through a hospital-specific percentage increase to its prospective payment rate. In most instances, the size of a hospital's DSH adjustment would depend upon the number of patient days provided to poor Medicare patients or Medicaid patients. In its March 2007 Report to Congress , MedPAC found that about three-quarters of the Medicare DSH payments (accounting for about $5.5 billion in FY2004) was not empirically justified in terms of higher patient care costs. Also, Medicare's DSH payments were poorly targeted to hospitals' shares of uncompensated care Under this provision, starting in FY2014 and for subsequent fiscal years, the Secretary will make DSH payments equal to 25% of what otherwise would be made, a payment that represents the empirically justified amount as determined by MedPAC in its March 2007 Report to Congress. In addition to this amount, starting in FY2014, the Secretary will pay to such acute care hospitals an additional amount using a formula that is the product of three factors: The difference in the hospital's DSH payments because of this legislation. For FY2014, the difference in the percentage change in the uninsured under-65 population from 2013 (as calculated from current estimates from CBO data before the vote to enroll the act in the House) and those who are uninsured in the most recent period for which data is available minus 0.1 percentage points; in FY2015 through FY2019, there will be a 0.2 percentage point subtraction; in FY2018 and subsequently, the calculation will use data from the Census Bureau or other appropriate sources as certified by the Chief Actuary of CMS. The percentage of uncompensated care provided by the hospital (relative to all acute care hospitals) for a selected period based on appropriate data. There will be no administrative or judicial review of any estimate used to determine the factors or any periods used to establish the factors. The CBO score is $0.0 billion for FY2010-FY2014 and -$22.1 billion for FY2010-FY2019. Sec. 3134. Misvalued Codes Under the Physician Fee Schedule. The Medicare physician fee schedule is based on assigning relative weights to each of the more than 7,000 physician service codes used to bill Medicare. The relative value for a service compares the relative work involved in performing one service with the work involved in providing other physicians' services. The scale used to compare the value of one service with another is known as a resource-based relative value scale (RBRVS). CMS is responsible for maintaining and updating the fee schedule, including the modification and refinement of the methodology for estimating relative value units (RVUs). CMS relies on advice and recommendations from the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) in its assessments. In general, as currently implemented, increases in RVUs for a service or number of services lowers the resultant fees for other physician services because of the budget neutrality condition. One consequence has been that the payments for evaluation and management codes, whose RVUs typically are not increased over time, have fallen relative to other codes whose RVUs have increased and as a consequence of new technologies that have been introduced into coverage with relatively high RVUs. CMS is required to review the RVUs no less than every five years. Under this provision, the Secretary is required to periodically identify physician services as being potentially misvalued, and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule. To identify potentially misvalued services, the Secretary is to examine codes (and families of codes as appropriate) with the fastest growth, that have experienced substantial changes in practice expenses, for new technologies or services, that are frequently billed in conjunction with furnishing a single service, with low relative values, particularly those that are often billed multiple times for a single treatment, that have not been subject to review since the implementation of the RBRVS (the so-called 'Harvard-valued codes'), and other codes the Secretary determined to be appropriate. The Secretary is to review and make appropriate adjustments to the work relative value units under the fee schedule. The provision also repeals Section 4505(d) of the Balanced Budget Act of 1997, which established requirements for developing new resource-based practice expense relative value units, as well as Section 1868(a) of the Social Security Act (42 U.S.C. 1395ee(a)), which established the Practicing Physicians Advisory Council, a group of physicians who meet quarterly to discuss proposed changes in regulations and carrier manual instructions related to physician services. CBO estimates that this provision will have no impact on spending over the 5-year or 10-year budget window. Sec. 3135 as modified by Sec. 1107 of the Reconciliation Act. Modification of Equipment Utilization Factor for Advanced Imaging Services. Under the Medicare fee schedule, some services have separate payments for the technical component and the professional component. For example, imaging procedures generally have two parts: the actual taking of the image (the technical component), and the interpretation of the image (the professional component). Medicare pays for each of these components separately when the technical component is furnished by one provider and the professional component by another. When both components are furnished by one provider, Medicare makes a single global payment that is equal to the sum of the payment for each of the components. CMS's method for calculating the Medicare fee schedule reimbursement rate for advanced imaging services assumed that imaging machines are operated 25 hours per week, or 50% of the time that practices are open for business. Setting the equipment use factor at a lower rate has led to higher payment for these services. Citing evidence showing that the utilization rate is 90%, rather than the 50% previously assumed, MedPAC has urged CMS to use the higher utilization rate in the calculation of fee schedule payments for advanced imaging services and CMS adopted a 90% use rate assumption in its 2010 final rule for Medicare physician payment. The PPACA and Reconciliation Act provisions change the utilization rate assumption for calculating the payment for advanced imaging equipment from 50%, as assumed in prior years, to 75% for 2011 and in subsequent years. This overrides the CMS 2010 final rule that applied a 90% use rate assumption. According to MedPAC and the Government Accountability Office (GAO), there are opportunities to improve the efficiency of the Medicare fee schedule. In 2005, MedPAC recommended reducing certain fees to account for efficiencies and savings from the technical preparation and supplies achieved when multiple imaging services are furnished sequentially on contiguous body parts during the same visit. Starting January 1, 2006, physicians receive the full technical component fee for the highest paid imaging service in a visit, but technical component fees for additional imaging services are reduced by 25%. The provision increases the technical component payment reduction for sequential imaging services on contiguous body parts during the same visit from 25% to 50%. By January 1, 2013, the CMS Chief Actuary is to conduct and make publicly available an analysis of whether the cumulative expenditure reductions attributable to these adjustments are projected to exceed $3 billion for the period 2010 through 2019. The CBO score is -$0.9 billion for FY2010-FY2014 and -$2.3 billion for FY2010-FY2019. Sec. 3136. Revision of Payment for Power-Driven Wheelchairs. Prior to enactment of PPACA, Medicare pays for new or replacement power-driven wheelchairs either through monthly rental payments during the beneficiary's period of medical need (not to exceed 13 continuous months), or, on a lump-sum basis. Rental payments for wheelchairs are statutorily determined as 10% of the purchase price of the chair for each of the first 3 months and 7.5% of the purchase price for each of the remaining 10 months of the rental period. Medicare pays for most DME on the basis of a fee schedule, except in Competitive Acquisition Areas where payments are to be determined based on supplier bids. Starting January 1, 2011, PPACA restricts the lump-sum payment option for new or replacement chairs to only the complex, rehabilitative power wheelchairs. The lump-sum payment option is eliminated for all other wheelchairs. The provision does not apply to competitive acquisition areas prior to January 1, 2011. Also starting January 1, 2011, the rental payment for power-driven wheelchairs will be 15% of the purchase price for each of the first three months (instead of 10%), and 6% of the purchase price for each of the remaining 10 months of the rental period (instead of 7.5%). The CBO score is -$0.6 billion for FY2010-FY2014 and -$0.8 billion for FY2010-FY2019. Sec. 3137, as modified by Sec. 10317, and further modified by Sec. 102 of the Extenders Act. Hospital Wage Index Improvement. A hospital wage index is used to adjust the standardized amount to account for the local wage variation or cost of labor in the hospital's area. Starting in FY2005, CMS has adjusted this data to account for the relative skill mix of the hospitals in the area. This occupationally mix adjusted average hourly wage is then divided by the same measure calculated using data from all hospitals in the nation to establish the area's adjusted wage index. MedPAC issued its mandated report on recommended changes to the hospital wage index in June 2007. CMS has hired an independent consulting firm to further evaluate the impact of making the recommended changes. Unlike other providers, acute care hospitals may apply to the Medicare Geographic Classification Review Board (MGCRB) for a change in classification from a rural area to an urban area, or reassignment from one urban area to another urban area. To reclassify, a hospital had to meet certain standards, establishing that its average hourly wage (AHW) was within a certain threshold of the AHW of the area where it wanted to reclassify. Starting in FY2010, CMS raised the reclassification threshold. MGCRB hospital reclassifications are established on a budget neutral basis so aggregate inpatient payments will not increase as a result of the reclassified hospitals' higher payments. Section 508 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA, P.L. 108-173) provided $900 million for a one-time, three year geographic reclassification of certain hospitals who were otherwise unable to qualify for administrative reclassification to areas with higher wage index values. These reclassifications were extended legislatively at various points until September 30, 2009. This provision extended the Section 508 reclassifications until September 30, 2010. Section 102 of the Extenders Act extends the section 508 and special exception reclassifications for an additional year through September 30, 2011. The Secretary is required to use the FY2010 wage index data (promulgated in the August 27, 2009, Federal Register and subsequent corrections). Beginning on April 1, 2010, the average hourly wage data of these hospitals will be included in the reclassified area only if including the data results in a higher wage index. Certain hospitals that had a lower wage index from October 1, 2009, through March 31, 2010, than from April 1, 2010, through September 30, 2010, will be paid an additional amount to reflect such difference by December 31, 2010. By December 31, 2011, the Secretary is required to provide a plan to Congress on how to comprehensively reform the Medicare wage index system; this plan is to take into account MedPAC recommendations included in its June 2007 Report to Congress . The Secretary is also required to restore the reclassifications thresholds used in determining hospital reclassifications to the percentages used for FY2009 Medicare Geographic Classification Review Board (MGCRB) decisions, starting in FY2011 and in subsequent fiscal years (until the first fiscal year beginning on or after the date that is one year after the date of the submission of the Secretary's wage index reform plan). This provision is to be implemented in a budget neutral fashion. The CBO score for the PPACA provision is $0.3 billion for FY2010-FY2014 and $0.3 billion for FY2010-FY2019 . CBO estimates the Extenders provision to extend section 508 reclassifications will cost $0.3 billion for FY2011-FY2012. Sec. 3138. Treatment of Certain Cancer Hospitals. Eleven cancer hospitals are exempt from the inpatient prospective payment system (IPPS) used to pay inpatient hospital services provided by acute care hospitals. These hospitals are also held harmless under the outpatient prospective payment system (OPPS) and will not receive less from Medicare under this payment system than under the prior outpatient payment system. Under OPPS, Medicare pays for outpatient services using ambulatory payment classification (APC) groups. This provision requires the Secretary to conduct a study which would consider the cost of drugs and biologics to determine if the outpatient costs incurred by IPPS-exempt cancer hospitals with respect to Medicare's APCs exceed those costs incurred by other hospitals reimbursed under OPPS. If so, the Secretary would be required to provide for an appropriate OPPS adjustment starting January 1, 2011. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3139. Payment for Biosimilar Biological Products. A biologic is a preparation, such as a therapeutic product or a vaccine, which is made from living organisms. Medicare Part B pays for a limited number of drugs and therapeutic products, including biologics, administered to patients in physician offices and hospital outpatient departments, or those administered through durable medical equipment (DME) and billed by pharmacy suppliers. CMS assigns a Healthcare Common Procedure Coding System (HCPCS) code to each drug, and Medicare payments for Part B drugs are based on the average sales price (ASP) for each HCPCS code. CMS uses the same HCPCS code for all drug products listed as therapeutically equivalent in FDA's Orange Book . Therefore, a brand-name drug and any generic versions of the same drug would have the same HCPCS code and the prices would be averaged together for ASP determinations. The provision allows a Part B biosimilar product approved by the Food and Drug Administration to be reimbursed at the ASP of the biosimilar plus 6% of the ASP of the reference product. (The term reference biological product means the licensed biological product that is referred to in the application for the biosimilar product.) The CBO score (Sections 3139 and Sections 7001-7003 combined) is -$0.1 billion for FY2010-FY2014 and -$7.1 billion for FY2010-FY2019. Sec. 3140. Medicare Hospice Concurrent Care Demonstration Program. Medicare covers hospice care for terminally ill beneficiaries instead of most other Medicare services related to the curative treatment of their illness. The provision requires the Secretary to conduct a three-year demonstration program, from Medicare funds that would otherwise be paid for hospice care, to allow patients who are eligible for hospice to also receive all other Medicare covered services during the same period of time. The Secretary is to select not more than 15 hospice programs in both urban and rural areas to examine improvement in patient care, quality of life, and cost-effectiveness that results from the demonstration project. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3141. Application of Budget Neutrality on a National Basis in the Calculation of the Medicare Hospital Wage Index Floor for Each All-Urban and Rural State. A hospital wage index is used to adjust the standardized amount to account for the local wage variation or cost of labor in the hospital's area. As required by statute, the wage index for any urban area in a state cannot be less than the rural wage index of that state (often referred to as the rural floor). The effect of the rural floor (that is, raising the wage index for urban areas in a state to that state's rural wage index) is required to be implemented on a budget neutral basis by adjusting the wage index of all hospitals not affected by the rural floor. Until FY2009, CMS funded the budget neutrality requirement associated with the impact of the rural floor though a nationwide adjustment. Starting in FY2009, CMS began a transition to fund the budget neutrality requirement through a state-specific adjustment; the statewide adjustment would be fully implemented in FY2011. States with no hospitals receiving the rural floor wage index would not have a reduced payment; those hospitals within each state with urban areas paid at the higher rural wage index would fund the higher payments for the affected hospitals. The provision requires the application of budget neutrality requirement associated with the effect of the imputed rural and rural floor on a national basis (through a uniform, national adjustment to the area wage index) for discharges starting October 1, 2010. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3142. HHS Study on Urban Medicare-Dependent Hospitals. Medicare dependent hospitals (MDHs) are small rural hospitals with a high proportion of patients who are Medicare beneficiaries. MDHs receive special treatment, including higher payments, under Medicare's inpatient prospective payment system (IPPS). Certain other hospitals, such as rural referral centers (RRC) and sole community hospitals (SCHs) receive special treatment under IPPS. Other small, limited service critical access hospitals (CAHs) are exempt from IPPS and paid 101% of their reasonable costs. IPPS includes certain payment adjustments, such as the indirect medical education (IME) adjustment for teaching hospitals, to compensate hospitals for higher average costs which might not be in their control. The disproportionate share hospital (DSH) adjustment increases payments for hospitals that serve a relatively high proportion of poor Medicare and Medicaid patients. This provision requires the Secretary to conduct a study within 9 months of enactment on the need for an additional Medicare payments for urban Medicare-dependent hospitals paid under IPPS which receive no additional IPPS payments (have an IME or DSH adjustment) or receive special treatment (as an RRC, SCH, or MDH). CAHs are to be excluded as well. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3143. Protecting Home Health Benefits. This provision requires that nothing in PPACA may result in a reduction of guaranteed home health benefits under title XVIII of the Social Security Act. CBO did not score this provision. Sec. 10325 - Repealed by Sec. 202 of the Extenders Act . Revision to Skilled Nursing Facility Prospective Payment System . SNFs are paid through a prospective payment system (PPS) which is composed of a daily ("per-diem") urban or rural base payment amount that is then adjusted for case mix and area wages. The base payment is adjusted for treatment type and care needs of the beneficiary based on 53 payment-adjusted resource utilization groups (RUGs). According to the CMS final rule for FY2010, published on August 11, 2009, CMS described how it would establish a revised case-mix classification methodology (Resource Utilization Group–Version Four; RUG-IV) and implementation schedule for FY2011 (starting October 1, 2010), reflecting updated staff time measurement data derived from the recently completed Staff Time and Resource Intensity Verification (STRIVE) project, among other things. According to CMS, these revisions to the case-mix are intended to correct for changes made for FY2006, in which changes that were intended to better account for the resources used in the care of medically complex patients resulted in payments exceeding budget neutrality estimates. Under PPACA, the Secretary was prohibited from implementing the revised case-mix classification methodology (Resource Utilization Group–Version Four; RUG-IV) described in the FY2010 final rule prior to October 1, 2011. Section 202 of the Extenders Act repealed this delay in the implementation of the RUG-IV system and specified that it be implemented as of the beginning of FY2010. The CBO score for the PPACA provision was $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. and $0 billion for FY2011–FY2020 for the Extenders Act repeal. Sec. 1109 of the Reconciliation Act. Payment for Qualifying Hospitals. Medicare payments to acute care hospitals in low-cost counties will be increased by a total of $400 million for two years (FY2011 and FY2012). The qualifying hospitals are located in counties ranked in the lowest quartile of adjusted Medicare Part A and B benefit spending (adjusted by age, sex, and race). The additional payments to each qualifying hospital will be in proportion to its Medicare inpatient hospital payments relative to Medicare inpatient hospital payments for all qualifying hospitals. The CBO score is $400 million from FY2011 through FY2012. Subtitle C—Provisions Relating to Part C Sec. 3201 as modified by Sec. 10318 of PPACA and Sec. 1102 of the Reconciliation Act. Medicare Advantage Payment. Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private plans are paid a per-person amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. Payments to MA plans are determined by comparing plan bids to a benchmark. Each bid represents the plan's estimated revenue requirement for providing required Medicare services to an average Medicare beneficiary. The benchmark is the maximum amount Medicare will pay a plan. If the plan bid is below the benchmark, the plan is paid its bid plus a rebate equal to 75% of the difference between the bid and the benchmark. If the bid is above the benchmark, the plan is paid the benchmark and each plan enrollee must pay a premium equal to the difference between the bid and the benchmark. MA benchmarks are based, in part, on historical Medicare private plan payment rates. (MA benchmarks for Regional MA plans are based in part on historical MA plan payments, and in part on Regional MA plan bids.) Benchmark amounts are increased each year by the growth in Medicare spending (the national MA per capita growth percentage), or in certain years, the benchmark may be set at the greater of the previous year's rate increased by the growth in Medicare or average spending in original Medicare in that area, with adjustments. Local MA plans choose the counties they wish to serve. Regional plans must serve an entire region defined by the Secretary, and may choose to serve more than one region. Regions are made up of states or groups of states. Though all MA organizations were required to have a quality improvement program by January 1, 2010, payments to MA plans are not contingent on the quality of care provided to plan enrollees. Under PPACA: MA Benchmarks. Under PPACA, the benchmarks in 2011 will be held at the 2010 levels. In 2012, PPACA phases-in blended benchmarks based on a percentage (95%, 100%, 107.5%, or 115%) of a base amount. In 2012, the base amount is to be set at per-capita spending in original Medicare; after 2012, the base amount is either the previous year's base amount increased by the growth in overall Medicare, or per capita spending in original Medicare in that county. The percentage adjustment to the base amount will be determined by the county's per capita FFS spending relative to that of other counties. Counties will be divided into 4 equal groups (or quartiles). The 25% of counties with the highest per capita spending will have a benchmark based on 95% of the base amount. The 25% of counties with the next highest per capita spending in FFS Medicare will have a benchmark based on 100% of the base amount (i.e., 100% of per capita FFS spending in the county). The 25% of counties with the third highest per capita FFS spending will have benchmarks set at 107.5% of the base amount. Counties with the lowest per capita spending in FFS Medicare will have a benchmark based on the 115% of that amount. The phase-in schedule for the new benchmarks varies over two, four, or six years depending on the size of the benchmark reduction, with a longer phase-in schedule for areas where the benchmark decreases by larger amounts. The Secretary will periodically re-rank the counties. If a county's quartile ranking changes, the county will receive a one-year phase-in to the new ranking level. The benchmarks as calculated under the new methodology cannot be greater than what they would have been in the absence of PPACA. The new blended benchmarks does not apply to the Program for All Inclusive Care for the Elderly (PACE plans). Quality Increases to Benchmarks. PPACA increases benchmarks based on plan quality, with higher increases for quality plans in qualifying areas. Starting in 2012, plans with at least a 4-star rating on a 5-star quality rating scale will receive an increase in their benchmark. In 2012, qualifying plans receive a 1.5 percentage point increase in their benchmark; in 2013, the increase is 3.0 percentage points, and starting in 2014, the increase is 5.0 percentage points. The increases are doubled for qualifying plans in a qualifying county. A qualifying county is defined as a county with (1) lower than average per capita spending in original Medicare, (2) 25% or more beneficiaries enrolled in MA, as of December 2009, and (3) a payment rate in 2004 based on the minimum amount applicable to a metropolitan statistical area (i.e., an urban floor rate). New plans or plans with low enrollment, as determined by the Secretary, may also qualify for a benchmark increase. Plans with low enrollment will be deemed to qualify for a quality increase in 2012. Starting in 2013, the Secretary is required to establish a method of determining plan quality for plans with low enrollment. New plans will be deemed to meet the quality requirements, but the percentage increase in their benchmarks will be lower in 2013 and 2014. Rebates. An MA plan receives a rebate if its bid is below the benchmark. The rebate is equal to a percentage of the difference between the bid and the benchmark. Prior to PPACA, all such plans received a 75% rebate to be used to provide additional benefits not covered under Medicare, reduced cost-sharing, and/or reduced Part B or D premiums. PPACA varies plan rebates based on quality. The highest quality plans (4.5 stars or higher) will receive a 70% rebate if their bid is below the benchmark. Plans with at least 3.5 stars and less than 4.5 stars receive a 65% rebate. Plans with less than 3.5 stars receive a 50% rebate if their bid is below the benchmark. In 2012, plans with low enrollment will be treated as having a 4.5 star rating (with a 70% rebate). Starting in 2012, new plans will be treated as having 3.5 stars. New plans are defined as those that are offered by organizations that have not had a contract as an MA organization in the preceding three years. The change in rebate percentages will be phased in over three years. Application of Coding Intensity Adjustment . In general, MA plan payments are risk-adjusted to account for the variation in the cost of providing care. Risk adjustment is designed to compensate plans for the increased cost of treating older and sicker beneficiaries, and thus discourage plans from preferential enrollment of healthier individuals. The Deficit Reduction Act of 2005 (P.L. 109-171, DRA) required the Secretary to adjust for patterns of diagnosis coding differences between MA plans and providers under parts A and B of Medicare for plan payments in 2008, 2009, and 2010. PPACA requires the Secretary to conduct further analyses on the differences in coding patterns and adjust for those differences after 2010. Starting in 2014, PPACA specifies minimum coding intensity adjustments. In 2014, the adjustment will be at least the value of the adjustment in 2010 plus 1.3 percentage points; for 2015 to 2018, the adjustment will be not less than the adjustment for the previous year increased by 0.25 percentage points; starting in 2019, the coding intensity adjustment will not be less than 5.7%. Repeal of Comparative Cost Adjustment Program. Comparative Cost Adjustment is a program required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-132) to: (1) examine a new MA payment system under which payments to MA plans would be based on a weighted average of plan bids; and (2) introduce possible adjustments (either increases or decreases) to FFS Medicare Part B premiums, based on a comparison of the costs of providing required Medicare benefits to the cost of providing the same benefits in the MA program. PPACA repeals this program. The CBO score (combined with Section 3209 and Section 1103 of HCERA) is -$30.3 billion for FY2010-FY2014 and -$135.6 billion for FY2010-FY2019. Section 1103 of the Reconciliation Act. Savings from Limits on MA Plan Administrative Costs . A Medical Loss Ratio (MLR) identifies the proportion of a plan's premium revenue that the plan devotes to the provision of health care services. The remaining proportion represents the amount spent on managing the plan, including administrative costs, advertising, and profits. Beginning in 2014, PPACA requires plans to have an MLR of not less than .85 or remit to the Secretary a payment equal to their total revenue multiplied by the difference between .85 and their MLR. The Secretary is required to restrict enrollment in an MA plan if its MLR was below .85 for three consecutive years and terminate the plan's contract if the plan fails to meet the MLR requirements for five consecutive years. The CBO score for this section was included in the estimate for Section 3201. Sec. 3202. Benefit Protection and Simplification. Under MA, enrollee cost sharing (i.e., coinsurance, copayments, and deductibles) is determined on a plan-by-plan basis. Cost sharing for a particular service may be greater than or less than the cost sharing under original Medicare, and may change from year to year. However, the total value of cost sharing required by an MA plan is constrained by the estimated actuarial value of total cost sharing under original Medicare. Under PPACA, beginning in 2011, MA plans will be prohibited from charging cost sharing that is greater than the cost sharing under original Medicare for certain services including chemotherapy treatment, renal dialysis, skilled nursing care, and services identified by the Secretary. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3203. Application of Coding Intensity Adjustment During MA Payment Transition. This provision was repealed by the Reconciliation Act. A coding intensity adjustment provision was added to Section 3201 and is discussed above. Sec. 3204. Simplification of Annual Beneficiary Election Periods. Medicare beneficiaries may enroll in or change their enrollment in MA from November 15 to December 31 each year (the annual, coordinated election period). Changes go into effect January 1 st of the next year. During the first three months of the year, beneficiaries can enroll in an MA plan, and individuals enrolled in an MA plan can either switch to a different MA plan or return to original Medicare (the continuous open enrollment and disenrollment period). Effective beginning in 2011, PPACA shifts the annual, coordinated election period for MA and Part D to October 15 through December 7. Also beginning in 2011, this provision prohibits beneficiaries from switching MA plans or enrolling in an MA plan from original Medicare after the start of the benefit year. PPACA, however, allows beneficiaries who had enrolled in Medicare Advantage during the annual, coordinated election period to disenroll and return to original Medicare during the first 45-day period of the new benefit year (January 1-February 15), and allows those beneficiaries to enroll in a Part D prescription drug plan. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3205. Extension for Specialized MA Plans for Special Needs Individuals. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173) established a new type of Medicare Advantage (MA) coordinated care plan focused on individuals with special needs. Special needs plans (SNPs) are allowed to target enrollment to one or more types of special needs individuals including (1) institutionalized; (2) dually eligible; and/or (3) individuals with severe or disabling chronic conditions. This provision extends SNP authority through December 31, 2013. The Secretary is required to establish a frailty payment adjustment, similar to PACE, for fully integrated dual-eligible SNPs. The Secretary only has authority to adjust payments to dual-eligible SNP when those plans have fully integrated Medicare and Medicaid benefits, including long-term care, and met other criteria. Fully integrated dual-eligible SNPs will be exempted from the IME payment phase-out applicable to all MA plans. In addition, the provision temporarily extends authority through the end of 2012 for SNPs that do not have contracts with state Medicaid programs to continue to operate, but not to expand their service area. The provision requires the Secretary to establish a process to transition SNP beneficiaries that do not qualify as special needs individuals, to fee-for-service Medicare and other MA plans. As part of the transition process, the Secretary will provide for an exception process for beneficiaries who lose Medicaid coverage to reapply for benefits. Beginning in 2012, SNPs will be required to have approval of the National Committee for Quality Assurance in order to serve targeted populations. Periodically, beginning in 2011, the Secretary is required to evaluate, revise, and publish the MA risk adjustment payment methodology to recalibrate payments for higher medical and care coordination costs for specified conditions. The CBO score (combined with Section 3208) is $0.6 billion for FY2010-FY2014 and $0.7 billion for FY2010-FY2019 . Sec. 3206. Extension of Reasonable Cost Contracts. Reasonable cost plans are Medicare Advantage (MA) plans that are reimbursed by Medicare for the actual cost of providing services to enrollees. Cost plans were created in the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982. The Balanced Budget Act of 1997 included a provision to phase-out the reasonable cost contracts, however, the phase-out has been delayed over the years through congressional action. These plans are allowed to operate indefinitely, unless two other plans of the same type (i.e., either 2 local or 2 regional plans) offered by different organizations operate for the entire year in the cost contract's service area. Under prior law, after January 1, 2010, the Secretary could not extend or renew a reasonable cost contract for a service area if (1) during the entire previous year there were either two or more MA regional plans or two or more MA local plans in the service area offered by different MA organizations, and (2) these regional or local plans meet minimum enrollment requirements. PPACA extends for three years—from January 1, 2010, to January 1, 2013—the length of time reasonable cost plans may continue operating regardless of any other MA plans serving the area. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3207. Technical Correction to MA Private Fee-for-Service Plans. MA coordinated care plans are required to meet medical access requirements by forming networks of contracted providers. Prior to 2011, PFFS plans can meet medical access requirements either by establishing payment rates for providers that are not less than rates paid under original Medicare or by developing contracts and agreements with a sufficient number and range of providers within a category to provide covered services under the terms of the plan. Starting in 2011, PFFS plans sponsored by employers or unions are required to establish contracted networks of providers to meet access requirements. Non-employer sponsored MA PFFS plans are required to establish contracted networks of providers in "network areas" defined as areas having at least two plans with networks (such as health maintenance organizations [HMOs], provider sponsored organizations [PSOs], or local preferred provider organizations [PPOs]). In areas without at least two network-based plans, the non-employer PFFS plans retain the ability to establish access requirements through establishing payment rates that are not less than those under original Medicare. PPACA allows the Secretary to grant employer-based PFFS plans with enrollment as of October 1, 2009, a waiver from the network requirements in a manner similar to the Secretary's authority to waive or modify other MA requirements for employer-based coordinated care plans as specified in a 2008 service area extension waiver policy, as modified in an April 11, 2008, CMS memo entitled "2009 Employer Group Waiver-Modification of the 2008 Service Area Extension Waiver Granted to Certain MA Local Coordinated Care Plans." The CBO score is $0.0 billion for FY2010-FY2014 and $0.1 billion for FY2010-FY2019. Sec. 3208. Making Senior Housing Facility Demonstration Permanent. In general, MA plans are required to serve an area no smaller than a county, which prevents plans from targeting smaller areas of healthier, low-cost enrollees. However, it is possible for an MA plan to receive a waiver of this requirement to be able to restrict enrollment to residents of a retirement community. Effective January 1, 2010, PPACA requires the Secretary to establish a new type of MA plan called an MA Senior Housing Facility Plan, which is to be allowed to limit its service area to a senior housing facility within a geographic area. An MA Senior Housing Facility Plan is to be an MA plan that serves beneficiaries who reside in a continuing care retirement community, has a sufficient number of on-site primary care providers as determined by the Secretary, supplies transportation benefits to other providers, and were in existence under a demonstration for at least one year. The CBO score for this section was included in the estimate for Section 3205. Sec. 3209. Authority to Deny Plan Bids. In general, the Secretary has the authority to negotiate bids submitted by MA plans similar to the authority of the Director of the Office of Personnel Management with respect to negotiations with plans participating in the Federal Employees Health Benefits Program. The Secretary may only accept a bid after determining that it is supported actuarially and that it reasonably and equitably reflects the revenue requirements of benefits provided under the plan. The Secretary's authority to negotiate with plans does not apply to Private Fee-for-Service (PFFS) MA plans. Effective January 1, 2011, PPACA clarifies that the Secretary is not required to accept any or every bid submitted by an MA plan or Part D prescription drug plan. The CBO score for this section was included in the estimate for Section 3201. Sec. 3210. Development of New Standards for Certain Medigap Plans. Many Medicare beneficiaries have individually purchased health insurance policies, commonly referred to as "Medigap" policies. Beneficiaries with Medigap insurance typically have coverage for Medicare's deductibles and coinsurance; they may also have coverage for some items and services not covered by Medicare. Individuals generally select from one of a set of standardized plans (Plan "A" through Plan "L", though not all plans are offered in all states). The law incorporates by reference, as part of the statutory requirements, certain minimum standards established by the National Association of Insurance Commissioners (NAIC) and provides for modification where appropriate to reflect program changes. PPACA requests that NAIC create new model plans for C and F that include nominal cost sharing to encourage the use of appropriate Part B physician services. The nominal cost sharing is to be based on evidence either published or from integrated delivery systems. The revisions are to be consistent with rules applicable to changes in NAIC Model Regulations. The new models C and F are to be available in 2015. The CBO score is $0.0 billion for FY2010-FY2014 and -$0.1 billion for FY2010-FY2019. Sec. 10327(c). Elimination of MA Regional Plan Stabilization Fund. MMA created the MA Regional Program and established the MA Regional Plan Stabilization Fund to encourage plans to enter into and/or remain in the MA Regional Program. The fund was originally set at $10 billion with additional money added to the fund from savings in the bidding process. Funds were to be available from 2007 through the end of 2013. Subsequent legislation decreased the amount of funds available and delayed their availability. Most recently, MIPPA reduced the initial funding of the program to one dollar. Money from the regional plan bidding process continued to flow into the Fund, but availability had been delayed until 2014. PPACA eliminates the Fund and transfers amounts in the Fund to the Part B Trust Fund. The CBO score is -$0.1 billion for FY2010-FY2014 and -$0.2 billion for FY2010-FY2019. Subtitle D—Medicare Part D Improvements for Prescription Drug Plans and MA-PD Plans Sec. 3301 as modified by Sec. 1101 of the Reconciliation Act . Medicare Coverage Gap Discount Program for Brand-Name Drugs and Closing the Medicare Prescription Drug "Donut Hole." Medicare law sets out a defined standard benefit structure under the Part D prescription drug benefit that includes a gap in coverage, commonly referred to as the "doughnut hole." In 2010, the standard benefit includes a $310 deductible and a 25% coinsurance until the enrollee reaches $2,830 in total covered drug spending (Medicare and beneficiary spending combined). After this initial coverage limit is reached, the enrollee is responsible for the full cost of the drugs until total costs hit the catastrophic threshold, $6,440 in 2010. In general, in 2010, Part D enrollees who do not receive assistance in the form of the Part D low-income subsidy would be responsible for a total of $4,550 in out-of-pocket costs before reaching the catastrophic phase ($310 deductible, $630 in co-insurance in the initial coverage phase, and $3,610 in the coverage gap). This provision incorporates a voluntary agreement with the Pharmaceutical Research and Manufacturers of America (PhRMA) to provide discounts of 50% for brand-name drugs used by Part D enrollees in the Part D coverage gap. Manufacturers of prescription drugs will be required to enter into agreements with Medicare Part D drug plan sponsors to provide discounts on drugs provided to plan enrollees in the coverage gap period beginning January 1, 2011. The amount of the discount, in addition to the amount actually paid by the enrollee, will count toward costs incurred by the plan enrollee. Plan enrollees receiving the low-income subsidy or enrolled in an employee–sponsored retiree drug plan will not be eligible for the discount. Drugs sold and marketed in the U.S. by a manufacturer will not be covered under Part D unless the manufacturer agrees to participate in the discount program. The provision also requires the Secretary to contract with a third party entity (or entities) to administer the drug discount program and to establish performance requirements and data standards for the third-party contractor(s). Section 1101 of the Reconciliation Act added provisions to close the coverage gap by 2020 and to provide for an immediate reduction in costs for beneficiaries who enter the coverage gap in 2010. Specifically, in 2010, Medicare Part D enrollees who enter the coverage gap will receive a rebate of $250. Additionally, the Reconciliation Act reduces beneficiary cost sharing for brand-name drugs from 100% in 2010 (minus the $250 rebate) to 25% by 2020. In 2011 and 2012, per the manufacturer discount provision in PPACA, beneficiary cost-sharing will be reduced to 50% of the price of the drug. In 2013 and beyond, the Medicare program will cover additional costs beyond the 50% discount to further reduce cost-sharing; in total, beneficiary cost-sharing for brand-name drugs during the coverage gap will be 47.5% in 2013 and 2014, 45% in 2015 and 2016, 40% in 2017, 35% in 2018, 30% in 2019, and 25% in 2020 and beyond (in 2020, the manufacturer discounts account for 50% of the reduction and the Medicare Part D program pays the remaining 25%). For generic drugs , which are not subject the required 50% discount, beneficiary cost-sharing in the coverage gap will be reduced to 93% in 2011; in 2012 and for each succeeding year, the percentage will decrease by an additional 7%, until 2020 when beneficiaries' cost-sharing for generic drugs will equal 25% (in 2020, the Medicare Part D program will pay 75% of the cost of generic drugs). The Reconciliation Act also makes several modifications to the methodology used to determine updates to the total out-of-pocket expenditure amounts for years 2014 through 2019. In general, these changes will reduce the rate of growth in the total amount that Part D enrollees would need to spend before reaching the catastrophic threshold for these years. The CBO score is +$9.2 billion for FY2010-FY2014 and +$42.6 billion for FY2010-FY2019 . Sec. 3302. Improvement in Determination of Part D Low-Income Benchmark Premium. The federal government pays up to 100% of the Part D premiums for low-income subsidy (LIS) beneficiaries who are enrolled in "benchmark" plans. A Part D plan qualifies as a benchmark plan if it offers basic Part D coverage with premiums equal to or lower than the regional low-income premium subsidy amount. MA plans offering prescription drug coverage submit a separate bid for the Part D portion. Payment for the portion of the premium attributable to basic prescription drug benefits is calculated in the same way as that for stand-alone PDPs, however an MA plan may choose to apply some of its Part C rebate payments to lower the Part D premium. If an MA plan uses rebate payments to reduce its Part D premium, this reduced amount is factored into the calculation of the regional low-income benchmark. This has the effect of lowering the benchmark and potentially of reducing the number of plans that qualify as low-income plans. MedPAC has noted that the number of plans that qualify as low-income benchmark plans has been decreasing in recent years, resulting in fewer options for LIS enrollees. This provision excludes the Medicare Advantage rebate amounts from the MA-PDP premium bids when calculating the low-income regional benchmark. This provision will be effective starting in the 2011 plan year. The CBO score is +$0.3 billion for FY2010-FY2014 and +$0.7 billion for FY2010-FY2019. Sec. 3303. Voluntary De Minimus Policy for Subsidy Eligible Individuals Under Prescription Drug Plans and MA-PD Plans. To help maintain plans that wish to serve LIS beneficiaries at fully subsidized or $0 premiums, this provision authorizes a policy, beginning in 2011, through which plans that bid a nominal amount above the regional low-income subsidy (LIS) benchmark amount could choose to absorb the cost of the small difference between their bid and the LIS benchmark in order to qualify as a LIS-eligible plan. The Secretary has discretion to auto-enroll LIS beneficiaries into these plans in order to maintain adequate LIS plan choices. The de minimus threshold amount will be established by the Secretary. The CBO score is +$0.1 billion for FY2010-FY2014 and +$0.4 billion for FY2010-FY2019. Sec. 3304. Special Rule for Widows and Widowers Regarding Eligibility for Low-Income Assistance. To qualify for financial assistance under the Part D low-income subsidy (LIS) program, Medicare beneficiaries must have resources no greater than the income and resource limits established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173). Each year, the Secretary conducts a redeeming process to determine whether those who automatically qualified for the full subsidy in a given year continue to meet the criteria for eligibility in the following year. For those who have qualified for the full or partial subsidy through the application process, the agency that made the determination decision (SSA or an individual state) is responsible for monitoring a recipient's eligibility. For example, for cases in which eligibility has been established through an application with SSA, a report of a subsidy-changing event, such as marriage, divorce, or death of a spouse, will trigger a redetermination of subsidy eligibility during the calendar year. This can result in changes to the individual's deductible, premium and cost sharing subsidy, or even termination of his or her LIS eligibility status. In the case of the death of a spouse, it is possible that the surviving spouse, as the sole owner of the previously combined resources, may exceed the resource limit for an individual and may no longer qualify for the LIS program. This provision requires that, beginning in 2011, the surviving spouse of an LIS-eligible couple undergo a redetermination of his or her eligibility status no earlier than one year from the next redetermination that would have occurred after the death of a spouse. Subsequently, the LIS widow/widower is to be determined or redetermined, as appropriate, for LIS on the same basis as other LIS-eligible beneficiaries. The CBO score is +$0.1 billion for FY2010-FY2014 and +$0.2 billion for FY2010-FY2019. Sec. 3305. Improved Information for Subsidy Eligible Individuals Reassigned to Prescription Drug Plans and MA-PD Plans. According to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173), low-income subsidy (LIS) beneficiaries who are enrolled in plans with premiums below the low-income regional benchmark amount receive assistance with premiums and cost sharing. Those who are enrolled in LIS-eligible plans whose plan bids exceed the regional benchmark amount for the next benefit year are randomly reassigned by the Secretary of HHS to new plans whose bids are at or below the regional benchmark amount in order to ensure that these beneficiaries continue to receive a subsidy of plan premiums. It is possible that the new plan's exceptions, appeals and grievance mechanisms could differ from the old plan and that some covered drug(s) a beneficiary is currently taking would not be covered by the new plan. In the case of an LIS beneficiary who has been reassigned to another LIS plan, the provision requires the Secretary, beginning in 2011, to transmit within 30 days of the reassignment information to the beneficiary about formulary differences between the former plan and the new plan with respect to the beneficiary's drug regimen, as well as a description of the beneficiary's rights to request a coverage determination, exception or reconsideration, or resolve a grievance. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3306. Funding Outreach and Assistance for Low-Income Programs. Section 119 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) provided $25 million for fiscal years 2008 and 2009 for beneficiary outreach and education activities related to low-income programs related to the Medicare through State Health Insurance Counseling and Assistance Programs (SHIPs), Area Agencies on Aging (AAAs), Aging and Disability Resource Centers (ADRCs), and the Administration on Aging (AoA). This provision extends MIPPA Section 119 and provides an additional $45 million for outreach and education activities related to Medicare low-income assistance programs, including the Part D low-income subsidy (LIS) program and the Medicare Savings Program (MSP). Funds are to be allocated to SHIPs, AAAs, ADRCs, and the National Center for Benefits Outreach and Enrollment in the same proportion as under MIPPA and will be available for obligation through 2012. The Secretary was also provided the authority to enlist the support of these entities to conduct outreach activities aimed at preventing disease and promoting wellness as an additional use of these funds. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3307. Improving Formulary Requirements for Prescription Drug Plans and MA-PD Plans with Respect to Certain Categories or Classes of Drugs. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173) requires Part D plans to operate formularies that cover drugs within each therapeutic category and class of covered Part D drugs, although not necessarily all drugs within such categories and classes. The Secretary of HHS published a regulation (42 CFR Section 423.120) that requires Part D plans to have at least two drugs within each therapeutic category and class. However, through sub-regulatory guidance, the Secretary protected access to certain classes of drugs by requiring Part D plans to cover all, or substantially all, of the drugs in the following six drug classes: immunosuppressant, antidepressant, antipsychotic, anticonvulsant, antiretroviral, and anti-neoplastic. Section 176 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) codified that, beginning in plan year 2010, the Secretary would identify the classes and categories of drugs that should be protected, or covered entirely by Part D plans, to ensure that beneficiaries have access to certain therapies and to a wide variety of therapy options for certain conditions and established certain criteria the Secretary would use to identify such drugs. This provision of PPACA gives the Secretary authority to identify classes of clinical concern as defined by the Secretary and PDP sponsors will be required to include all drugs in these classes in their formularies. The provision also codifies the current six classes of clinical concern as they are currently specified through sub-regulatory guidance until the Secretary issues a rule regarding classes of clinical concern to be protected on plan formularies. The provision also removes the criteria specified in Section 176 of MIPPA that would have been used by the Secretary to identify protected classes of drugs. The provision will be effective starting the 2011 plan year. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3308. Reducing Part D Premium Subsidy for High-Income Beneficiaries. Beginning in 2007, as required by the MMA, high-income beneficiaries are required to pay higher premiums for Part B benefits. Beneficiaries with modified adjusted gross income that exceeds a threshold amount are charged additional premiums based on a sliding scale that ranges from 35% to 80% of the value of Part B. In 2010, threshold levels start at $85,000 for an individual tax return and $170,000 for a joint return (based on 2008 returns). The threshold amounts are specified in the law, and are adjusted annually for inflation using the Consumer Price Index (CPI). The income thresholds are tied to specific premium shares. Beneficiary premiums under Part D are not subject to income thresholds or means testing. This provision requires Part D enrollees who exceed certain income thresholds to pay higher premiums. The income thresholds will be set in a similar manner to those under Part B. The provision will also inflate the income thresholds by the CPI, except for the period between 2010 and 2019 when the income thresholds would not be updated. In addition, the provision expands the current authority for IRS to disclose income information to SSA for purposes of adjusting the Part B subsidy to include the Part D subsidy adjustments. The CBO score is -$2.4 billion for FY2010-FY2014 and -$10.7 billion for FY2010-FY2019. Sec. 3309. Elimination of Cost Sharing for Certain Dual Eligible Individuals. Cost-sharing subsides for LIS enrollees are linked to the standard Part D prescription drug coverage. Full-subsidy eligibles have no deductible, minimal cost sharing during the initial coverage period and coverage gap, and no cost-sharing over the catastrophic threshold. Full-benefit dual eligibles who are residents of medical institutions or nursing facilities have no cost-sharing. This provision will eliminate cost sharing for drugs dispensed to beneficiaries receiving care under a home and community based waiver who would otherwise require institutional care. This provision is effective on a date specified by the Secretary, but no earlier than January 1, 2012. The CBO score is +$0.3 billion for FY2010-FY2014 and +$1.1 billion for FY2010-FY2019. Sec. 3310. Reducing Wasteful Dispensing of Outpatient Prescription Drugs in Long-Term Care Facilities Under Prescription Drug Plans and MA-PD Plans. Part D plans are required to offer a contract to any pharmacy willing to participate in its long-term care (LTC) pharmacy network so long as the pharmacy is capable of meeting certain minimum performance and service criteria and any other standard terms and conditions established by the plan for its network pharmacies. Each LTC facility selects at least one eligible LTC pharmacy to provide Medicare drug benefits to its residents. Plan formularies must be structured so that they meet the needs of long-term care residents and provide coverage for all medically necessary medications at all levels of care. Both physician prescribing patterns and pharmacy benefit manager (PBM) payment practices result in prescriptions commonly being dispensed in 30- or 90-day quantities. In situations when the full amount dispensed is not utilized by the patient, for example. due to discharge, death, adverse reactions, the remaining medication may become waste. This provision will require Part D sponsors, starting January 1, 2012, to employ utilization management techniques, determined by the Secretary in consultation with relevant stakeholders, to reduce the quantity dispensed per fill when dispensing medications to beneficiaries who reside in long-term care facilities in order to reduce waste associated with 30-day fills. These techniques could include such things as weekly, daily, or automated dose dispensing. The CBO score is -$1.0 billion for FY2010-FY2014 and -$5.7 billion for FY2010-FY2019. Sec. 3311. Improved Medicare Prescription Drug Plan and MA-PD Complaint System. Part D and Medicare Advantage (MA) related complaints are tracked and resolved through a centralized complaints system within the Centers for Medicare & Medicaid Services (CMS), while complaints submitted directly to plan sponsors (grievances) are tracked and resolved by each plan sponsor using its own system. CMS maintains a central repository of MA and Part D-related complaints received by its Regional Offices, Central Office, or through 1-800-MEDICARE. This provision requires the Secretary to develop and maintain a system, which is widely known and easy to use, to handle complaints regarding MA and Part D plans or their sponsors. The system is to have the ability to report and initiate appropriate interventions and monitoring based on substantial complaints and to guide quality improvement. A plan complaint is defined as a complaint that is received (including by telephone, letter, e-mail, or any other means) by the Secretary (including by a regional office, the Medicare Beneficiary Ombudsman, a sub-contractor, a carrier, a fiscal intermediary, or a Medicare Administrative Contractor). The Secretary is required to develop a model electronic complaint form to be used for reporting complaints under the system that would be displayed on the Medicare.gov and Medicare Beneficiary Ombudsman websites. The Secretary is also required to conduct annual reports of the complaint system that would include an analysis of the numbers and types of complaints reported under the system; geographic variations in the complaints; the timeliness of agency or plan responses to the complaints; and the resolution of the complaints. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3312. Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans. Section 1852(g) of the Social Security Act outlines general requirements regarding Medicare Advantage exceptions and appeals processes. The Part D program adapted many of the existing rules for appeals that apply to Medicare Advantage program. The coverage and determination and appeals processes may vary among MA and Part D plans as long as these general requirements are met. This provision will require a prescription drug plan sponsor or a MA organization offering MA-PD plans to use a single, uniform exceptions and appeals process with respect to the determination of prescription drug coverage for an enrollee under the plan and to provide instant access to this process through a toll-free telephone number and an Internet website. This provision will apply to exceptions and appeals made on or after January 1, 2012. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3313. Office of the Inspector General Studies and Reports. According to Section 1860D-14 of the SSA, full-benefit dual-eligible individuals who have not elected a Part D plan are to be auto-enrolled into one by CMS. Because plans vary in the formularies they offer, some dual eligibles could find that they have been auto-enrolled in a plan that may not best meet their needs. Additionally, when the Medicare prescription drug program was created, it was expected that drug plan sponsors would negotiate with drug manufacturers to obtain price concessions on drugs covered under Part D, and thus reduce total costs to the government and to beneficiaries. Some studies have suggested that Part D plans are not obtaining rebates equivalent to those required under Medicaid. PPACA requires the Office of Inspector General of HHS (OIG) to report annually, beginning July 1, 2011, on the extent to which formularies used by prescription drug plans and MA-PD plans under Part D include drugs commonly used by full-benefit dual eligible individuals. OIG is also required to complete a study by October 1, 2011, that compares covered prescription drug prices paid under the Medicare Part D program to those negotiated by state Medicaid plans for the top 200 drugs determined by both volume and expenditures including all rebates and discounts received by the Medicaid and Part D plans. The report is not to disclose information that is deemed proprietary or likely to negatively impact a Medicaid program or Part D plans' ability to negotiate drug prices. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 3314. Including Costs Incurred By AIDS Drug Assistance Programs And Indian Health Service In Providing Prescription Drugs Toward The Annual Out Of Pocket Threshold Under Part D. Under a standard Medicare Part D plan design, beneficiaries must incur a certain level of out-of-pocket costs ($4,550 in 2010) before catastrophic protection begins. These include costs that are incurred for the deductible, cost-sharing, or benefits not paid because they fall in the coverage gap. Generally, costs are counted as incurred, and thus treated as true out-of-pocket (true out-of-pocket) costs only if they are paid by the individual (or by another family member on behalf of the individual), paid on behalf of a low-income individual under the subsidy provisions, or paid under a State Pharmaceutical Assistance Program. Additional payments that do not count toward TrOOP include Part D premiums and coverage by other insurance, including group health plans, workers' compensation, Part D plans' supplemental or enhanced benefits, or other third parties. This provision will allow costs paid by the Indian Health Service or under an AIDS Drug Assistance Program to count toward the out-of-pocket threshold for costs incurred on or after January 1, 2011. The CBO score is +$0.2 billion for FY2010-FY2014 and +$0.6 billion for FY2010-FY2019. Sec. 3315. Immediate Reduction in Coverage Gap in 2010 ( repealed by Section 1101 of the Reconciliation Act ). Sec. 10328. Improvement in Part D Medication Therapy Management (MTM) Programs. S ection 1860-D-4(c) of the SSA requires Part D sponsors to incorporate a Medication Therapy Management Program (MTM) into their plan benefit structures. An MTM program is a program of drug therapy management that may be furnished by a pharmacist and is designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events. Targeted individuals are those who have multiple chronic diseases, are taking multiple covered part D drugs, and are identified to likely incur annual costs for covered Part D drugs that exceed a level specified by the Secretary. The MTM program may include elements that promote enrollee understanding of the appropriate use of medication and increased adherence with medication regimes, and must be developed in cooperation with licensed and practicing pharmacists and physicians. This provision amends Section 1860D-4(c) to require Part D sponsors to include in their MTM programs an annual comprehensive medication review furnished in person or using telehealth technologies by a licensed pharmacist or other qualified provider, and follow-up interventions as warranted based on the findings of the annual review or the targeted medication enrollment starting in plan years beginning on or after the date that is 2 years after the date of enactment. Additionally, the plan sponsor will be required to have in place a process to assess on a quarterly basis the medication use of individuals who are at risk but not enrolled in the MTM program, including individuals who have experienced a transition in care. The plan sponsor will also be required to have in place a process to automatically enroll targeted beneficiaries in the MTM program and permit such beneficiaries to opt out of enrollment in the program. The Secretary of HHS has been given authority to modify or broaden requirements for MTM programs and to study new MTM models through the Center for Medicare and Medicaid Innovation (as added by Section 3021). The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Subtitle E—Ensuring Medicare Sustainability Sec. 3401 as modified by Sec. 10319 of PPACA, and Sec. 1105 of the Reconciliation Act. Revision of Certain Market Basket Updates and Incorporation of Productivity Improvements into Market Basket Updates That Do Not Already Incorporate Such Improvements . Most fee-for-service Medicare providers receive predetermined payment amounts established under different, unique prospective payment systems. Each year, the base payment amounts in the different Medicare payment systems are increased by an update factor to reflect the increase in the unit costs associated with providing health care services. Generally, Medicare's annual updates are linked to either: (1) projected changes in specific market basket (MB) indices which are designed to measure the change in the price of goods and services (such as labor and equipment) that are purchased by the provider and intended to reflect the effect of inflation on providers' costs per service; or (2) the Consumer Price Index for All Urban Consumers (CPI-U). Generally, PPACA provides for updates based on the MB or CPI minus full productivity estimates for all Parts A and B providers and suppliers who are subject to a MB or CPI update. The productivity offset is to equal the percentage change in the 10-year moving average of annual economy-wide private nonfarm business multi-factor productivity. The estimate used will be that published before the promulgation of the regulation establishing increases in the Medicare rates for the year or period. Specifically, this provision will implement a full productivity adjustment for inpatient hospital services, inpatient rehabilitation, long-term care hospital services, skilled nursing facilities and hospices beginning October 1, 2012, for inpatient psychiatric facilities beginning July 1, 2012, for hospital outpatient departments beginning January 1, 2012, and for home health providers beginning in October 1, 2014. For providers paid through the clinical laboratory test fee schedule, the proposal will replace the scheduled 0.5% payment reduction for calendar years 2011 through 2013 with a full productivity adjustment for calendar year (CY) 2011 and subsequent years. Dialysis providers will be subject to the productivity adjustment starting in CY2012; the productivity adjustments for other Part B providers will begin in CY2011. Except where noted below, the application of the update adjustments may result in a negative factor and a basis of payment that would be lower than in the preceding year. The update factors for Medicare providers and suppliers will be subject to the following adjustments : Acute care hospitals, long-term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, and outpatient hospitals: Aside from the productivity factors mentioned earlier, the MB update for acute care inpatient (IPPS) services and inpatient rehabilitation facilities (IRFs) will be reduced 0.25 percentage points starting in FY2010, effective for discharges starting April 1, 2010) and FY2011; 0.1 percentage points in FY2012 and FY2013; 0.3 percentage points in FY2014; 0.2 percentage points in FY2015 and FY2016; and 0.75 percentage points in FY2017 though FY2019. These same reductions also apply to the update for long-term care hospitals except that a larger reduction of 0.5 percentage points will apply starting October 1, 2010 (RY2010). The MB update for the hospital outpatient prospective system will be reduced 0.25 percentage points in CY2010 and CY2011 and by 0.1 percentage points in CY2012 and CY2013. 0.3 percentage points in CY2014; 0.2 percentage points in CY2015 and CY2016; and 0.75 percentage points in CY2017 though CY2019. Skilled nursing facilities: The SNF MB update will be subject to the productivity factor adjustment beginning in FY2012 . Home health agencies: Aside from the productivity factor adjustment beginning in 2015, the MB update for home health services will be reduced by 1.0 percentage point in CY2011, CY2012, and CY2013. Hospice care: The hospice MB update will be subject to the productivity factor adjustment beginning in FY2013. Aside from the productivity factor adjustment, the MB update will be reduced by 0.3 percentage points in FY2013. For each of the fiscal years from FY2014 through FY2019, a 0.3 percentage point reduction to the MB will be contingent upon the level of the insured population relative to the projection of insured population for the year preceding enactment. Specifically, only if the level of non-elderly insured population is 5 or fewer percentage points above the projections would the MB update be reduced by 0.3 percentage points. Dialysis: The ESRD MB will no longer be subject to a 1 percentage point reduction beginning in 2012, but will be subject to the productivity factor adjustments starting in CY2012. Ambulance services: The productivity adjustment factor will be applied to the CPI-U used to increase the ambulance fee schedule starting in CY2011. Ambulatory surgical services: The productivity adjustment factor will be applied to the CPI-U used to update payments for ambulatory surgical services starting in CY2011. Laboratory services: The existing 0.5 percentage point reduction to the CPI-U update to the fee schedule in CY2009 and CY2010 will be retained. A 1.75 percentage point reduction to the update in CY2011 through CY2015 will be established; this reduction may result in a negative update. The productivity adjustment factor will be applied to the CPI-U starting in CY2011, but in the application of the adjustment will not be able to reduce the increase to less than zero. Certain durable medical equipment: The productivity adjustment factor will be applied to the CPI-U used to increase the fee schedules for certain durable medical equipment (DME) beginning in CY2011. Certain DME would have received a payment increase of CPI-U plus 2 percentage points in CY2014. The 2 percentage point increase was eliminated. Prosthetic devices, orthotics, and prosthetics: The productivity adjustment factor will be applied to the CPI-U update for the applicable fee schedule for this DME category starting in CY2011 . Other items: The productivity adjustment factor will be applied to the CPI-U update for this DME category starting in CY2011. (See Appendix B for timeline of update reductions including productivity adjustments.) The CBO score is -$23.7 billion for FY2010-FY2014 and -$156.6 billion for FY2010-FY2019. Sec. 3402. Temporary Adjustment to the Calculation of Part B Premiums. Medicare Part B finances coverage for physicians' and other outpatient services, in part, through premiums paid by beneficiaries who enroll in the voluntary program. Before January 2007, the Part B premium was set at 25% of the program's costs per aged enrollee (enrollees who were age 65 or older) and was applied universally to all enrollees. Since then, under a provision of the Medicare Modernization Act, approximately 1.7 million higher-income beneficiaries have faced progressively greater shares of those costs—35 percent, 50 percent, 65 percent, or 80 percent, depending on income. The income categories that those shares apply to are based on enrollees' modified adjusted gross income. In 2010, the income thresholds for those premium shares are $85,000, $107,000, $160,000, and $214,000, respectively. (For married couples, the corresponding income thresholds are twice those values.) The income thresholds rise each year with changes in the consumer price index. The provision will freeze the current income thresholds for the period of 2011 through 2019 at the 2010 levels. The CBO score is -$7.5 billion for FY2010-FY2014 and is -$25.0 billion for FY2010-FY2019. Sec. 3403 as modified by Sec. 10320. Independent Payment Advisory Board. This provision establishes an Independent Payment Advisory Board to develop and submit detailed proposals to Congress and the President to reduce Medicare spending. The Board is to consist of 15 members with expertise in health care financing, delivery, and organization. All members are to be appointed by the President and confirmed by the Senate. Proposals are to primarily focus on payments to MA and PDP plans and reimbursement rates for certain providers. The Board will be prohibited from developing proposals related to Medicare benefits, eligibility, or financing. Proposals, which will only be required in certain years, will have to meet specific savings targets. Recommendations made by the Board automatically go into effect unless Congress enacts specific legislation to prevent their implementation. The first year the Board's proposals can take effect is 2015. Membership and Structure. The Board is to be composed of 15 members, appointed by the President with the advice and consent of the Senate. Members of the Board will serve six-year, staggered terms. Members may not serve more than 2 full consecutive terms. The Senate Majority Leader, the Speaker of the House, the Senate Minority Leader, and the House Minority Leader will each present three recommendations for appointees to the President. The President, with the advice and consent of the Senate, is required to appoint a Chair for the Board. The Board will elect a Vice Chairman. Members can only be removed by the President for neglect of duty or malfeasance in office. In addition to the 15 members of the Board, the Secretary of Health and Human Services (HHS), the Administrator of the Center for Medicare and Medicaid Services (CMS), and the Administrator of the Health Resources and Services Administration (HRSA) will serve as ex-officio, non-voting members of the Board. Qualifications for membership are similar to the qualifications required for members of the Medicare Payment Advisory Board (MedPAC). Individuals involved in the delivery or management of health care services cannot constitute a majority of the Board. In addition to these qualifications, the President is required to establish a system for publicly disclosing any financial or other conflicts of interests relating to members. Individuals that engage in any other business, vocation, or employment cannot serve as appointed members of the Board. Members will be considered officers in the executive branch for purposes of applying Title I of the Ethics in Government Act of 1978. After serving on the Board, former members will be barred from lobbying the Board and other relevant executive branch departments and agencies and relevant congressional committees for one year. The Chair will be responsible for exercising all of the Board's executive and administrative functions, including those related to the appointment and supervision of employees and the use of funds. All requests for discretionary appropriations to fund the Board's activities must be approved by a majority vote. Requirements for Proposal Submission. The provision requires that the Board submit proposals to the President for years in which the projected rate of growth in Medicare spending per beneficiary exceeds a target growth rate. Determinations of the projected and target growth rates are to be made by the CMS Office of the Actuary (OACT) beginning in 2013. The Board is required to submit its first proposal to the President by January 15, 2014, for implementation in 2015. If the Board fails to submit a proposal to the President by January 15, the Secretary will be required to submit a contingent proposal to Congress meeting the same requirements by January 25. For years 2014 through 2017, the Board will be required to submit proposals for years in which the projected rate of growth in Medicare spending per beneficiary exceeds the average of the projected percentage increase in the Consumer Price Index for All Urban Consumers (CPI) and the Consumer Price Index for Medical Care (CPI-M). Beginning in 2018, proposals will only be required for years in which the projected rate of growth in Medicare spending exceeds the Gross Domestic Product (GDP) plus 1.0%. Recommendations proposed by the Board are required to reduce Medicare spending by the lesser of 0.5 percentage points in 2015, 1.0 percentage points in 2016, 1.25 percentage points in 2017, 1.5 percentage points in 2018, and the amount by which the rate of growth in Medicare spending exceeds the target growth rate. Proposals cannot increase Medicare spending over a 10-year period. Scope of Proposals. The provision lays out a number of specific fiscal and policy criteria which the Board will be required to meet in making its recommendations. When developing and submitting proposals, the Board is required, to the extent feasible, to (1) prioritize recommendations that would extend Medicare solvency and target reductions to sources of excess cost growth; (2) include only those recommendations that improve the health care delivery system, including the promotion of integrated care, care coordination, prevention and wellness and quality improvement and protect beneficiary access to care, including in rural and frontier areas; (3) consider the effects of changes in provider and supplier payments on beneficiaries; consider the effects of proposals on any provider who has, or is projected to have, negative profit margins or payment updates; (4) consider the unique needs of individuals dually eligible for Medicare and Medicaid, and (5) include recommendations for administrative funding to carry out its recommendations. As appropriate, each proposal is required to include recommendations that would reduce spending in Medicare Parts C and D. Reductions could be obtained by reducing Medicare payments for administrative expenses to MA and PDP plans, denying or removing high bids for drug coverage from the calculation of the monthly bid amount for Part D plans, and reducing performance bonuses for MA plans. Recommendations may not target the base beneficiary premium percentage or the full premium subsidy for Part D plans. The Board is prohibited from making recommendations that would ration care, raise revenues, increase beneficiary premiums, increase beneficiary cost-sharing, restrict benefits, or modify eligibility. Additionally, proposals submitted before December 2018 for implementation in 2020, cannot include recommendations that would reduce payments to providers and suppliers scheduled to receive a reduction in their payment updates in excess of a reduction due to productivity. Presidential Review. At the beginning of the year following the determination by the Secretary, the Advisory Board is to submit its recommendations to the President who is to, in turn, immediately submit them to Congress. The provision dictates certain information which must accompany the Advisory Board's submission, including a requirement for legislative language implementing the recommendations. Congressional Consideration. Section 3403 directs the Secretary to automatically implement the Board's recommendations unless Congress, by August 15 of the year in which the recommendations are submitted, enacts legislation superseding the Board's proposal. The provision establishes special "fast track" parliamentary procedures governing congressional consideration of legislation implementing the Board's recommendations. These fast track procedures differ from the normal parliamentary mechanisms used by the chambers to consider most legislation and are designed to ensure that Congress, should it choose to do so, can act quickly on the proposal put forth by the Advisory Board. The fast track procedures established by the provision mandate the introduction of the Board's legislative proposal by the House and Senate majority leaders "by request" on the day it is submitted to Congress. When introduced, such legislation is to be referred to the Senate Committee on Finance and to the House Committees on Energy and Commerce and Ways and Means. These committees may mark up the measure, and must report it to their respective chambers not later than April 1 or be discharged of its further consideration. The expedited procedure waives the provisions of Senate Rule XV, which would ordinarily bar the Finance Committee from reporting a committee amendment containing significant matter not in its jurisdiction so long as the amendment in question "is relevant" to a proposal in the Advisory Board bill. The provision also restricts the House or Senate from considering any amendment (including committee amendment), bill, or conference report which would repeal or change the Board's recommendations unless those changes meet the same fiscal and policy criteria (described above) that the Board was required to meet in developing its recommendations. PPACA provides for this restriction to apply not only to House and Senate consideration of the Board legislation submitted by the President, but to all other legislation Congress considers as well. This restriction may be waived solely by a vote of three-fifths of the Members. No expedited procedures are established for initial House floor consideration of the Board's legislation. In the Senate, a motion to proceed to consider the legislation is privileged and not debatable. Amendments offered to the legislation on the Senate floor must be germane and may not reduce the savings in Medicare per capita growth below established targets. Debate in the Senate on each amendment to the bill is limited and overall Senate consideration of the legislation may not exceed 30 hours, after which a final vote will be taken on it. In the event that there is a need to resolve bicameral differences on the legislation, debate on any conference report or amendment exchange is limited to no more than 10 hours, after which a final vote will occur. Should the measure be vetoed, Senate debate on a veto message is limited to one hour. Fast Track Consideration of Legislation to Discontinue Payment Advisory Board. The provision establishes an additional set of fast track parliamentary procedures governing House and Senate consideration of a joint resolution to discontinue the Independent Payment Advisory Board and the "automatic" process of implementation described above. These procedures ensure that the House and Senate may act promptly on such a measure by limiting debate and amendment at the committee and floor level. The procedures also establish a supermajority requirement of three-fifths of Members duly chosen and sworn for passage of such a joint resolution in each chamber. Implementation by the Secretary . The Secretary is required to implement the Board's recommendations by August 15 of the year in which the proposal was submitted. Any recommendation that would change a provider's payment rate will apply on the first day of the first fiscal year, calendar year, or rate year (which varies depending on provider type) after August 15 th . Beginning in 2019, the Secretary will be prohibited from implementing the Board's recommendations if two conditions are met: (1) the Board was required to submit a proposal to Congress in the preceding year, and (2) the OACT determined that the rate of growth in per capita NHE exceeded the rate of growth in per capita Medicare spending. These restrictions are not to affect requirements pertaining to the Board's submission of proposals to Congress or the rules related to congressional consideration of these proposals. Additional Review Procedures. The Board must submit a draft copy of each proposal it develops to the Medicare Payment Advisory Commission (MedPAC) and to the Secretary for review. Advisory Functions. Beginning in 2014, for any year the Board is not required to submit a proposal to the President and Congress, the Board will be required to submit to Congress advisory reports on matters related to the Medicare program. Prior to 2020, these reports may include recommendations to improve payment systems for those providers and suppliers exempted from the Board's recommendations. Beginning in 2015, the provision also requires that the Board submit to Congress and the President advisory recommendations to slow the rate of growth in NHE. These recommendations could not target expenditures in federal health care programs. The Board will be required to coordinate these recommendations, which must be made available to the public, with those contained in other Board proposals and advisory reports. Recommendations, which are required at a minimum once every two years, could be implemented either administratively by the Secretary or legislatively by Congress. These advisory reports will not be subject to the rules for congressional consideration. Funding. The provision appropriates $15 million to the Board to carry out its functions beginning in year 2012. This amount will increase by the rate of inflation for each year thereafter. Sixty percent of the appropriation will come from the Part A Medicare Trust Fund and 40% from the Part B Trust Fund. Oversight Mechanisms. The provision establishes a consumer advisory council to advise the Board on the impact of payment policies on consumers. The Council is to be composed of 10 consumer representatives appointed by the Comptroller General of the United States, each from among the 10 regions established by the Secretary. The provision also requires the GAO to conduct a study on changes in payment policies, methodologies, rates, and coverage policies under Medicare resulting from the Board's proposal. Specifically, the study is to provide an assessment of the effect of the Board's proposal on Medicare beneficiary's access to providers, affordability of premiums and cost-sharing, the potential impact of changes on other government or private sector purchasers of care, and the quality of care provided. The report is due by July 1, 2015. The GAO is to conduct additional studies as appropriate. The CBO score is $0.0 billion for FY2010-FY2014 and -$15.5 billion for FY2015-FY2019. Subtitle G—Protecting and Improving Guaranteed Medicare Benefits Sec. 3601. Protecting and Improving Guaranteed Medicare Benefits. This section requires that that no provisions in PPACA may result in a reduction in Medicare benefits currently guaranteed under Title XVIII. This section also requires that Medicare savings achieved under the PPACA are to be used to extend the solvency of the Medicare trust funds, reduce Medicare premiums and other cost-sharing for beneficiaries, improve or expand guaranteed Medicare benefits, and protect access to Medicare providers. This provision was not scored by CBO. Sec. 3602. No Cuts in Guaranteed Benefits. Under prior law, MA plans were required to provide all Medicare covered benefit except hospice. This provision requires that nothing in the PPACA may result in the reduction or elimination of any benefits guaranteed by law to participants in Medicare Advantage plans. This provision was not scored by CBO. Title IV—Prevention of Chronic Disease and Improving Public Health Subtitle B—Increasing Access to Clinical Prevention Services. Sec. 4103 as modified by 10402(b). Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan. Medicare covers a one-time initial preventive physical examination (IPPE), for purposes of health promotion and disease detection, which includes education, counseling, and referrals with respect to screening and other preventive services. The IPPE is reimbursable only if provided within one year of Medicare Part B enrollment. Medicare does not otherwise cover periodic routine health examinations (i.e., those provided in the absence of symptoms). The U.S. Preventive Services Task Force (USPSTF), administered by the HHS Agency for Healthcare Research and Quality (AHRQ), is an independent panel of private-sector experts in primary care and prevention that conducts assessments of scientific evidence of the effectiveness of a broad range of clinical preventive services, including screening, counseling, and preventive medications. It provides evidence-based recommendations for the use of preventive services, which may vary depending on age, gender, and risk factors for disease, among other considerations. Services are given a grade of A, B, C, D or an I Statement. Services graded A or B are recommended. For services graded C, the USPSTF makes no recommendation for or against their routine use. For services graded D, the USPSTF recommends against routinely providing the service to asymptomatic patients, based on evidence that the service is not beneficial, and may be harmful. "I" Statements are provided when evidence is insufficient to support a recommendation. This provision amends SSA§1861 to require that Medicare Part B cover, without cost-sharing, "personalized prevention plan services," including a comprehensive health risk assessment beginning on January 1, 2011. The personalized plan can include several specified elements, including medical and family history, identification of health risk factors, and a plan for preventive screenings. All enrolled beneficiaries will be eligible for personalized prevention plan services once every year without any cost-sharing. During the first year of Part B enrollment, beneficiaries can receive only the IPPE. Beneficiaries will be eligible to receive personalized prevention plan services each year thereafter provided that the beneficiary has not received either an IPPE or personalized prevention plan services within the preceding 12 months. The Secretary is required to develop appropriate guidance and conduct outreach and related activities with respect to personalized prevention plan services and health risk assessments. These services are included in the list of Medicare covered preventive services under Sec. 4104 of PPACA. The CBO score is $1.4 billion for FY2010-FY2014 and $3.6 billion for FY2010-FY2019. Sec. 4104. Removal of Barriers to Preventive Services in Medicare. Section 1833(a) of the SSA establishes coinsurance for the beneficiary, generally requiring Medicare to cover 80% of the costs of covered services under Part B, with specified exceptions. Section 1833(b) establishes an annual deductible for which the beneficiary is responsible. These sections have been amended over the years to waive coinsurance and/or the deductible for many, but not all, covered preventive services. The provision amends SSA Sec. 1861 to define preventive services covered by Medicare to mean a specified list of currently covered services, including colorectal cancer screening services even if diagnostic or treatment services were furnished in connection with the screening. The list also includes the IPPE, as well as the personalized prevention plan services that are covered pursuant to Sec. 4103 of PPACA. Coverage will continue to be subject to all criteria that apply to each preventive service covered under prior law. The provision also amends SSA Sec. 1833 to waive beneficiary coinsurance requirements for most preventive services, requiring Medicare to cover 100% of the costs. Services for which no coinsurance will be required are the IPPE, personalized prevention plan services, any additional preventive service covered under the Secretary's administrative authority, and any currently covered preventive service (including medical nutrition therapy, and excluding electrocardiograms) if it is recommended with a grade of A or B by the USPSTF. The provision generally waives the application of the deductible for the same types of preventive services noted above for which coinsurance would be waived. It does not, however, waive the application of the deductible for any additional preventive service covered under the Secretary's administrative authority. The CBO score is $0.3 billion for FY2010-FY2014 and $0.8 billion for FY2010-FY2019. Sec. 4105. Evidence-Based Coverage of Medicare Preventive Services. The provision authorizes the Secretary to modify the coverage of any currently covered preventive service (including services included in the IPPE, but not the IPPE itself), to the extent that the modification is consistent with USPSTF recommendations. The provision also allows the Secretary to withhold payment for any currently covered preventive service graded D (i.e., not recommended) by the USPSTF. The enhanced authority and the prohibition do not apply to services furnished for the purposes of diagnosis or treatment (rather than as preventive services furnished to asymptomatic patients). The CBO score is -$0.3 billion for FY2010-FY2014 and -$0.7 billion for FY2010-FY2019. Subtitle C—Creating Healthier Communities. Sec. 4202. Medicare Demonstration: Promotion of Healthy Lifestyles. Subsection (b) of this provision requires the Secretary to conduct an evaluation of community-based prevention and wellness programs, and based on findings, develop a plan for promoting healthy lifestyles and chronic disease self-management for Medicare beneficiaries. The evaluation is to include an evidence review of literature, best practices, and resources, and an evaluation of existing community prevention and wellness programs sponsored by the Administration on Aging. To fund the evaluation, the Secretary is required to transfer to CMS $50 million in total from the Part A and Part B Trust Funds, in whatever proportion the Secretary determines. Activities under this evaluation will not be subject to review under the Paperwork Reduction Act of 1995, which subjects collections of information from the public to clearance by OMB. The CBO score is $0.1 billion for FY2010-FY2014 and $0.1 billion for FY2010-FY2019. Sec. 4204. Immunizations. Among other requirements, this section requires GAO to conduct a study and report to Congress on the impact of the coverage of vaccines under Medicare Part D on access to those vaccines by beneficiaries who are 65 years of age or older. The section appropriates $1 million for FY2010 for this study. The CBO score is $0.0 for FY2010-FY2014 and $0.0 for FY2010-FY2019. Title V—Health Care Workforce Subtitle F—Strengthening Primary Care and Other Workforce Improvements Sec. 5501. Expanding Access to Primary Care Services and General Surgery Services. Medicare uses a fee schedule to reimburse physicians for the services they provide. In certain circumstances, physicians receive an additional payment to encourage targeted activities. These bonuses, typically a percentage increase above the Medicare fee schedule amounts, can be awarded for a number of activities including demonstrating quality achievements, participating in electronic prescribing, or practicing in underserved areas. For instance, Section 1833(m) of the Social Security Act provides bonus payments for physicians who furnish medical care services in geographic areas that are designated by the Health Resources and Services Administration (HRSA) as primary medical care health professional shortage areas (HPSAs) under Section 332 (a)(1)(A) of the Public Health Service (PHS) Act. The bonus payment equals 10% of what would otherwise be paid under the fee schedule. The provision establishes a new 10% bonus on select evaluation & management (E&M) and general surgery codes under the Medicare fee schedule for five years, beginning January 1, 2011. The primary care service codes to which this bonus applies will be office visits, nursing facility visits, and home visits. The bonus will be available to primary care practitioners who (1) are physicians who have a specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine, or are nurse practitioners, clinical nurse specialists, or physician assistants, and (2) furnish 60% of their services in the select codes. Practitioners providing major surgical procedures in health professional shortage areas will also be eligible for a bonus under this provision. Over the same five year period beginning January 1, 2011, general surgeons providing care in a HPSA will be eligible for a 10% bonus on major surgical procedure codes, defined as surgical procedures for which a 10-day or 90-day global period is used for payment under the Medicare fee schedule. The review and adjustment of RVUs (under Section 1848(c)(2)(B)) will be adjusted for these incentives; only half (50%) of the cost of the bonuses are to be taken into consideration in the budget neutrality calculation in 2011 and in subsequent years, with an across-the-board reduction to all codes (through a modification of the conversion factor) accounting for the adjustment, except for physicians who primarily provide services in health professionals shortage areas. The CBO score is $2.5 billion for FY2010-FY2014 and is $3.5 billion for FY2010-FY2019. Sec. 10501(i). Development and Implementation of Prospective Payment System (PPS) for FQHCs. A federally qualified health center (FQHC) is a type of provider defined by the Medicare and Medicaid statutes. FQHCs include all organizations receiving grants under section 330 of the Public Health Service Act (PHSA), clinics that have been certified as meeting such requirements (called FQHC Look-Alikes) or outpatient facilities that are operated by tribal organization or urban Indian organizations. FQHC services are defined by Medicare statute as rural health clinic services (such as physician services, those provided by physician assistants, nurse practitioners, nurse midwives, visiting nurses, clinical psychologist or social workers and related services and supplies), diabetes outpatient self-management training services, medical nutrition therapy services and preventive primary health services required under section 330 of the Public Health Service Act (PHSA). FQHCs receive cost-based reimbursement from Medicare, subject to a per-visit payment limit and certain productivity standards. Medicare pays FQHCs on an interim basis for covered services furnished to beneficiaries using an all-inclusive rate for each visit (except for certain vaccines which are paid on a cost basis). Generally, the FQHC's final payment rate is calculated by dividing the FQHC's total allowable cost for such services by the total visits which is subject to the maximum per-visit payment limit. The payment limits are increased each year by the Medicare Economic Index (MEI) and are different for urban and rural FQHCs. The upper payment limit per visit for urban FQHCs is $119.29 starting January 1, 2009, through December 31, 2009, and per visit limit for rural FQHCs is $102.58 effective January 1, 2009. This provision repealed Sec. 5502 established earlier in the legislation. Under Sec. 10501(i), effective for services starting on January 1, 2011, the statutory definition of FQHC services will include the Medicare definition of preventive services at 1861(ddd)(3) that were established in Section 2002 of PPACA. These services include screening and preventive services (other than electrocardiograms), an initial preventive physical examination, and personalized prevention plan services. The cross reference to preventive services in the PHSA will be retained. The Secretary is to develop a prospective payment system (PPS) for FQHC services as established by a new Section 1834(o) of the SSA. The PPS will establish payment rates for specific codes that take into account the type, intensity and duration of services and can include appropriate geographic adjusters. FQHCs will be required to submit necessary data no later than January 1, 2011. The new payment system will be established for cost reporting periods beginning on or after October 1, 2014. Initial FQHC payments under the new PPS are to equal 100% of reasonable costs (determined without application of a per visit payment limit or productivity screen) that would have been reimbursed if the PPS system had not been implemented. In subsequent years, payments rates will be increased by the MEI (in the first year) or by a MB promulgated by regulations if available. FQHC payment codes may be implemented by program instruction. Program payments for FQHC services will be made at 80% of the lesser of actual charge or the PPS amount. FQHCs that contract with MA plans will receive what they would otherwise receive under the new PPS. Medicare's payments for FQHCs services will no longer be subject to reasonableness tests. CBO did not provide a separate score for this subsection of the provision. Title VI—Transparency and Program Integrity Subtitle A—Physician Ownership and Other Transparency Sec. 6001 as modified by Sec. 10601 of PPACA, and by Sec. 1106 of the Reconciliation Act. Limitation on Medicare Exception to the Prohibition on Certain Physician Referrals for Hospitals. Physicians are generally prohibited from referring Medicare patients for certain services to facilities in which they (or their immediate family members) have financial interests. However, among other exceptions, physicians are not prohibited from referring patients to whole hospitals in which they have ownership or investment interests. Providers that furnish substantially all of their designated health services to individuals residing in rural areas are exempt as well. Under this provision, beginning no later than 18 months after the date of enactment, only physician-owned hospitals meeting certain requirements will be exempt from the prohibition on self-referral. Hospitals that have physician ownership and a provider agreement in operation on December 31, 2010, and that meet other specified requirements will be exempt from this self-referral ban. These requirements include a limitation on the expansion of the facilities' service capacity and address conflicts of interest, bona fide investments, and patient safety issues. In addition, the hospital could not have converted from an ambulatory surgical center to a hospital after the date of enactment. Exempt hospitals meeting those requirements will not be permitted to increase the number of operating rooms, procedure rooms or beds for which the hospital is licensed as the date of enactment. A process is to be established to allow certain hospitals to expand by February 1, 2011, as established by regulations promulgated by January 1, 2011. Hospitals can apply for such an expansion once every two years. The increase will be limited to facilities on the main campus of the hospital. There will be no administrative or judicial review of this process. The Secretary is required to establish policies and procedures to ensure compliance with these requirements, beginning on their effective date, including unannounced site reviews of hospitals. These audits are to begin no later than May 1, 2012. The CBO score is -$0.1 billion for FY2010-FY2014 and -$0.5 billion for FY2010-FY2019. Sec. 6002. Transparency Reports and Reporting of Physician Ownership or Investment Interests. This provision adds a new section 1128G to the Social Security Act to require covered drug, device, biological, or medical supply manufacturers that make a payment or another transfer of value to a physician (other than employees of a manufacturer) or a teaching hospital to report annually, in electronic form, specified information on such transactions to the Secretary of HHS. Certain information is to be excluded from these reporting requirements, including payments or transfers of $10 or less, unless the aggregate annual payments or transfers to a recipient exceeds $100 (which, after 2012, would be indexed for inflation), samples intended for patient use, patient educational materials, and loans of a covered device for a short-term time period. The provision also requires manufacturers, or group purchasing organizations to report annually to the Secretary, in electronic form, certain information regarding an ownership or investment interest held by a physician (or an immediate family member) in the manufacturer or group purchasing organization during the preceding year. Certain penalties will apply for failure to submit these reports to the Secretary. The Secretary is also required to establish procedures to ensure public availability of the information to be submitted under this section. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6003. Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services. This section amends section 1877 of the Social Security Act, which prohibits physician referrals, for certain services that may be paid for by Medicare, to entities with which the physician has a financial relationship. Specifically, section 6003 amends one of the exceptions to this prohibition, the in-office ancillary services exception. The provision adds a requirement that with respect to magnetic resonance imaging, computed tomography, positron emission tomography, and any other designated health services as determined by the Secretary, the referring physician must inform the individual in writing at the time of the referral that the individual may obtain the services from a person other than the referring physician, a physician who is a member of the same group practice as the referring physician, or an individual who is directly supervised by the physician or by another physician in the group practice. The individual must be provided with a written list of suppliers who furnish these services in the area in which the individual resides. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6004. Prescription Drug Sample Transparency. The provision adds a new section 1128H of the Social Security Act to require drug manufacturers and authorized distributors of an applicable drug to submit annually to the Secretary of Department of Health and Human Services the identity and quantity of drug samples requested and distributed under section 503 of the Prescription Drug Marketing Act of 1987 (PDMA, P.L. 100-293). This submission must be aggregated by the name, address, professional designation, and signature or the practitioner making the request for the sample (or an individual acting on the practitioner's behalf), as well as any other category of information that the Secretary determines is appropriate. An applicable drug is defined to include drugs that are available by prescription and for which payment is available under Medicare or a Medicaid state plan (or a waiver of such plan). The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6005. Pharmacy Benefit Managers Transparency Requirements. Pharmacy benefit managers (PBMs) are companies that administer drug benefit programs for employers and health insurance carriers. Drug manufacturers may provide "rebates" to PBMs for a particular drug in exchange for the placement of the drug on the PBM's formulary (it's list of approved drugs). This provision requires PBMs that manage prescription drug coverage under a contract with a Part D drug plan or a qualified health plan offered through an exchange (established by a state under Section 1311 of PPACA) to share certain financial information with the Secretary of HHS, the plans the PBMs contract with through Medicare Part D, or the exchanges in a manner, form, and timeframe specified by the Secretary. Specifically, PBMs are required to disclose information on: (1) the percentage of all prescriptions that are provided through retail pharmacies compared to mail order pharmacies, and the generic dispensing rates for each type of pharmacy (for example, independent, chain, supermarket or mass merchandiser pharmacy) that is paid by the PBM under contract; (2) the aggregate amount and types of rebates, discounts or price concessions that the PBM negotiates on behalf of the plan and the aggregate amount of these that are passed through to the plan sponsor, and the total number of prescriptions dispensed; and (3) the aggregate amount of the difference between the amount the plan pays the PBM and the amount that the PBM pays the retail and mail order pharmacy, and the total number of prescriptions dispensed. This information is considered confidential and is to be protected by the Secretary. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Subtitle D—Patient-Centered Outcomes Research Sec. 6301. Patient-Centered Outcomes Research as modified by Sec. 10602 . The need for credible information about which clinical strategies work best, under what circumstances and for whom has been widely recognized by clinicians, patients, researchers and policy makers. Commonly referred to as comparative effectiveness research (CER), the Institute of Medicine (IOM) defines this type of research as the "the generation and synthesis of evidence that compares the benefits and harms of alternative methods to prevent, diagnose, treat, monitor a clinical condition and improve delivery of care" with the aim of tailoring decisions to the needs of individual patients. CBO has referred to CER as "a comparison of the impact of different options that are available for treating a given medical condition for a particular set of patients." MedPAC has referred to "comparative-effectiveness" as "analysis [that] compares the clinical effectiveness of a service (drugs, devices, diagnostic and surgical procedures, diagnostic tests, and medical services) with its alternatives." The phrase "patient-centered outcomes research" has also been used as an alternate term. Most recently, comparative effectiveness research has been addressed in current law by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173) and the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Section 1013 of the MMA authorizes the Agency for Healthcare Research and Quality (AHRQ) to conduct and support research on outcomes, comparative clinical effectiveness, and appropriateness of pharmaceuticals, devices, and health care services. The section also prohibits the Center for Medicare and Medicaid Services (CMS) from using the data to withhold coverage of a prescription drug. The ARRA provided $1.1 billion in funds to support the development and dissemination of CER. ARRA also asked the Institute of Medicine to recommend national priorities for the research to be addressed by ARRA funds. This section of the PPACA modifies Title XI of the Social Security Act to add a Part D, Comparative Clinical Effectiveness Research after sections on General Provisions, Peer Review, and Administrative Simplification. The provision authorizes the establishment of a private, non-profit, tax-exempt corporation, which is to be neither an agency nor establishment of the United States government called the "Patient-Centered Outcomes Research Institute." This institute is to enhance the capacity to conduct comparative clinical effectiveness research (CCER). The purpose of the Institute would be to "assist patients, clinicians, purchasers, and policy makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient sub-populations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items." The duties of the Institute are to (1) identify research priorities and establish a research agenda, (2) carry out the research project agenda, (3) collect relevant data from CMS and other sources, (4) appoint expert advisory panels, (5) support patient and consumer representatives, (6) establish a methodology committee, (7) provide for a peer-review process for primary research, (8) release research findings, (9) adopt the national priorities, the research project agenda, the methodological standards developed and updated by the methodology committee, and any peer-review process provided under point (7), and (10) submit an annual report to Congress and the President. The Institute is to give preference to the Agency for Healthcare Research and Quality and the National Institutes of Health in the awarding of contracts to conduct the research, if the organizations are so authorized in their governing statutes. The provision establishes a Board of Governors for the Institute, which would be responsible for carrying out the duties of the Institute. The Institute's Board is to consist of the Directors of AHRQ and the NIH (or their designee) as well as 17 members appointed by the Comptroller General of the United States representing patients and health care consumers, physicians and providers, private payers, pharmaceutical, device, and diagnostic manufacturers or developers, representatives of quality improvement or independent health service researchers, and representatives of the federal government or the states. The provision includes a number of limitations on the use of CCER. A rule of construction specifies that the Institute is not to be permitted to mandate coverage, reimbursement or other policies for any public or private payer nor to prevent the Secretary from covering the routine costs of clinical care received by Medicare, Medicaid, or CHIP beneficiaries in the case where the individual is participating in a clinical trial where the costs would be covered by the program. In addition, the Secretary could only use evidence and findings from CCER to make a Medicare coverage determination if the process is iterative and transparent and includes public comment and considers the effect on subpopulations. CCER is not to be construed as (1) superseding or modifying the coverage of items or services under Medicare that the Secretary determines are reasonable and necessary, nor (2) authorizing the Secretary to deny coverage of items or services under Medicare solely on the basis of comparative clinical effectiveness research. The Secretary is prohibited from using CCER evidence and findings in determining Medicare coverage, reimbursement, or incentive programs in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, non-disabled, or not terminally ill, nor in a manner that would preclude or have the intent to discourage individuals from choosing health care treatments based on how the individual values the tradeoff between extending the length of life and the risk of disability. The Institute will also not be allowed to develop or employ a dollars-per-quality adjusted life year or similar measure that discounts value of life because of disability as a threshold to establish what type of care is cost effective or recommended, nor would the Secretary utilize such an adjusted life year (or such a similar measure) as a threshold to determine coverage, reimbursement, or incentive programs under Medicare. The provision creates a new trust fund, the Patient-Centered Outcomes Research Trust Fund (the PCORTF) in the U.S. Treasury to fund the Institute and its activities. Monies will be directed to this fund from the general fund of the Treasury as well as the Medicare Trust Funds and from fees imposed on health insurance and self-insured plans. In years 2010, 2011, and 2012, $10 million, $50 million, and $150 million will be appropriated from Treasury to the fund. Beginning in 2013, the PCORTF will also be financed from fees on health insurance and self-insured health plans. For FY2013, the Secretary will transfer amounts from the Medicare Federal Hospital Insurance and the Federal Supplemental Medical Trust Funds to the PCORTF in proportion to total Medicare expenditures that come from each Fund for a given year. In FY2013, the amount is to be equivalent to $1 multiplied by the average number of individuals entitled to benefits under Part A or enrolled under Part B of Medicare during the year. (In FY2014 through FY2019, the amounts are to be equivalent to $2, adjusted for increases in health care spending FY2014, multiplied by the average number of such individuals for the given year.) For fiscal years 2014 through 2019, the provision requires a transfer of $150 million from the Treasury as well as the net revenues from a fee of $1 in FY2013 and $2 (adjusted for health care spending increases) in FY2014 through FY2019, on each health insurance policy in the United States multiplied by the number of lives covered under that policy. Insurance policies that primarily provide non-health benefits will be exempt. This fee will sunset after FY2019 (plan years ending after September 30, 2019). The CBO score is $0.1 billion for FY2010-FY2014 and -$0.3 billion for FY2010-FY2019. Subtitle E—Medicare, Medicaid, and CHIP Program Integrity Provisions Sec. 6401 as modified by Sec. 10603 of PPACA, and Sec. 1304 of the Reconciliation Act. Provider Screening and Other Enrollment Requirements Under Medicare, Medicaid, and CHIP. CMS has implemented regulations requiring providers and suppliers to complete an application to enroll in the Medicare program and receive billing privileges. As part of the enrollment process, providers and suppliers are required to submit information necessary to verify identity and state licensure. CMS reserves the right to perform on-site inspections of a provider or supplier to verify compliance with standards. If enrollment requirements are not met, CMS may revoke Medicare billing privileges. Providers and suppliers must resubmit and recertify the accuracy of their enrollment information every five years. This provision requires the Secretary to establish procedures for enrolling providers and suppliers enrolling in the Medicare, Medicaid, and CHIP programs. The enrollment process is required to include provider screening, enhanced oversight measures, disclosure requirements, moratoriums on enrollment, and requirements for developing compliance programs. Provider Screening . The Secretary, in consultation with the OIG, has six months to develop the procedures related to provider screening. The Secretary is to determine the level of screening according to risk and with respect to a category of providers and suppliers. At a minimum, all providers and suppliers will be subject to licensure checks, including checks across states. The Secretary has the authority to impose additional screening measures such as criminal background checks, fingerprinting, unannounced site visits, database checks, and other screening measures as appropriate. To cover the costs of screening, institutional providers will be subject to fees. Fees will start at $500 in 2010 and increase by the rate of inflation annually thereafter. The provision requires the Secretary to use the fees collected to fund program integrity efforts. The Secretary has the authority to exempt providers from fees in case of hardship. The revised screening measures will apply to providers and suppliers who have not yet enrolled in Medicare, Medicaid, and CHIP in one year, to current providers and suppliers in two years, and to providers and suppliers re-enrolling in one or more of these programs in 6 months. No provider or supplier will be allowed to participate in Medicare, Medicaid, or CHIP if they have not been screened within three years. Enhanced Oversight. The Secretary is required to establish procedures for imposing periods of enhanced oversight, such as prepayment review and payment caps, on new providers and suppliers. The period cannot be less than 30 days or last more than one year. Beginning January 1, 2011, in instance when there is a significant risk of fraud, the Secretary will be required to impose a 90-day period of enhanced oversight on DME suppliers initially enrolling in the program. The Secretary will also have the authority to impose temporary moratoriums on enrolling new providers and suppliers if the Secretary determines that these moratoriums are necessary to combat fraud. Disclosure Requirements. The provision imposes new disclosure requirements on providers and suppliers enrolling or re-enrolling in Medicare, Medicaid, or CHIP. Applicants will be required to disclose current or previous affiliations with any provider or supplier that has uncollected debt, has had their payments suspended, has been excluded from participating in Medicare, Medicaid, or CHIP, or has had their billing privileges revoked. The Secretary is authorized to adjust payments or deny enrollment in these programs if these affiliations pose an undue risk to the program. Compliance Programs. The provision requires Medicare, Medicaid, and CHIP providers and suppliers, within a particular industry or category, to establish a compliance program. The requirements for the compliance program are to be developed by the Secretary and the OIG. The Secretary is required to consider the extent to which compliance programs have been adopted by providers when creating a timeline for implementation. The CBO score is $0.0 for FY2010-FY2014 and -$0.1 billion for FY2010-FY2019. Sec. 6402 as modified by Sec. 1303 of the Reconciliation Act. Enhanced Medicare and Medicaid Program Integrity Provisions. Data Matching . Currently, claims and payment data for Medicare and Medicaid are housed in multiple databases. CMS is in the process of consolidating information stored in these databases into an Integrated Data Repository (IDR). According to the agency's website, the eventual goal of the IDR is to support an integrated data warehouse containing data related to Medicare & Medicaid claims, beneficiaries, providers, and health plans. The provision requires CMS to include in the IDR claims and payment data from the following programs: Medicare (Parts A, B, C, and D), Medicaid, CHIP, health-related programs administered by the Departments of Veterans Affairs (VA) and Defense (DOD), Social Security, and the Indian Health Service (IHS). The priority is the integration of Medicare and Medicaid claims and payment data. Data for the remaining programs is to be integrated as appropriate. The Secretary is required to enter into data sharing agreements with the federal agencies listed above for the purposes of identifying fraud, waste, and abuse. This provision also grants the OIG and the DOJ explicit access to Medicare, Medicaid, and CHIP payment and claims data (including Medicare Part D data) for the purposes of conducting law enforcement and oversight activities. Access to Data. Inspectors General have substantial independence and powers to carry out their mandate to combat waste, fraud, and abuse, including relatively unlimited authority to access all records and information of an agency. This provision grants the OIG the authority, under Medicare and Medicaid, to obtain information from any individual (including a beneficiary) or entity (i.e., provider, supplier, contractor, subcontractor, etc.) that directly or indirectly provides medical services payable by a Federal health care program. Types of information include any supporting documentation necessary to validate a claim for payment such as medical records for individuals prescribed Medicare Part B or Part D drugs. PPACA includes a separate clause mandating that the HHS OIG, the DOJ, and the GAO have access to Medicare Part D data for the purposes of carrying out health oversight activities. Beneficiary Participation in Health Care Fraud Scheme. The provision requires the Secretary to impose penalties against beneficiaries entitled to or enrolled in Medicare, Medicaid, or CHIP who knowingly participate in a health care fraud offense. Overpayments. In accordance with CMS instructions, overpayments must be repaid to CMS within 30 days of receiving a demand letter. If the debt is not paid in full after 30 days, interest is assessed and CMS reserves the right to collect the overpayment by offset. Under this provision, individuals will be required to report and return an overpayment within 60 days. Overpayments reported after this date will be considered an obligation as defined in Title 31 of the USC. National Provider Identifier. Health care providers often have many different provider numbers, one for billing each private insurance plan or public health care program. The administrative simplification provisions of HIPAA required the adoption and use of a standard unique identifier for health care providers or National Provider Identifier (NPI). All health care providers who are considered covered entities under HIPAA were required to obtain and submit claims using an NPI as of May 2007. This provision requires the Secretary to issue a regulation by January 1, 2011, mandating that all Medicare and Medicaid providers include their NPI on all claims and enrollment applications. Permissive Exclusions. HHS OIG has the authority to exclude health care providers from participation in federal health care programs. Exclusions are mandatory under certain circumstances, and permissive in others (i.e., HHS OIG has discretion in whether to exclude an entity or individual). This provision subjects any individual or entity that makes a false statement or misrepresentation on an application to enroll or participate in a federal health care program to the OIG's permissive exclusion authority. The provision explicitly applies to MA plans, Medicare prescription drug plans (PDPs), and Medicaid managed care plans as well as their participating providers and suppliers. Civil Monetary Penalties (CMPs). Section 1128A (a) of the SSA authorizes the imposition of CMPs on a person, organization, agency, or other entity that engages in various types of improper conduct with respect to federal health care programs. This section generally provides for CMPs of up to $10,000 for each false claim submitted, $15,000 or $50,000 under other circumstances, and an assessment of up to three times the amount claimed. This provision adds additional actions that are subject to CMPs. Specifically, individuals who have been excluded from a Federal health care program who order or prescribe an item or service; individuals who make false statements on enrollment applications, bids, or contracts to participate in a federal health care program; or persons who know of an overpayment and do not return the overpayment may be subject to a CMPs of $50,000. Kickbacks and Revising the Intent Requirement. Under the federal anti-kickback statute, SSA Section 1128B(b), it is a felony for a person to knowingly and willfully offer, pay, solicit, or receive anything of value (i.e., "remuneration"), in return for a referral or to induce generation of business reimbursable under a federal health care program. Violations of section 1128B carry penalties of up to $25,000, imprisonment of five years, or both. The federal False Claims Act (FCA) is considered by many to be an important tool for combating fraud against the U.S. government. In general, the FCA imposes civil liability on persons who knowingly submit a false or fraudulent claim or engage in various improper activities involving federal government money or property. Penalties under the FCA include treble damages, plus an additional penalty of $5,500 to $11,000 for each false claim filed. Section 6402(f)(1) of PPACA amends section 1128B to provide that a claim for items or services resulting from a violation of section 1128B will also constitute a false or fraudulent claim that may be subject to penalties under the FCA. Further, section 6402(f)(2) of PPACA addresses the intent requirements of section 1128B. This section amends section 1128B to specify that with respect to violations of the section, a person does not have to have actual knowledge of section 1128B, or specific intent to commit a violation of it. Treatment of Certain Charitable and Other Innocuous Programs. Under Section 1128A of the SSA, the HHS OIG is authorized to impose CMPs and assessments on a person, including an organization, agency, or other entity, who engages in various types of improper conduct with respect to federal health care programs. One type of prohibited conduct, described in section 1128A(a)(5), occurs when a person offers or transfers remuneration to a Medicare or Medicaid beneficiary when such person knows or should know the remuneration is likely to influence the beneficiary's ordering or receiving items or services (payable, at least in part, by Medicare or Medicaid) from a particular provider, practitioner, or supplier. Further, individuals who commit violations of the federal anti-kickback statute, Section 1128B(b), may be subject to CMPs under section 1128A for damages amounting to not more than three times the total amount of remuneration offered, paid, solicited, or received, without regard to whether a portion of such remuneration was offered, paid, solicited, or received for a lawful purpose. Section 6402(d)(2)(B) of PPACA amends the definition of "remuneration" in section 1128A(i)(6) of the SSA to exclude remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs; the offer or transfer of items or services for free or less than fair market value by a person, subject to certain additional requirements; and, effective on a date specified by the Secretary (but no earlier than January 1, 2011), a waiver of the copayment amount (under prescription drug plan offered by a PDP sponsor or an MA-PD plan offered by an MA organization) for the first fill of a covered part D drug that is a generic drug for individuals enrolled in a the prescription drug plan or a MA-PD drug plan. Testimonial Subpoena Authority. The testimonial subpoena authority grants the authority to issue subpoenas and require the attendance and testimony of witnesses and the production of any other evidence that relates to matters under investigation or in question. Under this provision, the Secretary is given the authority to issue subpoenas and require the attendance and testimony of witnesses and the production of any other evidence that relates to matters under investigation or in question by the Secretary. The Secretary also has the ability to delegate this authority to the OIG and the Administrator of CMS for the purposes of a program exclusion investigation. Surety Bonds. To be eligible to receive a provider number from CMS and bill Medicare, DME suppliers are required to provide the Secretary with a surety bond in the amount of $50,000 or greater. A surety bond issued by a State would satisfy this requirement. The Secretary has the authority to impose these requirements on other Part A and B providers and suppliers, except physicians. Home health agencies are required to provide the Secretary with a surety bond equal to 10% of the aggregate Medicare and Medicaid payments made to the agency for that year or $50,000, whichever is smaller. A surety bond for a home health agency is effective for four years, with limited exceptions. This provision gives the Secretary the authority to require certain providers and suppliers to provide surety bonds commensurate with the volume of billing. The value of the bond, however, cannot be less than $50,000. The Secretary also has the authority to impose this requirement on other providers and suppliers considered to be at risk by the Secretary. Payment Suspensions. Under CMS regulations, CMS and its contractors have the authority to withhold payment in whole or in part if there is reliable evidence of an overpayment or fraud. CMS regulations stipulate the procedures CMS and its contractors must follow when deciding to suspend payment. This provision provides the Secretary with explicit statutory authority to suspend payments to providers and suppliers pending an investigation of fraud, unless the Secretary determines that there is good cause not to suspend payments. The provision also requires the Secretary to consult with the OIG to determine whether there is a credible allegation of fraud and requires the Secretary to implement this provision through rulemaking. Health Care Fraud and Abuse Control (HCFAC) Account. Activities to fight health care fraud, waste, and abuse are funded by the Health Care Fraud and Abuse Control (HCFAC) account. The HCFAC account funds two programs: (1) the HCFAC program, which finances the investigative and enforcement activities undertaken by HHS, the OIG, the DOJ, and the FBI, and (2) the Medicare Integrity Program (MIP), which finances the program integrity activities undertaken by CMS contractors. HCFAC was established by HIPAA, which sought to increase and stabilize Federal funding for health care anti-fraud activities. HIPAA appropriated funds to the HCFAC account for years 1997 through 2003. In December 2006, Congress passed the Tax Relief and Health Care Act, or TRHCA, which extended the mandatory annual appropriation for the HCFAC program by a CPI adjustment until 2010. TRHCA did not extend the annual appropriation for MIP. This provision appropriates an additional $10 million annually to the HCFAC program for fiscal years 2011 through 2020. Funds are to be appropriated in the same proportion as allocated in FY2010 and are to be available until expended. The provision also permanently applies the CPI adjustment mandated under TRHCA to the HCFAC program and adds a CPI-adjustment to the MIP program beginning in 2011. Sec. 1303 of the Reconciliation Act appropriates additional funding to the HCFAC program for fiscal years 2011 through 2016: (1) $95 million for FY2011; (2) $55 million for FY2012; (3) $30 million for FY2013 and FY2014; and $20 million for FY2015 and FY2016. Funding is to be available without further appropriation until expended. Medicare and Medicaid Integrity Programs. Under the Medicare Integrity Program (MIP), CMS contracts with private entities to conduct a variety of activities designed to protect Medicare from fraud, waste, and abuse. Activities include auditing providers, identifying and recovering improper payments, educating providers about fraudulent providers, and instituting a Medicare-Medicaid data matching program. This provision requires MIP contractors to provide the Secretary and the OIG with performance statistics, including the number and amount of overpayments recovered, the number of fraud referrals, and the return on investment for such activities as requested by the Secretary or the OIG. The Secretary is also required to conduct evaluations of eligible entities at least every three years and, beginning in FY2011, submit a report to Congress describing the use and effectiveness of MIP funds. The reports will be due 6 months after the end of each fiscal year. The CBO score is -$1.1 billion for FY2010-FY2014 and -$2.9 billion for FY2010-FY2019. Sec. 10330. Modernizing Computer and Data Systems of CMS to Support Improvements in Care Delivery. The provision requires the Secretary to develop a plan along with a budget to modernize the computer and data systems of CMS. In developing the plan, the Secretary is required to consider how such a system could make data available in a timely and reliable manner to providers and suppliers to support their efforts to better manage and coordinate care, and support consistent evaluations of payment and delivery system reforms. The Secretary is required to post the plan on the CMS website within 9 months from the date this legislation is enacted. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6403. Elimination of Duplication Between the Healthcare Integrity and Protection Data Bank (HIPDB) and the National Practitioner Data Bank (NPDB). The HIPAA of 1996 required the Secretary to develop and maintain a national health care fraud and abuse data collection program for the reporting of adverse actions taken against health care providers. This database is called the Healthcare Integrity and Protection Data Bank (HIPDB). The statute requires the following types of health care related adverse actions be reported to the HIPDB - civil judgments, federal or state criminal convictions, actions taken by federal or state licensing agencies, and provider exclusions from Medicare and Medicaid. Only final adverse actions are reportable to the HIPDB. Administrative fines, citations, corrective action plans, and other personnel actions are not reportable except under certain circumstances. Settlements, in which a finding of liability has not been established, are also not reportable. Both federal and state government agencies as well as health plans are required to report to the HIPDB. Prior to the HIPDB, Congress established the National Practitioner Data Bank or NPDB with the Health Care Quality Improvement Act of 1986. The NPDB collects data related to the professional competence of physicians, dentists, and other health care practitioners. The types of information included in the NPDB are medical malpractice payments, certain adverse licensure actions, adverse privilege actions, adverse professional society actions, and exclusions from Medicare and Medicaid. Section 1921 of the SSA expanded the scope of reporting requirements for the NPDB to encompass additional adverse licensure actions and actions taken by State licensing and certification agencies, peer review organizations, and private accreditation organizations. States are required to have a system for reporting adverse actions to the NPDB. This provision requires the Secretary to maintain a national health care fraud and abuse data collection program for the reporting of certain final adverse actions (excluding settlements in which no findings of liability have been made) taken against health care providers and furnish such information to the NPDB. Information collected in the NPDB is to be available to the agencies and authorities listed under section 1921(b). The Secretary has the authority to establish fees for the disclosure of such information. The provision requires States to have a system for reporting information with respect to any final adverse action taken against a health care provider, supplier, or practitioner. The Secretary is also required to implement a transition process, which must be completed within one year, for transferring all information collected in the HIPDB to the NPDB, thereby eliminating the HIPDB. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6404. Maximum Period of Submission of Medicare Claims Reduced to Not More Than 12 Months. Prior Medicare statute required that payments only be made if a written request for payment is filed within three calendar years after the year in which the services were provided. The Secretary is authorized to reduce this period to no less than one year if it deems it necessary for the efficient administration of the program. As established by CMS regulations, the time limit on submitting a claim for payment is the close of the calendar year after the year in which the services were furnished. This provision requires that beginning January 2010, the maximum period for submission of Medicare claims be reduced to not more than 12 months. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6405 as modified by Sec. 10604. Physicians Who Order Items and Services Required to be Medicare Enrolled Physicians or Eligible Professionals. In order to receive payment from Medicare, physicians are required to certify that specified services (i.e., inpatient psychiatric services, post-hospital extended care services, and home health services) meet certain conditions. In the case of home health services, physicians are required to certify that such services were required because the individual was confined to his home and needs skilled nursing care or physical, speech, or occupational therapy; a plan for furnishing services to the individual has been established; and such services were provided under the care of a physician. In the case of DME, the Secretary is authorized to require, for specified covered items, that payment be made for items and services only if a physician has communicated to the supplier a written order for the item. This provision requires that for written orders and certifications made on or after July 1, 2010, physicians or eligible professionals who order DME or HH services be enrolled in the Medicare program. The Secretary is given the authority to extend these requirements to physicians and eligible professionals that order other categories of Medicare items and services, including covered Part D drugs, if the Secretary determines that it would help reduce fraud, waste, and abuse. The CBO score is -$0.2 billion for FY2010-FY2014 and -$0.4 billion for FY2010-FY2019. Sec. 6406. Requirement for Physicians to Provide Documentation on Referrals to Programs at High Risk of Waste and Abuse. OIG has "permissive" authority to exclude an entity or an individual from a federal health program under numerous circumstances, including failing to supply documentation related to payment for items and services. Under this provision, beginning January 1, 2010, the Secretary has the authority to disenroll, for no more than one year, a Medicare enrolled physician or supplier that fails to maintain and provide access to written orders or requests for payment for DME, certification for home health services, or referrals for other items and services to the Secretary. The provision also extends the OIG's permissive exclusion authority to include individuals or entities that order, refer, or certify the need for health care services that fail to provide adequate documentation to the Secretary to verify payment. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6407 as modified by Sec. 10605. Face-to-Face Encounter with Patient Required Before Physicians May Certify Eligibility for Home Health Services or Durable Medical Equipment Under Medicare. Home health services are covered under Medicare Parts A and B. In order to receive payment from Medicare, physicians are required to certify and re-certify that specified services (i.e., inpatient psychiatric services, post-hospital extended care services, and home health services) meet certain conditions. In the case of home health services, physicians are required to certify that such services were required because the individual was confined to his home and needs skilled nursing care or physical, speech, or occupational therapy; a plan for furnishing services to the individual has been established; and such services were provided under the care of a physician. In the case of DME, the Secretary is authorized to require, for specified covered items, that payment be made for items and services only if a physician has communicated to the supplier a written order for the item. Under this provision, beginning January 1, 2010, physicians are required to have a face-to-face encounter (including through telehealth) with the individual prior to issuing a certification or re-certification for home health services or DME. Physicians furnishing home health services under Part A are required to document that they had a face-to-face encounter with the patient within a reasonable time frame. Physicians furnishing home health services under Part B are required to document that they had a face-to-face encounter within the six-month period preceding the certification. In the case of DME, physicians are required to document that a physician, physician assistant, nurse practitioner, or clinical nurse specialist have a face-to-face encounter during the six-month period preceding the certification. The Secretary is authorized to apply the face-to-face encounter requirement to other Medicare items and services based upon a finding that doing so would reduce the risk of waste, fraud, and abuse. The provision also specifies that eligible professionals include nurse practitioners or clinical nurse specialists who are collaborating with the physician, a certified nurse midwife, or physician assistant as defined in statute. The CBO score is -$0.3 billion for FY2010-FY2014 and -$1.0 billion for FY2010-FY2019. Sec. 6408. Enhanced Penalties. Section 1128A (a) of the SSA authorizes the imposition of CMPs on a person, organization, agency, or other entity that engages in various types of improper conduct with respect to federal health care programs, and generally provides for CMPs of up to $10,000 for each false claim submitted, $15,000 or $50,000 under other circumstances, and an assessment of up to three times the amount claimed. This provision of PPACA mandates that persons who knowingly make, use, or cause to be made or used any false statement material to a fraudulent claim be subject to a civil monetary penalty of $50,000 for each violation. This provision also adds a new clause to the CMP statute—persons who fail to grant timely access, upon reasonable request (as defined by the Secretary in regulations), to the OIG, for the purpose of audits, investigations, evaluations, or other statutory functions of the OIG, will be subject to CMPs of $15,000 for each day of failure. Penalties for MA and Part D plans . MA plans enter into contracts with the Secretary to participate in the Medicare program. The Secretary has the authority to impose sanctions and CMPs on MA plans that violate the terms of the contract. Among the types of violations are failing to provide medically necessary care, imposing excess beneficiary premiums, expelling or refusing to re-enroll beneficiaries, and misrepresenting or falsifying information. This provision increases the number of violations subject to sanctions and CMPs by the Secretary. Under the provision, plans that enroll individuals in a MA or Part D plan without their consent (except Part D dual eligibles), transfer an individual from one plan to another for the purpose of earning a commission, fail to comply with marketing requirements, or employ or contract with an individual or entity that violates the terms of the contract will be subject to sanctions imposed by the Secretary. The provision also enhances penalties for plans that misrepresent or falsify information furnished to the Secretary or to an individual by an additional assessment equal to the amount claimed by the plan based on the false information. These new penalties apply to acts committed on or after January 1, 2010. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6409. Medicare Self-Referral Disclosure Protocol. In 1998, the HHS Office of the Inspector General (HHS OIG) issued a Self-Disclosure Protocol (SDP), which includes a process under which a health care provider can voluntarily self-disclose evidence of potential fraud, in an effort, to avoid the costs or disruptions that may be associated with an investigation or litigation. On March 24, 2009, HHS OIG issued an "Open Letter to Health Care Providers" that makes refinements to the SDP. In the Open Letter, HHS OIG announced that it would no longer accept disclosure of a matter that involves only liability under the physician self-referral law in "the absence of a colorable anti-kickback statute violation." Further, for anti-kickback-related submissions accepted into the SDP following the date of the letter, HHS OIG requires a minimum $50,000 settlement amount to resolve the matter. This provision requires that the Secretary, in cooperation with the OIG, establish a self-referral disclosure protocol (SRDP) to enable health care providers and suppliers to disclose actual or potential violations of the physician self-referral law. In addition, the Secretary will be required to post information on CMS' website to inform stakeholders of how to disclose actual or potential SRDP violations. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 6410. Adjustments to the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Acquisition Program . Medicare generally pays for most durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) on the basis of a fee schedule. MMA required the Secretary to establish a Competitive Acquisition Program for specified medical equipment in specified areas to replace the Medicare fee schedule. The program is to be phased-in, starting in nine of the largest metropolitan statistical areas (MSAs) in 2009 (round 1), expanding to an additional 70 of the largest MSAs in 2011 (round 2) and remaining areas after 2011. PPACA expands the number of areas included in round 2 of the program from 70 to 91 MSAs. The 21 additional MSAs will be the next largest MSAs by population. The Secretary is required to extend the program, or apply competitively bid rates, to remaining areas by 2016. The CBO score is -$0.3 billion for FY2010-FY2014 and -$1.4 billion for FY2010-FY2019. Sec. 6411. Expansion of the Recovery Audit Contractor (RAC) Program. Recovery Audit Contractors, or RACs, are private organizations that contract with CMS to identify and collect improper payments made in Medicare Parts A and B. Congress originally required the Secretary to conduct a three-year demonstration program using RACs in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173). In December 2006, Congress passed the Tax Relief and Health Care Act of 2006 (TRHCA, P.L. 109-432), which made the program permanent and mandated the expansion of RACs nationwide by January 1, 2010. Medicare pays RACs differently than it pays other administrative contractors. Historically, Medicare's administrative contractors have been paid a fixed annual budget for a defined scope of work. In contrast, Congress mandated that CMS pay RACs using contingency fees. A contingency fee is a negotiated payment, typically a percentage, for every overpayment recovered. This provision requires that the Secretary enter into contracts with RACs for Medicare Part C and D activities by December 31, 2010. Among the requirements for Part C and D RACs are ensuring that each MA or PDP plan have in place an anti-fraud plan, reviewing the reinsurance payments of Part D plans, and comparing Part D plan's enrollment estimates for high cost beneficiaries. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 10606. Health Care Fraud Enforcement. This section contains a variety of requirements related to health care fraud enforcement. Among these provisions, the U.S. Sentencing Commission will now be required to review and amend the federal sentencing guidelines and policy statements applicable to persons convicted of federal health care offenses, as specified by the legislation. In addition, PPACA deems existing certain criminal offenses to be "federal health care fraud offenses" under the U.S. Criminal Code. By defining a particular offense as a "federal health care offense," convictions for violations of these listed statutes may be punishable by longer prison terms and/or higher fines, and other enforcement mechanisms may apply. The new federal health care offenses include the federal anti-kickback statute under section 1128B of the Social Security Act (42 U.S.C. § 1320a-7b), section 1349 of the U.S. Criminal Code (attempting or conspiring to commit a criminal offense), section 301 of the Federal Food Drug and Cosmetic Act, and section 501 of ERISA. This section also amends certain subpoena authority relating to health care. For example, this section amends the Civil Rights of Institutionalized Persons Act (CRIPA, 42 U.S.C. §1997 et seq.), which provides authority for the Department of Justice (DOJ) to initiate or intervene in lawsuits in federal courts in order to protect the rights of institutionalized persons. Under CRIPA, the Attorney General, or a person at his or her direction, could require access by subpoena to any institution that is the subject of an investigation under CRIPA and to additional information relating to any institution that is the subject of an investigation under the act. The information obtained under a subpoena may not be used for any purpose other than to protect the constitutional and legal rights, privileges, or immunities of persons who reside or will reside in an institution, and the DOJ could not transmit this information for any other purpose. The CBO score is $0.0 billion for FY2010-FY2014 and $0.0 billion for FY2010-FY2019. Sec. 1301 of the Reconciliation Act. Community Mental Health Centers. Under current law, community mental health centers (CMHCs) must meet certain requirements in order to receive payment under Medicare. For example, CMHCs must demonstrate that they can provide the core mental health services described in the Public Health Service Act and that they are licensed in the state in which they are operating. Section 1301 of the Reconciliation Act requires that a CMHC also demonstrate that they provide at least 40% of their services to individuals not eligible for Medicare. Section 1301 also restricts Medicare reimbursement for mental health services delivered in an individual's home or in an inpatient or residential setting. Sec. 1302 of the Reconciliation Act. Medicare Prepayment Medical Review Limitations. To protect the Medicare program from improper payments and fraudulent billing, Medicare contractors have the authority to review a provider's claims prior to payment. This is referred to as prepayment medical review. Under Medicare statute, contractors can only conduct prepayment review of a provider's claims only under certain circumstances: (1) to develop a claims payment error rate and (2) when there is a likelihood of a sustained or high level of improper billing. Section 1302 of the Reconciliation Act repeals these statutory limitations on prepayment review. The combined CBO score for1301, 1302, and 1303 is -$0.3 billion for FY2010-FY2014 and -$0.9 billion for FY2010-FY2019. Title IX—Revenue Provisions Subtitle A—Revenue Offset Provisions Sec. 9015 as modified by Sec. 10906 of PPACA, and Sec. 1402 of the Reconciliation Act. Additional Hospital Insurance Tax on High-Income Taxpayers and Unearned Income Medicare Contribution. Under current law, employees and employers each pay a payroll tax of 1.45% to finance Medicare Part A. PPACA imposes an additional tax of 0.9% on high-income workers with wages over $200,000 for single filers and $250,000 for joint filers effective for taxable years after December 31, 2012. Since employers cannot be expected to know the wages of a spouse, they will be directed to collect these revenues from all workers with wages exceeding $200,000 and then the individuals would have to reconcile any excess withholding on their tax return. The 0.9% tax will also be levied on the self-employed if their incomes exceed the specified thresholds. The self-employed will not be allowed to deduct this additional tax as a business expense. The Reconciliation Act imposes an additional tax on net investment income, defined as interest, dividends, annuities, royalties, rents and taxable net capital gains. It excludes distributions from a qualified annuity from a pension plan. Households with modified adjusted gross income under these thresholds will not be subject to the investment income tax. Specifically, effective for taxable years after December 31, 2012, the Reconciliation Act will a tax equal to 3.8% of the lesser of net investment income for such taxable year, or the excess of modified adjusted gross income (MAGI) over $250,000 for joint filers ($125,000 for married filing separately and $200,000 for all other returns). This tax is also applicable to income from estates and trusts. The active income from trade for self-employed and S-corporations will not be subject to the tax. For these entities, the tax will apply only to passive income and trade income related to commodity trading. There is also a special provision for the application of the tax to S. Corporations which sell their businesses. JCT estimates that this provision will increase revenues by $38.3 billion during FY2010-FY2014 and $210.2 billion during FY2010-FY2019. Appendix B. Timeline for Update Reductions Including Productivity Adjustments, by Provider Type Appendix B. Appendix C. Implementation Timeline of Medicare Provisions in PPACA Table C -1 through Table C -12 list the start date, effective date, or deadline for the Medicare changes established by PPACA (P.L. 111-148, as amended by P.L. 111-152) in chronological order. Modifications made by the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309) are also noted within the affected provisions. Where applicable, the frequency, duration, and end date associated with specific changes or requirements are noted in a separate column. Provisions that had non-specific implementation requirements or deadlines are presented separately in Table C -13 . For additional information on provisions that appear in the timeline, refer to the more detailed summaries in Appendix A . For definitions of acronyms used in the timeline, refer to Appendix D . Appendix C. Appendix D. List of Acronyms

Medicare is a federal program that pays for covered health services for most persons 65 years old and older and for most permanently disabled individuals under the age of 65. The rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy continue to challenge the program's ability to provide quality and effective health services to its 47 million beneficiaries in a financially sustainable manner. On March 23, 2010, the President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as passed by the Senate on December 24, 2009, and the House on March 21, 2010. The new law will, among other things, make numerous statutory changes to the Medicare program. On March 30, 2010, the President signed into law H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (the "Reconciliation Act," or HCERA; P.L. 111-152), which modifies a number of Medicare provisions in PPACA and adds several new provisions. Several PPACA provisions were also modified by the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), which was signed into law on December 15, 2010. This report, one of a series of CRS products on PPACA and the Reconciliation Act, examines the Medicare related provisions in these Acts. Estimates from CBO on PPACA and the Reconciliation Act indicate that net reductions in Medicare direct spending (absent interaction effects) will reach close to $400 billion from FY2010 to FY2019. Major savings are expected from constraining Medicare's annual payment increases for certain providers, tying maximum Medicare Advantage payments near or below spending in fee-for-service Medicare, reducing payments to hospitals that serve a large number of low-income patients, creating an Independent Payment Advisory Board to make changes in Medicare payment rates, and modifying the high-income threshold adjustment for Part B premiums. A new Hospital Insurance tax for high-wage earners will also raise approximately $87 billion over 10 years, and a new Medicare tax on net investment income, added by the Reconciliation Act, is expected to raise an additional $123 billion over 10 years. Other provisions in PPACA address more systemic issues, such as increasing the efficiency and quality of Medicare services and strengthening program integrity. For example, PPACA requires the establishment of a national, voluntary pilot program that will bundle payments for physician, hospital, and post-acute care services with the goal of improving patient care and reducing spending. Another provision adjusts payments to hospitals for readmissions related to certain potentially preventable conditions. In addition, PPACA subjects providers and suppliers to enhanced screening before allowing them to participate in the Medicare program, and both PPACA and the Reconciliation Act increase funding for anti-fraud activities. PPACA also improves some benefits provided to Medicare beneficiaries. For instance, Medicare prescription drug program enrollees will receive a 50% discount off the price of brand-name drugs during the coverage gap (the "doughnut hole") starting in 2011, and the coverage gap will be phased out by 2020. Other provisions expand assistance for some low-income beneficiaries enrolled in the Medicare drug program, and eliminate beneficiary copayments for certain preventive care services. This report reflects the Medicare provisions at the time of the enactment of PPACA and HCERA. It is meant to serve as a historical reference to the complete set of Medicare provisions included in the laws, as of March 30, 2010. It will not be updated to capture subsequent legislative changes, program guidance, public notices, or rulemaking.

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On July 20, 2012, a 24-year-old male entered a theater in Aurora, CO, and perpetrated what has been described as one of the worst mass shootings in modern U.S. history. James Holmes allegedly shot to death 12 people and wounded another 58 people, seven of them critically. He was armed with an M16 variant semiautomatic rifle equipped with a drum magazine, a 12-gauge pump shotgun, and at least one, possibly two .40-caliber handguns. He reportedly bought these firearms legally from federally licensed gun dealers in Colorado. He also reportedly purchased over 6,000 rounds of ammunition through Internet-based transactions. Sixteen days later, on August 5, 2012, a 40-year-old U.S. Army veteran entered a Sikh temple and committed a mass-casualty shooting in the Oak Creek suburb of Milwaukee, WI. In this attack, Wade Michael Page allegedly shot to death six worshipers and critically wounded another three people. One of the wounded victims was a police officer, whom Page allegedly shot numerous times as the officer administered first aid to another victim. Then, Page shot himself to death, after being wounded by a responding police officer. Page was armed with a 9mm semiautomatic pistol that he had acquired legally, when he resided in North Carolina. Press accounts describe Page as a neo-Nazi, white supremacist, and it is widely thought that he mistook the Sikh temple for a Muslim mosque. These and other mass-casualty shootings prompted some Members of the 112 th Congress to reconsider proposals to reinstate a 1994 ban on semiautomatic assault weapons and large capacity ammunition feeding devices, which expired in September 2004. There were similar calls to ban such feeding devices (see H.R. 308 and S. 32 ) following the January 8, 2011, Tucson, AZ, shooting, in which 6 people were killed and 14 wounded, including Representative Gabrielle Giffords, who was grievously wounded. Similarly, the Aurora, CO, shootings led some Members to call for greater regulation of interstate, Internet-based ammunition transfers ( S. 3458 / H.R. 6241 ). Since March 2011, much of the gun control debate in the 112 th Congress has swirled around allegations that the Department of Justice (DOJ) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) mishandled a Phoenix, AZ-based gun trafficking investigation known as "Operation Fast and Furious." In December 2010, two suspect firearms linked to that investigation were found at the murder scene of Border Patrol Agent Brian Terry. In January 2010, ATF whistleblowers contacted Senator Charles Grassley with assertions that suspected gun traffickers had not been arrested in a timely fashion and, as a result, a large number of suspect firearms had not been interdicted and have reportedly passed into the hands of drug traffickers and other criminals. The whistleblowers referred to this investigative tactic as "gun walking." According to one source, 665 of these firearms have been recovered by law enforcement at crime scenes on both sides of the border. Another 1,355 suspect firearms reportedly remain unaccounted for. Senator Grassley, ranking minority Member on the Committee on the Judiciary, and Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, have issued four joint staff reports on Operation Fast and Furious, and the House committee has held several related hearings. Representative Elijah Cummings, the committee's ranking minority Member, has also issued two reports related to this controversial operation. On November 1, 2011, a high-ranking DOJ official testified before the Senate Committee on the Judiciary's Crime and Terrorism Subcommittee that he had identified "gun walking" as a potentially risk laden investigative technique in April 2010 but failed to inform the Attorney General about the potential risks. On November 8, 2011, the Senate Committee on the Judiciary held a DOJ oversight hearing, and Attorney General Eric Holder fielded questions about Operation Fast and Furious. The Attorney General conceded that a February 4, 2011, letter from DOJ to congressional investigators contained "inaccurate" information regarding the depth of knowledge that departmental officials had of ATF's use of the "gun walking" tactic. On December 8, 2011, the House Committee held a hearing to explore, among other things, whether senior departmental officials knew more about Operation Fast and Furious than what was previously indicated in a May 3, 2011, hearing before that committee. On November 18, 2011, the President signed into law the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ; P.L. 112-55 ), following House and Senate passage on the previous day. This act provides ATF with $1.152 billion for FY2012. In response to Operation Fast and Furious, Congress included in that act a provision (§219) that reflects a Senate-passed amendment sponsored by Senator John Cornyn to prevent the expenditure of any funding provided under it to be used by a federal law enforcement officer to facilitate the transfer of an operable firearm to a person known to be or suspected of being connected to a drug cartel without that firearm being continuously monitored or controlled. The act, however, does not include an amendment that was sponsored by Representative Denny Rehberg and adopted in House full committee markup that would have prevented ATF from collecting multiple long gun sales reports from federally licensed gun dealers in Southwest Border states. In addition, two ATF funding provisos and one Federal Bureau of Investigation (FBI) funding proviso were made permanent with the inclusion of "futurity" language, as opposed to temporary, annual appropriations restrictions. These provisos essentially prohibit the consolidation or centralization of firearm acquisition and disposition records. In its FY2013 DOJ budget submission, the Administration proposed dropping the Cornyn language prohibiting "gun walking," arguing that the prohibition is unnecessary. The Administration also proposed stripping the futurity language out of the ATF and FBI funding provisions noted above, which were made permanent in the FY2012 appropriations cycle. In addition, the Administration proposed stripping futurity language out of a long-standing but controversial provision known as the Tiahrt amendment, which prohibits ATF from releasing firearms trace data under a range of circumstances. Besides including futurity language, Congress has altered the language of the Tiahrt amendment several times in recent years to clarify under which circumstances and at what level of detail it is proper to release firearms trace data to law enforcement and other governmental officials, as well as to researchers, the media, and the general public. Other legislative developments in the 112 th Congress include the following: On October 29, 2012, Representative Issa and Senator Grassley released Part II of their three-part, final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The second of three parts, Part II examines the interaction of senior DOJ officials in the Criminal Division and the Office of the Deputy Attorney General with ATF headquarters, the Phoenix Field Division, and the Arizona U.S. Attorney's Office. On September 22, 2012, the Senate voted to invoke cloture on the Sportsmen's Act of 2012 ( S. 3525 ), clearing the way for the Senate to consider this bill, possibly, when it reconvenes. Like the Sportsmen's Heritage Act of 2102 ( H.R. 4089 ), the Senate bill includes provisions designed to promote access to federal lands for hunting and other sporting activities. On September 20, 2012, the Committee on Oversight and Government Reform held a hearing on a report by the DOJ Office of Inspector General (OIG) entitled A Review of ATF's Operation Fast and Furious and Related Matters . The OIG testified to the report's findings that high-ranking, supervisory officials within ATF headquarters and the Phoenix Field Division, as well as the U.S. Attorney's Office for the District of Arizona and Main Justice (DOJ headquarters), were responsible for misguided strategies and tactics, errors in judgment, and management failures related to Operation Fast and Furious. On July 31, 2012, Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, and Senator Charles Grassley, ranking minority Member of the Committee on the Judiciary, released a report entitled Fast and Furious: The Anatomy of a Failed Operation . The first of three, this report essentially chronicles how the ATF Phoenix Division and the U.S. Attorney's Office for the Arizona District ran a gun trafficking investigation from October 2009 through January 2010, during which controversial "gun walking" tactics were employed that—in Representative Issa and Senator Grassley's estimation—seriously compromised public safety and contributed to violent crime and death on both sides of the international border. On June 28, 2012, the House passed a resolution ( H.Res. 711 ) citing Attorney General Eric Holder in contempt of Congress for his failure to produce additional, subpoenaed documents related to Operation Fast and Furious by a roll call vote of 255-67 (Roll no. 441). The Committee on Oversight and Government Reform had previously approved a report ( H.Rept. 112-546 ) that accompanied this resolution by a vote of 23-17. Shortly before the committee took up the resolution, President Barack Obama asserted executive privilege, rather than disclose subpoenaed documents related to ATF's Operation Fast and Furious. The House also passed a related resolution ( H.Res. 706 ) that authorizes the committee to initiate or intervene in judicial proceedings to enforce certain subpoenas. On May 18, 2012, the House passed the National Defense Authorization Act (NDAA) for Fiscal Year 2013 ( H.R. 4310 ). This bill includes a provision that would allow Department of Defense (DOD) mental health professionals and commanding officers to inquire about privately owned firearms that a service member might hold off-base, if he is considered to be a risk of suicide or a danger to others. A provision included in the FY2011 NDAA ( P.L. 111-383 ) prohibits the Secretary of Defense from collecting information on privately owned firearms held by service members, DOD civilian employees, or their families off-base. On May 10, 2012, the House passed a measure ( H.R. 5326 ) that would fund ATF for FY2013 at $1.151 billion. This measure includes the Cornyn anti-gun walking provision, and would make several additional ATF appropriations riders permanent law by including futurity language in those provisions, instead of following the Administration's proposal and stripping futurity language out of the provisions that were made permanent law in the FY2012 appropriations cycle. The House-passed bill also includes a provision that would prohibit ATF from collecting long gun sales reports. This provision reflects a Rehberg amendment that was successfully offered in full committee markup. On May 3, 2012, Representative Issa, chairman of the House Oversight and Government Reform Committee, issued a staff briefing paper to committee Members that included a draft resolution to cite the Attorney General with contempt for not fully complying with committee subpoenas for information about Operation Fast and Furious and other matters. On April 19, 2012, the Senate Committee on Appropriations reported a bill ( S. 2323 ) that would fund ATF for FY2013 at $1.153 billion. This bill includes the Cornyn provision, but it does not include any language similar to the Rehberg amendment. Like the House bill, it does not address the Administration's proposal to strip futurity language out of the provisions that were made permanent law in the FY2012 appropriations cycle, but it would not make any additional provisos permanent law. On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 ( H.R. 4089 ), a bill that would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting with certain exceptions set out in statute. Language to a similar effect was included in the FY2013 Interior, Environment, and Related Agencies Appropriations bill ( H.R. 6091 ), which the House Committee on Appropriations reported on July 10, 2012. On November 16, 2011, the House passed a bill ( H.R. 822 ) that would establish a greater degree of reciprocity between states that issue concealed carry permits for handguns to civilians than currently exists under state law. The Senate considered a similar amendment, which was narrowly defeated, in the 111 th Congress. On October 11, 2011, the House passed a Veterans' Benefits Act ( H.R. 2349 ). This bill includes a provision that would prohibit the Department of Veterans Affairs from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination were made by a judge, magistrate, or other judicial authority based upon a finding that the beneficiary posed a danger to himself or others. Similar proposals were considered in either the House or the Senate in the 110 th and 111 th Congresses, in the wake of the enactment of the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ). During May 2011, firearms-related amendments were offered to bills to extend certain USA PATRIOT Act provisions related to national security investigations ( H.R. 1800 , S. 1038 , and S. 990 ), but those amendments were not passed. On the one hand, Representative Mike Quigley's amendment would have allowed firearms transfers to be denied, if prospective transferees were the subject of a FBI national security investigation. On the other hand, Senator Rand Paul's amendment would have specifically excluded firearms transfer records from the business records that can be collected without a warrant during a national security investigation. The 112 th Congress could also examine issues potentially arising from the tragic shootings in Tucson, AZ, on January 8, 2011, in which 6 people were killed and 13 wounded, including Representative Giffords. Armed with a 9mm Glock 19 semiautomatic pistol loaded with a 33-round extended magazine, the shooter reportedly fired 31 shots before bystanders were able to subdue him while he was attempting to reload with another 33-round extended magazine. He also carried two additional 15-round magazines. As discussed below, these magazines were previously defined under federal law as large capacity ammunition feeding devices (LCAFDs) and were banned for 10 years, from September 13, 1994, through September 13, 2004, as part of the larger semiautomatic assault weapons ban. Legislation has been introduced to reinstate the LCAFD ban ( H.R. 308 and S. 32 ) and to ban firearms within the proximity of certain high-level federal officials ( H.R. 367 and H.R. 496 ). Congressional interest could also focus on the shooter's mental illness and illegal drug use. On November 15, 2011, the Senate Committee on the Judiciary's Subcommittee on Crime and Terrorism held a hearing on the Fix Gun Checks Act of 2011 ( S. 436 / H.R. 1781 ). This proposal would amend P.L. 110-180 to advance certain deadlines and apply deeper cuts to a wider array of federal law enforcement assistance grant programs to incentivize the greater sharing of firearms-related disqualifying records. Congress passed P.L. 110-180 in the wake of the tragic April 16, 2007, Virginia Tech shootings. Through the years, legislative proposals to restrict the availability of firearms to the public have raised the following questions: What restrictions on firearms are permissible under the Constitution? Does gun control constitute crime control? Can the nation's rates of homicide, robbery, and assault be reduced by the stricter regulation of firearms commerce or ownership? Would restrictions stop attacks on public figures or thwart deranged persons and terrorists? Would household, street corner, and schoolyard disputes be less lethal if firearms were more difficult and expensive to acquire? Would more restrictive gun control policies have the unintended effect of impairing citizens' means of self-defense? In recent years, proponents of gun control legislation have often held that only federal laws can be effective in the United States. Otherwise, they say, states with few restrictions will continue to be sources of guns that flow illegally into more-restrictive states. They believe that the Second Amendment to the Constitution, which states that "[a] well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed," is being misread in today's modern society. They argue that the Second Amendment (1) is now obsolete, with the presence of professional police forces; (2) was intended solely to guard against suppression of state militias by the central government and is therefore restricted in scope by that intent; and (3) does not guarantee a right that is absolute, but rather one that can be limited by reasonable requirements. They ask why in today's modern society a private citizen needs any firearm that is not designed primarily for hunting or other recognized sporting purposes. Proponents of firearms restrictions have advocated policy changes on specific types of firearms or components that they believe are useful primarily for criminal purposes or that pose unusual risks to the public. Fully automatic firearms (i.e., machine guns) and short-barreled rifles and shotguns have been subject to strict regulation since 1934. Fully automatic firearms have been banned from private possession since 1986, except for those legally owned and registered with the Secretary of the Treasury as of May 19, 1986. More recently, "Saturday night specials" (loosely defined as inexpensive, small handguns), "assault weapons," ammunition-feeding devices with capacities for more than seven rounds, and certain ammunition have been the focus of control efforts. Opponents of gun control vary in their positions with respect to specific forms of control but generally hold that gun control laws do not accomplish what is intended. They argue that it is as difficult to keep weapons from being acquired by "high-risk" individuals, even under federal laws and enforcement, as it was to stop the sale and use of liquor during Prohibition. In their view, a more-stringent federal firearms regulatory system would only create problems for law-abiding citizens, bring mounting frustration and escalation of bans by gun regulators, and possibly threaten citizens' civil rights or safety. Some argue that the low violent crime rates of other countries have nothing to do with gun control, maintaining instead that multiple cultural differences are responsible. Gun control opponents also reject the assumption that the only legitimate purpose of ownership by a private citizen is recreational (i.e., hunting and target-shooting). They insist on the continuing need of people for effective means to defend themselves and their property, and they point to studies that they believe show that gun possession lowers the incidence of crime. They say that the law enforcement and criminal justice system in the United States has not demonstrated the ability to furnish an adequate measure of public safety in all settings. Some opponents further believe that the Second Amendment includes a right to keep arms as a defense against potential government tyranny, pointing to examples in other countries of the use of firearms restrictions to curb dissent and secure illegitimate government power. The debate has been intense. To gun control advocates, the opposition is out of touch with the times, misinterprets the Second Amendment, and is lacking in concern for the problems of crime and violence. To gun control opponents, advocates are naive in their faith in the power of regulation to solve social problems, bent on disarming the American citizen for ideological or social reasons, and moved by irrational hostility toward firearms and gun enthusiasts. Crime and mortality statistics are often used in the gun control debate. According to a recent study, however, none of the existing sources of statistics provide either comprehensive, timely, or accurate data with which to assess definitively whether there is a causal connection between firearms and violence. For example, existing data do not show whether the number of people shot and killed with semiautomatic assault weapons declined during the 10-year period (1994-2004) that those firearms were banned from further proliferation in the United States. Presented below are data on the following topics: (1) the number of guns in the United States, (2) firearms-related homicides, (3) non-lethal firearms-related victimizations, (4) gun-related mortality rates, (5) use of firearms for personal defense, and (6) recreational use of firearms. In some cases, the data presented are more than a decade old but remain the most recent available. The National Institute of Justice (NIJ) reported in a national survey that in 1994, 44 million people, approximately 35% of households, owned 192 million firearms, 65 million of which were handguns. Seventy-four percent of those individuals were reported to own more than one firearm. According to the ATF, by the end of 1996 approximately 242 million firearms were available for sale to or were possessed by civilians in the United States. That total includes roughly 72 million handguns (mostly pistols, revolvers, and derringers), 76 million rifles, and 64 million shotguns. By 2000, the number of firearms had increased to approximately 259 million: 92 million handguns, 92 million rifles, and 75 million shotguns. By 2007, the number of firearms had increased to approximately 294 million: 106 million handguns, 105 million rifles, and 83 million shotguns. In the past, most guns available for sale were produced domestically. In recent years, 1 million to 2 million handguns were manufactured each year, along with 1 million to 1.5 million rifles and fewer than 1 million shotguns. From 2001 through 2007, however, handgun imports nearly doubled, from 711,000 to nearly 1.4 million. By 2009, nearly 2.2 million handguns were imported into the United States. From 2001 through 2007, rifle imports increased from 228,000 to 632,000, and shotgun imports increased from 428,000 to 726,000. By 2009, rifle imports had increased to 864,000, but shotguns had decreased 559,000. By the same year, 2009, the estimated total number of firearms available to civilians in the United States had increased to approximately 310 million: 114 million handguns, 110 million rifles, and 86 million shotguns. Per capita, the civilian gun stock has roughly doubled since 1968, from one gun per every two persons to one gun per person. Retail prices of guns vary widely, from $75 or less for inexpensive, low-caliber handguns to more than $1,500 for higher-end, standard-production rifles and shotguns. Data are not available on the number of "assault weapons" in private possession or available for sale, but one study estimated that 1.5 million assault weapons were privately owned in 1994. As Table 1 shows, reports submitted by state and local law enforcement agencies to the FBI and published annually in the Uniform Crime Reports indicate that the firearms-related murder and non-negligent manslaughter rate per 100,000 of the population decreased from 6.6 for 1993 to 3.6 for 2000. The rate held steady at 3.6 for 2001 and fluctuated thereafter between a high of 3.9 for 2006 and 2007, and a low of 3.2 for 2010. For 2011, it has remained at 3.2. Figure 1 shows that the estimated murder rate peaked in 1974 at 9.8 victims per 100,000 of the population. It peaked again in 1980 (10.2), in 1991 (9.8), and 1993 (9.5). Correspondingly, the estimated firearms-related murders rates similarly peaked at 6.6 (1974), 6.4 (1980), 6.5 (1991), and 6.6 (1999). After 1993, the murder rate decreased to 5.5 in 2000, and the firearms-related murder rate decreased similarly to 3.5 in that year. The murder rates leveled off somewhat from 2001 to 2006, with slight increases in several of those years. Then, the murder rates decreased and leveled off at 3.2 for 2010 and 2011. Over those years (1968-2011), roughly two out of three murders were committed with a firearm. Although not shown in Figure 1 , roughly one out of two murders was committed with a handgun. By comparison, the non-firearms murder rates peaked in 1975 (3.4), 1980 (3.8), 1986 (3.5), and 1991 (3.4); the corresponding increases and decreases were of a lesser magnitude for non-firearms murder rates than those corresponding with firearms-related murder rates. The source of national data on firearms deaths is the publication Vital Statistics , published each year by the National Center for Health Statistics. Firearms deaths reported by coroners are presented in five categories: homicides, legal interventions, suicides, accidents, and unknown circumstances. For these categories, the data are presented below for 1993 through 2007 in two tables, one for all deaths and the other for juvenile deaths. As Table 2 shows, firearms fatalities decreased continuously from 39,595 in 1993 to 28,664 in 2000, for an overall decrease of nearly 28%. Compared with firearms deaths in 2000, such deaths increased by 3.2% in 2001 to 29,574, and increased again, by 2.3%, in 2002 to 30,243. They decreased by 0.3% in 2003 to 30,137, and decreased again, by 1.9%, in 2004 to 29,570. Firearms fatalities increased by 3.8% in 2005 to 30,694, by 0.7% in 2006 to 30,897, and by 1.1% in 2007 to 31,224. They increased again by 1.1% in 2008, but decreased by 0.7% in 2009. Of the 2009 total, 11,826 were homicides or due to legal intervention, 18,735 were suicides, 554 were unintentional (accidental) shootings, and 232 were of unknown causes. As Table 3 shows, there were 1,520 juvenile (younger than 18 years of age) firearms-related deaths in 2007. Of the juvenile total, 1,047 were homicides or due to legal intervention, 325 were suicides, 112 were unintentional, and 36 were of unknown causes. From 1993 to 2001, juvenile firearms-related deaths decreased by an average rate of 10% annually, for an overall decrease of 56%. From 2001 to 2002, such deaths increased slightly (by less than 1%), but declined by nearly 9% from 2002 to 2003. They increased from 2002 through 2006, by 5% to 7%, but decreased by nearly 5% in 2007. Juvenile firearms-related fatalities decreased again by 3.0% in FY2008 and nearly 6% in 2009. The other principal source of national crime data is the National Crime Victimization Survey (NCVS) conducted by the U.S. Census Bureau and published by the Bureau of Justice Statistics (BJS). The NCVS database provides some information on the weapons used by offenders, based on victims' reports. Based on data provided by survey respondents in calendar year 2009, BJS estimated that, nationwide, there were 4.3 million non-lethal violent crimes (rape or sexual assault, robbery, aggravated assault, and simple assault). Weapons were used in 22% of these incidents, and firearms were used by offenders in 8% of these incidents. The estimated number of firearms-related non-lethal violent crime incidents decreased from 428,670 in 2000 to 326,090 in 2009, and from 2.4 persons to 1.4 per 100,000 of the population ages 12 and older. According to BJS, NCVS data from 1987 to 1992 indicate that in each of those years, roughly 62,200 victims of violent crime (1% of all victims of such crimes) used guns to defend themselves. Another 20,000 persons each year used guns to protect property. Persons in the business of self-protection (police officers, armed security guards) may have been included in the survey. Another source of information on the use of firearms for self-defense is the National Self-Defense Survey conducted by criminology professor Gary Kleck of Florida State University in the spring of 1993. Citing responses from 4,978 households, Dr. Kleck estimated that handguns had been used 2.1 million times per year for self-defense, and that all types of guns had been used approximately 2.5 million times a year for that purpose during the 1988-1993 period. Why do these numbers vary by such a wide margin? Law enforcement agencies do not collect information on the number of times civilians use firearms to defend themselves or their property against attack. Such data have been collected in household surveys. The contradictory nature of the available statistics may be partially explained by methodological factors. That is, these and other criminal justice statistics reflect what is reported to have occurred, not necessarily the actual number of times certain events occur. Victims and offenders are sometimes reluctant to be candid with researchers. So, the number of incidents can only be estimated, making it difficult to state with certainty the accuracy of statistics such as the number of times firearms are used in self-defense. For this and other reasons, criminal justice statistics often vary when different methodologies are applied. Survey research can be limited because it is difficult to produce statistically significant findings from small incident populations. For example, the sample in the National Self-Defense Survey might have been too small, given the likely low incidence rate and the inherent limitations of survey research. According to NIJ, in 1994 recreation was the most common motivation for owning a firearm. There were approximately 15 million hunters, about 35% of gun owners, in the United States, and about the same number and percentage of gun owners engaged in sport shooting in 1994. The U.S. Fish and Wildlife Service (FWS) reported that there were more than 14.7 million persons who were paid license holders in 2003 and, according to the National Shooting Sports Foundation, in that year approximately 15.2 million persons hunted with a firearm and nearly 19.8 million participated in target shooting. The FWS reported that there were 14.4 million paid license holders in 2010. Two major federal statutes regulate the commerce in and possession of firearms: the National Firearms Act of 1934 (26 U.S.C. §5801 et seq.) and the Gun Control Act of 1968, as amended (18 U.S.C. Chapter 44, §921 et seq.). Supplementing federal law, many state firearms laws are stricter than federal law. For example, some states require permits to obtain firearms and impose a waiting period for firearms transfers. Other states are less restrictive, but state law cannot preempt federal law. Federal law serves as the minimum standard in the United States. The NFA was originally designed to make it difficult to obtain types of firearms perceived to be especially lethal or to be the chosen weapons of "gangsters," most notably machine guns and short-barreled long guns. This law also regulates firearms, other than pistols and revolvers, which can be concealed on a person (e.g., pen, cane, and belt buckle guns). It taxes all aspects of the manufacture and distribution of such weapons, and it compels the disclosure (through registration with the Attorney General) of the production and distribution system from manufacturer to buyer. As stated in the GCA, the purpose of federal firearms regulation is to assist federal, state, and local law enforcement in the ongoing effort to reduce crime and violence. In the same act, however, Congress also stated that the intent of the law is not to place any undue or unnecessary burdens on law-abiding citizens in regard to the lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity. The GCA, as amended, contains the principal federal restrictions on domestic commerce in small arms and ammunition. The statute requires all persons manufacturing, importing, or selling firearms as a business to be federally licensed; prohibits the interstate mail-order sale of all firearms; prohibits interstate sale of handguns generally and sets forth categories of persons to whom firearms or ammunition may not be sold, such as persons under a specified age or with criminal records; authorizes the Attorney General to prohibit the importation of non-sporting firearms; requires that dealers maintain records of all commercial gun sales; and establishes special penalties for the use of a firearm in the perpetration of a federal drug trafficking offense or crime of violence. As amended by the Brady Handgun Violence Prevention Act, 1993 ( P.L. 103-159 ), the GCA requires background checks be completed for all unlicensed persons seeking to obtain firearms from federal firearms licensees. Private transactions between persons "not engaged in the business" are not covered by the recordkeeping or the background check provisions of the GCA. These transactions and other matters such as possession, registration, and the issuance of licenses to firearms owners may be covered by state laws or local ordinances. For a listing of other major firearms and related statutes, see Appendix B . Under current law, there are nine classes of persons prohibited from shipping, transporting, receiving, or possessing firearms or ammunition: persons convicted in any court of a crime punishable by imprisonment for a term exceeding one year; fugitives from justice; unlawful users or addicts of any controlled substance as defined in Section 102 of the Controlled Substances Act (21 U.S.C. §802)); persons adjudicated as "mental defective" or committed to mental institutions; unauthorized immigrants and nonimmigrant visitors (with exceptions in the latter case, which have changed—effective July 9, 2012—as described below); persons dishonorably discharged from the U.S. Armed Forces; persons who have renounced their U.S. citizenship; persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and persons convicted of a misdemeanor crime of domestic violence. In addition, there is a 10 th class of persons prohibited from shipping, transporting, or receiving firearms or ammunition: persons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year. It also unlawful for any person to sell or otherwise dispose of a firearm or ammunition to any of the prohibited persons enumerated above, if the transferor (seller) has reasonable cause to believe that the transferee (buyer) is prohibited from receiving those items. Federal firearms licensees are prohibited from transferring a long gun or long gun ammunition to anyone less than 18 years of age, or a handgun or handgun ammunition to anyone less than 21 years of age. Since 1994, moreover, it has been a federal offense for any unlicensed person to transfer a handgun or handgun ammunition to anyone less than 18 years-of age. It has also been illegal for anyone under 18 years of age to possess a handgun or handgun ammunition (there are exceptions to this law related to employment, ranching, farming, target practice, and hunting). Regarding immigration status, the GCA does not distinguish between citizens and legal permanent aliens (legal immigrants); both are eligible to ship, transport, receive, and possess firearms and ammunition as long as they are not prohibited persons. By comparison, illegal immigrants and nonimmigrants are prohibited persons, but there are several exceptions described below. One of those exceptions reflects an October 2011 DOJ legal opinion. For nearly 30 years, legal immigrants and nonimmigrants who could establish a 90-day state residency were eligible to purchase, receive, and possess firearms. In 1999, however, Congress prohibited nonimmigrant aliens who are issued a visa from purchasing, receiving, or possessing a firearm, but included several exceptions for nonimmigrants who could establish that they are official representatives of a foreign government who are accredited to the United States government or the nonimmigrant's government mission to an international organization that is headquartered in the United States and possession of a firearm is necessary to their official capacity; officials of foreign governments or distinguished visitors who have been designated by the State Department and possession of a firearm is necessary to their official capacity; foreign law enforcement officers of a friendly foreign government entering the United States on law enforcement business; or visitors admitted to the United States for lawful hunting or sporting purposes or are in possession of a valid hunting license or permit lawfully issued in the United States. When ATF implemented this law, it issued a 2002 rule that prohibited all nonimmigrants from receiving or possessing a firearm, including those nonimmigrants who were legally admitted to the United States without being required to obtain a visa. At that time, ATF observed that about 50% of nonimmigrant aliens admitted to the United States were not required to obtain a visa. As is the case today, those visa-exempt nonimmigrants principally included Canadian visitors or Visa Waiver Program entrants admitted temporarily for business or pleasure. On October 28, 2011, however, the DOJ Office of Legal Counsel (OLC) issued an opinion that found ATF's interpretation of this law to be in error. The OLC found that the "plain text of the statute" only "addressed aliens who had been admitted to the United States under a nonimmigrant visa." On January 30, 2012, the OLC issued a subsequent opinion that found that ATF's 90-day residence requirement for noncitizens was also in error, because there was no statutory basis to promulgate a one-part test for citizens and a two-part test for noncitizens. Any unlicensed prospective buyer of a firearm—citizen or noncitizen—is required to present to an FFL a state-issued identification document to demonstrate that he resides in the state in which the FFL is licensed to conduct business. From December 1969 through July 2012, however, ATF and its predecessor agency required noncitizens to demonstrate that they had actually resided in the state for 90 days by presenting additional documentation (e.g., utility bills or rental leases), which citizens were not required to present. On June 7, 2012, ATF issued a final rule that brought its regulations into compliance with the OLC opinions. Correspondingly, ATF also issued a revised Form 4473 to reflect the changed regulations. As described below, FFLs and their unlicensed customers must fill this form out to document, among other things, that a customer is not a prohibited person. On July 9, 2012, FFLs were required to begin using the revised form. The instructions accompanying the revised form indicate that nonimmigants who are admitted legally to the United States without a visa (visa-exempt) are not prohibited from receiving or possessing firearms or ammunition. As noted above, such visa-exempt aliens would include Canadians who are often admitted to the United States for business or pleasure without being required to obtain a nonimmigrant B1/B2 visa, as well as other aliens admitted for similar purposes under the Visa Waiver Program. Nevertheless, all persons—citizens and noncitizens—must still demonstrate to an FFL their intention of making a home in the state in which they are attempting to acquire a firearm by presenting certain valid government-issued identification documents (e.g., driver's licenses, voter registration cards, tax records, or vehicle registrations). In some cases, such documentation may be difficult for visa-exempt aliens to acquire, because generally they are not authorized to accept paid employment and their stays in the United States are generally limited to 90 days. Furthermore, they would be required to engage the services of an FFL to export firearms they acquired in the United States to their home country, if they wished to take those firearms out of the United States. The International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), furthermore, would require that such international transfers be prearranged and made between a federally licensed exporter in the United States and a licensed importer in an individual's home county. Consequently, the nonimmigrant firearms owner would not be authorized to ship or carry those firearms personally out of the United States. Persons who are federally licensed to be engaged in the business of manufacturing, importing, or selling firearms are known as "federal firearms licensees (FFLs)." Under current law, FFLs may ship, transport, and receive firearms that have moved in interstate and foreign commerce. FFLs are currently required to verify with the FBI through a background check that non-licensed persons are eligible to possess a firearm before subsequently transferring a firearm to them. FFLs must also verify the identity of non-licensed transferees by inspecting a government-issued identity document (e.g., a driver's license). FFLs may engage in interstate transfers of firearms among themselves without conducting background checks. Licensees may transfer long guns (rifles and shotguns) to out-of-state residents, as long as the transactions are face-to-face and not knowingly in violation of the laws of the state in which the unlicensed transferees reside. FFLs, however, may not transfer handguns to unlicensed out-of-state residents. Since 1986, there have been no similar restrictions on the interstate transfer of ammunition. Furthermore, a federal firearms license is not required to sell ammunition; however, such a license is required to either manufacture or import ammunition. Also, FFLs are required to submit "multiple sales reports" to the Attorney General if any person purchases two or more handguns within five consecutive business days. As described below, FFLs are required to maintain records on all acquisitions and dispositions of firearms. They are obligated to respond to ATF agents requesting firearms tracing information within 24 hours. Under certain circumstances, ATF agents may inspect, without search warrants, their business premises, inventory, and gun records. Unlicensed persons are generally prohibited from acquiring firearms from out-of-state sources (except for long guns acquired from FFLs under the conditions described above). Unlicensed persons are also prohibited from transferring firearms to anyone who they have reasonable cause to believe are not residents of the state in which the transaction occurs. In addition, since 1986 it has been a federal offense for non-licensees to knowingly transfer a firearm or ammunition to prohibited persons. It is also notable that firearms or ammunition transfers initiated through the Internet are subject to the same federal laws as transfers initiated in any other manner. Criminal "gun trafficking" essentially entails the movement or diversion of firearms from legal to illegal markets. Therefore, it follows that the entire GCA is arguably a statutory framework designed to combat gun trafficking domestically, particularly interstate gun trafficking. ATF has developed a nationwide strategy to reduce firearms trafficking and violent crime by preventing convicted felons, drug traffickers, and juvenile gang members from acquiring firearms from gun traffickers. Gun trafficking cases include, but are not limited to, the following activities: Straw purchasers or straw purchasing rings; Trafficking in firearms by corrupt federally licensed gun dealers; Trafficking in firearms by unlicensed dealers (i.e., persons who deal in firearms illegally as the principal source of their livelihood); Trafficking in secondhand firearms acquired from unlicensed persons at gun shows, flea markets, and other private venues; and Trafficking in stolen firearms. Unlike other forms of contraband, almost all illegal firearms used criminally in the United States were diverted at some point from legal channels of commerce. ATF works to reduce firearms-related crime with two approaches, industry regulation and criminal investigation. ATF regulates the U.S. firearms industry by inspecting FFLs to monitor their compliance with the GCA and NFA, and to prevent the diversion of firearms from legal to illegal channels of commerce. Despite its crime-fighting mission, ATF's business relationships with the firearms industry and larger gun-owning community have been a perennial source of tension, which from time to time has been the subject of congressional oversight. Nevertheless, under current law, ATF Special Agents (SAs) and Industry Operations Investigators (IOIs) are authorized to inspect or examine the inventory and records of an FFL without search warrants under three scenarios: in the course of a reasonable inquiry during the course of a criminal investigation of a person or persons other than the FFL; to ensure compliance with the record keeping requirements of the GCA—not more than once during any 12-month period, or at any time with respect to records relating to a firearm involved in a criminal investigation that is traced to the licensee; or when such an inspection or examination is required for determining the disposition of one or more firearms in the course of a criminal investigation. By inspecting the firearms transfer records that FFLs are required by law to maintain, ATF SAs and IOIs are able to trace crime guns from their domestic manufacturer or importer to the first retail dealer that sold those firearms to persons in the general public, generating vital leads in homicide and other criminal investigations. In addition, by inspecting those records, ATF investigators sometimes discover evidence of corrupt FFLs dealing in firearms "off the books," straw purchases, and other patterns of illegal behavior. A "straw purchase" occurs when an individual poses as the actual transferee, but he is actually acquiring the firearm for another person. In effect, he serves as an illegal middleman. As part of any firearms transfer from an FFL to a private person, the GCA requires them to fill out jointly an ATF Form 4473. In addition, the FFL is required to verify the purchaser's name, address, date of birth, and other information by examining a government-issued piece of identification, most often a driver's license. Among other things, the purchaser attests on the ATF Form 4473 that he is not a prohibited person, and that he is the "actual transferee/buyer." Hence, straw purchases are known as "lying and buying for the other guy." Straw purchases are illegal under two provisions of the GCA. If the purchaser makes any false statement to a FFL with respect to any fact material to the lawfulness of a prospective firearms transfer, it is a federal offense punishable under 18 U.S.C. 922(a)(6). This provision also captures misrepresentations such as presenting false identity documents. Violations are punishable by up to 10 years' imprisonment. It is also illegal for any person knowingly to make any false statement with respect to the records that FFLs are required to maintain under 18 U.S.C. §924(a)(1)(A). This provision, however, also captures misrepresentations related to licensure and other benefits under the GCA. Violations are punishable by up to five years' imprisonment. Straw purchases, however, are not easily detected, because their illegality only becomes apparent when the straw purchaser's true intent is revealed by a subsequent transfer to the actual buyer (third party). In many cases, the actual buyer may be a prohibited person, who would not pass a background check. Under such a scenario, if the straw purchaser knew or had reasonable cause to know the actual transferee was a prohibited person, he would also be in violation of 18 U.S.C. §922(d), for which the penalty is up to 10 years' imprisonment. It would also be a violation for the prohibited person to possess or receive the firearm under 18 U.S.C. §922(g), for which the penalty is also up to 10 years' imprisonment. Alternatively, the actual buyer may not be a prohibited person, but may be seeking to acquire firearms without any paper trail linking him to the acquisition of the firearm. Under such a scenario, however, the straw purchase and subsequent illegal transfer would be even less apparent for several reasons. Under federal law, it is legal for an unlicensed, private person to purchase firearms and then resell them or give them away, as long as the transferees are not prohibited or underage persons; transferors do not deal in firearms in a volume that would require licensing; and transfers are intrastate , as generally only federally licensed gun dealers can legally transfer firearms interstate . Hence, individuals may buy several firearms at a time with the intention of giving those firearms away as presents to anyone, as long as they do not present those firearms to persons who are underage, out-of-state residents, or prohibited persons. They may also buy firearms and, then, sell those firearms at any time, as long as selling firearms is not the principal objective of their livelihood and profit, in which case they would be required to be federally licensed to deal in firearms. Furthermore, no federal background checks are required for recipients of subsequent intrastate firearms transfers. On the other hand, if the suspected straw purchaser were observed departing the licensed gun dealer's place of business and traveling immediately to another locale, where he transferred the firearm(s) to another person, there would be a reasonable suspicion that he was a straw purchaser. However, the actual buyer would not have committed a crime unless it could be proven that he had sponsored the straw purchase. Usually, such illegal arrangements become clear when the straw purchaser is interviewed by agents and admits to having bought the firearms for the third party, non-prohibited person. Moreover, depending on the time that elapses between the initial straw purchases and subsequent transfers to the actual buyer (third party), the illegality of the transfers may not become apparent until the actual buyer's true intent is revealed, when he either transports those firearms across state lines to be sold or bartered, attempts to smuggle them across an international border, or engages in some other illegal act. Sometimes, the behavior of the prospective transferee (straw purchaser) may raise reasonable suspicions. For example, during a controversial ATF Phoenix-based investigation known as "Operation Fast and Furious," several of the individuals under indictment made multiple purchases from the same FFL of multiple semiautomatic firearms. Raising suspicions further, they paid for these firearms with thousands of dollars in cash. Indeed, FFLs contacted ATF about these suspicious transfers, prompting the investigation. They did so, in part, because they realized that these firearms might be traced back to their businesses and they probably wanted to avoid any negative attention that those traces might bring back on them. It is notable that if an FFL believes a firearms transfer to be suspicious, he may choose not to sell those firearms to the individuals in question. If he should proceed with the transfer, however, as long as he had conducted the required criminal background check on the prospective buyer, and he and the prospective buyer had filled out the proper paperwork, his obligations under federal law would have been fulfilled. In summation, with regard to interstate transfers, it is unlawful for any person who is not federally licensed to deal in firearms to transport or receive a firearm into his own state of residence that was obtained in another state. In addition, it is unlawful for any person who is not federally licensed to deal in firearms to deliver a firearm to another unlicensed person who resides in a state other than the transferor's state of residence. Violations of either provision are punishable by a fine and/or not more than five years' imprisonment. It is also unlawful to smuggle firearms, or any other merchandise contrary to U.S. law from the United States. Violations are punishable by a fine and/or not more than 10 years' imprisonment. According to the Government Accountability Office (GAO), the largest percentage of Southwest Border gun trafficking cases is comprised of multiple straw purchases. And, large-scale straw purchasing schemes were at the center of several ATF Phoenix-based gun trafficking investigations, including Operation Fast and Furious. Contributing to the controversy surrounding Operation Fast and Furious, reportedly, the U.S. Attorney's Office in Arizona was reluctant to prosecute straw purchasing cases, even though ATF conducted several investigations involving dozens of firearms and multiple defendants from 2006 through 2010. Some of this reluctance to prosecute referred cases may have stemmed from legal interpretations (and underlying case law) made by the U.S. Attorney's Office in Arizona that "differed substantially from those of other U.S. Attorney's Offices." Other considerations could have included allocation of scarce resources and prosecutorial priorities. Nonetheless, as shown above, federal prosecutions for straw purchasing and related offenses nationally appears to have fallen off significantly in recent years, despite congressional efforts to increase ATF appropriations to combat gun trafficking. In addition, at a hearing on Operation Fast and Furious, an ATF agent testified that the penalties levied under current law are not harsh enough to deter gun trafficking to Mexican drug trafficking organizations. He opined that the "statute doesn't carry significant jail time," and that straw purchases were viewed as "paperwork violations." To explore this assertion, CRS requested criminal caseload data from the U.S. Attorneys Office for 18 U.S.C. §§922(a)(6) and 924(a)(1)(A) for FY2004 through FY2010. It is noteworthy, however, that the criminal cases under these provisions include violations involving false identities and entries, in addition to straw purchases. As Figure 2 shows, nationally, the defendants charged under §922(a)(6) declined from 459 for FY2004 to 218 for FY2010, or by about half (-52.5%). Similarly, defendants convicted under §922(a)(6) declined by more than half (-58.6%) for those years, even though they increased from FY2007 to FY2008 (17.3%). The defendants charged under §924(a)(1)(A) also declined from 290 for FY2004 to 2009 for FY2010, but at a slower rate of change (-27.9%). Convictions under that provision also declined through FY2008 (-22.3%), but increased for FY2009 (18.7%) and FY2010 (2.4%). Under either provision, about two-thirds of defendants were convicted during FY2004 through FY2010 cumulatively. As Figure 3 shows, moreover, over a third of the individuals convicted under either provision received no prison sentence. Over a third received a prison sentence of up to two years. The remainder received prison sentences of greater than two years. Several individuals received life sentences, but those individuals were likely career criminals who were convicted of additional offenses. To provide federal judges and prosecutors with greater leverage, on January 19, 2011, the U.S. Sentencing Commission (Commission) published proposed amendments to the sentencing guidelines that potentially increase penalties under the GCA for cases involving cross-border trafficking in small arms or ammunition, including straw purchases, and similar amendments to the Arms Export Control Act (AECA; 22 U.S.C. §2778 et seq.). While the GCA amendments to the Sentencing Guidelines Manual became effective on November 1, 2011, the Commission did not adopt the AECA amendments. According to an April 6, 2011, press release, the Commission's chair, Judge Patty B. Saris, stated, "Firearms trafficking across our borders is a national security issue. The Commission is aware of the view [shared] by some that firearms trafficking is fueling drug violence along our southwest border." After seven years of extensive public debate, Congress passed the Brady Handgun Violence Prevention Act of 1993 ( P.L. 103-159 , the Brady Act) as an amendment to the Gun Control Act of 1968, requiring background checks for firearms transfers between FFLs and non-licensed persons. The Brady Act included both interim and permanent provisions. Under the interim provisions, which were in effect through November 1998, background checks were required for handgun transfers, and licensed firearms dealers were required to contact local chief law enforcement officers (CLEOs) to determine the eligibility of prospective customers to be transferred a handgun. The CLEOs were given up to five business days to make such eligibility determinations. Under the interim provisions, 12.7 million firearms background checks (for handguns) were completed during that four-year period, resulting in 312,000 denials. On November 30, 1998, the Federal Bureau of Investigation (FBI) activated the National Instant Criminal Background Check System (NICS) to facilitate firearms-related background checks, when the permanent provisions of the Brady Act became effective. Through NICS, FFLs conduct background checks on non-licensee applicants for both handgun and long gun transfers. The objective of a Brady background check is to ensure that an unlicensed transferee is not a prohibited person under the GCA. It is notable that federal firearms laws serve as the minimum standard in the United States. States may choose, and have chosen, to regulate firearms more strictly. For example, some states require set waiting periods and/or licenses for firearms transfers and possession. As part of a Brady background check, an FFL is required to submit a prospective firearm transferee's name, sex, race, date of birth, and state of residence through NICS. Social security numbers and other numeric identifiers are optional, but the submission of such data is likely to increase the timeliness of the background check (and reduce misidentifications). The transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer/possession eligibility. Those systems include the NICS index, Interstate Identification Index (III), and National Crime Information Center (NCIC). If the transferee indicates that he is foreign born, his information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security, Immigration and Customs Enforcement. According to the FBI, the NICS index contains disqualifying records not found in either the III or NCIC on all the classes of prohibited persons enumerated in the GCA. It also includes records on persons previously denied firearms transfers. As of May 2010, the NICS index included a little over 6 million records. The III, or "Triple I," is a computerized criminal history index pointer system that the FBI maintains so that records on persons arrested and convicted of felonies and serious misdemeanors at either the federal or state level can be shared nationally. All 50 states and the District of Columbia participate in the III, and the system holds indices to nearly 70 million criminal history records. The NCIC includes files on information that is of immediate importance and applicability to law enforcement officials. Several NCIC files include over 4.4 million records on potentially prohibited persons. Hence, those files are pertinent to the Brady background check process. They include files on wanted persons (fugitives), persons subject to domestic abuse restraining orders, deported alien felons, persons in the U.S. Secret Service protective file, foreign fugitives, and known or suspected terrorists. While the FBI handles background checks entirely for some states, other states serve as full or partial points of contact (POCs) for background check purposes. In POC states, FFLs contact a state agency, and the state agency contacts the FBI for such checks. As part of the Brady background check process, NICS will respond to an FFL or state official with a NICS Transaction Number (NTN) and one of three outcomes: (1) "proceed" with transfer or permit/license issuance, because a prohibiting record was not found; (2) "denied," indicating a prohibiting record was found; or (3) "delayed," indicating that the system produced information that suggested there could be a prohibiting record. Under the last outcome, a firearms transfer may be "delayed" for up to three business days while NICS examiners attempt to ascertain whether the person is prohibited. At the end of the three-day period, an FFL may proceed with the transfer at his discretion if he has not heard from the FBI about the matter. The FBI, meanwhile, will continue to work the NICS adjudication for up to 90 days, during which the transaction is considered to be in an "open" status. If the FBI ascertains that the person is not in a prohibited status at any time during the 90 days, then the FBI will contact the FFL through NICS with a proceed response. If the person is subsequently found to be prohibited, the FBI will inform ATF and a firearms retrieval process will be initiated. Under no circumstances is an FFL informed about the prohibiting factor upon which a denial is based. Under the Brady background check process, however, a denied person may challenge the accuracy of the underlying record(s) upon which his denial is based. He would initiate this process by requesting (usually in writing) the reason for the denial from the agency that conducted the NICS check (the FBI or POC). The denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for the denial, the denied person may challenge the accuracy of that record. If the record is found to be inaccurate, the denying agency is legally obligated to correct that record. As with other screening systems, particularly those that are name-based, false positives occur as a result of Brady background checks, but the frequency of these misidentifications is unreported. Nevertheless, the FBI has taken steps to mitigate false positives. In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Index (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. So as not to be misidentified in the future, these persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future delayed transfers. Current law requires that NICS records on approved firearm transfers, particularly information personally identifying the transferee, be destroyed within 24 hours (see heading below, " Background Check Fee and Record Retention "). Under the GCA, there is also a provision that allows the Attorney General (previously, the Secretary of the Treasury) to consider petitions from a prohibited person for "relief from disabilities" and have his firearms transfer and possession eligibility restored. Since FY1993, however, a rider on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any funding provided under that account on processing such petitions. While a prohibited person arguably could petition the Attorney General, bypassing ATF, such an alternative has never been successfully tested. As a result, the only way a person can reacquire his lost firearms eligibility is to have his civil rights restored or disqualifying criminal record(s) expunged or set aside, or to be pardoned for his crime. As shown in Table 4 , under the permanent provisions of the Brady Act (December 1998 through 2009), more than 95.1 million checks were completed, resulting in more than 1.6 million denials, or nearly a 1.7% denial rate. More than 54.2 million of these checks were completed entirely by the FBI for non-point of contact (non-POC) states, the District of Columbia, and four territories. Those checks resulted in a denial rate of nearly 1.4%. Nearly 40.9 million checks were conducted by full or partial point of contact (POC) states. Those checks resulted in a higher denial rate of 2.1%. Table 5 shows breakouts for NICS denials by reasons and by denying agency. Under the Brady Act, Congress authorized a grant program known as the National Criminal History Improvement Program (NCHIP), the initial goal of which was to improve electronic access to firearms-related disqualifying records, particularly felony conviction records. DOJ's Bureau of Justice Statistics (BJS) administers this program, under which grants are made to states to assist in updating and automating criminal history and other related records so that they are able to participate effectively in key federal criminal justice systems. Besides the NICS Index, III, and NCIC, these systems also include the Integrated Automated Fingerprint Identification System (IAFIS) and the National Sex Offender Registry (NSOR). This grant program is administered by BJS, which is part of the Office of Justice Programs. Table 6 shows that over the last 18 years (FY1995-FY2012), Congress has appropriated nearly $562.8 million for NCHIP, or an annual average of $31.3 million. Nevertheless, in 2007 congressional testimony following the April 16, 2007, Virginia Tech tragedy, DOJ reported that approximately half of the 70 million criminal history records in the Interstate Identification Index (III) were missing final dispositions—a circumstance that often results in delayed background checks and firearms transfers. It was also reported that many states had not forwarded any records on persons adjudicated mentally defective to the FBI. As of April 30, 2007, the FBI reported that 22 states had contributed nearly 168,000 mental defective records to the FBI for inclusion in the NICS index; however, other states had declined to report persons adjudicated mentally defective to the FBI. In many cases, state mental health, patients' rights, and privacy laws prohibited the disclosure of those records. Other states may not have been able to report such persons to the FBI because mental health "databanks" that would include such records are not maintained. Following the Virginia Tech tragedy, the NICS mental defective file increased from 175,000 to 400,000 individual records, with California contributing more than 200,000 of those records. By May 2010, that number had increased to more than 859,000 records, due in large part to NCIS Improvement Amendments Act (described below). However, about half of the states had not contributed any records or had contributed only a handful of such records. For FY2012, the President's budget request included $12.0 million for NCHIP. The House-reported FY2012 Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ) would have provided $6.0 million for NCHIP. The Senate-passed CJS appropriations bill ( S. 1572 ) would have provided $8.0 million for this program. S. 1572 was folded into the Senate-passed FY2012 Minibus appropriations bill ( H.R. 2112 ). The House- and Senate-passed conference report version of H.R. 2112 ( H.Rept. 112-284 ), which the President has signed into law ( P.L. 112-55 ), provides $6.0 million for NCHIP. For FY2013, the Senate-reported CJS appropriations bill ( S. 2323 ) would provide $6 million for NCHIP, the same amount as requested by the Administration. The House Committee on Appropriations ordered reported a similar measure that would provide the same amount for NCHIP. Under the NICS Improvement Amendments Act of 2007, Congress authorized the Attorney General to make additional grants to states to improve further electronic access to records, including court disposition and corrections records, which are necessary to fully facilitate NICS background checks. Under the act, the Attorney General is required to report annually to Congress on federal department and agency compliance with the act's provisions. Because BJS administers this program, the BJS Director is required to report annually on the progress that states are making in providing reasonable estimates of the number of firearms-related disqualifying records that they have jurisdiction over, as well as the number of those records that have been made accessible to the FBI for NICS background check purposes. BJS has designated this grant program the "NICS Act Record Improvement Program (NARIP)," although congressional appropriations documents simply refer to it as "NICS improvement." As shown in Table 7 , Section 103(e) of the act included an authorization for appropriations for FY2009 through FY2013. The act directs that the grants provided under this authorization be made "in a manner consistent" with NCHIP. The act also requires that between 3% and 10% of each grant be allocated for a relief from disabilities program for persons adjudicated mentally defective. Also, as shown in Table 7 , Section 301(e) of the act included an additional authorization for appropriations for the same fiscal to improve state court computer systems to improve timeliness of criminal history dispositions. Under both authorizations, up to 5% of all grants may be set aside to provide assistance to tribal governments. As an additional incentive, Section 102 of P.L. 110-180 also provides that on January 8, 2011, any state that provides at least 90% of disqualifying records is eligible for a waiver of the 10% match requirement under NCHIP for two years. To be eligible for the waiver, as well as Section 103 grants, states are required to provide BJS with a reasonable estimate of the number of NICS-related disqualifying records that they hold within 180 days of enactment (July 6, 2008). To further encourage compliance, Section 104 of P.L. 110-180 includes a schedule of discretionary and mandatory reductions in Byrne Justice Assistance Grants (JAGs) for states that do not provide certain percentages of disqualifying records: for a two-year period (January 8, 2011, through January 8, 2013), the Attorney General may withhold up to 3% of JAG funding from any state that provides less than 50% of disqualifying records; for a five-year period (January 8, 2013, through January 8, 2018), the Attorney General may withhold up to 4% of JAG funding from any state that provides less than 70% of disqualifying records; and after January 8, 2018, the Attorney General is required to withhold 5% of JAG funding from any state that provides less than 90% of disqualifying records. The Attorney General's assessments of a state's progress is to be based upon the reasonable estimates that the state itself is required to provide under the act for the purposes of implementing the Section 103 grants and the Section 102 NCHIP waiver (discussed above). The act also allows the Attorney General to waive the mandatory 5% cuts if a state provides substantial evidence that it is making reasonable compliance efforts. Congress appropriated $10 million for NARIP in FY2009 and $20 million in FY2010. These amounts were well below the authorized levels in P.L. 110-180 . In FY2009, BJS awarded $2.5 million in NARIP grants to the following grantees (individual amounts in parentheses): Nevada Department of Public Safety ($798,000), New York Division of Criminal Justice Services ($937,000), and Oregon State Police ($771,000). In FY2010, BJS awarded $16.9 million in NARIP grants to the following grantees (individual amounts in parentheses): Florida Department of Law Enforcement ($3.159 million), Idaho State Police ($1.950 million), Illinois State Police ($1.210 million), New Jersey Administrative Office of the Courts ($860,000), New York Division of Criminal Justice Services ($5.995 million), Oregon State Police ($2.0 million), Texas Department of Public Safety ($752,000), and Wisconsin Office of Justice Assistance ($981,000). In FY2011, BJS awarded $20.1 million in NARIP grants to the following grantees (individual amounts in parentheses): Arizona Criminal Justice Commission ($582,930); Connecticut Office of Policy and Management, the Judicial Branch, and the Department of Mental Health and Addiction Services ($3.250 million); Florida Department of Law Enforcement ($2.575 million); Idaho State Police and the Idaho courts system ($1.206 million); Kentucky Justice and Public Safety Cabinet ($1.390 million); New Jersey Administrative Office of the Courts ($2.773 million); New York State Division of Criminal Justice Services ($3.199 million); North Dakota Office of Attorney General's Bureau of Criminal Investigation and Information Technology divisions ($205,973); Oregon State Police ($1.131 million); Texas Office of Court Administration ($547,039); Virginia State Police (VSP) and Supreme Court of Virginia ($764,100); and Wisconsin Office of Justice Assistance, Department of Justice, Department of Corrections, and Administrative Office of the Courts ($2.500 million). To be eligible for NARIP grants, states must certify that they have established a relief from disabilities program for persons adjudicated to be mentally defective, whereby they can petition to have their gun rights restored. For FY2009, only 14 states submitted certification applications and only three were certified (Nevada, New York, and Oregon) and awarded grants. DOJ suggested that one factor that might have inhibited states from applying for NARIP grants is opposition at the state level to restoring firearm rights under any circumstance. Another factor that might have influenced a state's choice is that NARIP funding only became available in March 2009, leaving little time to respond to the June 22, 2009, certification deadline. Other factors included budget constraints and the need to pass implementing legislation. As shown above, eight states were awarded grants for FY2010. As of September 30, 2010, nine states had been certified. For FY2012, the President's budget request included $12.0 million for this program. The House-reported FY2012 CJS appropriations bill ( H.R. 2596 ) would have provided $5.0 million for NARIP. The Senate-passed FY2012 CJS appropriations bill ( S. 1572 ) would have provided $10.0 million for this program. S. 1572 was folded into the Senate-passed FY2012 Minibus appropriations bill ( H.R. 2112 ). The House- and Senate-passed conference report version of H.R. 2112 ( H.Rept. 112-284 ), which the President has signed into law ( P.L. 112-55 ), provides $5.0 million for NARIP. For FY2013, the Senate-reported CJS appropriations bill would provide $7.0 million for NARIP, or $2.0 million over the $5.0 million requested by the Administration. The House Committee on Appropriations ordered reported a similar measure that would provide $12.0 million for NARIP. Beginning in FY1999, Congress has prohibited the collection of any fee for firearms-related background checks made through the FBI-administered NICS in DOJ appropriations. Beginning in FY2004, that provision also included language to require the next-day destruction of approved background check records. The issue of approved Brady background check record retention has been contentious since the inception of the FBI-administered NICS, because a provision in the Brady Act (§103(i)) prohibits the establishment of any electronic registry of firearms, firearms owners, or approved firearms transactions and dispositions. Nevertheless, under Attorney General Janet Reno DOJ proposed a rule on October 30, 1998, that would have allowed such records to be maintained for up to six months for audit purposes. The NRA challenged this proposed rule in federal court, arguing that retaining the approved records was tantamount to a temporary registry. On July 11, 2000, the United States Court of Appeals for the District of Columbia found that nothing in the Brady Act prohibited the temporary retention of information about lawful firearms transfers for certain audit purposes. On January 22, 2001, DOJ promulgated a final rule that allowed such records to be maintained for up to 90 days. Attorney General John Ashcroft opposed this rule, however, and DOJ proposed another rule on July 6, 2001, that called for the next-day destruction of those files. In July 2002, meanwhile, GAO reported that under Attorney General Reno, the FBI had conducted "non-routine" searches of the NICS audit log for law enforcement agencies to determine whether a person, whom subsequent information showed was a prohibited person, had been transferred a firearm within the previous 90 days. The FBI informed GAO that such searches were routinely conducted but were a "secondary benefit" given that the audit log was maintained primarily to check for system "accuracy, privacy, and performance." In addition, GAO reported that the next-day destruction of records would "adversely affect" other NICS operations, including firearms-retrieval actions, NICS audit log checks for previous background checks, verifications of NICS determinations for federal firearms licensees, and ATF inspections of federal firearms licensees' record keeping. Despite those adverse effects, opponents of greater federal gun control viewed the non-routine use of NICS records as being beyond the scope of authority given to the Attorney General under the Brady Act. GAO reported that DOJ took steps to minimize the adverse effects of the next-day destruction of those records. In the wake of the September 11, 2001, terrorist attacks, additional issues regarding Brady background checks emerged (see heading below, " Terrorist Watch List Screening and Brady Background Checks "). The Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ), which the President has signed into law ( P.L. 112-55 ), includes "futurity" language in the provision (§511) requiring that NICS approved firearm transfer records be destroyed within 24 hours. This "futurity" language makes the provision permanent law, as opposed to an annual appropriations restriction. Similar language was included in the House-reported FY2012 CJS appropriations bill ( H.R. 2596 ). Senator Orrin Hatch offered several related amendments during Senate consideration of H.R. 2112 , but the Senate ultimately did not vote upon those amendments. During the 111 th Congress, the gun control debate was colored by two key Supreme Court decisions. In District of Columbia v. Heller , the Court found that the District of Columbia (DC) handgun ban, among other regulations, violated an individual's right under the Second Amendment to lawfully possess a firearm in his home for self-defense. In McDonald v. City of Chicago , the Court found that an individual's right to lawfully possess a firearm for the purposes of self-defense under the Second Amendment applied to the states by way of the Fourteenth Amendment. Although the decision arguably limits a state's, city's, or local government's ability to prohibit handguns outright, it does not precisely delineate what would constitute permissible gun control laws under the Second Amendment. Consequently, these delineations will likely be developed in future cases. In the 111 th Congress, Members revisited several gun control issues that were previously considered in the 110 th Congress. For example, some Members in the House of Representatives, who were dissatisfied with the District's response to the Heller decision, passed a bill in the 110 th Congress that would have overturned provisions of the District's revised gun laws. In the 111 th Congress, Members of the Senate amended and passed a DC voting rights bill ( S. 160 ) with similar language. When the House turned its attention to DC voting rights, the leadership attempted to negotiate a compromise but ultimately tabled its version of the DC voting rights bill ( H.R. 157 ) rather than risk amendments to overturn DC guns laws. The DC gun amendments were introduced as stand-alone bills ( H.R. 5162 / S. 3265 ). So far, the 112 th Congress has not revisited this issue. The Senate Veterans' Affairs Committee reported stand-alone legislation that would have revamped procedures by which veterans are adjudicated "mentally incompetent" and, thus, lose their firearms possession and transfer eligibility ( S. 669 ). This reported bill reflected an amendment that Senator Richard Burr had offered and the Senate committee had adopted in the 110 th Congress during consideration of S. 2969 . Also in the 111 th Congress, the House Veterans' Affairs Committee considered a draft veterans' benefits bill and adopted an amendment offered by Representative John Boozman that included similar provisions. However, when the House considered the reported bill ( H.R. 6132 ) under suspension of the rules, it was called to the floor without the Boozman provisions. Nevertheless, as discussed below, this issue has reemerged in the 112 th Congress, when the House passed similar legislation ( H.R. 2349 ). The Senate also considered an amendment offered by Senator John Thune to the FY2010 Defense Authorization Act ( S. 1390 ) that was narrowly defeated and arguably would have provided for national reciprocity between states regarding the concealed carry of firearms. In the 112 th Congress, the House has passed similar legislation ( H.R. 822 ). The Senate Committee on Homeland Security and Governmental Affairs held a hearing on denying firearms to persons watch-listed as known or suspected terrorists ( S. 1317 / H.R. 2159 and S. 2820 ). The 112 th Congress revisited related issues during consideration of legislation to reauthorize the USA PATRIOT Act ( H.R. 1800 , S. 1038 , and S. 990 ). Also, in the 111 th Congress, the House Financial Services Committee reported a bill ( H.R. 3045 ; H.Rept. 111-277 ) that included a provision that would have prohibited public housing authorities from barring tenants from possessing legal firearms as a condition of their lease. This committee approved another housing bill that included a similar provision ( H.R. 4868 ). The House also passed amendments ( H.R. 5827 ) to federal bankruptcy law that would have allowed persons to claim either a single firearm or a collection of firearms of up to $3,000 in value as a federal exemption. And, on at least two occasions, the Senate Committee on the Judiciary scheduled a hearing on a bill to reform federal statutes under which federally licensed firearms dealers are regulated ( S. 941 / H.R. 2296 ). In addition, during the 111 th Congress, Members sponsored several proposals that were enacted. The Senate adopted an amendment offered by Senator Tom Coburn to the Credit CARD Act of 2009 ( H.R. 627 ) to allow people to carry firearms in national parks and wildlife refuges. The House voted on the Coburn amendment as a separate measure and passed it as well ( P.L. 111-24 ). The Senate adopted an amendment offered by Senator Roger Wicker to the FY2010 Transportation-HUD appropriations bill ( H.R. 3288 ) that allows private persons to carry firearms in their checked luggage on Amtrak trains. H.R. 3288 became the vehicle for the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), which included the Wicker provision. Congress reconsidered and passed amendments to the Law Enforcement Officers Safety Act (LEOSA; P.L. 108-277 ) to clarify and widen eligibility for certain qualified police officers to carry concealed firearms across state lines ( S. 1132 ; P.L. 111-272 ). Congress altered, but continued to make permanent, a funding limitation on the release of ATF firearms trace data ( P.L. 111-8 and P.L. 111-117 ), which is known for its original sponsor, Representative Todd Tiahrt. Two firearms-related provisions were included in the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ( P.L. 111-383 ). One provision (§1062), sponsored by Senator Jim Inhofe, prohibits the Secretary of Defense, and by implication base commanders, from collecting any information on privately owned firearms kept by military personnel, Department of Defense civilian employees, and their family members off-base. Another provision (§346) sponsored by Senators Jon Tester and Max Baucus addresses the demilitarization of small arms ammunition of several types and calibers, which is commonly sold as military surplus. Finally, during the 111 th Congress, gun trafficking across the Southwest border from the United States to Mexico was also an ongoing concern, as it has been for the 112 th Congress. The Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), included increased funding for ATF to investigate additional gun trafficking cases. In addition, Congress provided ATF with an FY2010 supplemental appropriation to combat further Southwest border gun trafficking ( P.L. 111-230 ). For a fuller discussion of legislative action in the 111 th Congress, see Appendix A . In the wake of the Aurora, CO, theater and Oak Creek, WI, Sikh temple mass-casualty shootings, several Members of Congress called for reconsideration of the 1994-2004 ban on semiautomatic assault weapons and the large capacity ammunition feeding devices. There were similar calls to ban such feeding devices (see S. 32 / H.R. 308 ) following the January 8, 2011, Tucson, AZ, mass shooting. The 112 th Congress has also seen considerable attention paid to ATF Southwest border gun trafficking investigation known as "Operation Fast and Furious." At several congressional hearings, the Attorney General was questioned at length about whom among the departmental officials conceived of, knew about, and/or approved this operation. It has led to the resignation of the U.S. Attorney for the District of Arizona. The House Committee on Oversight and Government Reform has held several hearings specifically on matters related to this operation. When the President asserted executive privilege rather than turn over additional, subpoenaed documents to the committee, the House passed a resolution holding the Attorney General in contempt of Congress for his failure to produce subpoenaed documents. The committee has also held a hearing on the DOJ Office Inspector General findings concerning both an earlier, Tucson, AZ-based investigation, known as Operation Wide Receiver, and Operation Fast and Furious. In addition, the Committee has released Parts I and II of its three-part, final report on Operation Fast and Furious. Several other gun control issues have emerged in the 112 th Congress. For example, the House passed a bill ( H.R. 822 ) that would establish greater reciprocity between states with firearms concealed carry statutes. The House also passed a Veterans' Benefits bill ( H.R. 2349 ) that would prohibit the Department of Veterans Affairs from making mentally incompetent determinations about beneficiaries for the purposes of gun control, unless such determinations were made by a judge, magistrate, or other judicial authority. Firearms-related amendments were also offered to bills that extended an expiring USA PATRIOT Act provision related to national security investigations and FBI access to business records. Both chambers have also considered bills to promote access to federal lands for hunting and other sporting activities ( S. 3525 and H.R. 4089 ). On July 20, 2012, a 24-year-old male entered a theater in Aurora, CO, and allegedly shot to death 12 people and wounded another 58 people, 7 of them critically. He was armed with a semiautomatic rifle equipped with a drum magazine, a 12-gauge pump shotgun, and at least one, possibly two, .40-caliber handguns. He reportedly bought these firearms legally from federally licensed gun dealers in Colorado. He also reportedly purchased over 6,000 rounds of ammunition and a 100-round magazine through online, interstate (mail order) transactions. This shooting prompted some Members of the 112 th Congress to support reconsideration of proposals to reinstate a 1994 ban on semiautomatic assault weapons and large capacity ammunition feeding devices, which expired in September 2004. So far, two questions have repeatedly been asked about the Aurora, CO, shooting: (1) Would the shooter's Smith & Wesson AR-15 and drum magazine have been prohibited under the 1994-2004 semiautomatic assault weapons (SAW) ban? and (2) What federal laws speak to the interstate, mail order ammunition sales/transfers (particularly those initiated over the Internet)? In addition, the shooter's mental health could emerge as an issue, but little information has surfaced to date about his state of mind. It is noteworthy that all accounts seem to indicate that the shooter bought his firearms, magazines, and ammunition legally. It is unclear at this time whether the Smith & Wesson AR-15 used by the Aurora, CO, shooter would have been subject to the 1994 SAW ban. Under the ban, a rifle was a SAW if it were semiautomatic and had an ability to accept a detachable (interchangeable) magazine, and had two of the following features: a folding or telescoping stock, a pistol grip that protruded conspicuously beneath the action of the weapon, a bayonet mount, a muzzle flash suppressor or threaded barrel to accommodate one, or a grenade launcher. The SAW ban specifically named the Colt AR-15 as prohibited, but it did not prohibit any Smith & Wesson firearm specifically as a SAW. Immediately following the ban, Colt modified the design of its rifle ("sporterized" it), and the post-ban version of the Colt AR-15 did not meet the features test and was legal, because it did not include two of the five features listed above. However, it definitely included a pistol grip and an ability to accept a detachable magazine—arguably the two hallmarks of a SAW rifle. Under the SAW ban, the further production of high capacity ammunition feeding devices (over 10 rounds) was also banned, but such devices privately or commercially held at home or abroad prior to enactment in 1994 were grandfathered in. (During the 10-year ban, imports of these devices proved problematic, because they were not stamped with either a manufacturing date or serial number. This is still the case today.) So, whether the shooter's drum magazine would have been banned is also unclear. The 1986 Firearms Owners' Protection Act (FOPA) repealed certain restrictions on interstate transfers of ammunition, including mail order transfers. As a result, since 1986, a person can deal in ammunition as long as he is not a prohibited person. As described above, however, a person must be federally licensed to manufacture or import ammunition. Unlike for firearms, moreover, there are no restrictions on the interstate transfer of ammunition by federally licensed gun dealers or unlicensed persons. Therefore, ammunition can be transferred interstate between unlicensed persons. In addition, there are no recordkeeping requirements for either licensed dealers or unlicensed persons with regard to ammunition transfers, except for transfers of "armor piercing ammunition" made by licensed dealers to unlicensed persons. With regard to the Internet-based firearms transfers, a CRS legislative attorney previously concluded in 2001 that "A review of applicable federal law … establishes that internet-based firearm sales are not imbued with a special character by virtue of their medium of transfer, and are in fact subject to the same degree of regulation as any other type of firearm transaction. " The same could be said for Internet-based ammunition sales. In summary, it may be appropriate to think of the Internet as a "means of communication," because it allows individuals to search for, contact, and communicate with others more efficiently than through the mail, want ads, publications, or over the phone. As consequence, it facilitates equally those individuals who would break the law as it does those who would obey the law. By comparison, prior to FOPA, only licensed firearms manufacturers, importers, and dealers were authorized to transfer ammunition to unlicensed persons. There was also a recordkeeping requirement for any handgun ammunition transfers made by a licensed dealer to an unlicensed person. While it was lawful for an unlicensed person to cross state lines and purchase ammunition face-to-face from an out-of-state licensed dealer, if an unlicensed person wanted to acquire ammunition from an out-of-state source, the ammunition had to be transferred from an out-of-state licensee to a licensee in the unlicensed person's state of residence. Then, the ammunition could be lawfully and subsequently transferred to the unlicensed person, who originally sought to acquire it. (Under current law, there is a similar construct for out-of-state, face-to-face transfers of long guns. Interstate handgun transfers are only lawful if they are conducted between licensees.) On July 30, 2012, Senator Frank Lautenberg introduced the Stop Online Ammunition Sales Act ( S. 3458 ), a bill that would require ammunition dealers to be federally licensed and would generally prohibit the sale of ammunition by unlicensed persons. The bill would require unlicensed persons purchasing ammunition from a licensed dealer to do so in person and to present a state-issued identification document at the point of purchase. In addition, the bill would require federally licensed gun dealers to maintain records on ammunition transfers, and to report to the Attorney General and to the area chief law enforcement officer whenever an unlicensed person purchases more than 1,000 rounds of ammunition within five consecutive business days. On August 5, 2012, a 40-year-old U.S. Army veteran entered a Sikh temple in the Oak Creek suburb of Milwaukee, WI, and allegedly shot to death six worshipers and critically wounded another three people. One of the wounded victims was a police officer, whom was shot numerous times as he administered first aid to another victim. The alleged shooter, Wade Michael Page, was armed with a 9mm semiautomatic pistol that he had acquired legally when he resided in North Carolina. After Page was wounded by a responding law enforcement officer, he shot himself to death. Press accounts described Page as a neo-Nazi, white supremacist, and it is widely thought that he mistook the Sikh temple for a Muslim mosque. While press accounts indicated that the FBI initially classified this attack as a domestic terrorism case, the FBI had not previously opened a file on Page. Based upon a preliminary assessment, moreover, the FBI has indicated that it appears that Page did not act in collusion with others, nor did he leave a suicide note, manifesto, or any other statement that would possibly explain his motive. Nevertheless, under Wisconsin state law this attack could possibly be considered a "hate crime" and be reported to the FBI Uniform Crime Reports as such. The 112 th Congress has revisited the issue of concealed carry and national reciprocity. On October 25, 2011, the House Committee on the Judiciary ordered reported the National Right-to-Carry Reciprocity Act of 2011 ( H.R. 822 ) by a vote (19-11) that was nearly split down party lines following several days of contentious markup. On November 10, 2011, the committee reported H.R. 822 ( H.Rept. 112-277 ). On November 16, 2011, the House considered and passed H.R. 822 , amended, by a recorded vote: 272-154 (Roll no. 852). H.R. 822 would establish an increased level of reciprocity among states that have laws that allow civilians to carry handguns in a concealed fashion. Under state law, 38 states, most recently Wisconsin, have enacted "shall issue" concealed carry laws, meaning permits are issued to all eligible applicants. Ten states have enacted more restrictive "may issue" laws, meaning state and/or local authorities have discretion whether to issue permits. In those states, applicants usually must demonstrate a need to carry a concealed handgun to the authorities. At one end of the spectrum, Alaska, Arizona, Wyoming, and Vermont allow concealed carry without a permit. At the other end, Illinois and the District of Columbia allow no concealed carry of firearms by civilians. With regard to interstate reciprocity, a handful of states have "recognition" statutes that recognize any state-issued concealed carry permit. Other states have "open" statutes that allow any resident of the United States, without regard to state residency, to apply for a concealed carry permit. Still other states have "hybrid" statutes that include elements of both the recognition and open statutes. Contiguous "shall issue" states often extend reciprocity to one another. However, some "shall issue" states have opted not to extend reciprocity to other "shall issue" states for a variety of reasons, even though they might have extended reciprocity to arguably more restrictive "may issue" states. The end result is a complicated array of state laws that arguably makes it very challenging for any individual to discern his legal ability to travel interstate with a concealed handgun. Under H.R. 822 , as ordered reported, a permit holder from state A would be able to travel to state B with a concealed handgun as long as state B had a concealed carry law, no matter which type ("shall" or "may" issue). The permit holder from state A would be required to comply with all other laws in state B, with the exception of the laws governing eligibility for and issuance of concealed carry permits. Several issues could arise, however. First, the bill makes no allowance for the difference between more permissive "shall issue" and more restrictive "may issue" state laws. Therefore, the bill could be viewed as an imposition by "shall issue" states over "may issue" states. Depending upon the circumstances, the bill could also be viewed as an imposition by some "shall issue" states over other "shall issue" states, depending upon differences in their respective concealed carry laws. For example, some "shall issue" states have good moral character clauses as part of their eligibility requirements, others do not. Some require "live fire" training prior to permit issuance, others do not. Some require a mental health evaluation, others do not. Several states issue permits to persons 18 years of age, while most states require applicants to be 21 years of age. Another issue that has emerged is "forum shopping," that is, one state's residents going to another state with an "open" statute so that they can return to their own state with a concealed carry permit that they would not have otherwise been able obtain in their own state. While language has been included in the bill, as ordered reported, that would arguably prevent individuals from forum shopping among states, Representative Daniel Lungren offered an amendment that the committee adopted that would require GAO to conduct a study of "open" state concealed carry laws and their implications for public safety. The committee also adopted a substitute amendment offered by Representative Trent Franks at the outset of the markup. Twelve other amendments were offered, but all were defeated. Minority Members offered amendments that would have denied concealed carry permits to categories of persons on terrorist watch lists and several classes of misdemeanants, including sex offenders, stalkers, drug traffickers to minors, and assailants of police officers. Other amendments addressed the need for more secure and verifiable concealed carry documentation and interstate information sharing on permittees for law enforcement and public safety purposes. Representative Louie Gohmert offered an amendment that would have allowed concealed carry in the District of Columbia, but it too was defeated. Proponents argue that establishing reciprocity on such a basis would be similar to the mutual recognition of out-of-state driver licenses. Opponents counter that most state driver license eligibility requirements are remarkably similar, unlike concealed carry eligibility requirements. Furthermore, states have opted to recognize the driver licenses of other states largely on their own accord without congressional intervention. Proponents contend further that criminals are less likely to victimize individuals who could be armed, thus leading to a reduction in crime. To support this view, the chairman of the House Committee on the Judiciary, Representative Lamar Smith, noted during the markup that, according to the National Rifle Association (NRA), concealed carry states on average had lower violent crime rates (22%) than states that did not have such laws. Opponents argue that introducing more firearms into potentially life threatening situations increases the likelihood that a firearm would be misused and innocent persons wounded or killed. To support their view, they have cited data compiled by the Violence Policy Center, which reported that from May 2007 through October 25, 2011, concealed carry permit holders had killed 11 law enforcement officers and 375 private citizens, and had engaged in 20 mass shootings and 29 murder/suicides. Several other concealed carry bills have been introduced in the House and the Senate. In the House, for example, Representative Paul Broun introduced the Secure Access to Firearms Enhancement Act ( H.R. 2900 ), a bill that is similar in effect to the Thune bill ( S. 2213 ) described below. Representative Timothy Johnson has introduced a bill ( H.R. 3543 ) that has the same title as H.R. 822 and reflects that bill as introduced. Senator Barbara Boxer introduced the Common Sense Concealed Firearms Permit Act of 2011 ( S. 176 ), which would facilitate concealed carry reciprocity arguably by establishing minimum federal eligibility requirements. On the other hand, elements of those eligibility requirements could be seen as being more restrictive than many existing state laws—particularly state "shall issue" laws. For example, the bill would require a concealed carry permit applicant to demonstrate (1) good cause for requesting the permit, and (2) that he is worthy of the public trust to carry a concealed firearm in public. Such eligibility requirements are arguably more closely aligned with state "may issue" laws. Senator Mark Begich introduced the National Right-to-Carry Reciprocity Act of 2012 ( S. 2188 ), a companion bill to H.R. 822 . And, Senator John Thune has introduced the Respecting States' Rights and Concealed Carry Reciprocity Act of 2012 ( S. 2213 ). Under S. 2213 , a resident of a state that allows concealed carry without a permit (Alaska, Arizona, Wyoming, and Vermont) would be allowed to do so in another state without a permit of any kind, arguably, as long as the host state issues concealed carry permits. Under H.R. 822 / S. 2188 , a resident of one of those states would have to acquire a permit from either his or another state. The 112 th Congress has revisited the issue of firearms carry and use on public lands. As described above, Senator Coburn sponsored legislation in the 111 th Congress that allows individuals to carry firearms in national parks and wildlife refuges, as long as such firearms carry is in compliance with state and local laws ( P.L. 111-24 ). On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 ( H.R. 4089 ) by a vote of 274-146 (Roll no. 164). This bill would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting with certain exceptions set out in statute (e.g., national security, public safety, or resource conservation). H.R. 4089 defines federal public lands broadly and, arguably, would promote allowance for fishing, hunting shooting on most federal public lands, with certain exceptions for national parks, national monuments managed by the National Park Service, lands held in trust for Indian tribes, and Outer Continental Shelf lands. (For a related bill, see also H.R. 3440 .) On September 22, 2012, the Senate voted to invoke cloture on a motion to proceed to the Sportsmen's Act of 2012 ( S. 3525 ). The Senate bill addresses some of the same hunting and fishing issues addressed in H.R. 4089 , but the two bills are different in their approach. The Senate recessed before considering S. 3525 further. Similarly, Section 438 of the FY2013 Interior, Environment, and Related Agencies Appropriations bill ( H.R. 6091 ), which the House Committee on Appropriations reported on July 10, 2012, would provide that appropriated funding under the bill could not be used to prohibit the use of or access to federal land for hunting, fishing, or recreational shooting. In addition, H.R. 4089 includes a provision that would prohibit the Environmental Protection Agency (EPA) from promulgating regulations under the Toxic Substances Control Act to restrict the lead content of ammunition and fishing tackle. The EPA was previously petitioned to address this issue on three occasions, but had denied those petitions. The EPA has adopted the position that it has no legal authority to regulate ammunition, and found that additional federal regulation of lead in fishing tackle is not warranted. (See also H.R. 1558 / S. 838 and H.R. 2834 / S. 2066 .) Conversely, Representative Jim McDermott has introduced the Guns-Free National Parks Act of 2012 ( H.R. 4063 ), a bill that would repeal the Coburn provision in P.L. 111-24 noted above. On a related issue concerning firearms on public lands, Representative Bob Gibbs and Senator Jim Webb introduced the Recreational Land Self-Defense Act of 2011 ( H.R. 1865 / S. 1588 ). This bill would prohibit the Secretary of the Army from banning individuals from firearms possession, including an assembled or functional firearm, while traveling through or visiting water resources development projects (e.g., reservoirs at Corps-operated dams and inland waterways) managed by the Army Corps of Engineers. It is noteworthy that although Corps staff is often charged with maintaining order among boaters and other visitors at Corps-managed reservoirs and waterways, and at adjoining campsites, they are not authorized to be armed, unlike National Park Service rangers. Under the bill, however, firearms possession and carrying would still be subject to the state and local laws in effect for the jurisdictions in which the Corps projects are located. In this way, this bill is similar to the 2009 National Parks legislation ( P.L. 111-24 ). Also, in the last session on July 14, 2011, the House passed an amendment ( H.Amdt. 653 ) offered by Representative Paul Gosar to the FY2012 Energy and Water Development and Related Agencies Appropriations bill ( H.R. 2354 ) that would have prohibited the expenditure of any funding under that bill to enforce any regulation to restrict firearms possession on corps projects or lands that exceeded state law. On May 18, 2012, the House passed the National Defense Authorization Act for Fiscal Year 2013 ( H.R. 4310 ). This bill includes a provision that would amend a provision enacted under P.L. 111-383 that prohibits base commanders from collecting information about firearms privately held by military personnel off-base. The amending provision (§1071) in H.R. 4310 would clarify that a military mental health professional or commanding officer may inquire about privately owned firearms if that service member is considered to be a high risk for suicide or causing harm to others. Also, during House consideration of H.R. 4310 , Representative Phil Gingrey successfully offered an amendment ( H.Amdt. 1124 ) that expresses a sense of Congress that active duty military personnel who either live in or are stationed in the District of Columbia (DC) ought to be exempt from DC firearms laws, which generally require the registration of firearms, both long guns and handguns, as well as forbid the carrying of any firearm outside of the home. The amendment was passed by voice vote. Under Project Gunrunner, ATF has increased its efforts to staunch the flow of illegal guns from the United States to Mexico through stepped up enforcement of domestic gun control laws and cooperation with Mexican authorities. For example, in its FY2013 budget submission to Congress, ATF presented the following data to demonstrate its overall efforts in Southwest Border states between FY2005 and FY2011: 1,471 cases involving 3,438 defendants recommended for prosecution; 2,376 defendants arrested; 2,338 indicted; 1,549 convicted; and 1,070 sentenced to an average of 102 months in prison; 442 cases and 1,467 defendants recommended for prosecution involved gang-related offenses; 752 cases involved trafficking of an estimated 26,129 firearms, of which 244 cases and 8,564 firearms were related to gang-related activities; and over 10,500 firearms and 1,407,000 rounds of ammunition were seized as a result of these investigations. To support these efforts, Congress appropriated $1.121 billion for ATF for FY2010. This amount included about $60 million for Project Gunrunner according to both House and Senate report language. For FY2011, ATF was appropriated $1.115 billion, but Congress had also appropriated an additional $37.5 million for ATF in the FY2010/FY2011 Southwest border supplemental appropriation ( P.L. 111-230 ). For FY2012, Congress appropriated $1.152 billion for ATF ( P.L. 112-55 ). The agency reports that approximately $68.9 million in direct funding has been allocated to efforts related to addressing Southwest Border gun trafficking groups. Moreover, ATF has trained Mexican law enforcement officials to use its eTrace program, through which investigators are sometimes able to trace the commercial trail and origin of recovered firearms and, in the process, identify gun trafficking trends and develop investigative leads. As described below, however, the interpretation of trace data has generated considerable debate. On the one hand, several substantive methodological limitations preclude using trace data as a proxy for the larger population of crime guns in Mexico or the United States. On the other hand, in conjunction with investigative experience, trace data show that certain firearms—particularly semi-automatic rifles with the ability to accept a detachable magazine that are greater than .22 caliber—are increasingly being used by the Mexican drug trafficking organizations and other criminals. In November 2010, the DOJ Office of the Inspector General (OIG) released an evaluation of Project Gunrunner. While the OIG was somewhat critical of ATF's eTrace program for yielding little "usable investigative leads," the OIG recommended that ATF work with DOJ to develop a reporting requirement for multiple long gun sales because Mexican DTOs have demonstrated a marked preference for military-style firearms capable of accepting high-capacity magazines. The OIG also recommended that ATF focus its investigative efforts on more complex criminal conspiracies involving high-level traffickers rather than on low-level straw purchasers. In January/February 2011, ATF's Southwest border efforts to deter cross-border gun trafficking became controversial following the murder of a U.S. Border Patrol agent in December 2010. Firearms found at the murder site were linked to a Phoenix, AZ-based Project Gunrunner investigation known as "Operation Fast and Furious." This operation was an attempt by ATF's Phoenix field office to conduct a more complex investigation. However, allegations of misconduct on the part of DOJ's and ATF's upper-levels of management have been the topic of four hearings conducted by the House Committee on Oversight and Government Reform. Those allegations have also dominated the discourse at two DOJ oversight hearings held by the House Committee on the Judiciary, as well as two hearings held by the Senate Committee on the Judiciary and its Subcommittee on Crime and Terrorism. Several Members of Congress, including two House full committee chairs, have written letters to the Attorney General urging him and the Administration to be more forthcoming about possible missteps that were taken in the lead-up to Operation Fast and Furious. Besides the oversight issues, at issue for Congress is how widespread were the gun walking tactics employed? And, what can be done to prevent such gun walking tactics from being misused again, without unduly encumbering federal law enforcement? Another related issue for Congress could be the Administration's arguably selective release of ATF firearms trace data. In the past, ATF periodically released data on firearms traces performed for Mexican authorities. Although substantive methodological limitations preclude using trace data as a proxy for the larger population of "crime guns" in Mexico or the United States, trace data have proven to be a useful indicator of trafficking trends and patterns. In June 2009, GAO recommended to the Attorney General that he should direct ATF to regularly update its reporting on aggregate firearms trace data and trends. For the next two years, nonetheless, only limited and arguably selected amounts of trace data have been released by ATF. On April 26, 2012, ATF released updated but limited data on firearms trace requests that were processed for Mexican authorities. On December 17, 2010, DOJ and ATF published a "60-day emergency notice of information collection" in the Federal Register , in which they requested that the Office of Management and Budget (OMB) review and clear a proposed information collection initiative by January 5, 2011, on an emergency basis under the Paperwork Reduction Act of 1995. While ATF was not granted emergency approval, OMB eventually approved this initiative on July 11, 2011. While opponents responded quickly and passed a provision to block ATF's implementation of this initiative, the blocking provision was not included in ATF's enacted FY2012 appropriation and ATF is currently collecting multiple rifle sales reports in Southwest Border states. Under the initiative, ATF proposed to require federal firearms licensees (FFLs) to report to ATF whenever they make multiple sales or other dispositions of more than one rifle within five consecutive business days to an unlicensed person. Such reporting was to be limited to firearms that are (1) semiautomatic, (2) chambered for ammunition of greater than .22 caliber, and (3) capable of accepting a detachable magazine. While details underlying this initiative were not fully revealed in the Federal Register , on December 20, 2010, acting ATF Director Kenneth Melson later clarified that the proposed multiple rifle sales reporting requirement would be (1) limited to FFLs operating in Southwest border states (Texas, New Mexico, Arizona, and California) and (2) confined initially to a one-year pilot project. On February 4, 2011, OMB informed ATF that it would not grant the emergency approval. Nevertheless, the notice's 60-day comment period ran through February 16, 2011. ATF received 12,680 comments, of which ATF estimated that 8,928 comments (70%) were in support of the program and 3,752 (30%) were opposed. Following DOJ and ATF consideration the initial round of comments, a subsequent 30-day comment period was invoked on April 29, 2010, during an additional 18,800 pages of comments were considered. On July 11, 2011, OMB approved the information collection initiative for a three-year period (ending July 31, 2014). It appears that some of the impetus for the information collection initiative was a recommendation made by the DOJ OIG in November 2010. As described above, in that review the OIG reported that ATF criminal investigations and firearms trace data indicated that Mexican drug trafficking organizations had demonstrated a marked preference for long guns (rifles and shotguns) capable of accepting detachable ammunition feeding devices. As a consequence, the OIG recommended that ATF work with DOJ to explore options for seeking a multiple long sales reporting requirement. In response to the OIG's recommendation, however, then Acting ATF Director Melson initially suggested that such a requirement could be beyond the ATF's and the DOJ's authority under current law, but that ATF would "explore the full range of options to seek information regarding multiple sales of long guns." Notwithstanding this concern about its authority, it appears that DOJ and ATF collectively concluded that there is sufficient authority under current law for ATF to collect reports on multiple sales of certain long guns from FFLs. Additional documentation posted on the OMB website suggested that ATF was proposing the information collection under its authority to issue "demand letters." Since the enactment of the Gun Control Act (GCA) in 1968, the ATF and its predecessor agencies at the Department of the Treasury have had the authority to issue "demand letters" to FFLs in order to obtain information from the records that FFLs are required by law to maintain at their places of business. Such letters have been primarily used to investigate and bring non-compliant FFLs into line and to expedite the acquisition of trace data. ATF's authority to issue demand letters to collect information under certain circumstances has been challenged and upheld in the federal courts. In 2000, for example, ATF issued demand letters to 41 FFLs who were deemed uncooperative because they had failed to comply with trace request responses in a timely manner. In these demand letters, the ATF required the FFLs to submit information concerning their firearm purchases and sales for the past three years and on a monthly basis thereafter until told otherwise. The U.S. Court of Appeals for the Fourth Circuit held that 18 U.S.C. Section 926(a), which prohibits the creation of a national registry of firearms, firearms owners, and transactions, did not directly limit the defendant's authority to issue demand letters and was not violated because the ATF narrowly tailored the request to its tracing needs by issuing the letter to the 0.1% of FFLs nationwide. In 1999, the ATF sent out another demand letter to approximately 450 FFLs who had 10 or more crime guns traced to them with a "time-to-crime" of three years or less. The demand letter required the FFLs to report the acquisition of secondhand firearms, including identification of the firearm but not the identities of the person from whom the secondhand firearm was acquired or the person to whom the firearm was transferred. The U.S. Courts of Appeals for the Fourth and Ninth Circuits generally held that Section 926(a) was not violated and that the appropriations rider that prohibits ATF from spending money in connection with consolidating or centralizing records was also not violated because a demand letter sent to less than 1% of all FFLs for a portion of record information does not constitute consolidating or centralizing record information. Opponents of this initiative argue that (1) ATF does not enjoy sufficient authority to require multiple rifle sales reports from FFLs; (2) such a reporting requirement would be unprecedented; and (3) the data collection that would result would essentially constitute an illegal firearms registry. Although this information collection initiative would require FFLs to provide ATF with additional documentation on firearms transactions involving rifles, which has not previously been required, it is not entirely unprecedented. On the other hand, an argument could be made that ATF's issuance of demand letters and the existing multiple handgun sales reporting requirement are precedents for multiple rifle sales reports. In the past, as described above, ATF had administratively required some FFLs to surrender firearms transaction records temporarily on a much wider scale, when there were indications of noncompliance or illegal firearms trafficking. Several Members of Congress, however, disagree with this decision and sent a letter to President Obama voicing strong opposition to the proposed multiple sales report proposal. Those Members maintain that if Congress authorized multiple handgun sales reporting in statute in 1986, then it is incumbent upon ATF to request that Congress provide it with similar statutory authority for a multiple rifles sales reporting requirement. On February 18, 2011, the House adopted an amendment by a roll call vote of 277-149 (Roll no. 115) offered by Representatives Dan Boren and Denny Rehberg to the Full-Year Continuing Appropriations Act, 2011 ( H.R. 1 ) that would have prohibited ATF from implementing that requirement. While the House passed H.R. 1 , the Senate rejected this bill on March 9, 2011, for budgetary considerations that went well beyond concerns about this policy rider. Meanwhile, the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( H.R. 1473 ; P.L. 112-10 ) does not include a similar rider. Senator Jon Tester introduced a bill ( S. 570 ) that would prohibit DOJ from collecting information on multiple rifle or shotgun sales. Following OMB's approval of this information collection initiative, Representative Rehberg successfully amended the FY2012 Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ) in full committee markup with language that would have prohibited ATF from implementing it by a vote of 25 to 16 on July 12, 2011. Meanwhile, the Senate folded its FY2012 CJS appropriations bill ( S. 1572 ) into a minibus appropriations bill ( H.R. 2112 ). Senator Dean Heller offered an amendment ( S.Amdt. 843 ) to H.R. 2112 that would have also blocked implementation of the reporting requirement, but the Senate did not vote on the Heller amendment. Language reflecting the Rehberg amendment was not included in the House- and Senate-passed conference version of the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ). Hence, it was not included into the bill that was signed into law ( P.L. 112-55 ) by the President on November 18, 2011. According to ATF, from August 14, 2011, through October 6, 2011, it collected 502 multiple rifle sales reports involving 1,276 firearms from FFLs in Southwest Border states. In addition, complaints were filed in federal district courts challenging ATF's ability to collect such information under its demand letter authority (18 U.S.C. §922(g)(5)(A)). However, in National Shooting Sports Foundation, Inc. v. Jones , the United States District Court for the District of Columbia (DC District Court) held that it was within ATF's demand letter authority to collect information from FFLs on the multiple sales of rifles. The DC District Court found that ATF's demand letter to FFLs on Southwest border was still limited in scope, even though it was "somewhat broader" than past demand letters that have been upheld by the federal courts. Nevertheless, opponents have renewed their efforts to end the multiple rifle sales reporting requirement during the FY2013 appropriations cycle. On April 26, 2012, Representative Rehberg successfully offered an amendment during full committee markup of the CJS appropriations bill ( H.R. 5326 ) with language that would prohibit ATF from collecting multiple long gun sales reports. Representative Justin Amash and Senator Jon Tester have introduced similar proposals ( H.R. 3814 / S. 570 ). According to ATF, in the first nine months of the initiative, ATF has referred over 115 defendants to the U.S. Attorneys for federal prosecution in 29 criminal cases in which leads were generated from multiple rifle sales reports. As part of these cases, ATF has taken about 168 firearms into evidence. As of May 22, 2012, approximately 1,045 FFLs had submitted 3,500 multiple rifle sales reports, encompassing around 8,200 firearms. ATF estimates that the time burden on each FFL was about one hour, seven minutes, costing an estimated $12 per year/per FFL. In January/February 2011, ATF and Project Gunrunner came under congressional scrutiny for a Phoenix, AZ-based investigation known as Operation Fast and Furious. ATF whistleblowers have alleged that suspected straw purchasers were allowed to amass relatively large quantities of firearms as part of long-term gun trafficking investigations. As a consequence, some of these firearms are alleged to have "walked," meaning that they were trafficked to gunrunners and other criminals before ATF moved to arrest the suspects and seize all of their contraband firearms. Some of these firearms were smuggled into Mexico. Two of these firearms—AK-47 variant rifles—were reportedly found at the scene of a shootout near the U.S.-Mexico border where U.S. Border Patrol Agent Brian Terry was shot to death. Press accounts assert that ATF has acknowledged that as many as 195 firearms that were purchased by persons under ATF investigation as part of Operation Fast and Furious were recovered in Mexico. Questions, moreover, have been raised about whether a firearm—an AK-47 variant handgun—that was reportedly used to murder U.S. ICE Special Agent Jamie Zapata and wound Special Agent Victor Avila in Mexico on February 15, 2011, was initially trafficked by a subject of a Houston, TX-based ATF Project Gunrunner investigation. As more information emerged, U.S. and Mexican policymakers expressed their dismay over the circumstances surrounding Operation Fast and Furious. Taking the lead, Senator Charles E. Grassley, the ranking minority Member on the Senate Judiciary Committee, wrote several letters to then ATF Acting Director Kenneth E. Melson and U.S. Attorney General Eric H. Holder voicing his concerns about Operation Fast and Furious and the whistleblower allegations that were brought to him. For example, on January 27, 2011, Senator Grassley wrote Acting Director Melson and requested a briefing on Project Gunrunner. He noted that Members of the Judiciary Committee have received numerous allegations that the ATF sanctioned the sale of hundreds of assault weapons to suspected straw purchasers, who then allegedly transported these weapons through the southwestern border area and into Mexico. On February 4, 2011, Assistant Attorney General Ronald Weich, DOJ Office of Legislative Affairs, responded with a letter that included the following statement: At the outset, the allegation described in your January 27, letter—that ATF "sanctioned" or otherwise knowingly allowed the sale of assault weapons to a straw purchaser who then transported them into Mexico—is false. ATF makes every effort to interdict weapons that have been purchased illegally and prevent their transportation to Mexico. Weich went on to say: We also want to protect investigations and the law enforcement personnel who directly conduct them from inappropriate political influence. For this reason, we respectfully request that Committee staff not contact law enforcement personnel seeking information about pending criminal investigations, including the investigation into the death of Customs and Border Patrol Agent Brian Terry. On February 9, 2011, Senator Grassley wrote Attorney General Holder a letter in which he presented documents that were provided to him by whistleblowers. They purported that a federally licensed gun dealer, who was cooperating with ATF, was encouraged by ATF and the Arizona U.S. Attorney's Office to continue transferring firearms to a suspected straw purchaser, despite misgivings regarding civil and criminal liabilities that could follow from such transfers for whom, he—the gun dealer—could possibly be found liable. As noted above, two of those firearms were found at the murder scene of Agent Terry. Both firearms were AK-47 variants (with serial numbers 1983AH3977 and 1971CZ3755). The accompanying documentation also showed that ATF had entered these firearms into its National Tracing Center's suspect gun database. In response to the previous letter, Senator Grassley observed the following: Unfortunately, the Justice Department's letter suggested that my attempts to seek information about these matters might be politically motivated. I understand the Department needs to "protect … law enforcement personnel … from inappropriate political influence." However, there is a difference between inappropriate political influence and appropriately holding officials accountable to the American people. These whistleblower allegations and related letter exchanges set off a chain of events that culminated in the House approving a resolution that cited the Attorney General with contempt, marking the first instance that Congress has ever thusly cited a sitting officer of a presidential Cabinet. Described below are the major developments that led to this precedent-setting vote. As allegations of gun walking mounted, on March 4, 2011, Attorney General Holder instructed the DOJ OIG to review ATF's gun trafficking investigations. Dissatisfied with DOJ's response to date, on March 8, 2011, Senator Grassley called for an independent review of the related allegations because the DOJ OIG had made recommendations about Southwest border gun trafficking investigations in its November 2011 audit that might possibly influence its future findings. On March 9, 2011, Representative Lamar Smith, chairman of the House Judiciary Committee, wrote the Attorney General and commended him for tasking the OIG with a review of ATF's firearms trafficking investigatory methods. In addition, Representative Smith asked DOJ to respond to the following questions by March 18, 2011: "How many weapons have been allowed to pass to Mexico under the program known as "Fast and Furious"? Is the program still active? Who at ATF Headquarters approved the program? Who in the U.S. Attorney's Office for the District of Arizona approved the program? On what authority did the office approve the program? Did ATF or the U.S. Attorney's Office in Phoenix coordinate the "Fast and Furious" program with the Department of Justice? Did the department approve the strategy? What changes or improvements has ATF made to its eTrace program and its ability to use intelligence to target gun trafficking organizations in general? Does ATF view the "Fast and Furious" program as a success?" DOJ responded to Representative Smith to say that the matter was under investigation. On March 31, 2011, Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, issued a subpoena, the first of two, to DOJ and ATF for documents related to Project Gunrunner following several unanswered requests for information related to ATF's anti-gun trafficking efforts on the Southwest Border. On May 3, 2011, Representative Issa questioned Attorney General Holder about Operation Fast and Furious at a House Committee on the Judiciary hearing on DOJ oversight. The Attorney General testified that he had only heard about Operation Fast and Furious "over the last few weeks." In turn, on May 4, 2011, Representative Issa released DOJ documents that arguably supported allegations that DOJ officials knew more about Operation Fast and Furious than they had previously admitted. These documents included the following: A January 8, 2010, memorandum from the ATF Phoenix Field Division Office on Operation Fast and Furious noting the involvement of U.S. Attorney for the District of Arizona Dennis Burke, who was in "full agreement with the current investigative strategy." The memo states that "currently our strategy is to allow the transfer of firearms to continue to take place … in order to further the investigation and allow for the identification of additional co-conspirators who would continue to operate and illegally traffic firearms to Mexican [Drug Trafficking Organizations]." A March 10, 2010, memorandum from DOJ Criminal Division Assistant Attorney General Lanny Breuer that authorized a wiretap application and arguably revealed a high level of participation in and knowledge of Operation Fast and Furious. A March 10, 2011, email referencing a directive from the Deputy Attorney General ordering law enforcement agents not to "design or conduct undercover operations which include guns crossing the border." The email clarifies that this includes "cases where we are working with the Mexican government to have them follow the vehicles once they are in Mexico." On June 13, 2011, the Committee on Oversight and Government Reform held a hearing on the department's legal obligation to respond to congressional subpoena. On June 14, 2011, Representative Issa and Senator Grassley issued a joint staff report on Operation Fast and Furious, which chronicled that ATF line supervisors became increasingly concerned when they witnessed hundreds of firearms being illegally transferred during surveillance operations, but they were reportedly directed not to arrest the suspects and interdict those firearms. Those agents contend that this was a questionable departure from past investigative practices. On June 15, 2011, the House Committee on Oversight and Government Reform held a hearing on these matters. Representative Issa expressed his concern that DOJ had not been entirely cooperative with his committee's efforts to investigate how some of those firearms found their way to crime scenes in Mexico and on the Southwest border. Following the hearing, on June 29, 2011, Representative Elijah E. Cummings, the committee's ranking minority Member, issued a report and held a forum during which the minority explored issues raised by some of those same ATF line supervisors, who had suggested during the House hearing that the penalties for firearm straw purchases under current law are arguably not stringent enough. The minority also discussed other gun control proposals related to gun shows, semiautomatic assault weapons, sniper rifles, and additional penalties for gun trafficking offenses. On July 26, 2011, the House Committee on Oversight and Government Reform held a follow-up hearing entitled "Operation Fast and Furious: The Other Side of the Border." As preceded the earlier hearing, a joint staff report was issued. This report found that ATF and DOJ leadership had not informed its own Attaché serving in Mexico City, the U.S. Ambassador to Mexico, nor the Mexican authorities about the investigation. As recovered firearms in Mexico increased, the ATF Attaché in Mexico City became more alarmed and contacted his superiors at ATF headquarters to express his grave concerns about the implications that this increased flow of illegal firearms could have for both Mexican and U.S. law enforcement officers as well as the public on both sides of the border. He and others were told by both ATF and DOJ officials that the investigation was under control and was having positive results. As noted above, however, Border Patrol Agent Terry was killed in a firefight in December 2010, and firearms connected to Operation Fast and Furious were found at the site of that firefight. In July 2011, the Washington Post reported that Operation Fast and Furious ultimately involved 2,020 firearms, of which 227 had been recovered in Mexico and 363 had been recovered in the United States. The investigation resulted in indictments of 20 individuals on multiple counts of straw purchasing and other federal offenses. While ATF officials maintained that the investigation had yet to be concluded and additional arrests of "high-level traffickers" might be forthcoming, no additional arrests have been made. As called for originally by Senator Grassley, the House Committee on Appropriations included report language with the Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ; H.Rept. 112-169 ) that recommended the appointment of "an outside, independent investigator," who would be charged with conducting "a thorough investigation of the allegations against ATF with respect to Operation Fast and Furious and policies guiding this and similar operations." In addition, the House committee called on both DOJ and ATF to cooperate fully with related oversight investigations, whether they were conducted by congressional committees, the DOJ OIG, or an independent investigator. Conversely, the Senate Appropriations Committee included report language with the CJS appropriations bill ( S. 1572 ; S.Rept. 112-78 ) that stated that the OIG would fulfill its oversight duties, and that Operation Fast and Furious was but a small part of ATF's Southwest border operations, which should not detract from the agency's efforts to protect Americans from illegal gun trafficking and other forms of cross-border crime. Conference report language accompanying the Consolidated and Further Appropriations Act, 2012 ( H.R. 2112 ; P.L. 112-55 ) does not call for an independent investigator, but it does call on both DOJ and ATF to cooperate fully with congressional oversight efforts ( H.Rept. 112-284 , p. 240). On August 30, 2011, among the fallout from Operation Fast and Furious, U.S. Attorney for the District of Arizona Dennis K. Burke resigned and ATF Acting Director Melson was reassigned to the DOJ Office of Legal Policy. In Melson's place, U.S. Attorney for the District of Minnesota B. Todd Jones was appointed interim acting ATF Director. However, Jones is not President Obama's nominee for ATF Director. The President's nominee remains Andrew Traver, the ATF Chicago Special Agent in Charge. On September 23, 2011, Representative Smith sent Attorney General Holder a second letter expressing his continuing concerns about Operation Fast and Furious, as well as the appointment of an acting ATF director who would be focused on both his duties as ATF acting director and U.S. Attorney for the District of Minnesota. He noted a provision in the FY2010 Omnibus Appropriations Act ( P.L. 111-117 ) requires each U.S. Attorney to reside in the district in which he serves, and questioned how Jones would be able to serve simultaneously in Minnesota as U.S. Attorney and Washington as ATF acting director. As a follow-up to his March 9 letter, Representative Smith asked DOJ to respond to the following questions by October 21, 2011: "Is the Department considering additional staff changes at ATF in response to Fast and Furious ? How does the Department justify accepting the resignation of the U.S. Attorney while the ATF's managers in charge of Fast and Furious appear to have faced no discipline? What role did the Department play in oversight of Operation Fast and Furious ? Does Todd Jones intend to maintain his residence in Minnesota while serving as acting director of ATF? Is the Department confident that the ATF can fulfill its mission with a part-time director who is based in Minnesota? Have you issued a waiver of the residency requirement for Todd Jones under 28 U.S.C. §545? If so, for what period does the waiver extend?" In addition, Representative Smith reiterated his concern about how the department had responded to congressional inquiries about Operation Fast and Furious. He noted for the record that the department had only answered one out of six questions he submitted in his March 9 letter. He raised concerns about what appeared to be deliberate attempts by the department to obscure the facts about Operation Fast and Furious. As an example, Representative Smith raised the department's description of the ballistic tests on the two semiautomatic rifles found at the site of Border Patrol Agent Terry's murder. The department apparently stated that the tests showed that neither firearm was used to fire the fatal shot; however, Representative Smith countered that the tests were inconclusive one way or another. Furthermore, Representative Smith raised an issue about an audio recording on which a federal agent reportedly mentioned a third firearm linked to Operation Fast and Furious that had been found at Agent Terry's murder scene. On October 12, 2011, the Committee on Oversight and Government Reform issued a second subpoena to DOJ for all departmental communications and documents "referring or related to Operation Fast and Furious, the Jacob Chambers Case, or any Organized Crime Drug Enforcement Task Force (OCDETF) firearms trafficking cases based in Phoenix, Arizona." According to a press release, Representative Issa said, "The documents this subpoena demands will provide answers to questions that Justice officials have tried to avoid [answering] since this investigation began eight months ago." On October 16, 2011, Representative Issa and Sharyl Attkisson—the CBS correspondent who broke the Operation Fast and Furious story nationally —appeared on Face the Nation with Bob Schieffer. Both Representative Issa and Ms. Attkisson discussed the possibility that a third firearm had been found at Agent Terry's murder scene. According to Ms. Attkisson, audio recordings had surfaced on which the ATF supervisory special agent in charge of Operation Fast and Furious made mention of a third firearm, an SKS rifle, that was possibly linked to a confidential informant working for either the FBI or DEA. Representative Cummings has called on the Committee on Oversight and Government Reform to hear testimony again from former ATF Acting Director Melson as a means of determining who is responsible for the conduct of this controversial gun trafficking operation. On October 18, 2011, Senator John Cornyn offered an amendment ( S.Amdt. 775 ) to the FY2012 minibus appropriations bill ( H.R. 2112 ), which included the Senate-reported FY2012 CJS appropriations bill ( S. 1572 ), to prohibit the expenditure of any funding provided under that bill, if enacted, to conduct criminal investigations that allowed firearms to be transferred knowingly to agents of drug cartels and U.S. law enforcement was unable to continuously monitor or control such firearms at all times. This amendment passed 99-0 (Record Vote Number: 167). On November 1, 2011, the Senate passed H.R. 2112 . The conference report version of H.R. 2112 ( H.Rept. 112-284 ), which both the House and Senate passed and the President signed into law ( P.L. 112-55 ), includes a modified version of the Senate-passed Cornyn amendment. The modified provision (§219) prohibits the expenditure of any funding provided under P.L. 112-55 to be used by a federal law enforcement officer to transfer an operable firearm to a person suspected or known to be connected to a drug cartel without that firearm being continuously monitored or controlled. On November 1, 2011, Lanny Breuer, the Assistant Attorney General for DOJ's Criminal Division, testified before the Senate Judiciary's Crime and Terrorism Subcommittee at a hearing on International Organized Crime. During the hearing, Senator Grassley acknowledged a statement made by Breuer on the previous day regarding a 2006-2007 Phoenix-based ATF investigation known as Operation Wide Receiver. With regard to that operation, Breuer said he first became aware of the "gun walking" strategy in April 2010, and it concerned him. However, he did not take his concerns about "gun walking" directly to the Attorney General. Instead, his subordinate spoke to "ATF leadership" about his concerns. Breuer testified that about 350 firearms were allowed to "walk" as part of Operation Wide Receiver, but he failed to make possible connections between Operation Wide Receiver and Operation Fast and Furious with regard to "gun walking." Nevertheless, in his October 31, 2011, statement, Breuer characterized "gun walking" as "unacceptable and misguided." Breuer also testified that over the past nearly five-year period, ATF had processed 94,000 firearm trace requests for Mexican authorities. Of those firearms, 64,000 were "traced" to the United States. In addition, on November 4, 2011, the Huffington Post reported that nearly 700 firearms linked to Operation Fast and Furious had been recovered: 276 in Mexico and 389 in the United States, according to ATF data through October 20, 2011. On November 8, 2011, the Senate Committee on the Judiciary held a DOJ oversight hearing, at which Senators Grassley and Cornyn questioned Attorney General Holder at length about Operation Fast and Furious. The Attorney General conceded that a February 4, 2011, letter from DOJ to congressional investigators contained "inaccurate" information regarding the depth of knowledge that departmental officials had of ATF's use of the "gun walking" tactic. In addition, the Attorney General qualified Breuer's earlier statement about 64,000 firearms recovered in Mexico having been "traced" back to the United States. As described below, only about a quarter of the 94,000 firearms submitted for tracing were probably ever fully traced back to the first U.S. retail owner of record. Consequently, the Attorney General stated that 64,000 of those firearms were "sourced" to the United States, in that they were either originally manufactured in, or imported into, the United States. However, no additional information was given about the 25,000 or so firearms that were eventually fully traced back to the United States, such as time-to-recovery or most frequently traced firearms (by type, make, model, and caliber). On December 2, 2011, Deputy Attorney General James M. Cole wrote both Representative Issa and Senator Grassley and again conceded that the February 4 letter to Senator Grassley from Assistant Attorney General Weich included inaccuracies arguably based upon responses that the department had initially received from the ATF leadership and the U.S. Attorney's Office in Arizona. DOJ formally withdrew that letter. On December 8, 2011, the House Committee on the Judiciary held a hearing on DOJ oversight and heard testimony from Attorney General Holder. However, Operation Fast and Furious was clearly the predominant issue before the committee. More specifically, at issue was who within DOJ management had knowledge of and, by extension, responsibility for the operation. For example, at a May 3, 2011, DOJ oversight hearing, Attorney General Holder testified that he had only heard about Operation Fast and Furious "over the last few weeks." On the other hand, internal DOJ documents obtained by the House Oversight and Government Reform Committee suggest that several high-level managers within the department were aware of, and possibly helped direct, ATF's Operation Fast and Furious. There were also emails between William Newell, the then-ATF Phoenix Special Agent in Charge, and at least one staff member of the National Security Council in which "updates" on Operation Fast and Furious were provided. On January 31, 2012, Chairman Smith sent the Attorney General a third letter, in which he admonished DOJ's stalling tactics and selective releases of materials related to the operation. In the letter, he surmised that "It is past time for the Department to provide a full and honest accounting of Operation Fast and Furious with details about its conception, approval, and who knew what when." On February 2, 2012, the House Oversight and Government Reform Committee held its fourth hearing related to Operation Fast and Furious, during which Attorney General Holder was questioned at length about possible false statements, and other questionable responses to repeated congressional inquiries, that were made with regard to this operation by the department. As a counterpoint, Representative Cummings noted that his staff had prepared a report that documented that "gun walking" operations had been conducted by the ATF and U.S. Attorney's Arizona Office as part of several Southwest border gun trafficking investigations. In addition to Wide Receiver (2006-2007), this report describes two other Phoenix-based ATF investigations that involved gun walking: Hernandez (2007) and Medrano (2008). Representative Cummings also argued that former Attorney General Michael Mukasey ought to be called before the committee to testify, because the gun-walking tactics had originated during the Administration of President George W. Bush. Also of note, during the hearing, Representative Stephen Lynch questioned the Attorney General about DOJ oversight of several sensitive investigative techniques, including gun walking, leading him to observe the following: The problem here is that this tactic actually authorized—it puts law enforcement, Federal law enforcement in a position of authorizing criminal activity. They become complicit in it. That's very troubling, especially when it results in the death of a very brave, courageous agent or to innocent American civilian citizens. And what is especially troubling is that I believe that you didn't know about it. I believe that you didn't know about it. But that's not a comfort to me. It is unbelievable that either the Phoenix field office or the Boston office of the FBI can authorize criminal activity, not just a mere tactic, but a whole strategy of using that outside of the law, and then having innocent civilians killed. So I actually think that one of the solutions might be for Congress to pass a law that says, if there are those limited occasions where we are going to authorize criminal activity to go on in our society under the cover of law enforcement's authority, then either yourself, as the Attorney General, or the director of the FBI or the head of the ATF has to sign off on it because here, everyone escaped responsibility because of plausible deniability. They can say, I didn't know about it. Attorney General Holder responded: I think that's a legitimate question. I think we don't want to go too far in this sense in that law enforcement will engage in illegal activity in an attempt to solve crimes. We engage in illegal activity when we are—when we buy drugs from people who are selling drugs. We engage in illegal activity when we pay corrupt public officials money, when we go into undercover operations. But we have to have that ability. It is an extremely important law enforcement technique. But I think the point that you raise is a good one, and that is, that the approval to do these kinds of activities can't rest at the line level. There has to be supervisory responsibility. And the question is, where do you draw that line? In addition, Representative Gerald Connolly questioned Attorney General Holder about the need for tougher gun laws. The Attorney General responded that the Obama Administration had consistently favored reinstituting the semiautomatic assault weapons ban. Representative Connolly remarked that there had been no congressional hearing held so far on that topic or any other gun control proposal, yet the Attorney General had been questioned about Operation Fast and Furious on at least six previous occasions before various congressional committees. Chairman Issa countered that some of those hearings were appropriations hearings, at which Operation Fast and Furious was not the predominant issue. He also noted that, to date, the Obama Administration had not submitted any gun control-related legislative proposals to Congress. In turn, Representative Connolly asked the Attorney General if that were so. While the Attorney General did not comment upon any Administration-requested legislative proposals, he replied that he would be happy to submit a proposal to Congress for consideration and added that he thought that an anti-gun trafficking bill ( H.R. 2554 ) introduced by Representative Carolyn Maloney would make a good starting point. ( H.R. 2554 is described below under " Gun Trafficking-Related Proposals in the 112 th Congress ") On February 14, 2012, Chairman Issa sent the Attorney General a follow-up letter, in which he conveyed the committee's increasing frustration with the department. He questioned, among other things, why Patrick Cunningham, the former Criminal Chief of the U.S. Attorney's Office in Arizona, asserted his Fifth Amendment privilege against self-incrimination rather than testify before the committee. Regarding outstanding committee requests for documents and other information related to the operation, Representative Issa emphasized that the committee's subpoena is not optional, and that a failure to produce the requested documents was a violation of federal law. He went on to write that "By any measure, the Department has obstructed and slowed our [the committee's] work." On May 3, 2012, Representative Issa, Chairman of the Committee on Oversight and Government Reform, released a staff briefing paper and draft resolution to cite Attorney General Holder in contempt of Congress for not complying with subpoenas issued by the committee for DOJ documents related to Operation Fast and Furious. The staff briefing paper included the following statement, alleging that "For over a year, the Department has issued false denials, given answers intended to misdirect investigators, sought to intimidate witnesses, unlawfully withheld subpoenaed documents, and waited to be confronted with indisputable evidence before acknowledging uncomfortable facts." On May 10, 2012, during House consideration of the FY2013 CJS Appropriations bill ( H.R. 5326 ), two amendments were passed that also addressed Operation Fast and Furious. Representative Trey Gowdy offered an amendment ( H.Amdt. 1049 ) that reduced the DOJ General Administration account by $1.0 million and applied it to the spending reduction account. Representative Gowdy expressed his dissatisfaction with DOJ officials who have not complied with a committee subpoenas for greater information about Operation Fast and Furious. The Gowdy amendment passed by voice vote. Representatives Jason Chaffetz, Paul Gosar, and Blake Farenthold offered an amendment ( H.Amdt. 1068 ) that would prohibit the expenditure of any funding provided under the bill in contravention to a criminal provision related to fraud and false statements (18 U.S.C. §1001(a)). This amendment was passed on a recorded vote: 381-41 (Roll no. 226). On June 7, 1012, the House Committee on the Judiciary held a DOJ oversight hearing, in which Attorney General Holder was questioned by the chairman and other Members about his and other "high-level officials" knowledge about Operation Fast and Furious, and its underlying tactics that allegedly allowed firearms to be transferred to known and suspected associates of Mexican drug trafficking organizations. On June 11, 2012, the Committee on Oversight and Government Reform issued a press release announcing that it would meet to consider a staff briefing paper and draft resolution (described above) holding Attorney General Eric Holder in contempt of Congress for his failure to produce subpoenaed documents related to Operation Fast and Furious. On June 20, 2012, the committee approved a report ( H.Rept. 112-546 ) and accompanying resolution (unnumbered) to hold Attorney General Holder in contempt of Congress for his failure to produce subpoenaed documents related to Operation Fast and Furious, prompted in part by the President's assertion of executive privilege rather than turning over additional documents to the committee. Following consideration of several amendments, the committee approved the report by a vote of 23-17. On June 28, 2012, the House approved a resolution ( H.Res. 711 ) that accompanied the report described above and cited the Attorney General with contempt by a vote of 255 to 67 (Roll call no. 441). While over 100 Democrats boycotted the vote, the votes taken split down party lines, with the exception of 17 Democrats who voted yea and two Republicans who voted nay. Previously, a motion offered by Representative John Dingell to refer the measure back to committee was defeated by a vote of 172-251 (Roll call no. 440). The House approved a related resolution ( H.Res. 706 ) that authorizes the committee to initiate or intervene in judicial proceedings to enforce certain subpoenas by a vote of 258-95 (Roll call no. 442), with 21 Democrats voting yea and no Republicans voting nay. During floor debate, Members who favored the contempt resolution asserted that this measure is about government transparency and accountability and is a good faith effort to help bring closure to the grieving family of slain Border Patrol Agent Brian Terry. They noted that DOJ has provided less than 8,000 of the 140,000 pages of documents that it has handed over to its Inspector General regarding Operation Fast and Furious. Moreover, they underscored that it took 10 months for DOJ to concede that guns had been allowed to "walk" across the border, and that DOJ did so only after being confronted with a mass of internal documents provided to the committee largely by whistleblowers. They argued further that the Administration would not have asserted executive privilege unless there was something to hide. They also argued that mounting evidence supports the argument that high-level Administration officials purposefully embraced this risky and highly inappropriate investigative technique—gun walking—in an ill-fated attempt to build a major gun trafficking case that would net a cartel kingpin, a high-level plaza boss, or his enforcers. Members who opposed the contempt resolution countered that it is nothing more than "election-year political theater" and a "witch hunt," and that Attorney General Holder was being unjustly disparaged. They countered that the Attorney General has been unprecedentedly open with the committee by providing over 7,600 pages of documents and has been questioned at length about Operation Fast and Furious at no less than nine congressional hearings. Furthermore, they asserted that the Committee on Oversight and Government Reform's majority did not honor any requests made by the minority for witnesses or hearings related to "gun walking" and/or "gun trafficking." They submitted that a bipartisan, impartial investigation would have also examined the investigative techniques employed during the previous Administration, which they contend are examples of gun walking that possibly led to Operation Fast and Furious. Opponents also noted for the record that the majority has not considered any proposals to strengthen gun laws and address the criminal appetite for firearms in Mexico—particularly for assault weapons—that have been illegally acquired from U.S. civilian gun markets. They further underscored that the political nature of the contempt vote is borne out by the fact that, in their view, the committee's majority rushed to judgment by not holding a single hearing to examine possible merits of the President's assertion of executive privilege. On July 31, 2012, Representative Issa and Senator Grassley released Part I of their final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The first of three parts, Part I chronicles how the ATF Phoenix Field Division and the U.S. Attorney's Office for the District of Arizona adopted controversial "gun walking" tactics that—in Representative Issa and Senator Grassley's estimation—seriously compromised public safety and likely contributed to violent crime and death on both sides of the international border. Part I, moreover, examines the performance of several ATF supervisory officials in carrying out related responsibilities. It also includes allegations that the Arizona U.S. Attorney's Office misinterpreted 9 th Circuit case law regarding firearms straw purchases and, consequently, failed to indict suspects in a timely manner, when arguably ATF agents had sufficient probable cause to arrest them. While it is clear in hindsight that hundreds of firearms had been trafficked to Mexico long before the death of Border Patrol Agent Terry, no indictments were filed and no arrests were made until after this tragic case. (As described below, Part II of this final report has been released, and Part III is in process.) On September 20, 2012, the Committee on Oversight and Government Reform held a hearing on a report by the DOJ Office of Inspector General (OIG) entitled A Review of ATF's Operation Fast and Furious and Related Matters . In this report, the OIG found that high-ranking, supervisory officials within ATF headquarters and the Phoenix Field Division, as well as the U.S. Attorney's Office for the District of Arizona and Main Justice (DOJ headquarters), were responsible for misguided strategies and tactics, errors in judgment, and management failures related to both Operation Wide Receiver and Operation Fast and Furious. For example, during both operations, ATF supervisory special agents chose not to confront suspected straw purchasers and deliberately deferred enforcement actions, despite sufficient evidence of illegal firearms transfers that would have normally prompted some form of legal intervention (interview, arrest, and gun seizures), as part of a wider strategy to identify and dismantle an entire gun trafficking organization. In so doing, the OIG concluded that those agents had not adequately considered the implications that the deferred enforcement strategy—otherwise known as "gun walking"—had on public safety on either side of the border. The OIG further concluded that ATF headquarters had failed to conduct meaningful oversight, despite the risks to public safety and the sensitive, international implications of both operations. During the investigative phase of Operation Wide Receiver, the OIG found that neither the U.S. Attorney's Office for the District of Arizona nor the DOJ Criminal Division was fully informed of, and, consequently, did not agree to, the shift in the ATF Phoenix field office's strategy that allowed guns to "walk" during the operational phases of that operation. In contrast, during Operation Fast and Furious, the U.S. Attorney's Office was informed of, and agreed to, ATF's shift in strategy that, again, broke with the traditional approach of confronting suspected straw purchasers, when there was sufficient evidence of illegal firearm transfers. In March and April 2010, as Operation Fast and Furious was reaching its investigative zenith, ATF applied for and was granted multiple wiretap orders. Those wiretap applications were reviewed and approved by the DOJ Criminal Division. And, according to the OIG, those wiretap applications included affidavits that should have raised "red flags" for Criminal Division reviewers, because those red flags indicated that guns had walked, a practice that posed significant risks to public safety. However, Criminal Division reviewers—Deputy Assistant Attorney Generals (DAAGs)—failed to pick up on those red flags. According to the OIG, three of the five DAAGs who reviewed Operation Fast and Furious wiretaps indicated that they focused their attention on whether sufficient legal grounds were demonstrated in an application to support a wiretap, as opposed to evaluating the public safety implications of investigative procedures employed in the earlier phases of an operation. As a matter of practice, moreover, they only read the agent's affidavit, when supporting departmental memoranda indicated that there were concerns about the underlying investigation. During the same time frame, March and April 2010, one DAAG also reviewed prosecutorial memoranda prepared by a DOJ trial attorney as part of the process of indicting several Operation Wide Receiver suspects. In both memoranda, the trial attorney noted, "[T]here are things about this case that could be embarrassing to ATF,' including the fact that that guns 'were sold and not accounted for' and likely 'are in Mexico killing people." Based on those memoranda, the DAAG and several others surmised that guns had indeed "walked." In turn, on April 19, 2010, they briefed the Assistant Attorney General of the Criminal Division, informing him of the "gun walking" and that there were public safety consequences that potentially could be a "black eye" for ATF. Nevertheless, connections between gun walking and the two Phoenix-based operations—Operation Wide Receiver and Operation Fast and Furious—were reportedly not made by those officials in the Criminal Division, even though the division was at that very time in the process of reviewing several wiretap applications for the latter operation. Despite the international sensitivity and potential public safety risks, the OIG determined that former Attorney General Mukasey was never made aware of the potential flaws (gun walking) in Operation Wide Receiver by his subordinates, although he was briefed about plans to conduct controlled deliveries with the cooperation of Mexican law enforcement (which ultimately proved unfruitful). Nor was Attorney General Holder made aware of the potential flaws in Operation Fast and Furious by his subordinates during the operational phases of that investigation. On October 29, 2012, Representative Issa and Senator Grassley released Part II of their final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The second of three parts, Part II examines the interaction of senior DOJ officials in the Criminal Division and the Office of the Deputy Attorney General with ATF headquarters, the Phoenix Field Division, and the Arizona U.S. Attorney's Office. To be released later, Part III is to examine alleged obstruction of the Committee on Oversight and Government Reform's investigation of Operation Fast and Furious by senior DOJ officials, including the Attorney General himself. Although the United States does not maintain a registry of firearms or firearm owners (except for machineguns and destructive devices), as described above, ATF and federally licensed gun dealers maintain a decentralized system of transaction records, through which ATF can sometimes trace a firearm from its manufacturer or importer to its first private owner of record. Over the years, successful firearm traces have generated leads in criminal investigations and have generated data that illustrate wider trafficking trends and patterns. To support Project Gunrunner, ATF developed and deployed a Spanish-language version of its eTrace program for Mexican authorities to submit trace requests electronically to the United States. However, it should be underscored that not all firearms seized by Mexican authorities are traced, and trace submissions are more likely to be made for firearms believed to have originated in the United States. Problems persist with regard to the quality, quantity, and timeliness of firearms trace requests made by Mexican authorities and resultant data. Data on some firearms, for example, were submitted several times. If previous tracing trends hold true, about a quarter of trace requests would have failed because the firearm make, model, or serial number was erroneously entered into the system. It is also probable that ATF was only able to identify the first private firearm owner of record or other possible sources in the United States in about a quarter of trace requests. Nonetheless, trace data have proved to be a useful indicator of trafficking trends with regard to the types of firearms being trafficked, their possible sources, and how recently trafficked firearms were diverted from legal to illegal channels of commerce. Along these lines, GAO recommended that the Attorney General should direct ATF to regularly update its reporting on aggregate firearms trace data and trends in its June 2009 Project Gunrunner report. GAO also reported that ATF had traced more than 23,159 firearms from FY2004 through FY2008 for Mexican authorities. Approximately 86.6% of those firearms were determined to have originated in the United States. For the last three years (FY2006 through FY2008) of that study period, over 90% of firearms recovered in Mexico and traced by ATF were found to have originated in the United States. Of those firearms, 68% were manufactured in the United States and 19% were manufactured abroad and imported into the United States. About 70% of traced firearms were found to have come from Texas (39%), California (20%), and Arizona (10%). It is notable, however, that Mexican authorities had submitted only a fraction of the firearms that had been recovered in Mexico. In FY2008, for example, information on only about 7,200 of the nearly 30,000 firearms recovered by the Mexican Attorney General's office was submitted to ATF for tracing. In May 2010, Mexican President Felipe Calderon addressed a joint session of Congress and revealed that Mexican authorities had seized 75,000 firearms, of which 80% had been traced back to the United States. According to ATF, this higher than previously reported number of traces reflected a batch submission of trace requests made by the Mexican Attorney General that changed the trace totals for previous years, which are reported by year of recovery. In April 2011, the U.S. Embassy in Mexico City reported that ATF processed 78,194 trace requests for Mexican authorities from FY2007 through FY2010. Based on previous trace data, a large percentage of these trace requests would have involved firearms that were either manufactured in or imported into the United States for civilian markets, but such a percentage was not released by the Embassy. However, a significantly smaller percentage would have been successfully traced to the first private owner of record. Noticeably absent were any data on firearms with a short "time-to-recovery," that is, the time interval between the initial retail sale of a firearm by a federally licensed gun dealer to a private person and the firearm's recovery by law enforcement. A short time-to-recovery is one possible indicator that the firearm had been trafficked or stolen. Nor did the Embassy press release include any data on type, make, model, and caliber of the most frequently traced firearms. For trend analysis, such data would have been useful for total firearms traced, as well as for different time periods. In June 2011, ATF released limited trace data to the Senate Caucus on International Narcotics Control. The Senate Caucus reported that ATF processed 29,284 trace requests on firearms that were recovered by Mexican authorities in calendar years 2009 and 2010. Of those firearms, 20,504 (70%) were either manufactured in or imported into the United States. ATF did not provide any data on successful traces that resulted in identifying the first private owner of record, the time-to-recovery of traced firearms, or the most frequently traced firearms by type, make, model, and caliber. These omissions, in part, prompted Senator Grassley to write then ATF Acting Director Kenneth Melson with "questions about why ATF provided some select information, but not a more detailed analysis that would help Congress, and the American people, better understand the causes and sources of illegal firearms in Mexico." Senator Grassley expressed his concern that press accounts that focused exclusively on U.S. manufactured or imported firearms as a percentage of total trace requests submitted by Mexican authorities were misleading. Senator Grassley also cited an article that reported that a significant quantity of firearms that had been recovered by or turned over to the Mexican Army, as opposed to the Mexican Attorney General, had not been submitted to ATF for tracing. With the limited release of trace data, it became and probably remains less clear whether the flow of illegal guns consists of an "ant run" that has trickled across the border over the decades as individuals or small, independent organizations have smuggled firearms into Mexico for a variety of purposes, or an "iron river of guns" that has surged in recent years as Mexican DTOs have sought to arm themselves with firearms that are commonly available on the U.S. civilian market. When available, trace data suggest that the majority of firearms submitted for tracing originated in the United States, given that these firearms were either embossed with a U.S. manufacturer or importer's stamp. However, it is probable that a much smaller percentage of these firearms were successfully traced to the first U.S. private owner of record. More importantly, several substantive methodological limitations preclude using trace data as a proxy for the larger population of crime guns in Mexico or the United States. While the United States could be the largest source of crime guns in Mexico, trace data do not conclusively establish that assertion as fact. In addition, another consideration could be the possibility that the 78,000 firearms that were submitted by Mexico's Attorney General for tracing represent a proverbial "pig in the python." Unknown, but possibly significant, percentages of these firearms could have been illegally smuggled into Mexico over decades. Moreover, while there is little evidence to suggest that Mexican DTOs are acquiring military grade firearms directly from sources within the United States, these organizations are arguably capable of acquiring such firearms and other military armaments (e.g., recoilless rifles, rocket launchers, and grenades) from other illicit, international sources given the profitability of the illegal drug trade. In the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ; H.R. 2112 ), conferees included report language ( H.Rept. 112-284 , p. 240) that requires ATF to provide the Committees on Appropriations with annual data on the total number of firearms recovered by the government of Mexico, and of those, the number for which an ATF trace is attempted, the number successfully traced and the number determined to be manufactured in or imported into the United States prior to being recovered in Mexico. On April 26, 2012, in compliance with the provision described above, ATF released revised but limited trace data for calendar years 2007 through 2011. ATF underscored that the government of Mexico did not and does not provide it with data on the total number of firearms seized in that country, nor did the agency make any attempt to estimate the number of firearms seized in that country. Nevertheless, of 99,691 firearms submitted by Mexican authorities to ATF for tracing for those calendar years (2007-2011), 68,161 (68.3%) were considered to be U.S.-sourced, in that those firearms were either originally manufactured in or imported into the United States. Of those U.S.-sourced firearms, 27,825 (27.9%) were traced back to the initial purchaser, or the first retail purchaser of record. And, another 1,461 (1.4%) of those U.S.-sourced firearms were legitimately exported to Mexico from a U.S. gun dealer to a Mexican law enforcement or government agency. While ATF did not provide any data on the make, model, or caliber of (1) U.S.-sourced firearms, (2) firearms traced back to the initial purchaser, or (3) traced firearms with a short time-to-recovery, it did provide breakdowns by type of firearm. ATF noted that the percentage of firearms submitted for tracing that were rifles had shifted markedly during those years. For example, for 2007 rifles accounted for 28.2% of firearms submitted for tracing. That percentage increased to 58.6% for 2010 and decreased somewhat to 43.3% for 2011. The 112 th Congress has revisited the issue of veterans, mental incompetency, and firearms eligibility. On July 22, 2011, the House Committee on Veterans' Affairs Subcommittee on Disability and Memorials marked up and reported a veterans' benefits bill ( H.R. 2349 ). During markup, Representative Denny Rehberg successfully offered an amendment to the bill that would prohibit the Department of Veterans Affairs (VA) from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination were made by a judge, magistrate, or other judicial authority based upon a finding that the beneficiary posed a danger to himself or others. As described below, similar amendments were considered in the 110 th and 111 th Congresses. On October 6, 2011, the full committee approved this bill. On October 11, 2011, the House passed H.R. 2349 by a voice vote. It includes the Rehberg amendment, which reflects a bill ( H.R. 1898 ) that Representative Rehberg previously introduced on May 13, 2011. Senator Burr introduced a similar bill ( S. 1707 ) on October 13, 2011. Proponents of the Veterans Second Amendment Protection Act, like the NRA, view the current VA policy as placing an unwarranted indignity on men and women, in many cases at the end of their lives, who have previously served their country honorably in the Armed Forces. Arguably, some of those veterans referred by the VA to the FBI as having been "adjudicated as mental defective" may have only been mentally incapacitated due to age or other related infirmities, as opposed to suffering from a severe mental illness or disability that caused them to behave in a threatening or dangerous manner. Opponents of the proposal, like the Brady Campaign, have countered that the VA has demonstrated due diligence by complying with the law and, by doing so, has increased public safety. They could argue further that the VA's current policy does not diminish national recognition of those veterans' honorable service; instead, it has been implemented to protect those veterans and others from the harm that might occur if they acquired a firearm and used it improperly. For a fuller discussion of underlying issues, see Appendix A . The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. ATF works independently and through partnerships with industry groups; international, state and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. Congress usually funds ATF in the Commerce-Justice-Science (CJS) appropriations bill. In the absence of an enacted bill for FY2012, Congress passed a continuing resolution ( P.L. 112-36 ) that funded ATF at its FY2011 level (less 1.503%) through November 18, 2011. As discussed further below, Congress passed full-year CJS appropriations in the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ; H.Rept. 112-284 ), which the President signed into law ( P.L. 112-55 ) on November 18, 2011. For FY2012, this act provided ATF with $1.152 billion, or nearly $39.5 million more than the previous year. In part, the increased appropriation for FY2012 reflects that the FY2010/FY2011 Southwest border supplemental appropriation was annualized in that year's appropriation. As reflected in Figure 4 , if the $37.5 million FY2010/FY2011 Southwest border supplemental were included in ATF's FY2011 appropriation, the FY2012 appropriation would reflect a considerably smaller increase, $2.0 million. For FY2013, the Administration has requested $1.153 billion for ATF. Although this amount reflects a net increase of about $1.3 million, the FY2013 request includes no new budget enhancements for ATF. Instead, it anticipates over $26.9 million in savings or other offsets in either contract reductions ($24.8 million) or information technology savings ($2.1 million). As Figure 5 shows, the largest portion ($875.5 million, or 76%) of the requested appropriation would be allocated to the firearms budget decision unit. The second-largest portion ($253.7 million, or 22%) would be allocated to the arson and explosives budget decision unit. The remainder ($23.1 million, or 2%) would be allocated to the alcohol and tobacco diversion budget decision unit. By percentage, these allocations are comparable to those reported by ATF to correspond with the agency's FY2012 enacted appropriation. Also of significance, the Administration's request includes proposals to strip out futurity language that was attached to two ATF appropriations riders during the FY2012 appropriations cycle making those riders permanent law. The first rider prohibits ATF from consolidating or centralizing within DOJ the records of firearms acquisitions and dispositions (or any portion thereof) that federally licensed gun dealers are required by law to maintain. When gun dealers go out of business, however, those records are forwarded to ATF. And, the second rider prohibits ATF from electronically searching those out-of-business records by name or any personal identification code. For evidentiary purposes, those records are maintained on microform. For retrieval and storage purposes, out-of-business records are maintained in a digital format, so those records may be searched electronically by firearm serial number, but not by owner (first retail buyer of record). In addition, the Administration's request would strip out futurity language (inserted for FY2008 and every year thereafter) included in a controversial ATF appropriations rider known as the Tiahrt amendment. For a fuller discussion of underlying issues, see  Appendix A . On April 19, 2012, the Senate Committee on Appropriations reported an FY2013 funding measure ( S. 2323 ) that would provide ATF with the same amount as requested by the Administration ($1.153 billion). The Senate bill, however, does not follow the Administration's request to strip the futurity language out of ATF appropriations riders that were made permanent in the previous year's appropriations act ( P.L. 112-55 ). On the one hand, Senate report language ( S.Rept. 112-158 , p. 73) noted that Operation Fast and Furious was only one part of ATF's Southwest border operations to reduce illegal gun trafficking to Mexico. On the other hand, language was included in the departmental general provisions that would continue to prohibit the expenditure of any funding under the bill from being used to facilitate the transfer of an operable firearm to a known or suspected agent of a drug cartel (§217). Another provision would continue to prohibit ATF from issuing regulations that would prohibit the importation of certain types of shotguns (§538). Yet another provision, which may have implications for ATF, prohibits any U.S. Attorney from holding multiple jobs outside of the scope of a U.S. Attorney's professional duty (§213). As described above, the U.S. Attorney for the District of Minnesota, B. Todd Jones, is currently serving as the interim acting ATF Director. On April 26, 2012, the House Committee on Appropriations approved a similar FY2013 funding measure ( H.R. 5326 ) that would also provide the same amount for ATF ($1.153 billion). This measure also includes provisions that are similar to those included in the Senate-reported bill described above (§§217, 536, and 213). In addition, the House measure includes futurity language in three additional long-standing prohibitions (riders) included in the ATF salaries and expenses appropriations language. These provisions would prohibit ATF from altering the regulatory definition of "curios and relics," requiring federally licensed gun dealers to conduct physical inventories," or revoking a federal firearms license for lack of business activity. In addition, during House full committee markup, Representative Rehberg successfully offered an amendment that would prohibit ATF from requiring multiple long gun sales reports. As described below, a similar Rehberg-sponsored amendment was included in the FY2012 House bill, but it was not included in an enacted bill. On May 10, 2012, the House passed H.R. 5326 , amended. Two amendments reduced ATF funding for FY2013 to $1.151 billion, or $537,000 less than the FY2012 appropriation. For FY2012, the Administration requested $1.147 billion for ATF. This amount would have funded 5,147 FTE positions and 5,181 permanent positions. Although it would have provided a $34.8 million increase (3.1%) over ATF's enacted FY2011 appropriation, nearly all of this increase would have been for increases to the agency's base budget, including the annualized $37.5 million Southwest border supplemental appropriation. Correspondingly, the Administration anticipated offsets and savings of $27.3 million, as well as a program increase of $1.5 million as a budget enhancement for ATF to participate in a DOJ-wide initiative to increase law enforcement electronic surveillance capabilities nationally. Reductions included $10.0 million in the National Integrated Ballistic Information Network (NIBIN), $4.0 million in reduced training opportunities for state and local law enforcement, and $1.0 in the alcohol and tobacco program. According to the ATF, the remaining $12.3 million in reductions would be sustained through other administrative efficiencies and cost reductions. As noted above and described below, Congress appropriated ATF $1.152 billion for FY2012. Figure 6 shows budget decision unit allocations, as proposed in the FY2012 budget request and as reported in the FY2013 budget request. Under the request, the firearms compliance and investigations decision unit was to be allocated the lion's share, 75%, of appropriated funding. Under the enacted appropriation, it was allocated 76%. The arson and explosives investigations decision unit and the alcohol and tobacco diversion decision unit were to be allocated 23% and 2%, respectively, of the requested appropriation. Under the enacted appropriation, however, the arson and explosives investigations decision unit was allocated 22%. On July 20, 2011, the House Committee reported an FY2012 CJS appropriations bill ( H.R. 2596 ; H.Rept. 112-169 ). This measure would have provided ATF with $1.111 billion, $1.1 million (0.1%) less than the FY2011 enacted amount and $35.9 million (3.1%) less than the Administration's FY2012 request. In full committee markup, the bill was amended with two firearms-related amendments. One, described above, would have prohibited ATF from implementing an OMB-approved information collection initiative, under which federally licensed gun dealers in Southwest border states are required to submit multiple sales reports for certain semiautomatic rifles to ATF. As discussed below, this provision was not included in the enacted FY2012 appropriation. The other would prohibit ATF from implementing additional restrictions on the importation of certain shotguns that include certain features (e.g., pistol grips, folding or collapsible stocks, laser sights, and the ability to accept large capacity ammunition feeding devices) that ATF has determined to be non-sporting. This prohibition was included in the enacted FY2012 appropriation. Moreover, H.R. 2596 included language of "futurity" in several firearms-related riders. As described below, similar language was included in three provisions in the enacted appropriation. On September 15, 2011, the Senate Committee on Appropriations reported an FY2012 CJS appropriations bill ( S. 1572 ; S.Rept. 112-78 ) that would have provided $1.09 billion for ATF, $22.3 million (2.0%) less than the FY2011-enacted amount, $57 million (5.0%) less than the Administration's request of $1.147 billion, and $21.1 million (1.9%) less than the House mark. The Senate folded S. 1572 into a Minibus appropriations bill ( H.R. 2112 ) and passed this measure. In addition to the Senate-passed Cornyn amendment ( S.Amdt. 775 , discussed above), several other firearms-related amendments were offered but not voted upon. For example, Senators Mark Begich and Orrin Hatch offered an amendment to broaden the circumstances under which handguns could be transferred legally in interstate commerce ( S.Amdt. 786 ). Senator Dean Heller offered an amendment to prohibit ATF from implementing its Southwest border multiple rifle sales reporting requirement ( S.Amdt. 843 ). Similar language, as described above, has been included in the House-reported bill ( H.R. 2596 ). Senator Hatch also offered three amendments to include language of "futurity" into firearms-related riders accompanying the ATF appropriation ( S.Amdt. 745 , S.Amdt. 770 , and S.Amdt. 875 ). The House-reported and -passed bill included similar futurity language. Senator Jon Tester offered an amendment that would overturn an ATF ruling that persons who have medical marijuana prescriptions are ineligible to possess firearms ( S.Amdt. 882 ). On November 14, 2011, House and Senate conferees reported H.R. 2112 ( H.Rept. 112-284 ), which has been enacted ( P.L. 112-55 ). It provides ATF with $1.152 billion for FY2012. This amount is $39.5 million (3.5%) greater than the FY2011 enacted amount, $4.7 million (0.4%) greater that the FY2012 request, $40.6 million (3.7%) greater than the House-reported amount, and $61.7 million (5.7%) greater than Senate-passed amount. As discussed above, this act includes revised language that reflects the Cornyn amendment. This provision (§219) prohibits any federal law enforcement officer from facilitating the delivery of an operable firearm to an individual known or suspected of being connected to a drug cartel. It also includes "futurity" language that makes three long-standing annual appropriation riders permanent law. For FY2012 and every year thereafter, these riders prohibit DOJ from consolidating or centralizing any records maintained by federally licensed gun dealers related to the acquisition and disposition of firearms; ATF from electronically retrieving firearm transfer records that have been submitted to ATF, when federally licensed gun dealers go out business, by searching those out-of-business records by any individual's name or other personal identification code; and the FBI from charging a fee in connection with a Brady background check for firearms transfer and possession eligibility, and requires further that the FBI destroy all Brady background check records related to approved firearm transfer records within 24 hours (§511). In addition, the act includes a provision (§541) that is similar to House language that would prevent ATF from implementing additional restrictions on the importation of certain shotguns, as well as report language requiring ATF to report to the House and Senate Appropriations Committees annually on firearm trace requests processed for Mexican authorities. On May 12, 2011, the House Judiciary Committee considered a bill, the FISA Sunsets Reauthorization Act of 2011 ( H.R. 1800 ), to extend certain expiring provisions of the Foreign Intelligence Surveillance Act (FISA). In full committee markup, Representative Mike Quigley offered an amendment that would have allowed the Attorney General to deny a firearms transfer to any person about whom the Attorney General gathered information during the course of a national security investigation (under FISA), if that information generated a "reasonable belief" that the firearm(s) might be used by the prospective transferee in terrorism-related conduct. This amendment was defeated by a vote of 11 to 21. During Senate consideration of similar bill, the PATRIOT Sunsets Extension Act of 2011 ( S. 1038 and S. 990 ), Senator Rand Paul offered several versions of an amendment ( S.Amdt. 328 , S.Amdt. 363 , and S.Amdt. 373 ) that would have exempted certain "firearms records" from the business records that can be secretly obtained by FBI agents during a FISA national security investigation (§215 of the USA PATRIOT Act, as amended). On May 26, 2011, during consideration of S. 990 , the Senate tabled S.Amdt. 363 by a vote of 85 to 10. Therefore, the amendment was not included in the enacted legislation ( P.L. 112-14 ). Following the Tucson shootings, issues were raised about the shooter's mental illness and drug use, as well as his use of large capacity ammunition feeding devices (LCAFDs). Another issue that was raised was banning firearms within the proximity of certain high-level federal officials. As described above, persons who have been "adjudicated mental defective" or who are "unlawful users of or addicted to any controlled substance" are prohibited from possessing a firearm or having one transferred to them. The FBI maintains files on those persons as part of the NICS Index. According to the FBI, as of December 31, 2010, the NICS Index included 1,107,758 records on individuals who had been adjudicated mental defective. Although the NICS Index included 2,092 records on individuals who are known to be drug users and addicts, arrest records for drug offenses are also contained in the Interstate Identification Index (III). Following the Virginia Tech mass shooting on April 16, 2007, Congress passed the NICS Improvement Amendments Act of 2007 (NIAA; P.L. 110-180 ), a law that established incentives to prompt state, local, and tribal governments to transfer mental defective files to the FBI for inclusion in the NICS Index. Although this act focused on mentally ill persons who were adjudicated to be a threat to themselves or others, it did not focus on drug users. As a consequence, Congress could revisit the NIAA to increase incentives for state, local, and tribal governments to transfer records on both categories of prohibited persons. Along these lines, Mayors Against Illegal Guns (MAIG) released a "plan to prevent further tragedies" like Tucson. The MAIG plan calls for the following steps: fully funding the NICS Improvement Amendments Act ( P.L. 110-180 ) to help agencies and states cover the costs of gathering records on prohibited persons and making them electronically available to the FBI; providing larger cuts (up to 50%) to a wider array of federal law enforcement assistance grant programs for not providing such records than what is currently provided for under P.L. 110-180 ; requiring every federal agency to certify to the Attorney General twice a year that all disqualifying records, including those related to drug use or addiction, have been electronically provided to the FBI; clarifying and expanding regulatory definitions related to mental health and drug use; and safeguarding the rights of people who are listed in databases queried by NICS. Senator Charles Schumer introduced a bill that would amend P.L. 110-180 to advance certain deadlines and apply deeper cuts to a wider array of federal law enforcement assistance grant programs ( S. 436 ). Representative Carolyn McCarthy introduced an identical measure ( H.R. 1781 ). Representatives McCarthy and John Dingell have reportedly submitted a request to GAO for an assessment of weaknesses in firearms-related background check procedures. On November 15, 2011, the Senate Committee on the Judiciary's Subcommittee on Crime and Terrorism held a hearing on the Fix Gun Checks Act of 2011 ( S. 436 / H.R. 1781 ). The Tucson shooter was reportedly armed with a 9mm Glock 19 semiautomatic pistol loaded with 31 rounds in a 33-round extended magazine. This pistol is normally equipped with a 15-round magazine, two of which the shooter also had on his person. He also had another 33-round extended magazine. He managed to fire at least 31 shots, emptying a single magazine. He killed 6 people and wounded another 13, including Representative Giffords. Three bystanders, one of whom was wounded, managed to subdue the shooter as he attempted to reload his second 30-plus round magazine. Representative McCarthy has introduced a bill to reinstate a ban on magazines that are capable of accommodating more than 10 rounds ( H.R. 308 ). Such a ban was in effect from September 13, 1994, through September 13, 2004, as part of the larger semiautomatic assault weapons ban (described below). Senator Frank Lautenberg has introduced a similar bill ( S. 32 ). Representatives Laura Richardson and Peter King have introduced bills ( H.R. 367 and H.R. 496 ) that would prohibit most people from carrying a firearm within 1,000 feet of certain high-level federal officials while those officials were holding a public event, campaigning for office, or otherwise acting in an official capacity. Both bills arguably are modeled on the Gun Free School Zone Act of 1990 ( P.L. 101-647 ), which prohibits firearm possession in a school zone (on the campus of a public or private school or within 1,000 feet of the grounds). Other salient firearms-related issues that continue to receive attention include (1) screening firearms background check applicants against terrorist watch lists; (2) combating gun trafficking and straw purchases; (3) reforming the regulation of federally licensed gun dealers; (4) requiring background checks for private firearms transfers at gun shows; (5) more-strictly regulating certain firearms previously defined in statute as "semiautomatic assault weapons"; and (6) banning or requiring the registration of certain long-range .50 caliber rifles, which are commonly referred to as "sniper" rifles. On November 5, 2009, U.S. Army Major Nidal Malik Hasan allegedly shot 13 persons to death and wounded over 30 at Fort Hood, TX. Prior to the shootings, Hasan had corresponded by email with a radical Muslim imam, Anwar al-Aulaqi, who U.S. authorities had long suspected of having substantial ties to al-Qaeda. Although FBI counterterrorism agents were aware of Hasan's communications with al-Aulaqi, it was unclear at what level Hasan was being scrutinized by the FBI. If he had been the subject of a full counterterrorism investigation, FBI policy would have required that he be watch-listed. Depending upon the sequence of events, had Hasan been watch-listed, there is a possibility that his purchase of a pistol and the required Brady background check could have alerted FBI counterterrorism agents to that transfer, and they might have been able to take steps that would have prevented the shootings. The Fort Hood shootings renewed interest in the U.S. government's use of terrorist watch lists for firearms- and explosives-related background checks. Before February 2004, terrorist watch list checks were not part of the Brady background check process because being a suspected or known terrorist was and is not a disqualifying factor for firearms transfer/possession eligibility under federal or state law. As is the case today, to determine such eligibility, the National Instant Criminal Background Checks System (NICS) queries three databases maintained by the FBI. They include the National Crime Information Center (NCIC), the Interstate Identification Index (III), and the NICS index. The NICS index includes disqualifying records on persons that would not be included in the III or NCIC, for example, persons dishonorably discharged from the Armed Forces, adjudicated as a mental defective, or convicted of certain serious immigration violations, among others. The III contains criminal history records for persons arrested and convicted of felonies and certain serious misdemeanors. The NCIC contains law enforcement files on fugitives and persons subject to restraining orders, among other persons. NCIC also contains a file known as the Violent Gang and Terrorist Organization File (VGTOF). Prior to the 9/11 attacks, this file included limited information on known or suspected terrorists and gang members. NICS examiners were not informed of VGTOF hits, as such information was not considered relevant to determining firearms transfer/possession eligibility. In November 2002, DOJ initiated a NICS transaction audit to determine whether prohibited aliens (non-citizens) were being improperly transferred firearms. As part of this audit, NICS procedures were changed so that NICS examiners would be informed of VGTOF hits. Under Homeland Security Presidential Directive 6, moreover, the Administration initiated a broad-based review of the use of watch lists, among other terrorist identification and screening mechanisms. In September 2003, the FBI-administered Terrorist Screening Center (TSC) was established and work was begun to improve and merge several watch lists maintained by the U.S. government into a consolidated Terrorist Screening Database (TSDB). Following those efforts, TSDB lookout records from other agency watch lists were downloaded into VGTOF. By May 2007, VGTOF contained more than 100,000 records. In 2009, the FBI created a separate file for "known and appropriately suspected terrorists (KST)" by splitting VGTOF into separate gang and terrorist files. As of March 31, 2010, the KST included 278,219 terrorist watch list records. In November 2003, DOJ directed the FBI to revise its NICS procedures to include measures to screen prospective firearms transferees and permittees against terrorist watch list records (KST, formerly VGTOF). Effective February 2004, the Brady background check process was altered to include a terrorist watch list check and to alert NICS staff when a prospective firearms transferee or permit applicant is potentially identified as a known or suspected terrorist. In the case of a watch list hit, NICS sends a delayed transfer (for up to three business days) response to the querying FFL or POC. If NICS examiners cannot find a prohibiting factor, they immediately contact the TSC and FBI Counterterrorism Division (CTD) to (1) validate the hit and (2) allow FBI Special Agents in the field to check for possible prohibiting factors. If no prohibiting factors are uncovered within the three-day period, a firearms dealer may proceed with the transaction at his discretion, but FBI counterterrorism officials continue to work the case for up to 90 days, during which time the background check is considered to be in an "open" status. If and when a transaction is approved, all identifying information submitted by or on behalf of the transferee is to be destroyed within 24 hours. At the end of the 90-day period, if no prohibiting factor has been reported to the NICS Center, all records related to the NICS transaction are destroyed except for the NICS Transaction Number (NTN) and date of the transaction. If the FFL proceeded with the transaction at his discretion following three business days and the applicant is found to be disqualified, then the ATF is to be notified and a firearms retrieval action is to be initiated in coordination with a JTTF. When Congress passed the Brady Act in 1994, the use of terrorist watch lists during firearms-related background checks was not considered. As a consequence, the Attorney General has no specific statutory authority to screen prospective gun buyers against terrorist watch list records. Nevertheless, the FBI adopted procedures to do this because being on such a list suggests that there may be an underlying factor that would bar a prospective background check applicant from possessing a firearm. Hence, a possible issue for Congress could be whether terrorist watch list checks should be incorporated statutorily into the Brady background checks for firearms. In addition, a proviso attached to the FY2005 DOJ annual appropriation and every year thereafter requires that NICS-generated approved firearms transaction records be destroyed within 24 hours. Nevertheless, as described above, the FBI has been retaining approved firearms transaction records for up to 90 days, if those records are related to terrorist watch list hits. Furthermore, information on the subjects of those checks are passed on to FBI investigators in the field. While the NICS records are eventually destroyed for non-denials, it is unknown what happens to the information generated by NICS-related terrorist watch list hits that are passed on to the FBI CTD and Special Agents in the field, who are usually assigned to Joint Terrorism Task Forces. Information about those firearms transactions is possibly recorded and stored electronically in the FBI's investigative case files. In the Brady Act, however, there is a provision that prohibits the (1) transfer of any Brady system record to any other federal or state agency, or (2) the use of the Brady system as a national registry of firearms or firearms owners. In light of the former prohibition, a second issue for Congress could be whether to grant the FBI greater authority to maintain and access NICS records for the purposes of counterterrorism, or should existing statutory limitations that were arguably designed to prevent the maintenance of and access to such records be strengthened. In light of the first two issues, it follows that a third issue for Congress could be whether the Attorney General should be given explicit authority to deny firearms transfers to watch-listed persons on a case-by-case basis, or should all known or suspected terrorists be statutorily prohibited from possessing firearms and explosives. As described above, although watch-listed persons may be the subject of ongoing foreign intelligence, national security, and criminal investigations, they may not be persons prohibited from possessing firearms or explosives under current law. As subsequent events would indicate, DOJ concluded that it was limited under current law in its authority to use terrorist watch lists as part of the background check processes to deny firearms and explosives transfers to known or suspected terrorists. In hearings before the House Committee on the Judiciary, Attorney General Alberto Gonzales was questioned several times by Members of Congress about NICS procedures and terrorist watch list hits. Representative Chris Van Hollen: "Does it make sense to you that we stop a person from boarding the airline in order to protect the public safety, [but] that an individual can turn around, get in their car, go to the local gun shop and buy 20 semiautomatic assault weapons?" Attorney General Gonzales: "I think we should be doing everything we can to ensure that people [who] are in fact terrorists shouldn't have weapons in this country, the truth of the matter is. But unless they are disabled [disqualified] from having a weapon under the statute there's not much that we can do other than maybe try and get them out of the country or, by the way, to see if there's any disability under the statute that would allow us to deny them a firearm." In 2005, then Attorney General Gonzales directed the DOJ to form a working group to review federal gun laws—particularly in regard to NICS background checks—to examine whether additional authority should be sought to prevent firearms transfers to known or suspected terrorists. Nearly two years later, on April 25, 2007, DOJ proposed legislation that would give the Attorney General authority to deny a firearm transfer, state-issued firearms permit, or explosive license to any person found "to be or have been engaged in conduct constituting, in preparation for, in aid of, or related to terrorism." In the 110 th Congress (2007-2008), Senator Lautenberg and Representative King introduced this proposal ( S. 1237 / H.R. 2074 ), but no further action was taken on either bill. In the 111 th Congress (2009-2010), several bills were introduced that would have addressed firearms- and explosives-related background checks and terrorist watch list checks. Senator Lautenberg and Representative King reintroduced their bill that was based on the DOJ draft proposal ( S. 1317 and H.R. 2159 ). Representative McCarthy reintroduced her bill, newly titled the No Fly, No Buy Act of 2009, that would have allowed the Attorney General to deny firearms to persons who are on the TSA's No Fly terrorist watch list ( H.R. 2401 ). And, Senator Lautenberg introduced a bill that would have allowed the Attorney General to maintain NICS records on approved transfers that were also related terrorist watch list hits ( S. 2820 ). In addition, GAO provided Congress with updated data on NICS-related terrorist watch list hits, lending renewed impetus to the reintroduction of the DOJ draft proposal. And, the November 2009 Fort Hood shootings renewed interest in terrorist watch list records and firearms-related background checks. Nearly four years after the first GAO report, GAO issued a follow-up report on NICS-related terrorist watch list hits in May 2009. GAO reported that from February 2004 through February 2009 there were 963 NICS background checks that resulted in terrorist watch list matches and, of those checks, about 90% (865) were allowed to proceed and a firearms or explosives transfer may have occurred; however, only one explosives background check resulted in a proceed with transaction; and of the 10% that resulted in denials (98), the denials were based on felony convictions, illegal immigration status, fugitive from justice status, and the unlawful use of, or addiction to, a controlled substance. All of these denials involved firearms, as opposed to explosives. In this report, GAO also recommended that if Congress should move forward with legislation providing the Attorney General with the discretionary authority to deny a firearms transfer or permit, or an explosives license/permit, based on a terrorist watch list hit, then, consideration should be given to including a provision in that legislation that would require the Attorney General to promulgate guidelines that would delineate under what circumstances such authority could be evoked. Following this report, Representative King and Senator Lautenberg reintroduced the DOJ draft proposal as nearly identical bills ( H.R. 2159 and S. 1317 ), which supporters dubbed the "Terror Gap" proposal. On May 5, 2010, the Senate Committee on Homeland Security and Governmental Affairs held a hearing on "Terrorists and Guns: The Nature of the Threat and Proposed Reforms." GAO testified about measures taken by the FBI to improve firearms and explosives background checks for counterterrorism purposes. GAO reported that from February 2004 through February 2010, there were 1,228 positive encounters with individuals watch-listed as terrorists through NICS related firearms or explosives transactions. These encounters involved 650 individuals because 450 of these individuals were involved in multiple transactions. Six of these individuals were involved in 10 or more transactions. In 1,119 encounters, the transactions were allowed to proceed. In 109 encounters, the transactions were denied. From March 2009 to February 2009, moreover, there were 272 positive encounters and all of the transactions were allowed to proceed, including one that involved explosives. Senator Joseph Lieberman, chair of the committee, noted that firearms had been used in at least two deadly terrorist plots perpetrated by Muslim extremists. Those incidents included the Fort Hood shootings noted above and the June 2009 Little Rock, AR, recruiting center shootings, where two U.S. servicemen were shot—one was killed and the other wounded. In several other thwarted plots, conspirators were arrested for planning to use firearms to attack servicemen at Fort Dix, NJ, in 2006 and the Quantico, VA, Marine base in 2009. Senator Lindsey Graham, however, voiced opposition to the Terror Gap proposal. He maintained that denying a firearms transfer based upon a felony conviction in a lawful court was fundamentally different from doing so based on a terrorist watch list record that was created by an investigator or intelligence analyst. In the 112 th Congress, Senator Lautenberg and Representative King have reintroduced the Terror Gap proposal ( S. 34 and H.R. 1506 ). As in the preceding two Congresses, these nearly identical bills are based upon the April 2007 DOJ proposed legislative language. In the 112 th Congress, four proposals that address gun trafficking have been introduced ( H.R. 2554 , S. 1973 , H.R. 4190 , and H.R. 6195 ). While no further action has been taken on any of these proposals, as described above, several Members have voiced their support for such a proposal and the Attorney General has indicated that the Administration would work with Congress to develop such a proposal. On July 15, 2011, Representative Carolyn Maloney introduced the Stop Gun Trafficking and Strengthen Law Enforcement Act of 2011 ( H.R. 2554 ). This proposal would amend the GCA to establish a new federal "trafficking in firearms" offense under two provisions. Under the first proposed provision, it would be unlawful for any person to receive, transfer, or otherwise dispose of two or more firearms that have been shipped or transported in interstate or foreign commerce (regardless of whether anything of value is exchanged), while knowing, or having reasonable cause to believe , that one or more of those firearms would be transferred subsequently to another person whose receipt of a firearm would be unlawful, or who intends to or will use, carry or possess, or dispose of the firearm unlawfully. Under the second proposed provision, it would be unlawful for any person knowingly to direct, promote, or facilitate such conduct. Violations of either provision would be punishable by a fine and/or not more than 20 years' imprisonment. Moreover, it would provide that any person who acts in the capacity of an organizer, supervisory position, or any other management position, in concert with five or more other persons would be subject to not more than 25 years' imprisonment. In addition, under H.R. 2554 it would also be unlawful to conspire to violate the first provision, and the proposal would make such a conspiracy punishable by a fine and/or not more than 10 years' imprisonment. On December 18, 2011, Senator Kirsten Gillibrand introduced the Gun Trafficking Prevention Act of 2011 ( S. 1973 ). This proposal would amend the Gun Control Act of 1968 (GCA) and establish a new federal "trafficking in firearms" offense. Under this provision, it would be unlawful for any person knowingly to ship, transport, transfer, or otherwise dispose of two or more firearms to another person if he (the transferor/seller) knows or has reasonable cause to believe that such actions would be, or would result in, a violation of any federal, state, or local law that is punishable by a term of imprisonment exceeding one year (excluding misdemeanors punishable by two years or less of imprisonment); receive two or more firearms from another person if he (the transferee/buyer) knows or has reasonable cause to believe that such receipt would be, or would result in, a violation of federal, state, or local law that is punishable by a term of imprisonment exceeding one year (excluding misdemeanors punishable by two years or less of imprisonment); make materially false statements to an FFL, and purchase, receive, or otherwise acquire two or more firearms for, or on behalf of, any other person (a straw purchase); and direct, promote, or facilitate the unlawful conduct described above. Violations of any of the four subparagraphs described above would be punishable by a fine and/or not more than 20 years' imprisonment for a violation. This provision would also establish an affirmative defense to any prosecution under the subparagraphs described above if the firearm(s) in question were transferred following a background check pursuant to 18 U.S.C. §922(t) that showed that the "actual buyer" was not a prohibited person under either federal or state law. S. 1973 would also make it unlawful to conspire to commit such violations, and would make such a conspiracy punishable at the same level as the actual criminal act(s), a fine and/or not more than 20 years' imprisonment. Regarding such conspiracies, the proposal would direct the U.S. Sentencing Commission to recommend increased penalties for graduated offense levels for violations that involve more than 4, but fewer than 15 firearms; more than 14, but fewer than 25 firearms; more than 24, but fewer than 100 firearms; or more than 100 firearms. It is noteworthy that the federal Sentencing Guidelines since 1987 have included a graduated table of sentencing enhancements based on the number of firearms involved. It was last amended in 2001 so that an offense level, used to determine the sentencing range, could be enhanced if the unlawful activity involved 3-7 firearms, 8-24 firearms, 25-99 firearms, 100-199 firearms, or 200 or more firearms. As the Sentencing Guidelines attempt to provide the most appropriate sentencing range based on the severity of the crime and the extent of the offender's criminal record, this bill would possibly impose a more severe sentencing range on a first-time or low-level offender because it would take a lesser number of firearms to trigger a sentence enhancement. In addition, S. 1973 includes several provisions designed to "crack down" on corrupt gun dealers, who knowingly violate certain provisions of the GCA, National Firearms Act (NFA), and Arms Export Control Act (AECA). With regard to firearms trace data, the proposal would require the Attorney General to annually identify certain FFLs who posed a "heightened risk of firearms being diverted to criminal use." Such determinations would be made based on a "specific criteria" that would include the following elements: short "time-to-crime" for firearms traced to the dealer, incomplete crime trace results for firearms sold by a dealer, significant or frequent reports by a dealer of firearms losses or thefts, and other violations of federal firearms laws by a dealer. Furthermore, it would increase penalties for certain recordkeeping violations from "not more than" one year to "up to" three years' imprisonment. Finally, it would require GAO to conduct a study on firearms that are either lost or stolen in transit between FFLs. On March 8, 2012, Representative Adam Schiff introduced the Straw Purchase Penalty Enhancement Act ( H.R. 4190 ). This bill would amend the GCA to create a mandatory minimum sentence of two years' imprisonment for any person who makes a false statement in violation of either 18 U.S.C. §§922(a)(6) or 924(a)(1)(A) in the firearms transfer records (ATF Form 4473) that FFLs are required to maintain under current law, if the transferee knows or has reason to believe that the false statement will further the transfer of two or more firearms to a prohibited person; and has the intent to conceal the identity of the prohibited person to whom the firearm is to be transferred. On July 25, 2012, Representative Peter King introduced H.R. 6195 , the Detectives Nemorin and Andrews Anti-Gun Trafficking Act of 2012. This proposal would have amended the GCA by creating a new subsection at 18 U.S.C §924—Penalties. This amendment would have created a new separate "gun trafficking" crime punishable by a fine and/or imprisonment of not more than 20 years for committing a certain offense under the GCA under one of two sets of conditions. The first set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was transported, received or possessed by that person and stolen or had the importer's or manufacturer's serial number removed. The second set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was offered by sale, transfer, or barter to another who is either prohibited by federal or state law from possessing a firearm, not 18 years of age, is in a school zone, or is not a resident of the state in which he has attempted to acquire the firearms. If someone committed one of the offenses already punishable by the GCA, each of which carries its own penalty, under either of these conditions, such a person could be prosecuted under this separate gun trafficking crime and face a fine and/or imprisonment of not more than 20 years. This bill was silent as to whether the sentences for the proposed "gun trafficking" crime and the individual predicate GCA offenses, if a person was prosecuted under both provisions, would have been served consecutively or concurrently. It appears that such a matter would have likely been influenced by the U.S. Sentencing Commission guidelines. This bill also included numerous other provisions oriented toward gun trafficking. Among other things, the bill would have (1) increased funding for Project Safe Neighborhoods; (2) required the AG to give a biennial report to Congress on firearms tracing and prosecutions; (3) required the FBI to give ATF access to its stolen gun files maintained in its National Crime Information Center; (4) required the AG to establish a "national instant stolen gun check system"; and (5) made it unlawful to transport, possess, or receive a firearm that had the importer's or manufacturer's serial number removed, obliterated, or altered, regardless of one's awareness of this fact. On at least two occasions during the 111 th Congress, the Senate Judiciary Committee postponed hearings on the Bureau of Alcohol, Tobacco, Firearms and Explosives Reform and Firearms Modernization Act ( S. 941 ). Senator Mike Crapo and Senator Patrick Leahy, chair of the Judiciary Committee, introduced this bill on April 30, 2009. Representatives Steve King and Zack Space introduced a companion bill ( H.R. 2296 ). In regard to regulating federally licensed firearms dealers, this proposal would have established a two tier, graduated penalty system for violations characterized as being of a minor or serious nature; established a process by which ATF licensing decisions could be reviewed by an administrative law judge; required the Attorney General to issue guidelines governing ATF investigations of GCA violations; and defined the "willful" standard of intent to mean "knowingly and intentionally" disregarding a "legal duty." Proponents for this proposal argue that these provisions would allow federal firearms licensees greater opportunity to address non-substantive recordkeeping issues that under current law could lead to the revocation of their licenses. Opponents argue that relaxing such provisions would weaken ATF authority and efforts to reduce the number of "kitchen table top" dealers, who are not substantively engaged in the business and, hence, are ineligible for such licenses, and "rogue" dealers, who are not adequately controlling and accounting for their firearms inventories. Additional provisions in the bill would have addressed several other firearms-related issues concerning machine guns, firearms parts, and handgun possession of a minor in the presence of a parent or legal guardian. In the 112 th Congress, Representative Steve King and Senator Mike Crapo have reintroduced this proposal ( H.R. 1093 / S. 835 ). Federal law does not regulate gun shows specifically. Federal law regulating firearms transfers, however, is applicable to such transfers at gun shows. Federal firearms licensees—those licensed by the federal government to manufacture, import, or deal in firearms—are required to conduct background checks on non-licensed persons seeking to obtain firearms from them, by purchase or exchange. Conversely, non-licensed persons—those persons who transfer firearms but who do not meet the statutory test of being engaged in the business—are not required to conduct such checks. To some, this may appear to be an incongruity in the law. Why, they ask, should licensees be required to conduct background checks at gun shows but not non-licensees? To those opposed to further federal regulation of firearms, it may appear to be a continuance of the status quo (i.e., non-interference by the federal government into private firearms transfers within state lines). On the other hand, those seeking to increase federal regulation of firearms may view the absence of background checks for firearms transfers between non-licensed/private persons as a loophole in the law that needs to be closed. A possible issue for Congress is whether federal regulation of firearms should be expanded to include private firearms transfers at gun shows and other similar venues. Among gun show-related proposals, there are two basic models. The first model is based on a bill ( S. 443 ) that was introduced in the 106 th Congress by Senator Lautenberg, who successfully offered this proposal as an amendment to the Senate-passed Violent and Repeat Juvenile Offender Act ( S. 254 ). Several Members introduced variations of the Lautenberg bill in the 107 th Congress. In the 108 th Congress, Representative Conyers—ranking minority Member of the Judiciary Committee—introduced H.R. 260 , which was very similar to the Lautenberg bill. In addition, former Senator Daschle introduced the Justice Enhancement and Domestic Security Act of 2003 ( S. 22 ), which included gun show language that was similar to the Lautenberg bill. The second model is based on a bill ( S. 890 ) introduced in the 107 th Congress by Senators McCain and Lieberman. In the 108 th Congress, Senator McCain reintroduced this proposal as well ( S. 1807 ). And, Representative Michael Castle introduced a similar gun show proposal ( H.R. 3832 ). Also in the 108 th Congress, on March 2, 2004, during consideration of the Protection of Lawful Commerce in Arms Act ( S. 1805 ), the Senate passed a gun show-related amendment ( S.Amdt. 2636 ) offered by Senator McCain by a yea-nay vote of 53-46 (Record Vote Number: 25). However, the bill's floor manager, Senator Larry Craig, pulled this bill from further floor consideration before a final vote could be taken on the measure rather than risk passage of a bill that included gun control and assault weapons ban provisions (the latter provision is described below). In the 109 th Congress, Representative Castle reintroduced his proposal ( H.R. 3540 ), but a similar measure was not introduced in the Senate. In the 110 th Congress, Representative Castle and Senator Lautenberg reintroduced separate gun show proposals ( H.R. 96 and S. 2577 ). Senator Biden included similar provisions in the Crime Control and Prevention Act of 2007 ( S. 2237 ). In the 111 th Congress, Senator Lautenberg and Representative Castle again reintroduced similar measures that would have required background checks for private firearms transfers at guns shows ( S. 843 and H.R. 2324 ). In the 112 th Congress, Senator Lautenberg has reintroduced this measure ( S. 35 ) and Representative McCarthy has introduced a companion measure ( H.R. 591 ). In 1994, Congress banned for 10 years the possession, transfer, or further domestic manufacture of semiautomatic assault weapons (SAWs) and large-capacity ammunition feeding devices (LCAFDs) that hold more than 10 rounds that were not legally owned or available prior to the date of enactment (September 13, 1994). The SAW-LCAFD ban expired on September 13, 2004. The SAW ban statute classified a rifle as a semiautomatic assault weapon if it was able to accept a detachable magazine and included two or more of the following five characteristics: (1) a folding or telescoping stock, (2) a pistol grip, (3) a bayonet mount, (4) a muzzle flash suppressor or threaded barrel capable of accepting such a suppressor, or (5) a grenade launcher. There were similar definitions for pistols and shotguns that were classified as semiautomatic assault weapons. Semiautomatic assault weapons that were legally owned prior to the ban were not restricted and remained available for transfer under applicable federal and state laws. Opponents of the ban argue that the statutorily defined characteristics of a semiautomatic assault weapon were largely cosmetic, and that these weapons were potentially no more lethal than other semiautomatic firearms that were designed to accept a detachable magazine and were equal or superior in terms of ballistics and other performance characteristics. Proponents of the ban argue that semiautomatic military-style firearms, particularly those capable of accepting large-capacity ammunition feeding devices, had and have no place in the civilian gun stock. During and following World War II, assault rifles were developed to provide a lighter infantry weapon that could fire more rounds, more rapidly (increased capacity and rate of fire). To increase capacity of fire, detachable self-feeding magazines were developed. These rifles were usually designed to be fired in fully automatic mode, meaning that once the trigger is pulled, the weapon continues to fire rapidly until all the rounds in the magazine are expended or the trigger is released. Often these rifles were also designed with a "select fire" feature that allowed them to be fired in short bursts (e.g., three rounds per pull of the trigger), or in semiautomatic mode (i.e., one round per pull of the trigger), as well as in fully automatic mode. By comparison, semiautomatic firearms, including semiautomatic assault weapons, fire one round per pull of the trigger. According to a 1997 survey of 203,300 state and federal prisoners who had been armed during the commission of the crimes for which they were incarcerated, fewer than 1 in 50, or less than 2%, used, carried, or possessed a semiautomatic assault weapon or machine gun. Under current law, any firearm that can be fired in fully automatic mode or in multi-round bursts is classified as a "machine gun" and must be registered with the federal government under the National Firearms Act of 1934. Furthermore, it is illegal to assemble a machine gun with legally or illegally obtained parts. The population of legally owned machine guns has been frozen since 1986, and they were not covered by the semiautomatic assault weapons ban. In the 108 th Congress, proposals were introduced to extend or make permanent the ban, whereas other proposals were made to modify the definition of "semiautomatic assault weapon" to cover a greater number of firearms by reducing the number of features that would constitute such firearms, and expand the list of certain makes and models of firearms that are statutorily enumerated as banned. A proposal ( S. 1034 ) introduced by Senator Dianne Feinstein would have made the ban permanent as would have a proposal ( H.R. 2038 / S. 1431 ) introduced by Representative McCarthy and Senator Lautenberg. The latter measure, however, would have modified the definition and expanded the list of banned weapons. Senator Feinstein also introduced measures that would have extended the ban for 10 years ( S. 2109 / S. 2498 ). In addition, on March 2, 2004, the Senate passed an amendment to the gun industry liability bill ( S. 1805 ) that would have extended the ban for 10 years, but the Senate did not pass this bill. In the 109 th Congress, Senator Dianne Feinstein introduced a bill that would have reinstated previous law for 10 years ( S. 620 ). Representative McCarthy and Senator Lautenberg reintroduced their bills to make the ban permanent ( H.R. 1312 / S. 645 ). In the 110 th Congress, Representative McCarthy reintroduced a similar proposal ( H.R. 1022 ) and another measure ( H.R. 1859 ) that would prohibit the transfer of a semiautomatic assault weapon with a large-capacity ammunition feeding device, among other things. Representative Mark Steven Kirk introduced the Assault Weapons Ban Reauthorization Act of 2008 ( H.R. 6257 ). Senator Biden included provisions to reauthorize the ban in the Crime Control and Prevention Act of 2007 ( S. 2237 ). In the wake of the Tucson shootings, Representative McCarthy introduced a measure that would reinstate the large capacity ammunition feeding device ban ( H.R. 308 ). Senator Lautenberg introduced a similar measure ( S. 32 ). In the 109 th Congress, legislation was introduced to regulate more strictly certain .50 caliber rifles. Some of these rifles are chambered to fire a relatively large round originally designed for the Browning Machine Gun (BMG) and have been adopted by the U.S. military as long-range "sniper" rifles. Gun control advocates argue that these firearms have little sporting, hunting, or recreational purpose. They maintain that these rifles could be used to shoot down aircraft, rupture pressurized chemical tanks, or penetrate armored personnel carriers. Gun control opponents counter that these rifles are expensive, cumbersome, and rarely, if ever, used to commit crimes. Furthermore, they maintain that these rifles were first developed for long-range marksmanship competitions and then adopted by the military as sniper rifles. The Fifty Caliber Sniper Weapons Regulation Act of 2005 ( S. 935 ), introduced by Senator Dianne Feinstein, would have amended the National Firearms Act (NFA) to regulate ".50 caliber sniper weapons" in the same fashion as short-barreled shotguns and silencers by levying taxes on the manufacture and transfer of such firearms and by requiring owner and firearms registration. In the 110 th Congress, Senator Feinstein introduced a similar measure ( S. 1331 ). The other proposal introduced by Representative James Moran, the 50 Caliber Sniper Rifle Reduction Act ( H.R. 654 ), also would have amended the NFA to include those weapons, but it would have also amended the Gun Control Act to effectively freeze the population of those weapons legally available to private persons and to prohibit any further transfer of those firearms. In other words, H.R. 654 would have grandfathered-in existing rifles but would have banned their further transfer. Consequently, the proposal would have eventually eliminated those rifles all together from the civilian gun stock. It would have been likely that covered .50 caliber rifles would have had to be destroyed or handed over to the ATF as contraband when the legal firearm owner died or wanted to give up the firearm. H.R. 654 included no compensation provision for rifles destroyed or handed over to the federal government. Furthermore, both proposals ( S. 935 and H.R. 654 ) would have defined ".50 caliber sniper weapon" to mean "a rifle capable of firing center-fire cartridge in .50 caliber, .50 BMG caliber, any other variant of .50 caliber or any metric equivalent of such calibers." Many rifles, and even some handguns, are chambered to fire .50 caliber ammunition, meaning the projectile is about one-half inch in diameter. Opponents of this legislation note that this definition was very broad and would have likely covered .50 caliber rifles that would not be considered "long-range" or "sniper" rifles. The .50 BMG caliber round, on the other hand, is an exceptionally large cartridge (projectile and casing), which was once used almost exclusively as a heavy machine gun round. Representative Moran also offered an amendment to the FY2006 Department of Commerce appropriations bill ( H.R. 2862 ) that would have prohibited the use of funding provided under that bill to process licenses to export .50 caliber rifles, but that amendment was not adopted by the House. Appendix A. Legislation in the 111 th Congress The 111 th Congress revisited several issues previously considered in the 110 th Congress. For example, Congress considered amendments to DC voting rights bills that would have further overturned DC gun laws ( S. 160 and H.R. 157 ). In addition, Congress passed several other gun-related provisions included in enacted legislation that address carrying firearms on public lands ( P.L. 111-24 ), transporting firearms in passenger luggage on Amtrak trains ( P.L. 111-117 ), widening law enforcement off-duty concealed carry privileges ( P.L. 111-272 ), prohibiting higher health care premiums for gun owners ( P.L. 111-148 ), and prohibiting the Department of Defense (DOD) from regulating firearms privately owned but lawfully held by service members, DOD civilian personnel, and their family members off-base ( P.L. 111-383 ). The 111 th Congress also reconsidered or newly considered several other provisions that were not enacted: gun rights restoration for veterans previously deemed to be mentally incompetent ( S. 669 and H.R. 6132 ), interstate reciprocity of concealed carry privileges ( S. 1390 and S. 845 ), firearms possession in public housing ( H.R. 3045 and H.R. 4868 ), and the treatment of firearms under bankruptcy proceedings ( H.R. 5827 / S. 3654 ). Constitutionality of DC Handgun Ban and Related Legislation On June 26, 2008, the Supreme Court issued its decision in District of Columbia v. Heller on the constitutionality of a DC law that banned handguns for 32 years, among other things. Passed by the DC Council on June 26, 1976, the DC handgun ban required that all firearms within the District be registered and all owners be licensed, and it prohibited the registration of handguns after September 24, 1976. In a 5-4 decision, the Supreme Court found the handgun ban to be unconstitutional because it violated an individual's right under the Second Amendment to possess a handgun in his home for lawful purposes such as self-defense. DC Council Passes Emergency Law On July 15, 2008, the DC Council passed a temporary, emergency law that allowed residents through a registration/certificate process to keep a handgun in their home as long as that firearm had a capacity of fewer than 12 rounds of ammunition and was not loadable from a magazine in the handgrip, which in effect limited legal handguns under the temporary law to revolvers as opposed to semiautomatic pistols. The emergency law also continued to require that handguns be kept unloaded and disassembled, or trigger locked, unless an attack in a home was imminent or underway. Pro-gun groups immediately criticized the council's emergency law for not being in the "spirit" of the Supreme Court's decision because it continued to ban semiautomatic pistols and did not fully roll back the trigger lock requirement. Since the initial emergency law was passed, the DC Council has passed several other pieces of similar temporary, emergency laws related to the Heller decision. These laws include new firearms-related provisions that were also included in permanent legislation passed by the DC Council that is described below. Legislation Related to DC Gun Laws Several Members of Congress were dissatisfied with the DC Council's temporary law. On July 24, 2008, Representative Mike Ross filed a motion to discharge the Rules Committee from consideration of H.Res. 1331 , a resolution that would have provided for the consideration of a bill to restore Second Amendment rights in the District of Columbia ( H.R. 1399 ). This bill was similar to previous bills introduced by Representative Mark Souder and Senators Kay Bailey Hutchison and Orrin Hatch in previous congresses. Representative Ross introduced H.R. 1399 in the 110 th Congress for himself and Representative Souder on March 27, 2007, and Senator Hutchison introduced a companion measure ( S. 1001 ) on March 28, 2007. In the 110 th Congress, Representative Travis Childers introduced a similar bill ( H.R. 6691 ) on July 31, 2008. All three bills would have amended the DC Code to limit the Council's authority to regulate firearms; remove semiautomatic firearms that can fire more than 12 rounds without manually reloading from the definition of "machine gun"; amend the registration requirements so that they do not apply to handguns, but only to sawed-off shotguns, machine guns, and short-barreled rifles; remove restrictions on ammunition possession; repeal requirements that DC residents keep firearms in their possession unloaded and disassembled, or bound by a trigger lock; repeal firearms registration requirements generally; and repeal certain criminal penalties for possessing or carrying unregistered firearms. Representatives John Dingell, John Tanner, and Mike Ross reportedly negotiated an agreement with the House leadership to consider H.R. 6691 in early September. H.R. 6691 included language that stated as a congressional finding that DC officials "have indicated their intention to continue to unduly restrict lawful firearm possession and use by citizens of the District." H.R. 6691 also included a provision that would have allowed DC residents to purchase firearms from federally licensed gun dealers in Virginia and Maryland. On September 9, 2008, the House Oversight and Government Reform Committee held a hearing on the possible effects H.R. 6691 might have on the District. On the same day, Representative Eleanor Holmes Norton introduced H.R. 6842 , a bill that would have required the DC mayor and Council to ensure that regulations were promulgated that would have been consistent with the Heller decision. On September 15, 2008, the House Oversight and Government Reform Committee reported H.R. 6842 ( H.Rept. 110-843 ). On September 17, 2008, however, the House amended H.R. 6842 with the text of H.R. 6691 and passed the Childers bill. DC Council Passes Permanent Legislation On December 16, 2008, the DC Council passed the Firearms Control Amendment Act of 2008 (FCAA; B17-0843) and the Inoperable Pistol Amendment Act of 2008 (IPAA; B17-0593). Mayor Adrian Fenty signed the FCAA into law on January 28, 2009 (L17-0372). This bill was transmitted to Congress on February 10, 2009. From the day of transmittal, Congress had 30 legislative days to review this bill under the DC Home Rule Act (according to the District of Columbia). Among other things, this law amends the DC Code to adopt the federal definition of "machine gun," which does not include semiautomatic pistols; prohibit the possession and registration of "assault weapons" and rifles capable of firing .50 caliber Browning Machine Gun (BMG) rounds; and require that all firearms made after January 1, 2011, be microstamped. Many provisions of this law, including the assault weapons ban and the microstamping provisions, were modeled after California state law. Mayor Fenty signed IPAA into law on January 16, 2009 (L17-0388). It was transmitted to Congress on February 4, 2009. Because the bill includes penalty provisions, Congress had 60 legislative days to review this bill under the DC Home Rule Act. Among other things, this permanent legislation amends the DC Code to criminalize the possession of inoperable firearms; criminalize the discharge of firearms; prohibit carrying a rifle or shotgun; allow for the transportation of firearms under the same conditions as permitted under federal law; and change the waiting period to purchase a firearm from 48 hours to 10 days. DC Voting Rights and Gun Laws in the 111 th Congress On February 26, 2009, Senator John Ensign successfully amended ( S.Amdt. 576 ) the District of Columbia House Voting Rights Act of 2009 ( S. 160 ) by a yea-nay vote of 62-36 (Record Vote Number 72) with language that would have overturned certain DC guns laws and prevent the District from legislating in these areas in the future. The Senate passed this bill on the same day by a yea-nay vote of 61-37 (Record Vote Number 73). This bill was tabled while the House leadership attempted to negotiate an end to the impasse over the DC gun laws and bring its version of the DC voting rights bill ( H.R. 157 ) to the floor. In April 2010, efforts were made to revive the voting rights bill, but some Members prepared amendments to overturn the city's gun laws. Consequently, Members managing the DC voting rights bill postponed further consideration rather than risk passage of amendments that would overturn the city's gun laws. Senator John McCain and Representative Travis Childers introduced their amendments as stand-alone bills, the Second Amendment Enforcement Act ( S. 3265 / H.R. 5162 ). In the 112 th Congress, Representative Mike Ross has introduced a proposal to restore Second Amendment rights in the District of Columbia ( H.R. 645 ). Constitutionality of the Chicago Handgun Ban On June 28, 2010, the Supreme Court issued its 5-4 decision in McDonald v. City of Chicago and found that the individual right to lawfully possess a firearm for the purposes of self-defense under the Second Amendment applied to the states by way of the Fourteenth Amendment. Although the McDonald decision arguably nullified the Chicago handgun ban by limiting a state, city, or local government's ability to prohibit handguns outright, it does not delineate what would constitute permissible gun control laws under the Second Amendment. Indeed, the Supreme Court remanded the Chicago handgun ban back to the Seventh Circuit Court of Appeals for a rehearing. Consequently, the delineation of permissible gun laws will likely be developed in future cases. Nevertheless, the city of Chicago has reportedly adopted handgun regulations that are similar to those adopted by the District of Columbia. These regulations allow eligible residents to register one operable handgun per household, but in most cases that handgun must be locked and rendered inoperable, and it cannot be carried outside of the home. Public Lands and Firearms Possession and Use In the 111 th Congress, Senator Tom Coburn successfully amended the Credit CARD Act of 2009 ( H.R. 627 ) with a provision ( S.Amdt. 1067 ) that allows private persons to carry firearms in national parks and wildlife refuges (effective February 22, 2010). This amendment passed by a vote of 67 to 29 (Record Vote Number 188) on May 12, 2009. Under H.Res. 456 , the House voted on the Coburn amendment as a separate measure and passed it by a vote of 279 to 147. President Barack Obama signed H.R. 627 into law on May 22, 2009 ( P.L. 111-24 ). Previously, in the 110 th Congress during consideration of a public land bill ( S. 2483 ), Senator Coburn offered but later withdrew an amendment ( S.Amdt. 3967 ) that would have overturned federal regulations that prohibit visitors to parks and wildlife refuges managed by the National Park Service (NPS) and Fish and Wildlife Service (FWS) from possessing operable and loaded firearms. While these regulations were last revised substantively in 1981 and 1983, similar firearms restrictions were promulgated in the 1930s in an effort to curb poaching and other illegal activities. There are exceptions for hunting and marksmanship under current law. Since the 1980s, however, many states have passed laws that allow persons to carry concealed handguns for personal protection. Although 48 states have "concealed carry" laws, only 24 of those states reportedly allow concealed handguns to be carried in state parks. On April 30, 2008, in part at the urging of some Members of Congress, the Department of the Interior (DOI) published proposed regulations that would authorize the possession of loaded and concealed firearms, as long as carrying those firearms in that fashion would be legal under the laws of the states where the public lands are located. While the initial comment period was scheduled to end on June 30, 2008, it was extended until August 8, 2008. DOI reported receiving approximately 90,000 comments on those proposed regulations. Final regulations were issued on December 10, 2008. Those regulations took effect on January 9, 2009. However, on March 19, a U.S. District Judge issued a preliminary injunction on the regulations in a lawsuit brought by three groups: the Brady Campaign to Prevent Gun Violence, the National Parks Conservation Association, and the Coalition of National Park Service Retirees. On March 20, the NRA filed a notice to appeal in Federal District Court in opposition to the preliminary injunction. Senator Coburn also introduced a bill, the Protecting Americans from Violent Crime Act of 2008 ( S. 2619 ), that was very similar to his proposed amendment and DOI's proposed regulations. Supporters of those proposals pointed to a reported rise in illegal activities and violent crime on public lands. Opponents argued that the risk of a violent crime encounter in National Parks and Wildlife Refuges was negligible. They further argued that allowing others to carry loaded and concealed handguns on their person would make them less safe. In the 111 th Congress, similar measures were introduced by Representative Doc Hastings and Senator Mike Crapo ( H.R. 1684 / S. 816 ). Amtrak Passengers and Firearms On September 16, 2010, Senator Roger Wicker amended the FY2010 Transportation-HUD appropriations bill ( H.R. 3288 ) with language to authorize private persons to carry firearms and ammunition in their checked luggage on Amtrak trains. The Wicker amendment ( S.Amdt. 2366 ) passed by a yea-nay vote, 68-30 (Record Vote Number 279). On September 17, 2009, the Senate passed this bill. Later, H.R. 3288 became the vehicle for the Consolidated Appropriations Act, 2010. Conferees retained the Wicker language in the conference agreement ( H.Rept. 111-366 ), and the President signed H.R. 3288 into law ( P.L. 111-117 ) on December 16, 2009. Section 159 of the act requires Amtrak, with the Transportation Security Administration, to report to Congress (within six months of enactment—June 16, 2010) on proposed guidance and procedures to implement a "checked firearms program." The reported guidance and procedures are to be implemented within one year of enactment. The act further requires that checked firearms be placed in a locked, hard-sided container, and that passengers planning to carry firearms in their luggage declare their intentions to Amtrak at the time they make their reservations or within 24 hours of departure. Similar requirements are set out for placing ammunition in checked luggage. Law Enforcement Officers Safety Act Amendments The 111 th Congress passed amendments to clarify and expand eligibility under the Law Enforcement Officers Safety Act (LEOSA; P.L. 108-277 ). This law authorizes certain qualified active-duty and retired law enforcement officers to carry concealed firearms across state lines, while off duty. Senator Leahy, the Judiciary Committee chair, introduced the amendments as a stand-alone bill ( S. 1132 ). In the House, Representative J. Randy Forbes introduced a similar measure ( H.R. 3752 ). The Senate Judiciary Committee approved S. 1132 on March 11, 2010, and the Senate passed the bill on May 13, 2010. The Senate Judiciary Committee filed a report on this bill on July 27, 2010 ( S.Rept. 111-233 ). The House passed S. 1132 on September 29, 2010. The President signed S. 1132 into law on October 12, 2010 ( P.L. 111-272 ). The 2010 LEOSA amendments (1) clarify that certain Amtrak and executive branch law enforcement officers are eligible for concealed carry privileges under P.L. 108-277 , (2) reduce the length of service criterion for eligibility under that law from 15 to 10 years, and (3) clarify other provisions of the law related to certification and credentialing. Previously, in the 110 th Congress, the Senate Judiciary Committee reported a similar bill ( S. 376 ; S.Rept. 110-150 ) on September 5, 2007. This bill was also introduced by Senator Leahy. Representative Forbes introduced a similar bill ( H.R. 2726 ). The language of S. 376 was incorporated into S. 2084 , the School Safety and Law Enforcement Improvement Act of 2007, when that bill was reported on September 21, 2007 ( S.Rept. 110-183 ). In the 109 th Congress, the Senate amended H.R. 1751 , the Court Security Improvement Act of 2006, with similar LEOSA provisions and passed that measure. Patient Protection and Affordable Care Act and Firearms The 111 th Congress included language in the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) that prohibits data collection on gun ownership or higher premiums for gun owners under wellness program provisions. The catalyst for this language was an "action alert" that Gun Owners of America (GOA) sent out, urging its membership to oppose a Senate health care reform proposal released on November 18, 2009. The GOA argued that the Senate proposal, along with other enacted provisions of law, would have required doctors to provide "gun-related health data" to a computerized national health information network. With such information, the GOA maintained that the federal government would deny individuals the ability to obtain a firearm or firearms permit. Of particular concern for the GOA were mental health records. Another concern raised by the GOA was the possibility that insurance providers under the Senate proposal would have been required or prompted to raise premiums for persons who exhibited arguably "unhealthy behaviors," such as firearms ownership. Although the Senate proposal included provisions to amend the Health Insurance Portability and Accountability Act (HIPAA) that addressed electronic data transaction standards for national health information sharing purposes to facilitate eligibility determinations and health care plan enrollments, it did not include any provisions that would have directly required the national collection of "gun-related health data." Without a clear directive, it is debatable whether the Department of Health and Human Services (HHS) would have undertaken such data collection on firearms ownership and possession given other provisions in current law, albeit in different statutory contexts, that prohibit the establishment of a registry of privately held firearms or firearms owners. Dr. David Blumenthal, then National Coordinator for Health Information Technology at HHS, said that the current system does not include a database into which such information could be fed, nor are there plans to create one. Blumenthal added that "we don't want to do it and it's not authorized." Nor did the Senate proposal include any provisions that would have required or prompted insurance providers to raise premiums on gun owners. On the other hand, the Senate legislation did include provisions that would have codified and amended HIPAA wellness program provisions that would have addressed employer-based incentives for healthy behavior to reduce health care costs. Arguably, these provisions would not have precluded the Secretary of Health and Human Services from promulgating regulations that addressed risks associated with firearms ownership, possession, use, and storage. However, such regulations, if proposed, would have likely been tested in administrative and judicial review as to their impact on Second Amendment rights. Nonetheless, Senate legislators included new language in their Patient Protection and Affordable Care proposal, which the Senate passed as an amendment to H.R. 3590 on December 24, 2009. The Senate language, which was included in P.L. 111-148 , prohibits any wellness and health promotion activity sponsored under the act's HIPAA amendments from requiring the disclosure or collection of any information about the presence or storage of a lawfully possessed firearm or ammunition in the residence or on the property of an individual, or the lawful use, possession, or storage of a firearm or ammunition by an individual. The language also states that nothing in the bill would be construed to authorize any data collection on the lawful ownership, possession, use, or storage of firearms or ammunition, or to maintain records on individual ownership or possession of a firearm or ammunition. In addition, with regard to any health insurance to be provided under the act, this provision prohibits providers from increasing premium rates; denying coverage; or reducing or withholding discounts, rebates, or rewards for participation in a wellness program because of an individual's lawful ownership, possession, use, or storage of a firearm or ammunition. Finally, under the data collection activities authorized under the act, the language states that no individual would be required to disclose any information relating to the lawful ownership, possession, use, or storage of a firearm or ammunition. Guns Held Off-Base and Surplus Ammunition and Shell Casings In addition, two firearms-related provisions were included in the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ( P.L. 111-383 ). One provision (§1062), sponsored by Senator Jim Inhofe, prohibits the Secretary of Defense, and by implication base commanders, from collecting any information on privately owned firearms kept by military personnel, Department of Defense civilian employees, and their family members off-base. Another provision (§346) sponsored by Senators Jon Tester and Max Baucus addresses the demilitarization of small arms ammunition of several types and calibers, including spent shell casings, which is commonly sold as military surplus. NICS Improvement Amendments Act of 2007 In the wake of the Virginia Tech tragedy, the 110 th Congress passed legislation to improve firearms-related background checks. The Senate amended and passed the NICS Improvement Amendments Act of 2007 ( H.R. 2640 ) following lengthy negotiations, as did the House, on December 19, 2007, clearing that bill for the President's signature. President Bush signed the bill into law on January 8, 2008 ( P.L. 110-180 ). This law amends and strengthens a provision of the Brady Handgun Violence Prevention Act (Brady Act; P.L. 103-159 ) that requires federal agencies to provide, and the Attorney General to secure, any government records with information relevant to determining the eligibility of a person to receive a firearm for inclusion in databases queried by NICS. The act also includes provisions designed to encourage states, tribes, and territories (states) to make available to the Attorney General certain records related to persons who are disqualified from acquiring a firearm, particularly records related to domestic violence misdemeanor convictions and restraining orders, as well as mental health adjudications. To accomplish this, the act establishes a framework of incentives and disincentives, whereby the Attorney General is authorized to either waive a grant match requirement or reduce a law enforcement assistance grant depending upon a state's compliance with the act's goals of bringing firearms-related disqualifying records online. The original proposal ( H.R. 2640 ) was introduced by Representative McCarthy and co-sponsored by Representative John Dingell. As passed by the House by a voice vote on June 13, 2007, H.R. 2640 reportedly reflected a compromise between groups favoring and opposing greater gun control. The Senate Judiciary Committee approved similar, but not identical, NICS improvement amendments as part of the School Safety and Law Enforcement Improvement Act of 2004 on August 2, 2007, and reported this bill on September 21, 2007 ( S. 2084 ; S.Rept. 110-183 ). The Senate Judiciary Committee included five other measures in S. 2084 . With some modification, those measures included the School Safety Enhancements Act ( S. 1217 ), the Equity in Law Enforcement Act ( S. 1448 ), the PRECAUTION Act ( S. 1521 ), the Terrorist Hoax Improvements Act ( S. 735 ), and the Law Enforcement Officers Safety Act of 2007 (LEOSA; S. 376 ). Support for the NICS improvement and the LEOSA amendments (described below) in S. 2084 was reportedly divided and uneven, however. Citing privacy and cost issues related to the NICS amendments, Senator Coburn reportedly placed a hold on that legislation. In addition, some opposition to NICS improvement amendments had coalesced around an assertion made by Larry Pratt of Gun Owners of America that, under these amendments, any veteran who was or had been diagnosed with Posttraumatic Stress Disorder (PTSD) and was found to be a "danger to himself or others would have his gun rights taken away ... forever." Under current law, however, any veteran or other VA beneficiary who is adjudicated or determined to be a mental defective, because he poses a danger to himself or others, or is incapable of conducting his day-to-day affairs, is ineligible to possess a firearm. A diagnosis of PTSD in and of itself is not a disqualifying factor for the purposes of gun control under the NICS improvement amendments or previous law. Under the enacted NICS improvement amendments, VA beneficiaries who have been determined to be mental defectives could appeal for administrative relief and possibly have their gun rights restored if they could demonstrate that they were no longer afflicted by a disqualifying condition. Veterans, Mental Incompetency, and Firearms Eligibility In the 110 th Congress, Senator Burr successfully amended the Veterans' Medical Personnel Recruitment and Retention Act of 2008 ( S. 2969 ) in full committee markup on June 26, 2008. The language of the Burr amendment would have provided that "a veteran, surviving spouse, or child who is mentally incapacitated, deemed mentally incompetent, or experiencing an extended loss of consciousness shall not be considered adjudicated as a mental defective" for purposes of the Gun Control Act, "without the order or finding of a judge, magistrate, or other judicial authority of competent jurisdiction that such veteran, surviving spouse, or child is a danger to him or herself or others." Senator Burr introduced a bill, the Veterans' 2 nd Amendment Protection Act ( S. 3167 ), that would have achieved the same ends as his amendment to S. 2969 . In the 111 th Congress, Senator Burr reintroduced his bill as S. 669 , and the Senate Committee on Veterans' Affairs reported this bill ( S.Rept. 111-27 ) on June 16, 2009. Representative Jerry Moran introduced a similar bill ( H.R. 2547 ). The House Veterans' Affairs Committee considered and approved a similar provision that Representative John Boozman offered as an amendment to a draft bill in full committee markup on September 15, 2010. This provision was included in the reported version of the bill ( H.R. 6132 ; H.Rept. 111-630 ). However, when the House considered H.R. 6132 under suspension of the rules, an amended version of H.R. 6132 was called up that did not include the Boozman provision. Mental Defective Adjudications Under 27 C.F.R. Section 478.11, the term "adjudicated as a mental defective" includes a determination by a court, board, commission, or other lawful authority that a person, as a result of marked subnormal intelligence or a mental illness, incompetency, condition, or disease, (1) is a danger to himself or others, or (2) lacks the mental capacity to manage his own affairs. The term also includes (1) a finding of insanity by a court in a criminal case and (2) those persons found incompetent to stand trial or found not guilty by reason of lack of mental responsibility pursuant to articles 50a and 72b of the Uniform Code of Military Justice, 10 U.S.C. Sections 850a, 876(b). This definition of "mental defective" was promulgated by the ATF in a final rule published on June 27, 1997. In the final rule, the ATF noted that the VA had commented on the "proposed rulemaking" and had correctly interpreted that "adjudicated as a mental defective" includes a person who is found to be "mentally incompetent" by the Veterans Benefit Administration (VBA). Under veterans law, an individual is considered "mentally incompetent" if he or she lacks the mental capacity to contract or manage his or her own affairs for reasons related to injury or disease (under 38 CFR §3.353). In a proposed rulemaking, the ATF opined that the inclusion of "mentally incompetent" in the definition of "mental defective" was wholly consistent with the legislative history of the 1968 Gun Control Act. Reportedly, the VA could have been the only federal agency that had promulgated a definition like "mentally incompetent" that overlapped with the term "mental defective." VA Referrals to the FBI In November 1998, the VBA provided the FBI with disqualifying records on 88,898 VA beneficiaries. VA rating specialists had determined based upon medical evidence that these beneficiaries were unable to manage their own financial affairs. The VA appointed a fiduciary for purposes of receiving and managing each beneficiary's VA benefits. According to the VA, during the determination process beneficiaries were notified that VA proposed to rate them "incompetent" and that they were able to request a hearing and submit evidence to the contrary if they wished. VA also advised these beneficiaries regarding their right to appeal any final rating regarding their ability to receive and manage their own VA benefits. Despite the resultant NICS referral, however, the VA did not necessarily inform the beneficiary that he would lose his gun rights as a consequence of this determination. As described above, under the P.L. 110-180 the VA is required to inform the beneficiary of this outcome. Interestingly, the Veterans Medical Administration has not submitted any disqualifying records on VA medical care recipients to the FBI for inclusion in NICS for any medical/psychiatric reason (like PTSD). While veterans with PTSD or any other condition, who have been involuntarily committed under a state court order to a VA medical facility because they posed a danger to themselves or others, are ineligible to ship, transport, receive, or possess a firearm or ammunition under federal law, the Veterans Medical Administration would not make a related referral about that ineligibility to the FBI. Instead, the state in which the court resides would submit the disqualifying record to the FBI, if such a submission would be appropriate and permissible under state law. Nevertheless, the decision by the VA to submit VBA records on "mentally incompetent" veterans to the FBI for inclusion in the NICS mental defective file generated some degree of controversy in 1999 and 2000. Critics of this policy underscored that veterans routinely consented to "mentally incompetent" determinations so that a fiduciary (designated payee) could be appointed for them. Those critics contended that to take away a veteran's Second Amendment rights without his foreknowledge was improper. They also pointed out that no other federal agencies were providing similar disqualifying records to the FBI. This controversy subsided, but it re-emerged when Congress considered the NICS improvement amendments (described above). According to the Bureau of Justice Statistics, as of May 1, 2011, there were 130,886 files in the NICS mental defective file, which had been referred to the FBI by the VA. Those VA files accounted for 99.2% of mental defective files (131,979) referred to the FBI by any federal department or agency. In the view of some Members of Congress, it may be incongruous that other federal agencies, such as the Social Security Administration, that provide similar disability and income maintenance benefits to persons who are mentally incapacitated refer relatively few, if any, firearms-related disqualifying records about beneficiaries whom they serve to the FBI. Moreover, there are other individuals in the U.S. population who are similarly incapacitated due to their age-related infirmities or mental disabilities, but in many cases there are no mechanisms for state or local authorities to make similar referrals to the FBI. As a consequence, even with the changes put in place by P.L. 110-180 , those Members of Congress may view the VA's continued referral of firearms-related disqualifying records on veterans who have had a fiduciary appointed on their behalf but have not behaved in a threatening or dangerous manner to be an unjustified indignity placed on individuals who have served their country honorably in the Armed Forces. Other Members of Congress would maintain that the VA has faithfully complied with the law and that public safety is enhanced by making those referrals to the FBI. They might also argue that opposition to the VA policy waned between November 1998 and the 2007 congressional debate, demonstrating that veterans who were "adjudicated mental defective," rarely, if ever, sought to acquire and were subsequently denied firearms in a manner that could be described as an injustice. Those Members would likely underscore that, in their view, the VA's current policy does not diminish national recognition of those veterans' honorable service. Rather, the VA's policy has been implemented to protect those veterans and others from the harm that might result if they acquired a firearm and used it improperly due to reasons possibly related to their mental incompetency. Public Housing and Firearms Possession and Use In the 110 th Congress, the House passed a bill ( H.R. 6216 ) on July 9, 2008, that would have made changes related to the administration of the public housing program administered by the Department of Housing and Urban Development (HUD) through local public housing authorities (PHAs). The bill includes a provision that would have prohibited the HUD Secretary from accepting as reasonable any management or related fees charged by a PHA for enforcing any provision of a lease agreement that requires tenants to register firearms that are otherwise legally possessed, or that prohibits their possession outright. On the other hand, the bill would have allowed PHAs to terminate the lease of any tenant who was found to be illegally using a firearm. The gun-related provision in H.R. 6216 reportedly reflected a compromise. The original language restricting fees for enforcing gun restrictions was included in a motion to recommit offered during floor debate on a similar public housing bill ( H.R. 3521 ). That bill was not approved by the House, but was sent back to the House Financial Services Committee for further consideration. A new version of the public housing bill ( H.R. 5829 ) was introduced that included language from the motion to recommit, but it did not include the lease termination proviso, and the bill received no further consideration. In the 111 th Congress, the Financial Services Committee reported the Section 8 Voucher Reform Act of 2009 ( H.R. 3045 ; H.Rept. 111-277 ) on July 23, 2009. In committee markup, Representative Price successfully amended the bill on July 9, 2009, with language that would have prevented authorities from prohibiting firearms in public housing. The committee approved another housing bill that included a similar provision ( H.R. 4868 ) on July 27, 2010. Concealed Carry and Reciprocity (Thune Amendment) On July 22, 2009, the Senate considered an amendment ( S.Amdt. 1618 ) offered by Senator Thune to the FY2010 Defense Authorization Act ( S. 1390 ) that would have arguably provided for national reciprocity between states regarding the concealed carry of firearms. By agreement, the amendment needed 60 votes to pass, but it was narrowly defeated by a recorded vote, 58-39. Senator Thune introduced a similar bill, the Respecting States Rights and Concealed Carry Reciprocity Act of 2009 ( S. 845 ). As background, the issue of concealed carry under state law can be divided into four categories: (1) no permit required, (2) mandatory or "shall issue," (3) discretionary or "may issue," and (4) no concealed carry permitted. In Alaska and Vermont, state law allowed concealed carry without a permit (no permit required), as is the case today. When the Thune amendment was debated, 35 states had "shall issue" laws, in that the state issues the permit as long as the applicant meets the eligibility criteria. Eleven states were "may issue" states, in that the state had discretion in whether to issue a permit. And, Wisconsin and Illinois state law prohibited the concealed carry of firearms by civilians under any circumstances. Many states with concealed carry laws have extended concealed carry privileges, or reciprocity, to the residents of other states. According to the NRA, however, those concealed carry laws are often very technical and subject to change. Moreover, there are no national eligibility criteria, or training standards regarding concealed carry. Although the Thune amendment did not address the issue of national standards, it arguably would have required "may issue" states to honor the permits issued by "shall issue" states. By extension, it would also have required "shall issue" and "may issue" states to honor the eligibility of all residents of Alaska and Vermont to carry concealed firearms in their states, as long as those persons were not otherwise prohibited from possessing firearms. Bankruptcy and Firearms Representative John A. Boccieri and Senator Leahy introduced the Protecting Gun Owners in Bankruptcy Act of 2010 ( H.R. 5827 / S. 3654 ). This proposal would have amended federal bankruptcy law to permit an individual to exempt from the property of his estate a single rifle, shotgun, or pistol, or any combination thereof, as long as the total value of the exemption did not exceed $3,000. On July 28, 2010, the House passed H.R. 5827 by a roll call vote (two-thirds required) of 307-113 (Roll no. 479). In the 112 th Congress, Representative Tim Griffin has introduced a similar measure ( H.R. 1181 ). ATF Appropriations and Southwest Border Gun Trafficking The 111 th Congress considered legislation to either fund ATF or authorize increased appropriations for the agency. The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. ATF works both independently and through partnerships with industry groups; international, state, and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. ATF Appropriations for FY2011 The President's FY2011 budget request included $1.163 billion for ATF, an increase of $42.2 million, or 3.8%, compared to the FY2010-enacted appropriation. Proposed increases (over base) included $11.8 million for Project Gunrunner and $1.2 million for Emergency Support Function #13 (ESF-13), the Public Safety and Security Annex to the National Response Framework (NRF). The NRF sets broad responsibilities and lines of authority for federal agencies in the event of a national emergency or major disaster. Under the NRF, the Attorney General is responsible for ESF-13, which entails all hazards law enforcement planning and coordination for the entire United States and its territories. The Attorney General, in turn, has delegated his responsibility for ESF-13's implementation to the ATF. On July 22, 2010, the Senate Appropriations Committee reported an FY2011 CJS appropriations bill ( S. 3636 ; S.Rept. 111-229 ). This measure would have provided ATF with $1.163 billion for FY2011, matching the Administration's request. On July 22, 2010, the Senate Appropriations Committee marked up and reported the FY2011 Commerce, Justice, Science, and Related Agencies (CJS) appropriations bill ( S. 3636 ). The Senate bill would have matched the Administration's request. In the absence of an enacted CJS appropriations bill, Congress passed several continuing resolutions. As described above, the 112 th Congress finalized the FY2011 ATF appropriation and provided the agency with $1.113 billion. ATF Appropriations for FY2010 For FY2010, the Administration requested $1.121 billion and 5,025 full-time equivalent (FTE) positions for ATF, or $66.6 million and 68 FTE positions more than the amounts appropriated for FY2009 ($1.054 billion and 4,957). Of the difference, $23.6 million and 22 FTE positions were base adjustments. For Southwest border enforcement, the FY2010 request included a budget enhancement of $18 million to support Project Gunrunner and $25 million for the new National Center for Explosives Training and Research Center (NCETR). Compared to the enacted FY2009 level of funding, the FY2010 request would have provided a 4.9% increase. For ATF, Congress appropriated $1.121 billion in the Consolidated Appropriations Act, 2010 ( H.R. 3288 ). The President signed this bill into law on December 16, 2009 ( P.L. 111-117 ). The act provided an amount that was equal to the Administration's request. This amount was $52.5 million more than the final FY2009-enacted amount, or an increase of 4.9%. Conference report language ( H.Rept. 111-366 ) indicated that the act included $18 million for Project Gunrunner, the same amount requested by the Administration. In addition, the act also included $10 million to increase the Violent Crime Impact Team program, $6 million for construction (phase two) of the NCETR, and $1.5 million to complete ATF headquarters construction projects. On July 28, 2010, the House passed an FY2010 supplemental appropriations bill ( H.R. 5875 ) that included $39.1 million for ATF to increase Southwest border gun trafficking investigations. On August 5, 2010, the Senate passed its version of H.R. 5875 , which included $37.5 million for ATF. On August 9, the House introduced a new border security supplemental bill ( H.R. 6080 ), which was subsequently passed by the House on August 10. This bill contained language identical to Senate-passed H.R. 5875 . Reportedly, the House took up the bill with a new number to avoid a dispute related to its constitutional obligation to originate all revenue measures. This dispute arose with the addition of funding provisions in Senate-passed H.R. 5875 that were not included in the House-passed version. On August 12, the Senate passed H.R. 6080 . On August 13, the President signed H.R. 6080 into law ( P.L. 111-230 ). It provides ATF with an additional $37.5 million for Project Gunrunner. Southwest Border Gun Trafficking On the Southwest border with Mexico, firearms violence has spiked sharply in recent years as drug trafficking organizations have reportedly vied for control of key smuggling corridors into the United States. In March 2008, President Felipe Calderón called on the United States to increase its efforts to suppress gun trafficking from the United States into Mexico. In the 110 th Congress, the House passed a bill ( H.R. 6028 ) that would authorize a total of $73.5 million to be appropriated over three years, for FY2008 through FY2010, to increase ATF resources dedicated to stemming illegal gun trafficking into Mexico as part of the Mérida Initiative. Similar authorizations were included in S. 2867 , H.R. 5863 , and H.R. 5869 . In the 111 th Congress, similar authorizations were included in several bills ( S. 205 , H.R. 495 , H.R. 1448 , and H.R. 1867 ). Tiahrt Amendment and Firearms Trace Data Limitations Representative Todd Tiahrt offered an amendment that placed several funding restrictions and conditions on ATF and the FBI during full committee markup of the FY2004 DOJ appropriations bill ( H.R. 2799 ). While modified, those restrictions were included in the Consolidated Appropriations Act, 2004 ( P.L. 108-199 ). Amended to the ATF appropriations every year since (FY2005-FY2012), the Tiahrt restrictions prohibit the use of any funding appropriated for ATF to disclose firearms trace or multiple handgun sales report data for any purpose other than supporting "bona fide" criminal investigation or agency licensing proceedings, prohibit the use of any funding appropriated for ATF to issue new regulations that would require licensed dealers to conduct physical inventories of their businesses, require the next-day destruction of approved Brady background check records, and require ATF to include certain data disclaimers with any firearms tracing study it releases. Of these limitations, the first, dealing with disclosure of firearms trace or multiple handgun sales report data, probably was and is the most contentious. A coalition of U.S. mayors, including New York City Mayor Michael Bloomberg, maintain that they should have access to such data in order to identify out-of-state federally licensed gun dealers who wittingly or unwittingly sell large numbers of firearms to illegal gun traffickers. For FY2008, the Tiahrt limitation on firearms trace and multiple handgun sales report data was the source of debate when the Senate CJS Appropriations Subcommittee did not include this limitation in its draft bill. Senator Richard Shelby amended the FY2008 CJS appropriations bill (which became S. 1745 ) with similar, but modified, limitations in full committee markup. Similar language was included in the House-passed CJS appropriations bill ( H.R. 3093 ), and was included in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ; H.R. 2764 ), into which the CJS appropriations were folded. The modified FY2008 limitation included new language that authorizes ATF to share firearms trace data with tribal and foreign law enforcement agencies and federal agencies for national intelligence purposes; share firearms trace data with law enforcement agencies and prosecutors to exchange among themselves; and release aggregate statistics on firearms traffickers and trafficking channels, or firearms misuse, felons, and trafficking investigations. The FY2008 limitation, however, continued to prohibit the release of firearms trace data for the purposes of suing gun manufacturers and dealers. Moreover, the limitation includes the phrase "in fiscal year 2008 and thereafter," which made it permanent law according to the Government Accountability Office (GAO). Despite the futurity language, Congress has modified the limitation's language and included it (with futurity language) in the FY2009, FY2010, FY2011, and FY2012 Commerce, Justice, Science (CJS), and Related Agencies Appropriations Acts ( P.L. 111-8 , P.L. 111-117 , P.L. 112-10 , and P.L. 112-55 ). Appendix B. Major Federal Firearms and Related Statutes The following principal changes to the Gun Control Act have been enacted since 1968. The Firearms Owners' Protection Act, McClure-Volkmer Amendments ( P.L. 99-308 , 1986), eases certain interstate transfer and shipment requirements for long guns, defines the term "engaged in the business," eliminates some recordkeeping requirements, and bans the private possession of machine guns not legally owned prior to 1986. The Armor Piercing Ammunition Ban ( P.L. 99-408 , 1986, amended in P.L. 103-322 , 1994) prohibits the manufacture, importation, and delivery of handgun ammunition composed of certain metal substances and certain full-jacketed ammunition. The Federal Energy Management Improvement Act of 1988 ( P.L. 100-615 ) requires that all toys or firearm look-a-likes have a blazed orange plug in the barrel, denoting that it is a non-lethal imitation. The Undetectable Firearms Act ( P.L. 100-649 , 1988, amended by P.L. 108-174 , 2003), also known as the "plastic gun" legislation, bans the manufacture, import, possession, and transfer of firearms not detectable by security devices. The Gun-Free School Zone Act of 1990 ( P.L. 101-647 ), as originally enacted, was ruled unconstitutional by the U.S. Supreme Court ( United States v. Lopez , 514 U.S. 549 (1995), April 26, 1995). The act prohibited possession of a firearm in a school zone (on the campus of a public or private school or within 1,000 feet of the grounds). In response to the Court's finding that the act exceeded Congress's authority to regulate commerce, the 104 th Congress included a provision in P.L. 104-208 that amended the act to require federal prosecutors to include evidence that the firearms "moved in" or affected interstate commerce. The Brady Handgun Violence Prevention Act, 1993 ( P.L. 103-159 ), requires that background checks be completed on all non-licensed persons seeking to obtain firearms from federal firearms licensees. The Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ) prohibited the manufacture or importation of semiautomatic assault weapons and large-capacity ammunition feeding devices for 10 years. The act also bans the sale or transfer of handguns and handgun ammunition to, or possession of handguns and handgun ammunition by, juveniles (younger than 18 years of age) without prior written consent from the juvenile's parent or legal guardian; exceptions related to employment, ranching, farming, target practice, and hunting are provided. In addition, the act disqualifies persons under court orders related to domestic abuse from receiving a firearm from any person or possessing a firearm. It also increased penalties for the criminal use of firearms. The assault weapons ban expired on September 13, 2004. The Federal Domestic Violence Gun Ban (the Lautenberg Amendment, in the Omnibus Consolidated Appropriations Act for FY1997, P.L. 104-208 ) prohibits persons convicted of misdemeanor crimes of domestic violence from possessing firearms and ammunition. The ban applies regardless of when the offense was adjudicated: prior to, or following enactment. It has been challenged in the federal courts, but these challenges have been defeated. The Omnibus Consolidated and Emergency Appropriations Act, 1999 ( P.L. 105-277 ), requires all federal firearms licensees to offer for sale gun storage and safety devices. It also bans firearms transfers to, or possession by, most non-immigrants and those non-immigrants who have overstayed the terms of their temporary visa. The Treasury, Postal and General Government Appropriations Act ( P.L. 106-58 ) requires that background checks be conducted when former firearms owners seek to reacquire a firearm that they sold to a pawnshop. The Homeland Security Act of 2002 ( P.L. 107-296 ) establishes a Bureau of Alcohol, Tobacco, Firearms and Explosives by transferring the law enforcement functions, but not the revenue functions, of the former Bureau of Alcohol, Tobacco and Firearms from the Department of the Treasury to the Department of Justice. The Law Enforcement Officers Safety Act of 2004 ( P.L. 108-277 ) provides that qualified active and retired law enforcement officers may carry a concealed firearm. This act supersedes state level prohibitions on concealed carry that would otherwise apply to law enforcement officers, but it does not override any federal laws. Nor does the act supersede or limit state laws that permit private persons or entities to prohibit or restrict the possession of concealed firearms on their property or prohibit or restrict the possession of firearms on any state or local government property, installation, building, base, or park. The Protection of Lawful Commerce in Arms Act ( P.L. 109-92 ) prohibits certain types of lawsuits against firearms manufacturers and dealers to recover damages related to the criminal or unlawful use of their products (firearms and ammunition) by other persons. This law also includes provisions that (1) increase penalties for using armor-piercing handgun ammunition in the commission of a crime of violence or drug trafficking, (2) require the Attorney General to submit a report (within two years of enactment) on "armor-piercing" ammunition based on certain performance characteristics, including barrel length and amount of propellant (gun powder), and (3) prohibits federally licensed gun dealers from transferring a handgun to an unlicensed person without also providing a secure storage or safety device. The Violence Against Women and Department of Justice Reauthorization Act of 2005 ( P.L. 109-162 ) authorized to be appropriated for ATF the following amounts: $924 million for FY2006, $961 million for FY2007, $999 million for FY2008, and $1.039 billion for FY2009. The USA PATRIOT Improvement and Reauthorization Act of 2005 ( P.L. 109-177 ) includes a provision that requires that the ATF Director be appointed by the President with the advice and consent of the Senate. The Disaster Recovery Personal Protection Act of 2006, which was included in the Department of Homeland Security Appropriations Act, 2007 ( P.L. 109-295 ), amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. §5207) to prohibit federal officials from seizing or authorizing the seizure of any firearm from private persons during a major disaster or emergency if possession of that firearm was not already prohibited under federal or state law. It also forbids the same officials from prohibiting the possession of any firearm that is not otherwise prohibited. Also, the law bans any prohibition on carrying firearms by persons who are otherwise permitted to legally carry such firearms because those persons are working under a federal agency, or under the control of an agency, providing disaster or emergency relief.

Congress has debated the efficacy and constitutionality of federal regulation of firearms and ammunition, with strong advocates arguing for and against greater gun control. During the 112th Congress, several mass-casualty shootings punctuated public discourse on gun control. In a January 8, 2011, Tucson, AZ, shooting, 6 people were killed and 14 wounded, including Representative Gabrielle Giffords, who was grievously wounded. In a July 20, 2012, Aurora, CO, theater shooting, 12 people were killed and 58 wounded. In an August 5, 2012, Milwaukee, WI, Sikh temple shooting, 6 people were killed and three wounded. Several Members of Congress called for reconsideration of an expired ban on high capacity ammunition feeding devices (H.R. 308 and S. 32), strengthening provisions designed to encourage states to make firearms-related disqualifying records more accessible to federal authorities (S. 436/H.R.1781), and tightening regulation of interstate ammunition transfers (S. 3458/H.R. 6241). As a matter of oversight, the 112th Congress also considered the implications of Operation Fast and Furious and allegations that the Department of Justice (DOJ) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) mishandled that Phoenix, AZ-based gun trafficking investigation. On June 28, 2012, the House passed a resolution (H.Res. 711) and cited Attorney General Eric Holder with contempt for his failure to produce additional, subpoenaed documents related to that operation to the Committee on Oversight and Government Reform. The DOJ Office of the Inspector General issued findings that high-ranking officials within ATF, the Arizona U.S. Attorney's Office, and the DOJ Criminal Division were responsible for misguided strategies and tactics, errors in judgment, and management failures related to this operation. On May 18, 2012, the House passed the FY2013 Defense Authorization Act (H.R. 4310), which would amend a limitation on the Secretary of Defense's authority to regulate firearms privately held by members of the Armed Forces off-base. On May 10, 2012, the House passed a Commerce-Justice-State appropriations bill (H.R. 5326) that would fund ATF for FY2013, and on April 19, 2012, the Senate Committee on Appropriations reported a similar bill (S. 2323). On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 (H.R. 4089), a bill that would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting. The Senate could consider a related bill (S. 3525). Related language was included in a House-reported Interior Appropriations bill (H.R. 6091). On November 16, 2011, the House passed a bill (H.R. 822) that would establish a greater degree of reciprocity between states that issue concealed carry handgun permits. On October 11, 2011, the House passed a Veterans' Benefits Act (H.R. 2349) that would prohibit the Department of Veterans Affairs from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination is made by a judicial authority. This report also includes discussion of other salient and recurring gun control issues that have generated past or current congressional interest. Those issues include (1) screening firearms background check applicants against terrorist watch lists, (2) combating gun trafficking and straw purchases, (3) reforming the regulation of federally licensed gun dealers, (4) requiring background checks for private firearms transfers at gun shows, (5) more-strictly regulating certain firearms previously defined in statute as "semiautomatic assault weapons," and (6) banning or requiring the registration of certain long-range .50 caliber rifles, which are commonly referred to as "sniper" rifles. To set these and other emerging issues in context, this report provides basic firearms-related statistics, an overview of federal firearms law, and a summary of legislative action in the 111th and 112th Congresses.

longest

The size and composition of federal spending directed toward low-income people is a focus of public policy. Particularly in a budget-conscious environment, policy makers want to know what the federal government spends on programs to help needy populations, including the types of assistance provided and the characteristics of those who benefit. This report attempts to identify and provide information about federal programs that are targeted in some way toward low-income people and communities. An earlier version of the report looked at low-income programs and spending in FY2008 and FY2009; this version extends that analysis through FY2013. Programs included in this report are distinct from social insurance programs such as Social Security, Medicare, or Unemployment Insurance. Those programs are financed largely by contributions from workers and employers and benefits are earned on the basis of an individual's work history. Social insurance plays a major antipoverty role in the United States, but participation is generally meant to be universal (providing insurance to the population at large against becoming poor) and not specifically targeted toward low-income people. In contrast to social insurance, programs examined in this report are funded through general revenues and provide benefits and services to people with limited income either by tying eligibility to a specific measure of income, or by targeting assistance through funding allocation formulas or other need-related mechanisms. Some programs are highly targeted with detailed eligibility rules for individuals or households, while others encourage or prioritize services to low-income people within a broader target population group, such as the elderly. These programs attempt to ameliorate or mitigate the effects of low income by providing cash or noncash benefits to help people meet basic needs, such as food, housing, and health care. They also seek to address root causes of economic disadvantage by providing education, training, and other services to improve people's employability and earnings capacity. Some programs target assistance to communities with high concentrations of low-income people to compensate for their low tax capacities, and to help finance benefits and services for residents. While they share the common feature of an explicit low-income focus, programs discussed in this report are highly diverse in their purpose, design, and target population. They were established at different times, in response to different policy challenges, and not necessarily in coordination with one another. Readers should exercise caution in any attempt to generalize about these programs or draw conclusions from the information presented in this report. No single label accurately describes all programs in the report. Terms such as "social welfare" and "social safety net" are often understood to include social insurance programs, and are thus broader than the programs included here. "Public welfare" and "public assistance" are typically understood as a more narrow set of programs that primarily provide cash or near-cash benefits to low-income people. While such programs are included, programs that provide in-kind benefits and services also are discussed. "Income-tested" or "means-tested" might be used to describe these programs, but some target assistance toward low-income communities and do not apply a specific income or means test to individual participants or beneficiaries. The report examines programs by category, but the categories themselves are diverse. For example, the health category includes primary care for poor children and their families along with nursing home care for the elderly and disabled whose health costs may have depleted other income and assets. Cash aid includes traditional "welfare" in the form of cash assistance to needy families, but also includes pensions for needy veterans and two refundable tax credits for households with earnings, the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). Food assistance includes the Supplemental Nutrition Assistance Program (SNAP), as well as subsidized meals for low-income schoolchildren and home-delivered meals for the elderly. Similarly, no single trait characterizes the people served by these programs. They include elderly and disabled individuals, children and their families, single adults and couples without children, workers and nonworkers, veterans, homeless people, refugees, students, and others. While some popular perceptions of "welfare" assume that beneficiaries are unemployed able-bodied adults of working age, the report demonstrates that people with disabilities actually account for the single largest share of spending under the 10 largest low-income programs. Families with children where an adult is working account for the next largest share of spending, followed by the elderly. Households where no able-bodied adult is working account for a relatively small share of spending under these programs. Readers should also note that most of the programs included in this report are relatively small, and serve a fraction of their potentially eligible target population. The report refers to the collective target population of the programs as persons with "low" or "limited" income, rather than "poor" people. Although some programs limit participation to individuals with income below federal poverty guidelines, income eligibility criteria vary widely and frequently include people with income above the official federal definition of poverty. Key findings of this report are presented in the Summary , above. The body of the report is organized as follows: The report begins with an overview of trends in federal spending for low-income programs over the six-year period from FY2008 through FY2013. It continues with a brief descriptive overview of federal low-income programs by major category (health care, cash aid, food assistance, etc.). Following sections discuss spending trends by category and by budgetary classification ("mandatory" or "discretionary"). The next section looks specifically at spending and trends over the six-year period for the 10 largest programs included in the report, which together accounted for 82% of all low-income spending in FY2013. Key features of the 10 programs are summarized. Still focusing on the 10 largest programs, the next section presents an analysis of spending by the population groups served, including the elderly and disabled, families with children, and childless adults and couples. Nonelderly nondisabled households are further examined by whether they include working adults. A "related reading" section lists additional CRS reports that provide information on federal low-income policy, programs, and spending. The report concludes with several appendixes. Appendix A discusses the methodology used to create the database of low-income programs and spending, and Appendix B explains the methodology used to prepare the analysis of spending by population group. Appendix C provides overview tables of the programs included in the report, and Appendix D is a series of short fact sheets on each program. Federal spending for low-income programs totaled $561 billion in FY2008 and jumped to $708 billion the next year, as the Great Recession of 2007-2009 took hold. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) aimed to stimulate the economy with additional federal funding and was responsible for nearly 60% of the increased spending on low-income programs between FY2008 and FY2009. Caseloads also grew as unemployment rose and incomes declined, making more people eligible for such benefits as SNAP and Medicaid. Federal spending for low-income programs peaked in FY2011 at $764 billion, dropped in FY2012, and edged up again in FY2013. By that year, spending for low-income benefits and services had receded below FY2010 levels, but remained a third higher than comparable spending in FY2008. (See Figure 1 and Table 1 . ) The following sections briefly describe the programs included in each major category of benefits and services, organized by size of spending in FY2013. Tables in Appendix C list and highlight key features of the programs, and brief fact sheets on each program are provided in Appendix D . As noted earlier, these programs are highly diverse and provide a range of benefits and services to a variety of target populations (see " Important Caveats "). Just as health care dominates total federal spending on low-income programs, Medicaid dominates the health category. Medicaid accounted for 83% of health care spending in FY2013 and is the single largest program included in this report (accounting for 39% of total FY2013 low-income spending). Medicaid is intended to help specified categories of people who lack the income and resources to afford necessary medical care. Low-income parents, dependent children, the elderly, and individuals with disabilities have been the primary target populations served by Medicaid, although the Patient Protection and Affordable Care Act of 2010 (ACA, P.L. 111-148 ) expanded Medicaid eligibility to include most nonelderly, nonpregnant individuals with income below a specified level. The program finances the delivery of a wide range of primary and acute medical services as well as long-term supports and services such as nursing home care. The State Children's Health Insurance Program (CHIP) provides health coverage for low-income children who lack health insurance but whose family income exceeds Medicaid eligibility levels. Other large health programs include the low-income subsidy under Medicare Part D, which helps low-income seniors and individuals with disabilities pay for prescription drugs, and medical care for low-income veterans without service-connected disabilities. The latter program pays for an array of primary care, specialized care, and related social and support services provided by the Department of Veterans Affairs (VA). The Indian Health Service also offers a variety of health services to its target population, who are American Indians or Alaska Natives living on reservations or within a specified service delivery area. Consolidated Health Centers offer primary and other health services to low-income populations in medically underserved areas, and the Maternal and Child Health block grant supports preventive and primary health care services for low-income women, infants, and children. The Ryan White HIV/AIDS Program is intended to address the unmet care and treatment needs of individuals living with HIV or AIDS who lack insurance or resources to pay for core medical services, including prescription drugs, and related support services. Additional programs focus on specific health services, such as family planning and early breast and cervical cancer detection, or specific populations, such as refugees. Three programs account for the bulk of cash aid spending, and each ranks among the 10 largest of all programs for low-income people. Supplemental Security Income (SSI), which aims to provide a minimum income for aged, blind, or disabled individuals with very low income and resources, accounted for nearly 40% of cash aid spending in FY2013. The refundable portion of the Earned Income Tax Credit (EITC) accounted for another 38% of cash aid spending, and more than 14% came from the refundable Additional Child Tax Credit (ACTC). The EITC subsidizes the wages of low-income workers, with most benefits going to those with children. The ACTC is a refundable credit for families whose tax liability is too low for them to fully benefit from the regular nonrefundable Child Tax Credit. Cash aid also includes part of Temporary Assistance for Needy Families (TANF), the welfare reform program that replaced Aid to Families with Dependent Children (AFDC) in 1996. As AFDC's successor, TANF is still sometimes viewed as traditional welfare for poor families; however, the majority of TANF expenditures are for activities other than cash aid. TANF aims to increase the flexibility of states in meeting several statutory goals, including assisting needy families so that children can remain in their homes; ending dependence of needy parents through job preparation, work, and marriage; preventing and reducing incidence of out-of-wedlock pregnancies; and encouraging the formation and maintenance of two-parent families. In this report, TANF spending has been allocated among three categories—cash aid, social services, and employment and training—based on states' reporting of their actual expenditures. Finally, cash aid programs include pensions for needy elderly or disabled veterans and their dependents or survivors. The Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) dominates spending for food assistance, accounting for almost three-quarters of obligations in this category and ranking as the second-largest low-income program in FY2013. SNAP attempts to alleviate hunger and malnutrition and to help low-income households purchase food to support a healthy diet. The next largest area of food assistance spending is for programs that subsidize the costs of breakfast and lunch served to low-income schoolchildren; these programs aim to support learning readiness, promote healthy eating, and protect the health and well-being of low-income children. Related programs subsidize the costs of meals and snacks for children in child care and other out-of-school settings (and some low-income elderly and disabled adults in adult care settings) and for children during the summer when they lack access to school-based meal programs. Another program helps elementary schools with high concentrations of low-income students provide fresh fruit and vegetable snacks during the school day. Food assistance also includes the Special Supplemental Food Program for Women, Infants and Children (WIC), which provides supplemental food and nutrition education to low-income pregnant, postpartum, or breastfeeding women and their infants and young children who are at nutritional risk. The program seeks to protect children's health during critical developmental stages, prevent health problems, and improve health status. Food assistance programs also include congregate and home-delivered meals for the elderly to reduce hunger and promote socialization and well-being for older individuals, and emergency food assistance in the form of commodities for individuals defined by their states as needy. The Federal Pell Grant Program is the largest education program for people with limited incomes, accounting for 58% of targeted federal education spending in FY2013 and ranking as the fifth-largest program in this report. Pell Grants are one of several ways the federal government helps subsidize the costs of higher education for needy students. Other programs with similar goals include Federal Supplemental Educational Opportunity Grants and Federal Work-Study. In addition to direct assistance to students, the federal government provides institutional aid to help expand the capacity of colleges and universities that serve high proportions of low-income and minority students. Federal TRIO Programs offer grants to institutions of higher education and other organizations to motivate and support disadvantaged students as they move from high school through college. GEAR-UP serves low-income elementary and secondary school students who are at risk of dropping out, and aims to increase the number of such students who enter and succeed in higher education. College Access Challenge Grants pursue a similar goal, through partnerships between government agencies and philanthropic groups. The second-largest education program included in the report (also one of the 10 largest low-income programs) is Title I-A of the Elementary and Secondary Education Act, which accounted for more than one-fourth of targeted federal education spending in FY2013. Title I-A provides grants to local educational agencies with high concentrations of disadvantaged children and aims to ensure that all children have an opportunity to obtain a high-quality education and reach at least minimum proficiency on challenging academic achievement standards. Separate programs have similar goals for children of migrant workers, Indian children, and students in rural school districts. The Bureau of Indian Education operates programs to meet the educational needs of Indian children living on or near reservations. Other elementary and secondary education programs aim to increase student achievement through improvements in teacher and principal quality and to improve teacher knowledge and student performance in mathematics and science. Literacy is the focus of Adult Basic Education, which helps adults to become literate and obtain the skills necessary for employment and self-sufficiency and to become partners in their own children's educational development. Finally, 21 st Century Community Learning Centers are intended to provide a wide range of remedial education and academic enrichment opportunities during non-school hours for children in high-poverty and low-performing schools. The federal government supports the housing needs of low-income people primarily by subsidizing the cost of rental units in the private market. Section 8 housing vouchers and project-based rental assistance together accounted for nearly two-thirds of all housing and development spending in FY2013. (The voucher component of Section 8 is one of the 10 largest low-income programs.) The overarching goal of Section 8 is to provide low-income people with decent, safe, and sanitary housing. Public Housing, which represented 14% of spending in this category in FY2013, achieves a similar goal by making publicly owned rental units available to low-income tenants at affordable prices. The Public Housing account supports the capital needs and operating costs of publicly owned housing developments, as well as the HOPE VI program and Choice Neighborhoods, which demolish, rehabilitate, and replace distressed public housing units. Additional housing programs are intended to expand the supply of supportive housing for low-income elderly and disabled households, as well as individuals living with AIDS. Homeless Assistance Grants attempt to meet the needs of homeless individuals and families, including individuals with disabilities, for basic shelter, short-term and long-term housing, and related support services. Two block grants—HOME and the Community Development Block Grant (CDBG)—target federal assistance toward communities with high rates of poverty and aging housing stock (among other factors) to help meet the housing needs of low-income homeowners, homebuyers, and renters (HOME) and to expand the community's supply of decent housing and economic development activities (CDBG). An additional block grant provides housing assistance and helps develop private housing finance mechanisms on Indian lands. To address housing needs in rural areas, loans are available to help low-income households purchase, build, or renovate homes, and rental subsidies are available for low-income tenants. Low-interest loans and grants also are available to support new and improved water and waste disposal facilities in low-income rural communities. Finally, the housing and development category includes the Public Works and Economic Development program, which provides grants to distressed communities to help them revitalize, expand, and upgrade their physical infrastructure to attract new industries, expand businesses, diversify their economies, and generate job and investment growth. The social services category is diverse and includes a wide range of activities to support low-income or otherwise vulnerable populations. Of spending categorized as social services in this report, the vast majority—more than 90% in FY2013—is focused directly on children and youth or their families. Services funded by TANF are the largest single activity in this category, accounting for more than a quarter of the social services spending in this report. As noted in the earlier discussion of cash aid, TANF is often thought of as traditional welfare for poor families. However, states have flexibility in spending their TANF grants, and the majority of funds are used for noncash aid, including various social services for families with children. TANF spending also includes obligations under competitive grants for promotion of healthy marriage and responsible fatherhood. Head Start is the second-largest program in this category, accounting for more than 20% of social services spending for low-income populations. Head Start aims to promote school readiness for young children through a full array of educational, health, nutritional, social, and other services to children and their families. The Child Care and Development Fund (CCDF), accounting for 14% of social services spending in FY2013, subsidizes the cost of child care for low-income parents while they work or attend school. Additional programs targeted toward children and families include Child Support Enforcement, which assists custodial parents who are seeking child support from their children's noncustodial parent. Foster Care grants are used by states to provide temporary homes for children who cannot remain safely with their families; Adoption Assistance helps facilitate the adoption of children with special needs as defined by their state; and the Chafee Foster Care Independence Program helps current and former foster children transition to a self-sufficient adulthood. The Maternal, Infant, and Early Childhood Home Visiting Program is intended to promote a range of outcomes, including maternal and newborn health, child protection and prevention of child injuries, school readiness and achievement, reduction in crime or domestic violence, and family economic self-sufficiency. Of social services programs not specifically targeted toward children and families, the Social Services Block Grant (SSBG) is the largest and most flexible. The program supports a continuum of services to promote self-sufficiency, but decisions about target populations and services are left to the states. Other social services programs focus on specific target populations. For example, the Older Americans Act authorizes social services for the elderly and the Bureau of Indian Affairs provides various human services for American Indians. Programs that target services at the community level include the Community Services Block Grant (CSBG), which aims to reduce poverty and empower low-income individuals and families to become self-sufficient, and Emergency Food and Shelter Grants, which provide services for homeless and hungry individuals in high-need communities. Finally, the Legal Services Corporation attempts to ensure equal access to the justice system for people who are otherwise unable to afford legal counsel. Two programs serving disadvantaged youth comprised 43% of the FY2013 employment and training spending included in this report. Specifically, youth activities under the Workforce Investment Act (WIA) provide a variety of services to improve the educational and skill competencies of eligible youth and to develop connections with employers and mentoring opportunities with adults. Job Corps focuses on those disadvantaged youth who can benefit from an intensive residential program to become employable and productive. This category also includes work-related services for needy families with children under TANF, a small employment and training program for recipients of SNAP benefits, and a program that provides employability and related services to help refugees and other humanitarian entrants find jobs quickly. Remaining programs include WIA's adult activities program; Community Service Employment for Older Americans, which helps older individuals (age 55 or older) become self-sufficient through community service jobs and training; and Foster Grandparents, which provides stipends for low-income older individuals to provide services to children with special needs. Two programs make up the energy assistance category. The Low-Income Home Energy Assistance Program (LIHEAP) helps low-income households pay their heating and cooling expenses, and the Weatherization Assistance Program helps increase the energy efficiency of homes occupied by low-income people to reduce energy costs and improve health and safety. Health care is by far the largest category of low-income spending, accounting for nearly half of all expenditures in each of the six years from FY2008 through FY2013. Cash aid has consistently been the second-largest category (20% in FY2013), followed by food assistance (more than 14% in FY2013); however, spending for these two categories combined still falls short of spending for low-income health programs. Education, housing and development, and social services rank next in size, accounting for 7%, 6%, and 5%, respectively, of total low-income spending in FY2013. The last two categories—employment and training and energy assistance—each constituted less than 1% of low-income spending in FY2013. (See Figure 2 and Table 2 .) As noted above, health care dominates low-income spending; thus, total low-income spending tends to follow the same pattern as health care spending. (See Figure 3 .) Like total low-income spending, health expenditures during the FY2008-FY2013 period peaked in FY2011, declined in FY2012, and rose again in FY2013. However, other categories show different patterns. Spending for cash aid and food assistance generally rose over each of the six years (with a dip in the cash aid category in FY2012); peak spending for both of these categories occurred in FY2013. (The food category showed the largest growth over the period, with an 82% increase in spending between FY2008 and FY2013.) On the other hand, education spending peaked in FY2011 and declined in both of the subsequent years. Smaller categories—housing and development, social services, employment and training, and energy assistance—all saw their peak spending in FY2009. By FY2013, spending for these four categories combined was only slightly higher than in FY2008. (See Figure 4 .) Of total low-income spending in FY2013, about 82% was classified in budget terms as "mandatory" (also called "direct" spending) and the remainder as "discretionary." This was a slight shift from FY2008, when 78% of low-income spending was mandatory and 22% was discretionary. In mandatory programs, many of which are entitlements to individuals or units of government, Congress defines eligibility and payment rules in authorizing laws. These rules determine the amount of spending that will occur, so Congress generally must amend the authorizing law in order to control federal spending. The amount of federal spending for discretionary programs, on the other hand, is determined by Congress through the annual appropriations process. Mandatory spending may be structured as open-ended or capped. In an open-ended entitlement program, no predetermined ceiling is imposed on federal expenditures; instead, federal payments are made to all eligible beneficiaries for eligible expenditures as defined in law. (Medicaid is an example of an open-ended entitlement program.) In a capped program, the authorizing law limits the total amount of federal spending that can occur. (TANF is an example of a capped entitlement program.) Of mandatory spending discussed in this report, 90% was through open-ended programs in FY2013. The pattern of mandatory versus discretionary spending differs by major category of benefits and services. The three largest categories—health care, cash aid, and food assistance—are dominated by mandatory spending, while the smaller categories (with the exception of social services) are primarily or exclusively discretionary. In the top three categories, spending occurs largely through open-ended entitlement programs. Social services spending is a mixture; about two-thirds of such spending in FY2013 was classified as mandatory and the rest discretionary. Of mandatory social services spending, most (about three-fourths) was capped and the balance open-ended. This report describes a large number of programs, but it is important to note that just a few account for the vast majority of spending. (See Figure 5 .) The four largest programs accounted for nearly two-thirds (65%) of total low-income spending in FY2013, and the top 10 comprised almost 82%. The dominance of these large programs has grown somewhat since FY2008, when the same top four made up 61% of total low-income spending, and the top 10 accounted for 78%. Spending for Medicaid—the single largest program—went from 37% of the total in FY2008 to 39% in FY2013, and SNAP grew from 7% to 11%. (See Table 3 .) The 10 largest programs in FY2013 are the same as in FY2008, and Medicaid has consistently been number one; however, some of the others have shifted in rank order. Four programs ranked higher in FY2013 than in FY2008: SNAP, the Low-Income Subsidy for prescription drugs under Medicare Part D (LIS-Part D), the ACTC, and Section 8 Housing Choice Vouchers. Three programs declined in relative size: SSI, the refundable portion of the EITC, and TANF. Among the 10 largest programs, seven are entitlements, or mandatory spending programs. Of those seven, all but one are open-ended entitlements to individuals. As noted above, this means their spending levels are determined by the number of people who are eligible and apply for the program, rather than the amount Congress chooses to provide through the appropriations process. One mandatory program—TANF—is a capped entitlement to states (rather than individuals), which means that states are entitled to receive a fixed amount each year that is established in the authorizing law. Table 4 provides an overview of key features of each of these top 10 programs. Many low-income assistance programs target their benefits not only on the basis of financial need but also to certain populations, such as the aged, the disabled, or families with children. Other low-income assistance programs—while not explicitly restricting their benefits to certain groups—provide the bulk of assistance to them. Figure 6 provides estimates of federal spending in FY2011 by population group under the 10 largest low-income assistance programs identified in the previous section. The analysis uses FY2011 because it is the latest year for which data to divide spending among population groups are available for Medicaid. Estimates are provided for federal spending under the top 10 programs for the aged, the disabled, families with children, and childless adults and couples. Childless adults and couples represent nonelderly nondisabled adults in families without children. For families with children and for childless adults and couples, additional estimates are made for those with and without earnings. The figure also provides detail on the type of assistance received by each population group (e.g., health, food, housing, cash). As the figure shows, the population group benefitting from the most federal spending under the top 10 programs is the disabled, who received an estimated $208 billion in federal dollars in FY2011, or 33% of all federal spending under the 10 largest programs. Disabled individuals received $136 billion in health care assistance alone. The population group that received the second-most federal dollars was families with children with earnings, whose federal spending from the top 10 programs totaled $171 billion. This included $77 billion in cash assistance from the two refundable tax credits (EITC and ACTC), which are targeted to low-income families with children and are restricted to such families with earnings. The aged received $96 billion in low-income aid from the top 10 programs, predominantly in the health care category. Families with children but without wage earners received an estimated $61 billion from the top 10, largely from noncash programs. Childless adults received the least aid from the 10 largest programs; those with earnings received an estimated $9.7 billion in benefits and those without earnings an estimated $12.9 billion, mostly in the form of noncash benefits. Pell Grants, one of the 10 largest low-income assistance programs, provided student aid in FY2011 totaling $41.5 billion, and grants to states for services (education and TANF services) totaled $23 billion. (These are shown in Figure 6 and Table 5 as "Education and Services," rather than in a specific population category.) Table 5 shows the estimates of federal spending for each of the top 10 low-income assistance programs by population category in FY2011. For two programs, all spending was categorized for a single population group; the ACTC is only available for families with children with earners, and Pell Grants are only available for college students (shown in the "Education and Services" category). For the other eight programs, spending was allocated among population groups based on available data. (For a discussion of the methodology used to prepare these estimates by population groups, see Appendix B .) The following CRS reports provide related information on federal low-income policy, programs, and spending. Additional CRS reports are cited in footnotes, and each of the program fact sheets in Appendix D includes a reference to a relevant program-specific CRS report. CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009 : includes a brief history of federal low-income policy; a detailed discussion of concepts used to define individual eligibility for benefits and services (e.g., federal poverty guidelines and others); a discussion of mechanisms used to target resources on the basis of need (e.g., formula allocation factors and cost-sharing rules); and a discussion of the types of federal grants (formula, competitive, direct benefits to individuals) used to provide assistance, and related policies such as matching requirements. CRS Report R41823, Low-Income Assistance Programs: Trends in Federal Spending : analyzes spending trends for the 10 largest low-income programs (similar but not identical to the top 10 programs identified in this report) from FY1962-FY2013, with projections through FY2024. CRS Report R43731, Poverty: Major Themes in Past Debates and Current Proposals : provides a short history of key federal policies enacted over the past century to address poverty, presents several overarching themes that have recurred in antipoverty policy debates over time, and highlights selected current proposals in the context of these themes. CRS Report RL33069, Poverty in the United States: 2013 : presents detailed statistics on the incidence of poverty among various demographic groups and by geography, and compares measures of poverty under the official federal poverty guidelines and the "research supplemental poverty measure." CRS Report R41187, Poverty Measurement in the United States: History, Current Practice, and Proposed Changes : provides a history of the current official federal poverty measure, and discussion of alternatives. Appendix A. Methodology Used to Create Low-Income Program Database Selection of Low-Income Programs Programs were selected for inclusion in this report if they (1) have provisions that base an individual's eligibility or priority for service on a measure (or proxy) of low or limited income; (2) target resources in some way (e.g., through allocation formulas, variable matching rates) using a measure (or proxy) of low or limited income; or (3) prioritize services to low-income segments of a larger target population. A few programs without an explicit low-income provision were included because either their target population is disproportionately poor or their purpose clearly indicates a presumption that participants will be low income. Such programs that serve disproportionately low-income people include the Indian Health Service, Homeless Assistance Grants, Indian Education programs, Title I Migrant Education, and Indian Human Services. Programs with purposes that presume a low-income target population include Adult Basic Education and Social Services Block Grants. Federal student loan programs were considered for inclusion because they determine benefit levels through the same need-analysis system that is used for Pell Grants and several smaller postsecondary education programs. However, this system results in students from relatively well-off families receiving assistance, as there is no absolute income ceiling on eligibility. Pell Grants are structured in such a way that the majority of recipients are low-income and the lowest-income students receive the largest benefits. Student loan programs are not as strongly targeted and therefore are not included in the report. On the other hand, deliberations about whether to include the Additional Child Tax Credit (ACTC) reached a different conclusion. The regular Child Tax Credit (CTC) is a nonrefundable credit and phases out at relatively high income levels. The ACTC is a refundable credit that allows families with no or insufficient tax liability to get all or part of the benefit they would otherwise receive from the CTC. Because of the refundable nature and other design features of the ACTC, it serves predominantly lower-income families . For example, for tax year 2012, 90% of returns that claimed the ACTC were filed by families with adjusted gross income (AGI) below $40,000 and 89% of the credit went to such families. Thus, the ACTC is included in the report. Because the report includes only programs with direct spending, it does not include tax provisions, with the exception of direct spending for the refundable portion of the Earned Income Tax Credit (EITC) and the refundable ACTC. Finally, one program—Developmental Disabilities Support and Advocacy Grants—was included in the 2011 version of this report (CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009 ) but dropped in the current version. Only one component of that program had a low-income targeting provision, and that component was below the $100 million threshold for inclusion in this analysis (see below). Categorization of Programs Most programs are easily assigned to broad categories, such as health, cash aid, food assistance, or education. A few, however, have multiple purposes or allowable activities. For some of these programs, spending can be disaggregated into the relevant categories. For example, using state reporting of actual expenditures, it is possible to estimate the amount of TANF obligations attributable to cash aid, social services, and employment and training. Other programs cannot be disaggregated and must be assigned to a single category. For example, Transitional Cash and Medical Services for Refugees was categorized as health care, and Indian Human Services was categorized as social services although it also provides cash and housing assistance. The social services category, in general, is not well-defined and some analysts might assign some programs—and therefore dollars—differently. Head Start, for example, could be considered an education program, since its purpose is to promote school readiness; however, it supports a very broad range of activities (including activities for children ages 0-3 in its Early Head Start component) that can best be characterized collectively as social services. Foster Care and Adoption Assistance both give cash to families or other care providers, but income support is not these programs' purpose or sole use of funding. Foster Care subsidizes maintenance payments and administrative activities (including case planning) on behalf of children who cannot remain safely at home, and Adoption Assistance helps facilitate the adoption of children who would otherwise lack permanent homes. Thus, these programs were categorized as social services and not cash assistance. Likewise, Maternal, Infant, and Early Childhood Home Visiting is included in social services, rather than health care, because of the broad range of its intended purposes. Selection of Spending Measure New obligations incurred in the indicated fiscal year were chosen as the measure of spending for this report, although for many programs readers may be more accustomed to seeing appropriations (budget authority) or outlays. These spending concepts are related. Congress and the President enact budget authority through appropriations measures or other authorizing laws. Budget authority in turn allows federal agencies to incur obligations , through actions such as entering into contracts, employing personnel, and submitting purchase orders. Outlays represent the actual payment of these obligations, usually in the form of electronic transfers or checks issued by the Treasury Department. Obligations are used in this report because they are the most consistent measure available at the necessary level of detail for the majority of programs. The source of obligations data is the U.S. Budget Appendix for the second fiscal year (e.g., FY2015 budget appendix for final FY2013 obligations, FY2014 budget appendix for final FY2012 obligations, etc.). Obligations were either not available or not appropriate for a small number of programs. Because obligations were not available at the necessary program level, appropriations were used for the following: Transitional Cash and Medical Services for Refugees, Breast/Cervical Cancer Early Detection, the Title I Migrant Education Program, Social Services and Targeted Assistance for Refugees, and Foster Grandparents. For veterans' medical care, the Budget Appendix shows obligations for the entire program, not solely the income-tested component. Thus, estimated obligations for Priority Group 5 veterans (needy veterans without service-connected disabilities) were calculated from Department of Veterans Affairs data on obligations for Priority Groups 1-6 and 7-8 and the number of patients receiving care by individual priority group. The Budget Appendix also does not show obligations solely for the low-income subsidy portion of the Medicare Part D prescription drug program. Therefore, the report uses aggregate reimbursements for the low-income subsidy for the calendar year (instead of fiscal year), available from the annual report of the Medicare trustees. As noted above, TANF obligations provided in the Budget Appendix were disaggregated into the categories of cash aid, social services, and employment and training, based on states' reporting to the Department of Health and Human Services of their actual expenditures. The Budget Appendix includes obligations for the Section 502 single-family rural housing loan program in combination with other programs in an aggregate amount for the Rural Housing Insurance Fund Account. Thus, loan subsidy budget authority (also found in the Budget Appendix) was used for the Section 502 program in this version of the report. In the 2011 version, loan subsidy outlays were used, adjusted for re-estimates provided in the Federal Credit Supplement to the U.S. Budget for the relevant years; however, budget authority has now been chosen as a better measure. Finally, the report uses obligations from the Budget Appendix for the ACTC in FY2009-FY2013. However, for FY2008, ACTC obligations shown in the Budget Appendix also include an unspecified amount for a one-time $300 per child tax rebate, authorized by the Economic Stimulus Act of 2008 ( P.L. 110-185 ), which was not targeted on low-income families. That figure, which overstates the amount spent for the ACTC alone, was used in the 2011 version of this report with appropriate caveats. For the current version, however, data from the Internal Revenue Service Statistics of Income for tax year 2007 are used to provide a more accurate picture of the ACTC in FY2008. Spending Threshold Programs are included in this report if they had obligations in any year from FY2008 through FY2013 of at least $100 million. To simplify the analysis without significantly changing the overall picture, smaller programs were excluded, even if they met the low-income criteria. A few programs had spending above the threshold in some years but not in others. Spending totals cited throughout this report include these programs only for the years in which their obligations equaled or exceeded $100 million. In other words, each year's spending total is a snapshot of spending in that year for low-income programs that— in that year —had obligations totaling at least $100 million. (See Table C-1 for all spending amounts for all programs in each year.) Comparison with Predecessor CRS Report Series From 1979 to 2006, the Congressional Research Service (CRS) issued a series of reports, typically every other year, called Cash and Noncash Benefits for Persons with Limited Income . The series was conceived and produced (except for the last edition in 2006) by [author name scrubbed], Specialist in Social Policy, who retired from CRS in 2004. In 2011, CRS published CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009 , as a replacement for the Cash and Noncash series. The current report is an update to the 2011 version. The new report series uses different methodologies to select and categorize programs and measure spending; therefore, it cannot be considered an update of Cash and Noncash for various reasons. For example, the older series did not include certain programs that are now included, such as the low-income subsidy under Medicare Part D, Title I-A of the Elementary and Secondary Education Act, and Community Development Block Grants. The older series also had no minimum spending threshold, so it included smaller programs that are not included here. In addition, the older series included student loans, which are no longer included for reasons explained above. Several programs were also categorized differently in the previous series (e.g., Head Start was categorized as education, Foster Care and Adoption Assistance as cash aid, and Homeless Assistance Grants as social services). The older series used different measures of spending for different programs, while the new series uses obligations wherever possible. The older series also provided estimates of state-local spending, which are not included here. Finally, the older series traced spending back to 1968, which is beyond the scope of the current series. Changes in programs and appropriations accounts over time make it virtually impossible to trace obligations backward with precision. However, an analysis of long-term spending trends for 10 major needs-tested programs, using outlays, is available in CRS Report R41823, Low-Income Assistance Programs: Trends in Federal Spending , by [author name scrubbed]. Appendix B. Methodology Used for Analysis of Spending by Population The allocations of federal spending in FY2011 under the 10 largest low-income programs by population groups (see " Spending for the 10 Largest Programs by Population ") are estimates based on a specific methodology and available data. These estimates also rely upon certain simplifying assumptions and hence, represent an approximate division of spending among the population groups. Note that for most programs, data collected in conjunction with the administration of a program (administrative data) were used as the basis of making the allocations among population groups. However, programs use different definitions of "elderly" and "disabled" to determine eligibility and program requirements, so the population groupings are not consistent among all programs. For example, Medicaid uses age 65 to determine who is elderly, while a person is considered elderly for purposes of the SNAP program at age 60. Medicaid As noted earlier, the analysis uses FY2011 because it is the latest year for which data to divide spending among population groups are available for Medicaid. The allocation of Medicaid spending is based on a combination of administrative data and data from the Census Bureau's March 2011 Current Population Survey (CPS). FY2011 Medicaid administrative data report that, of total Medicaid expenditures in that year, 23% was received by the elderly and 43% by disabled recipients. These percentages were directly used to allocate federal Medicaid spending among those two population categories. However, Medicaid administrative data are not sufficient for allocating spending to the population groups representing nonelderly and nondisabled beneficiaries. (For example, they do not include information on whether a family had earnings.) An analysis of March 2011 CPS data was used to determine the allocation of federal spending among those population groups. The CPS identifies individuals covered by Medicaid, and the Census Bureau provides an estimate of the "market value" of Medicaid for those covered. The CPS also provides background demographic and economic characteristics of the population, including age, disability, whether the individual is in a family with children, and whether the individual was working or not. These background characteristics were used to identify Medicaid beneficiaries in families with children, as well as childless adult recipients (not aged or disabled) and whether any adult (aged 18 or older) in the family was employed in March 2011. Total Medicaid "market values" were computed for each population category, which determined each population category's share of total Medicaid market values for the nonelderly, nondisabled population. These shares were then applied to the 34% of Medicaid spending that remained, after spending was allocated to the elderly and disabled, to determine how much federal Medicaid spending was allocated to the population categories of families with children and childless adults and couples. Supplemental Nutrition Assistance Program The allocation of federal SNAP spending is based on an analysis of the FY2011 SNAP Quality Control Data files, administrative data that include information on the demographic and economic characteristics of SNAP participants and households. The information is for the full fiscal year, but the data are collected monthly and tabulations of them represent a monthly average. SNAP households were placed into six categories that were totally inclusive and mutually exclusive in the following order: households with an aged member, households with a disabled member, households with children and earnings, households with children without earnings, childless adults or couples with earnings, childless adults or couples without earnings. If a household could be classified in multiple categories, it was placed in the first category for which it met criteria for inclusion. For example, if the household had an aged member but also had children, it was placed in the "aged" category. Supplemental Security Income The allocation of federal SSI spending to the elderly and disabled is based on administrative data collected and published by the Social Security Administration. The share of spending for the aged and disabled in this report is from Table 2, SSI Annual Statistical Report, 2013 . Earned Income Tax Credit For the purpose of this report, EITC spending reflects obligations for the refundable portion of the tax credit. The Internal Revenue Service collects and publishes information on the refundable portion of the EITC in its Statistics of Income (SOI) data, derived from information on filed tax forms. The information in this report is based on the division of the refundable portion of the EITC for tax year 2010 (which would be paid in FY2011) between those filers who claimed the credit based on the presence of children versus those who claimed the credit based on having no children. Medicare Part D Low-Income Subsidy The allocation of the Medicare Part D prescription drug Low-Income Subsidy between the elderly and disabled is based on unpublished information obtained by CRS from the Department of Health and Human Services (HHS). They estimated that the elderly account for 55% of the total low-income subsidy, with the disabled accounting for the remaining 45% of the subsidy. Section 8 Housing Choice Vouchers The allocation of Section 8 spending among the population groups is based on an analysis of administrative data collected by the Department of Housing and Urban Development. FY2011 data were not available for Section 8; thus FY2010 data were used for these estimates. As with the SNAP information, households were categorized into population groups in the following order: households with an elderly member; households with a disabled head or child; households with children with earnings; households with children without earnings; households without children (or aged or disabled members) with earnings; and households without children (or aged or disabled members) without earnings. The Section 8 administrative data use an annual accounting period, representing the characteristics of a household over a year rather than in a month. Thus, families with earnings represent those who had any earnings over a year, rather than earnings in a month. Additionally, the disability information available for Section 8 households was more limited than that for SNAP, with the data only permitting identification of households with a disabled head or disabled child. Rent subsidies were tallied for each of these population shares, with federal Section 8 spending allocated based on each population's share of total subsidies. Temporary Assistance for Needy Families This report divides TANF spending among three categories: cash assistance, social services, and employment and training. For the analysis of spending by population group, social services and employment and training expenditures were placed in the "Education/Services" category. TANF cash assistance was allocated among the population groups based on TANF administrative data, which include information on demographic and other characteristics of families receiving TANF cash assistance. The information is for the full fiscal year, but the data are collected monthly and tabulations of them represent a monthly average. Using these data, TANF families were classified into three population groups: Disabled, representing families with a parent receiving SSI (not TANF cash), and a cash supplement paid on behalf of the children in the family from TANF; Families with children with earnings, representing those families with adult TANF recipients who had earnings; Families with children without earnings, representing families with adult TANF recipients who had no earnings and families without adult recipients (other than those with parents receiving SSI). TANF benefit amounts for these three categories were totaled, and federal TANF cash assistance spending was then allocated among the three population categories based on their shares of total cash assistance benefits from the administrative data files. Appendix C. Detailed Program Tables The following three tables provide specific information about programs included in this report. Programs are organized by category and listed within categories according to their Catalog of Federal Domestic Assistance (CFDA) number. (Program fact sheets in Appendix D are presented in the same sequence.) Table C-1 shows obligations (or another measure of spending, as noted) for each program from FY2008 through FY2013. ARRA amounts are included in the totals for each program, and are also shown in separate columns. The table also indicates the federal administering agency for each program. Table C-2 identifies, for each program, the general target population and the concept(s) used to determine individual income eligibility and (if relevant) the concept used to target federal resources broadly based on need. The table indicates the general concept used but not the specific application. For example, the table might indicate that federal poverty guidelines (FPG) are used as a concept in determining income eligibility for a particular program, but it does not indicate the specific percent of FPG that is used. Likewise, the table might show that a program uses formula allocation factors to direct federal resources toward areas with the greatest need, but it does not identify the specific factors or their weighting. Readers are referred to the fact sheets in Appendix D , relevant CRS reports, or the statutes themselves for these details. Table C-3 shows the type of federal assistance provided (typically formula grants, competitive or discretionary grants, or direct benefits) and the immediate recipients of this assistance. As noted in the table, "immediate" recipient refers to the level of government or the organization that directly receives the federal grant or award. Many programs require that funds be further distributed (by formula or other criteria) to other units of government or organizations. For example, federal grants may be awarded by formula to states, but states are then required to subaward these funds to local governments or other entities. This table only shows the "immediate" grantee. The table also indicates whether a program has provisions for participation by U.S. territories or residents or organizations located within the territories. The specific details of these provisions are not provided in the table; readers are referred to statutory language or the federal agency that administers the program for this information. Appendix D. Program Fact Sheets The following fact sheets provide brief information about each program included in this report's analysis. Efforts were made to present the information in a relatively consistent manner; however, the programs are sufficiently different that the fact sheets vary in scope and level of detail. Readers should note that the number of programs included in this report is not necessarily meaningful. While fact sheets are presented for 87 "programs," some could have been characterized as more than one program and others could have been consolidated. For each program, the following information is provided: Catalog of Federal Domestic Assistance (CFDA) number(s); statutory and regulatory citations; the name of the federal administering agency and (where relevant) the specific office within that agency; the program's purpose; the type of benefit or service provided; criteria used to determine individual eligibility; the form and recipient of federal assistance (note that "state" includes the District of Columbia); the allocation formula used if relevant; any matching or related nonfederal spending requirements; the amount of new obligations in FY2013; the budgetary classification of the program's spending; some limited detail on program participation; and citations to relevant CRS reports. Information was derived from statutes, regulations, agency websites, and budget documents. Programs are organized by category, and presented in order of their CFDA number. (Note that some programs have multiple CFDA numbers; they may not necessarily be inclusive of all CFDA numbers associated with a particular program.) Readers should note that participation data are provided to give a sense of scope for each program; however, these data use different time periods and units of measurement and therefore are not consistent from one program to another. They should not be totaled or compared. Only selected information is included in these fact sheets. Programs are generally described as they existed in FY2013, with references to major enacted changes that are effective in subsequent years. Certain programs are no longer funded and are described as they existed in their final year. For complete information about a particular program of interest, readers are referred to the legal citations provided, the federal administering agency, or the identified CRS report(s). The following table provides a list of programs and page numbers, for easier reference to individual program fact sheets. Health Care Medical Care for Veterans without Service-Connected Disability (CFDA #64.009) Authority: Statute: 38 U.S.C. Part 2, Chapter 17. Regulations: 38 C.F.R. Part 17. Federal administering agency: Department of Veterans Affairs, Veterans Health Administration. Purpose of program: To provide primary care, specialized care, and related social and support services to eligible veterans. Benefit/service: Standardized medical benefits package including preventive services, such as immunizations, screening tests, and health education and training classes; primary health care diagnosis and treatment, prescription drugs, comprehensive rehabilitative services, mental health services, including professional counseling, home health care, respite (inpatient), hospice and palliative care; and emergency care. Some veterans also may receive long-term care, including nursing home care, domiciliary care, adult day care, and limited dental care. Individual eligibility criteria: In general, eligibility for VA health care is based on veteran status, service-connected disabilities or exposures, and other factors such as veterans who were former prisoners of war or who are awarded the Purple Heart. Veterans with no service-connected conditions and who are Medicaid-eligible, or who have income below a certain VA means-test threshold and below a median income threshold for the geographic area in which they live are eligible to enroll in the VA health care system. These veterans are classified as Priority Group 5 veterans. Form and recipient of federal assistance: Services are provided directly by the VA in VA facilities or through contracts. Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $12,546 million (estimated obligations on behalf of Priority Group 5 veterans). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 1,409,341 Priority Group 5 veteran patients received care from the VA. CRS report s : CRS Report R43547, Veterans' Medical Care: FY2015 Appropriations , by [author name scrubbed]; and CRS Report R42747, Health Care for Veterans: Answers to Frequently Asked Questions , by [author name scrubbed] and [author name scrubbed]. Family Planning (CFDA #93.217) Authority: Statute: Title X of the Public Health Service Act, established in the Family Planning and Services and Population Research Act of 1970 (P.L. 91-572); 42 U.S.C. 300 to 300a-6. Regulations: 42 C.F.R. Part 59. Federal administering agency: Department of Health and Human Services, Office of the Assistant Secretary for Health, Office of Population Affairs, Office of Family Planning. Purpose of program: To assist individuals to determine freely the number and spacing of their children through the provision of education, counseling, and medical services. Benefit/service: A broad range of family planning methods and services (including natural family planning methods, infertility services, and services for adolescents). Family planning services include clinical family planning and related preventive health services; information, education and counseling related to family planning; and referral services. Services are free for persons whose income does not exceed federal poverty guidelines (unless covered by Medicaid or other health insurers) and are provided on a sliding fee scale basis for those with incomes between 100% and 250% of federal poverty guidelines. Individual eligibility criteria: Priority is given to individuals from low-income families, defined in regulation as individuals whose family income does not exceed 100% of federal poverty guidelines, and individuals whose family income exceeds 100% of federal poverty guidelines but who otherwise are unable to afford family planning services. Form and recipient of federal assistance: Competitive grants to public and nonprofit agencies. Allows participation by agencies in territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Outlying Islands, the Marshall Islands, the Federated States of Micronesia, Republic of Palau, and the U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: None. However, regulations provide that no project may be fully supported by Title X funds. New obligations (FY2013) : $278 million. Budgetary classification: Discretionary. Participation data (most recent available) : In calendar year 2012, a total of 4.764 million users were served by Title X-funded sites. CRS report: CRS Report RL33644, Title X (Public Health Service Act) Family Planning Program , by [author name scrubbed]. Consolidated Health Centers (CFDA #93.224) Authority: Statute: Section 330 of the Public Health Service Act, established by the Health Centers Consolidation Act of 1996 ( P.L. 104-299 ) and most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 42 U.S.C. 254b. Regulations: 42 C.F.R. Subpart 51c and 42 C.F.R. Parts 56.201-56.604. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary Health Care. Purpose of program: To provide health care services to groups that are determined to be medically underserved. Benefit/service: Primary and additional health care services defined in statute, delivered by community health centers, migrant health centers, health centers for the homeless, and health centers for residents of public housing. Individual eligibility criteria: The statute defines "medically underserved" as "the population of an urban or rural area designated by the Secretary as an area with a shortage of personal health services or a population group designated by the Secretary as having a shortage of such services." Regulations provide that, in designating these populations, the Secretary may consider economic factors, such as the percentage of the population with incomes below poverty. Grant funds may be used to pay the full cost of services to individuals and families with income at or below federal poverty guidelines; services are provided on a sliding fee scale basis for those with incomes between 100% and 200% of federal poverty guidelines and no discount is provided for those with incomes above 200% of poverty. Form and recipient of federal assistance: Competitive grants to public and private nonprofit entities. Allocation formula: Not applicable. Matching or related requirements: None. Grantees are expected to collect fees from third-party payors, such as Medicare, Medicaid, and private health insurance; centers may also collect fees from patients with family income above the federal poverty guidelines; and centers may also receive funding from state, local and other federal sources. For grants serving certain populations, federal funds must supplement and not supplant other funds used by the health center to serve the same population. New obligations (FY2013) : $2,882 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, 2.1 million patients were served. CRS reports: CRS Report R43304, Public Health Service Agencies: Overview and Funding , coordinated by [author name scrubbed]; and CRS Report RL32046, Federal Health Centers Program , by Barbara English. State Grants and Demonstrations (includes CFDA #93.536, #93.537, #93.767, #93.784, #93.791) Authority: Statute: grants and demonstrations with FY2013 obligations include Money Follows the Person (MFP) Rebalancing Demonstration, Section 6071 of the Deficit Reduction Act of 2005 ( P.L. 109-171 ) as amended by Section 2403 of the Affordable Care Act ( P.L. 111-148 ); Medicaid Integrity Program (MIP), Section 1936 of the Social Security Act as established by Section 6034 of the Deficit Reduction Act of 2005 ( P.L. 109-171 ); Grants to Improve Outreach and Enrollment, Section 201 of the Children's Health Insurance Program Reauthorization Act (CHIPRA, P.L. 111-3 ) and Section 10203 of the Affordable Care Act ( P.L. 111-48 ); Medicaid Incentives for Prevention of Chronic Disease Demonstration Project, Section 4108 of the Affordable Care Act ( P.L. 111-148 ); Emergency Health Services (EHS) Furnished to Undocumented Aliens, Section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( P.L. 108-73 ); Medicaid Emergency Psychiatric Demonstration, Section 2707 of the Affordable Care Act ( P.L. 111-148 ). Regulations: no program-specific regulations. Federal administering agency: Department of Health and Human Services, Centers for Medicare & Medicaid Services. Purpose of program: MFP: to help states rebalance their long-term services and supports programs to increase use of home and community-based services rather than institutional long-term care services. MIP: to reduce fraud, waste, and abuse in Medicaid. Outreach and Enrollment Grants: to increase enrollment and participation of children who are eligible for Medicaid or the State Children's Health Insurance Program (CHIP) but not enrolled. Prevention of Chronic Disease: to provide incentives for Medicaid beneficiaries to participate in programs to promote healthy lifestyles. EHS: to reimburse states for costs of emergency care provided to unauthorized aliens. Emergency Psychiatric Demonstration: to demonstrate impact of reimbursing institutions for mental disease for services to Medicaid-eligible individuals aged 21-64. Benefit/service: MFP: home and community-based long-term care services, including home health and personal care services. MIP: not applicable. Outreach and Enrollment: not applicable. Prevention of Chronic Disease: comprehensive, evidence-based programs to promote healthy lifestyles. EHS: emergency health services provided by hospitals, physicians, and ambulance suppliers. Emergency Psychiatric Demonstration: services of residential institutions for mental disease. Individual eligibility criteria: MFP: certain Medicaid beneficiaries residing in inpatient facilities who would continue to require the level of care provided by such facilities without provision of home and community-based long-term care services. MIP: not applicable. Outreach and Enrollment: as provided under Medicaid and CHIP. Prevention of Chronic Disease: Medicaid beneficiaries. EHS: unauthorized aliens who would otherwise be eligible for Medicaid, and certain parolees and Mexican citizens. Emergency Psychiatric Demonstration: Medicaid-eligible individuals aged 21-64 who require medical assistance to stabilize a psychiatric emergency medical condition. Form and recipient of federal assistance: MFP: competitive grants to states. MIP: not applicable. Outreach and Enrollment: competitive grants to states, local governments, community-based organizations, and tribal entities. Prevention of Chronic Disease: competitive grants to states. EHS: direct reimbursements to providers. Emergency Psychiatric Demonstration: competitive grants to states. Allocation formula: EHS: payments are made directly to providers from amounts reserved for states; two-thirds of funds are allocated among states based on their relative percentage of total undocumented aliens and the remaining third is allocated to the six states with the largest number of undocumented alien apprehensions. Not applicable for other programs. Matching or related requirements: MFP: an enhanced federal medical assistance percentage (FMAP) applies. Not applicable for other programs. New obligations (FY2013) : $534 million. (MFP: $344 million. MIP: $102 million. Outreach and Enrollment: $34 million. Prevention of Chronic Disease: $23 million. EHS: $16 million. Emergency Psychiatric Demonstration: $14 million.) Budgetary classification: Mandatory. Participation data (most recent available) : MFP: As of December 2013, about 41,000 individuals had been transitioned out of institutional settings. MIP: not applicable. Outreach and Enrollment: no data available. Prevention of Chronic Disease: As of August 31, 2013, there were 7,936 participants in 10 participating states. EHS: As of November 2013, payments had been made to 2,265 hospitals, 49,505 physicians, and 538 ambulance providers. Emergency Psychiatric Demonstration: As of June 30, 2013, there were 2,791 participants. CRS reports: CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline , by [author name scrubbed] et al., and CRS Report R43328, Medicaid Coverage of Long-Term Services and Supports , by [author name scrubbed]. Transitional Cash and Medical Services to Refugees (CFDA #93.566) Authority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1979 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 U.S.C. 1521-1524. Regulations: 45 C.F.R. Parts 400-401. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement. Purpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible. Benefit/service: Cash payments to eligible individuals that are at least equal to the payment rate to a family of the same size under the state's Temporary Assistance for Needy Families (TANF) program; and medical benefits, through payments to doctors, hospitals and pharmacists. Those eligible for Supplemental Security Income (SSI) may receive refugee cash assistance while their SSI applications are pending. Individual eligibility criteria: Adult refugees, asylees, other specified humanitarian cases, and trafficking victims who meet the income and asset tests for TANF or Medicaid but who are not categorically eligible for those programs; and unaccompanied refugee minor children. Form and recipient of federal assistance: Formula grants to states, and discretionary grants to state-alternative programs and voluntary agencies. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico, the Trust Territories of the Pacific, and the U.S. Virgin Islands). Allocation formula: Formula funds are allocated to states based on their estimates of eligible expenditures. Matching or related requirements: No matching requirements for formula grants. Voluntary agencies receiving discretionary grants must provide a $1 match for each 2 federal dollars. New obligations (FY2013) : $401 million (appropriations). Budgetary classification: Discretionary. Participation data (most recent available) : No data available. CRS report: CRS Report RL31269, Refugee Admissions and Resettlement Policy , by [author name scrubbed]. State Children's Health Insurance Program (CHIP) (CFDA #93.767) Authority: Statute: Title XXI of the Social Security Act, established by the Balanced Budget Act of 1997 ( P.L. 105-33 ), reauthorized by the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3 ), and most recently extended through FY2015 by the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended); 42 U.S.C. 1397aa-mm. Regulations: 42 C.F.R. Part 457. Federal administering agency: Department of Health and Human Services, Centers for Medicare & Medicaid Services. Purpose of program: To provide health coverage to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children. Benefit/service: Health care coverage is available through expansion of a state's existing Medicaid program, creation of a separate CHIP program, or a combination of both approaches where the state operates a CHIP Medicaid expansion and one or more separate CHIP programs concurrently. States that use the CHIP Medicaid expansion option must provide the full range of mandatory Medicaid benefits as well as all optional services specified in their state Medicaid plans. Alternatively, states may enroll CHIP Medicaid expansion children in Alternative Benefit Plans, which must include the same "essential health benefits" provided in plans available through the health insurance exchanges established under the ACA. All CHIP Medicaid expansion children are entitled to Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) coverage, which effectively eliminates any state-defined limits on the amount, duration, and scope of any benefit listed in Medicaid statute. CHIP Medicaid expansion programs must follow Medicaid's cost-sharing rules which generally exempt children from program participation fees and service-related cost-sharing. In general, for separate CHIP programs under which the majority of children are enrolled, states may offer one of three benefit options. As one option, states may elect to provide one of the following "benchmark" benefit packages: (1) the standard Blue Cross/Blue Shield preferred provider plan offered under the Federal Employees Health Benefits Program (FEHBP), (2) the health coverage that is offered and generally available to state employees, and (3) the health coverage that is offered by a health maintenance organization (HMO) with the largest commercial (non-Medicaid) enrollment in the state. As a second option, states may elect to offer "benchmark-equivalent" coverage with the same actuarial value as one of the benchmark packages listed above. As a third option, states may elect to offer "Secretary-approved" coverage for which benefits are appropriate for the target population. States with separate CHIP programs may vary cost-sharing requirements by family income, but the total annual aggregate cost-sharing (including premiums, copayments, and similar charges) for a family may not exceed 5% of total income in a year, and certain services such as preventive care are exempt from cost-sharing. Under certain conditions, states may also provide premium assistance for health insurance offered through private insurance arrangements for Medicaid children (including CHIP children) and their parents. States may seek CMS approval to waive many of the basic benefit rules described above to conduct demonstration projects under the Section 1115 authority that test alternative methods of meeting the overall purpose of CHIP. Individual eligibility criteria: Target populations are defined by states within federal parameters. Children must be under age 19, lack health insurance, and not be qualified for regular Medicaid. States may set the upper income limit for targeted children at up to 200% of federal poverty guidelines or 50 percentage points above the applicable pre-CHIP (1997) Medicaid income level. States may seek federal approval to serve higher-income children. States also may cover pregnant women who lack health insurance and meet specified income thresholds. The ACA requires states to maintain CHIP child eligibility standards (as of March 23, 2010) through September 30, 2019, as a condition for receiving payments under Medicaid. Beginning January 1, 2014, in determining CHIP eligibility, states must use modified adjusted gross income (MAGI) income counting rules, which include a standard 5% income disregard. Also beginning January 1, 2014, states are required to transition CHIP children ages 6 through 18 in families with MAGI income less than 133% of federal poverty guidelines to Medicaid. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: The national appropriation amount is set in statute and is the overall annual ceiling on federal funds available for CHIP in a fiscal year. The law calculates allotment amounts for each state for the federal share of their CHIP expenditures, which they will receive unless the national appropriation is inadequate. The allotment formula is based primarily on states' past and/or projected federal CHIP spending (depending on the year) increased by a growth factor. Annual allotments are available for two years, with unspent funds available for redistribution to shortfall states. Matching or related requirements: State expenditures are matched at an "enhanced" federal medical assistance percentage (E-FMAP). The E-FMAP for CHIP lowers the state's share of CHIP expenditures by 30% compared to the regular Medicaid FMAP. The CHIP E-FMAP rate is subject to a ceiling of 85% and a floor of 65%. From FY2016 through FY2019, the ACA increases the E-FMAP rate by 23 percentage points (not to exceed 100%) for most CHIP expenditures. This will increase the statutory range of the E-FMAP rate to 88% through 100%. New obligations (FY2013) : $9,357 million. Budgetary classification: Mandatory (capped entitlement to states). Participation data (most recent available) : During FY2013, the total number of children ever enrolled during the year was 8,130,793; and the total number of adults ever enrolled during the year was 219,473. CRS reports: CRS Report R43627, State Children's Health Insurance Program: An Overview , by [author name scrubbed] and [author name scrubbed]; CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline , by [author name scrubbed] et al.; and CRS Report R40226, P.L. 111-3: The Children's Health Insurance Program Reauthorization Act of 2009 , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. Voluntary Medicare Prescription Drug Benefit—Low-Income Subsidy (CFDA #93.770) Authority: Statute: Part D of Title XVIII of the Social Security Act, established by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ); 42 U.S.C. 1395w-101-152. Regulations: 42 C.F.R. Part 423. Federal administering agency: Department of Health and Human Services, Centers for Medicare & Medicaid Services, and Social Security Administration. Purpose of program: To provide low-income seniors and people with disabilities with comprehensive prescription drug benefits. Benefit/service: Prescription drug coverage with reduced premiums, copayments and other out-of-pocket expenses. Individual eligibility criteria: Individuals with incomes below 150% of federal poverty guidelines and limited resources are eligible for subsidized prescription drug coverage. Those with incomes no higher than 135% of federal poverty guidelines receive the highest level of subsidy. Certain individuals are automatically eligible: those also eligible for Medicaid (i.e., "dual eligibles"); Medicare Savings Program recipients; and Supplemental Security Income (SSI) recipients. Form and recipient of federal assistance: Contracts with participating prescription drug plans; payments are made to plans for the monthly premiums, deductibles and coverage gap expenses of low-income subsidy beneficiaries. Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations (FY2013) : $22,400 million (aggregate reimbursements under Low-Income Subsidy in calendar year 2013). Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : In calendar year 2013, 11.5 million beneficiaries received low-income subsidies. CRS report: CRS Report R40611, Medicare Part D Prescription Drug Benefit , by [author name scrubbed] and [author name scrubbed]. Medicaid (CFDA #93.778) Authority: Statute: Title XIX of the Social Security Act, established by the Social Security Amendments of 1965 (P.L. 89-97); 42 U.S.C. 1396 to 1396w-5. Regulations: 42 C.F.R. Parts 430-456. Federal administering agency: Department of Health and Human Services, Centers for Medicare & Medicaid Services. Purpose of program: To provide medical assistance to families with dependent children and aged, blind or disabled individuals who have insufficient income and resources to afford necessary medical care, and to provide rehabilitation and other services to help such families and individuals achieve independence and self-care. Benefit/service: Federal law provides two primary benefit packages for state Medicaid programs: traditional benefits and alternative benefit plans (ABPs). In addition, states can use waiver authority (for example, under Section 1115 of the Social Security Act) to tailor benefit packages to specified Medicaid enrollee groups. Under the traditional Medicaid benefits package, federal law requires states to cover certain services; other services may be offered at state option. Examples of mandatory services for most eligibility groups include inpatient and outpatient hospital services, services provided by qualified federal health centers and free-standing birth clinics, laboratory and x-ray services, physician services, pregnancy-related services, tobacco cessation services for pregnant women, family planning, non-emergency transportation, nursing facility services for individuals 21 and older, and home health care for those entitled to nursing home care. Examples of optional services provided for most eligibility groups in many states include prescription drugs, physician-directed clinic services, other licensed practitioners (e.g., optometrists, podiatrists, psychologists), inpatient psychiatric care for the elderly and individuals under age 21, nursing facility services for individuals under age 21, physical therapy, and prosthetic devices. As an alternative to traditional benefits, states have the option to provide alternative benefit plans (ABPs) to state-specified groups. ABPs may cover fewer benefits than traditional Medicaid, but must cover at least the 10 "essential health benefits" required of plans in the health insurance exchanges established under the Patient Protection and Affordable Care Act (ACA). Under both traditional benefits and ABPs, most Medicaid children under age 21 are entitled to Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services, which include well-child visits, immunizations, screening services at regular intervals, and medical care that is necessary to correct or ameliorate identified conditions. Beginning January 1, 2014, states that implement the ACA Medicaid expansion must provide ABPs to the newly eligible enrollees (with exceptions for special-needs subgroups). Individual eligibility criteria: Individuals must meet financial (i.e., income and sometimes resource) and nonfinancial (i.e., categorical) requirements. Federal law defines more than 50 potentially eligible population groups; some groups are mandatory (all states must cover them) and others are optional (states may cover them at their discretion). In some cases, income eligibility standards are tied directly to specified percentages of the federal poverty guidelines. For example, Medicaid mandatory coverage groups include pregnant women and children under age 6 with family incomes at or below 133% of poverty; children ages 6-18 with family incomes at or below 133% of poverty; certain parents and children in working families who are entitled to Medicaid for at least 6 months and up to 12 months if their income does not exceed 185% of poverty (i.e., Transitional Medical Assistance (TMA)); individuals who qualify for Medicare Part A whose incomes do not exceed 100% of poverty (Qualified Medicare Beneficiaries (QMBs)); and individuals who are entitled to Medicare Part A with incomes between 100% and 120% of poverty (Specified Low-Income Beneficiaries (SLMs)). Mandatory groups also include families who qualify via rules applicable to the former Aid to Families with Dependent Children (AFDC) program; also, families who lose Medicaid as a result of increased spousal support or earned income may receive TMA for four months. Medicaid optional groups with income eligibility standards tied directly to specified percentages of the federal poverty guidelines include pregnant women and infants with incomes between 133% and 185% of poverty; CHIP-financed targeted low-income children; disabled and elderly (age 65+) individuals with incomes up to 100% of poverty; disabled working individuals whose family income does not exceed 250% of poverty; and individuals who would be QMBs except that their incomes are between 120% and 135% of poverty (i.e., Qualifying Individuals (QI-1s)). Beginning January 1, 2014, the ACA required states to expand Medicaid eligibility to include most nonelderly, nonpregnant individuals with income at or below 133% of the federal poverty guidelines (effectively 138% with the 5% income disregard). However, in the June 28, 2012, decision in National Federation of Independent Business v. Sebelius , the Supreme Court held that the federal government cannot terminate current Medicaid program federal matching funds if a state does not expand its Medicaid program. The U.S. Supreme Court decision effectively made the ACA Medicaid expansion optional. The ACA also required states to transition to a new income counting rule based on modified adjusted gross income (MAGI) for most non-aged eligibility groups beginning January 1, 2014. Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no cap on federal spending. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable FMAP (see below). Matching or related requirements: The federal share of expenditures on Medicaid services is called the federal medical assistance payment (FMAP) and is inversely related to a state's per capita income. The FMAP is higher for states with lower per capita income relative to the national average and vice versa for states with higher per capita income. The FMAP ranges from a statutory low of 50% to a statutory high of 83%. Medicaid administrative expenditures are generally matched at a 50% rate, with certain exceptions. For FY2014 through FY2016, states receive a special 100% FMAP rate for the cost of individuals newly eligible for Medicaid due to the ACA expansion; after 2016, this FMAP phases down to a rate of 90% in 2020 and thereafter. New obligations (FY2013) : $286,920 million. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data (most recent available) : During FY2013, an average of 57.4 million individuals were enrolled in Medicaid each month (including 27.9 million children); and a total of 72.8 million individuals were enrolled during the year (including 35 million children). CRS reports: CRS Report R43357, Medicaid: An Overview , coordinated by [author name scrubbed]; and CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline , by [author name scrubbed] et al. Ryan White HIV/AIDS Program (CFDA #93.917) Authority: Statute: Title XXVI of the Public Health Service Act, established by the Ryan White Comprehensive AIDS Resources Emergency Act of 1990 ( P.L. 101-381 ) and most recently reauthorized by the Ryan White HIV/AIDS Treatment Extension Act of 2009 ( P.L. 111-87 ); 42 U.S.C. 300ff. Regulations: no formal program-specific regulations. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, HIV/AIDS Bureau. Purpose of program: To address the unmet care and treatment needs of persons living with HIV/AIDS who are uninsured or underinsured, and therefore are unable to pay for HIV/AIDS health care and vital health-related supportive services. Benefit/service: Primarily core medical services, such as outpatient and ambulatory health services, drug treatments (including through the AIDS Drug Assistance Program, ADAP), oral health, early intervention services, health insurance premium and cost-sharing assistance for low-income individuals, home health, medical nutrition therapy, hospice, home and community-based services, mental health, substance abuse outpatient care, and medical case management, including treatment adherence services; and some supportive services (i.e., outreach, medical transportation, language services, respite care for caregivers, and referrals for health care and support services). Services are provided without charge for individuals whose incomes are below federal poverty guidelines and are provided on a sliding fee scale basis for those whose incomes exceed federal poverty guidelines. Individual eligibility criteria: Individuals and families with HIV disease. Specific clinical and income eligibility criteria are set by states. Form and recipient of federal assistance: Formula grants to eligible metropolitan areas, "transitional grant" areas, and to states and territories; competitive supplemental grants are awarded based on need. Competitive grants are made to qualified health centers, family planning clinics, hemophilia centers, rural health clinics, Indian Health Service facilities and certain other health facilities and organizations; public and private nonprofit organizations; and dental schools. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Funds are allocated on the basis of number of living HIV and AIDS cases. Matching or related requirements: Any state with more than 1% of the nation's confirmed cases of HIV/AIDS must provide a nonfederal match equal to $1 for every federal $5 in the first year of payments under the grant, $1 for every federal $4 in the second year, $1 for every federal $3 in the third year, and $1 for every federal $2 in the fourth and fifth years of the grant. New obligations (FY2013) : $2,220 million. Budgetary classification: Discretionary. Participation data (most recent available) : 553,999 low-income people with HIV/AIDS were served in 2011 (preliminary estimate). CRS report: CRS Report RL33279, The Ryan White HIV/AIDS Program , by [author name scrubbed]. Breast/Cervical Cancer Early Detection (CFDA #93.919) Authority: Statute: Title XV of the Public Health Service Act, established by the Breast and Cervical Cancer Mortality Prevention Act of 1990 ( P.L. 101-354 ) and most recently reauthorized by the National Breast and Cervical Cancer Early Detection Program Reauthorization Act of 2007 ( P.L. 110-18 ); 42 U.S.C. 300k. Regulations: no formal program-specific regulations. Federal administering agency: Department of Health and Human Services, Centers for Disease Control and Prevention, Division of Cancer Prevention and Control. Purpose of program: To provide low-income, uninsured, and underserved women access to timely breast and cervical cancer screening and diagnostic services. Benefit/service: Clinical breast examinations, mammograms, Pap tests, pelvic examinations, diagnostic testing if results are abnormal, and referrals to treatment. No fees for services may be charged for women with incomes below 100% of federal poverty guidelines. (Under the Breast and Cervical Cancer Prevention and Treatment Act of 2000, P.L. 106-354 , women who are screened through the CDC program and found to have cancer are an optional Medicaid coverage group, which means that states may offer them medical services through their Medicaid programs.) Individual eligibility criteria: States must give priority to low-income women. CDC defines the eligible population as uninsured and underinsured women with income at or below 250% of federal poverty guidelines, aged 21-64 for cervical screening and 40-64 for breast screening. Form and recipient of federal assistance: Competitive grants to states, which enter into grants and contracts with public and private nonprofit entities. Allows participation by territories (Puerto Rico, American Samoa, Northern Mariana Islands, Marshall Islands, Micronesia, Palau) and Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: A nonfederal match, in cash or in-kind, of $1 for every federal $3 is required. Programs must also maintain their previous level of effort before additional resources will be considered toward the matching requirement. New obligations (FY2013) : $197 million (appropriations). Budgetary classification: Discretionary. Participation data (most recent available) : In 2012, a total of 340,038 women were screened for breast cancer and 251,637 women were screened for cervical cancer. Maternal and Child Health Block Grant (CFDA #93.994) Authority: Statute: Title V of the Social Security Act, enacted in 1935 and converted into a block grant by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ); 42 U.S.C. 701 to 709. Regulations: 45 C.F.R. Part 96. Federal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Maternal and Child Health Bureau. Purpose of program: To improve the health of all mothers and children consistent with applicable health status goals and national health objectives established by the Secretary of HHS. Benefit/service: Preventive and primary health care services for women, infants and children, including children with special health care needs. Within broad federal requirements, states determine the actual services provided under the block grant. Services funded by the block grant may include prenatal care, well-child care, dental care, immunization, family planning, and vision and hearing screening services. They may also include inpatient services for children with special health care needs, screening services for lead-based poisoning, and counseling services for parents of sudden infant death syndrome victims. Funds may not be used for inpatient services, other than for children with special health care needs, high-risk pregnant women, and infants (unless approved by the Secretary of HHS). States may not use the block grant funds to provide cash payments to recipients of health services. Individual eligibility criteria: Defined by the states. Federal law emphasizes services to low-income mothers and children, defined as those with income at or below the federal poverty guidelines. Form and recipient of federal assistance: Formula grants to states. Allows participation by specified territories (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, Northern Mariana Islands, Micronesia, Marshall Islands, and Palau). Allocation formula: Funds are allocated among states based on two factors: the amount awarded to each state in 1983 under previous programs that were consolidated into the block grant; and each state's relative share of low-income children. Matching or related requirements: States must provide $3 for every $4 in federal funding received. States must maintain their level of spending from state funds in 1989 on maternal and child health services. New obligations (FY2013) : $605 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, an estimated 43 million children, pregnant women, and reproductive-age women were served. CRS report: CRS Report R42428, The Maternal and Child Health Services Block Grant: Background and Funding , by [author name scrubbed]. Indian Health Service (no CDFA #) Authority: Statute: Snyder Act of 1921 (P.L. 83-568) and the Indian Health Care Improvement Act of 1976 ( P.L. 94-437 ), most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 25 U.S.C. 1601 et seq. Regulations: 42 C.F.R. Part 136. Federal administering agency: Department of Health and Human Services, Indian Health Service. Purpose of program: To elevate the health status of the Indian population to a level at parity with the general U.S. population. Benefit/service: Hospital, medical, and dental care, behavioral health, environmental health and sanitation services as well as outpatient services and the services of mobile clinics and public health nurses, and preventive care, including immunizations and health examinations of special groups, such as school children. Services are provided free of charge. Individual eligibility criteria: Persons of American Indian or Alaskan Native (AI/AN) descent who are members of a federally recognized Indian tribe, live within an Indian Health Service Health Service Delivery Area (HSDA), or are the natural minor children (18 years old or younger) of such an eligible member AI/AN and live within an HSDA. Form and recipient of federal assistance: Services are provided directly by the Indian Health Service in IHS or tribal health facilities or through contracts. Allocation formula: Not applicable. Matching or related requirements: None. The Indian Health Service collects reimbursements from Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and Department of Veterans Affairs for services that it provides to members of its eligible population who also are eligible for those programs. If an eligible AI/AN has private health insurance, IHS is reimbursed for services provided. New obligations (FY2013) : $5,661 million (services and facilities). Budgetary classification: Discretionary. Participation data (most recent available) : In 2013, the IHS service population was estimated at 2.2 million American Indians and Alaskan Natives. CRS report s : CRS Report R43330, The Indian Health Service (IHS): An Overview , by [author name scrubbed]; and CRS Report R41152, Indian Health Care: Impact of the Affordable Care Act (ACA) , by [author name scrubbed]. Cash Aid Pensions for Needy Veterans, their Dependents and Survivors (CFDA #64.104 and #64.105) Authority: Statute: 38 U.S.C. Chapter 15. Regulations: 38 C.F.R. Subpart A of Part 3. Federal administering agency: Department of Veterans Affairs, Veterans Benefits Administration. Purpose of program: To provide assistance to needy veterans, their dependents and survivors. Benefit/service: Cash assistance. Individual eligibility criteria: Veterans, age 65 and older or who are permanently and totally disabled (not due to military service or willful misconduct) regardless of age, who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive. Also, surviving spouses and unmarried dependent children of deceased veterans who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive. Form and recipient of federal assistance: Direct payment to individuals. Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations (FY2013) : $5,195 million. Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : In FY2013, benefits were paid to 308,993 veterans and 206,952 survivors. CRS report: CRS Report RS22804, Veterans' Benefits: Pension Benefit Programs , by [author name scrubbed] and [author name scrubbed]. Temporary Assistance for Needy Families (CFDA #93.558) Authority: Statute: Title IV-A of the Social Security Act, established by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) and most recently reauthorized by the Deficit Reduction Act of 2005 ( P.L. 109-171 ) and extended by the FY2015 appropriations law ( P.L. 113-235 ); 42 U.S.C. 601-619. Regulations: 45 C.F.R. Parts 260-270. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance. Purpose of program: To increase state flexibility in operating programs designed to (a) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (b) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (c) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (d) encourage the formation and maintenance of two-parent families. Benefit/service: Benefits or services reasonably calculated to achieve the four statutory goals above, and certain "grandfathered" activities conducted under predecessor program (Aid to Families with Dependent Children) prior to enactment of P.L. 104-193 . (Roughly two-thirds of total TANF federal and state expenditures in FY2012 and FY2013 were for noncash services, including child care, work activities, child welfare services, and various social services directed toward the statutory goals of family formation and reduced nonmarital pregnancies.) Cash assistance benefit levels are defined by the individual states. Individual eligibility criteria: Families with dependent children as determined eligible under income and asset criteria defined by the states. Form of assistance: Formula grants to states; competitive awards to public and private entities for healthy marriage promotion and responsible fatherhood grants. Allows participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands) and federally recognized Indian tribes and certain Alaskan Native organizations. Allocation formula: The basic TANF block grant is allocated among states according to their peak expenditures for pre-TANF programs during the FY1992-FY1995 period. TANF contingency funds are available to states that meet a test of economic "need" and increase spending from their own funds above what they spent in FY1994 on cash, emergency assistance, and job training in TANF's predecessor programs. Matching or related requirements: None. The basic TANF block grant requires states to maintain spending from their own funds on TANF or TANF-related activities for needy families with children equal to 75% of what was spent from state funds in FY1994 under TANF's predecessor programs. This maintenance-of-effort (MOE) requirement increases to 80% of FY1994 spending for states that fail to meet TANF work participation requirements. For the TANF contingency fund, a higher state spending requirement applies (100% of the historic level). New obligations (FY2013) : $17,332 million, broken down as follows, with estimates based on states' reporting of expenditures: $6,263 million (cash assistance); $9,491 million (social services); and $1,579 million (employment and training). (Includes obligations under the TANF block grant, supplemental grants, territories and tribal grants, contingency funds, healthy marriage promotion and responsible fatherhood grants. Note that in FY2009 and FY2010, states could draw down additional funds from the TANF Emergency Contingency Fund, created by the American Recovery and Reinvestment Act.) Budgetary classification: Mandatory (capped entitlement to states). Participation data (most recent available) : In FY2013, a monthly average of 1.8 million families, composed of 4.1 million recipients (including 3.1 million children), received TANF- or MOE-funded cash assistance. The larger number of individuals or families receiving any TANF- or MOE-funded benefit or service is not known. CRS report: CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An Overview , by [author name scrubbed]. Supplemental Security Income (CFDA #96.006) Authority: Statute: Title XVI of the Social Security Act, established by the Social Security Amendments of 1973 (P.L. 92-603); 42 U.S.C. 1381-1383f. Regulations: 20 C.F.R. Part 416. Federal administering agency: Social Security Administration. Purpose of program: To provide a minimum income for aged, blind or disabled individuals who have very limited income and assets. Benefit/service: Cash assistance. The basic federal SSI benefit is the same for all beneficiaries nationwide (reduced by any countable income). States may supplement the federal benefit. Individual eligibility criteria: Individuals who are aged 65 or older, blind or disabled (adults and children of any age), whose countable income and resources fall within certain specified limits. Form and recipient of federal assistance: Direct payments to individuals. Allows participation by individuals in the Northern Mariana Islands. Allocation formula: Not applicable. Matching or related requirements: Not applicable. However, states may supplement the federal benefit with their own funds. New obligations (FY2013) : $59,756 million. Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : In FY2013, a total of 8,381,134 beneficiaries received benefits, of which 219,800 received state supplements only. CRS reports: CRS Report 94-486, Supplemental Security Income (SSI) , by [author name scrubbed]; and CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) , by [author name scrubbed]. Additional Child Tax Credit (no CFDA #) Authority: Statute: 26 U.S.C. 24, established by the Taxpayer Relief Act of 1997 ( P.L. 105-34 ). Regulations: no formal program-specific regulations. Federal administering agency: Internal Revenue Service. Purpose of program: To assist eligible parents with dependent children whose tax liability is not sufficient to receive the full benefit of the regular nonrefundable Child Tax Credit. Benefit/service: Refundable tax credit. Individual eligibility criteria: Families with qualifying children (i.e., under age 17) who have earned income above a specified threshold, and whose tax liability is not sufficient for them to receive the full benefit of the regular nonrefundable Child Tax Credit. Form and recipient of federal assistance: The credit is provided in a refund check. Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $21,608 million. Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : For tax year 2012, 19.8 million returns claimed the Additional Child Tax Credit. CRS report: CRS Report R41873, The Child Tax Credit: Current Law and Legislative History , by [author name scrubbed]. Earned Income Tax Credit (refundable portion) (no CFDA #) Authority: Statute: 26 U.S.C. 32, established by the Tax Reduction Act of 1975 ( P.L. 94-12 ). Regulations: 26 C.F.R. 1.32. Federal administering agency: Internal Revenue Service, Earned Income Tax Credit Office. Purpose of program: To offset the burden of taxes, including Social Security taxes, and provide an incentive to work. Benefit/service: Tax credit to reduce the amount of income taxes owed; an eligible worker may receive the credit regardless of whether taxes are owed (i.e., the credit is refundable). Individual eligibility criteria: Families with qualifying children (i.e., under age 19 or 24 if a full-time student, or permanently or totally disabled) and childless adults (aged 25-64) who have earned income below specified levels. Form and recipient of federal assistance: The refundable portion of the credit can be provided in a refund check, or (prior to 2011) for eligible families with children, as an adjustment to income throughout the year. (This advance payment option was repealed for tax years beginning after Dec. 31, 2010, by P.L. 111-246 .) Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $57,513 million. Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : For tax year 2012, 24.3 million returns claimed the refundable portion of the EITC. CRS report: CRS Report R43805, The Earned Income Tax Credit (EITC): An Overview , by [author name scrubbed] and [author name scrubbed]. Food Assistance Supplemental Nutrition Assistance Program (formerly the Food Stamp Program) (CFDA #10.551) Authority: Statute: Food and Nutrition Act of 2008 ( P.L. 110-246 ), originally enacted by the Food Stamp Act of 1964 (P.L. 88-525), most recently reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 2011-2036. Regulations: 7 C.F.R. Part 271-283. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To alleviate hunger and malnutrition and permit low-income households to obtain a more nutritious diet by increasing their food purchasing power. Benefit/service: Benefits redeemable for food, typically provided through electronic benefit transfer. Allotments are determined on the basis of a low-cost model diet plan (called the Thrifty Food Plan). An individual household's allotment is equal to the inflation-indexed maximum allotment for that household's size, reduced by 30% of the household's net monthly income (gross income, less allowances for non-food living expenses). Individual eligibility criteria: Eligible households must (1) have gross monthly income no higher than 130% of federal poverty guidelines and limited liquid assets (special, higher standards apply to households with elderly/disabled members) or (2) be categorically (automatically) eligible because they receive benefits/services financed by Temporary Assistance for Needy Families (TANF) programs or the Supplemental Security Income (SSI) program. Some individuals are categorically ineligible: most noncitizens, able-bodied adults without dependents (ABAWDs) after three months (unless they are working or in a work/training program), strikers, and post-secondary students without dependents who are not working or in a work/training program. Form and recipient of federal assistance: Direct benefits to individuals; grants to states for assistance with administrative costs and operating expenses for employment/training programs for recipients. Allows participation by territories (Guam and the U.S. Virgin Islands). Separate programs operate in Puerto Rico (described later in this report), American Samoa, the Northern Mariana Islands and on Indian reservations (also described later in this report). Allocation formula: Not applicable. Matching or related requirements: None for expenditures on benefits; 50% for state administrative and the majority of employment/training expenditures. New obligations (FY2013) : $79,733 million, includes $5,933 million under the American Recovery and Reinvestment Act. Obligations are broken down as follows: $79,365 million (food assistance, including benefits, state administration, and other program costs), and $368 million (employment and training). Budgetary classification: Mandatory (entitlement to individuals for benefits and to states for administrative costs). Participation data (most recent available) : In FY2013, average monthly participation was 47,636,090 persons. CRS report s : CRS Report R42505, Supplemental Nutrition Assistance Program (SNAP): A Primer on Eligibility and Benefits , by [author name scrubbed]; and CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed] School Breakfast Program (Free and Reduced-Price Components) (CFDA #10.553) Authority: Statute: Section 4 of the Child Nutrition Act of 1966 (P.L. 89-642), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 U.S.C. 1773. Regulations: 7 C.F.R. Part 220. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To promote learning readiness and healthy eating behaviors through provision of nutritious breakfasts. Benefit/service: Breakfasts that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions. Individual eligibility criteria: Children are eligible to receive free school breakfasts if their family income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services, or if they are in foster care, migrant, runaway, or homeless. Children are eligible to receive reduced-price school breakfasts if their family income is between 130% and 185% of federal poverty guidelines. Schools with 40% or more of students identified as categorically eligible for free meals may serve free meals to all students at the school. Form and recipient of federal assistance: Cash is allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school breakfasts. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools and institutions also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands); American Samoa and the Northern Marianas receive a block grant in lieu of participation in child nutrition programs. Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of breakfast served (free, reduced-price, full-price). Matching or related requirements: None, although children's meal payments help finance the cost of the program. New obligations (FY2013) : $3,514 million (free and reduced-price components only). Budgetary classification: Mandatory (open-ended entitlement to participating schools and institutions). Participation data (most recent available) : In FY2013, average daily participation in the free and reduced-price components was 11.2 million children. CRS report: CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer , by [author name scrubbed]. National School Lunch Program (Free and Reduced-Price Components) (CFDA #10.555) Authority: Statute: Richard B. Russell National School Lunch Act (P.L. 79-396), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 U.S.C. 1751-1769i. Regulations: 7 C.F.R. Parts 210 and 245. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To safeguard the health and well-being of the nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food. Benefit/service: Lunches that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions. Individual eligibility criteria: Children are eligible to receive free school lunches if their household income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services, or if they are in foster care, migrant, runaway, or homeless. Children are eligible to receive reduced-price school lunches if their household income is between 130% and 185% of federal poverty guidelines. Schools with 40% or more of students identified as categorically eligible for free meals may serve free meals to all students at the school. Form and recipient of federal assistance: Cash and commodity food assistance are allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school lunches. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands); American Samoa and the Northern Marianas receive a block grant in lieu of participation in child nutrition programs. Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of lunch served (free, reduced-price, full-price). Matching or related requirements: None, although children's meal payments help finance the cost of the program. States must maintain the level of support they offered in 1980. New obligations (FY2013) : $10,549 million (free and reduced-price components only). Budgetary classification: Mandatory (open-ended entitlement to participating schools and institutions). Participation data (most recent available) : In FY2013, average daily participation in the free and reduced-price components was 21.5 million children. CRS report: CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer , by [author name scrubbed]. Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (CFDA #10.557) Authority: Statute: Section 17 of the Child Nutrition Act of 1966, established by the National School Lunch Amendments (P.L. 92-433) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 U.S.C. 1786. Regulations: 7 C.F.R. Part 246. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To provide supplemental food and nutrition education to eligible women and children to serve as an adjunct to good health care during critical times of development, to prevent the occurrence of health problems, including drug abuse, and improve the health status of beneficiaries. Benefit/service: Food assistance (in the form of vouchers for the purchase of specifically prescribed food packages), nutrition risk screening, and related services (e.g., nutrition education and breastfeeding support, medical care referral). Individual eligibility criteria: Eligible individuals are pregnant, postpartum or breastfeeding women, infants (to age 1) or children (to age 5) who are at nutritional risk (as defined by the Secretary), and who have family income no greater than 185% of federal poverty guidelines or who receive or are eligible for benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes and tribal organizations. Allocation formula: State allocations are based on a formula established through regulations that reflects food and caseload costs, inflation, and "need" as evidenced by poverty indices. Matching or related requirements: None. States are required to operate a cost containment system for infant formula, which results in manufacturers' rebates that reduce the cost of WIC food packages. New obligations (FY2013) : $6,945 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 8.7 million participants were served. CRS report: CRS Report R42353, Domestic Food Assistance: Summary of Programs , by [author name scrubbed] and [author name scrubbed]. Child and Adult Care Food Program (Lower-Income Components) (CFDA #10.558) Authority: Statute: Section 17 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 U.S.C. 1766. Regulations: 7 C.F.R. Part 226. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To enable nonresidential day care institutions to integrate a nutritious food service with organized care services for enrolled children or adults. Benefit/service: Breakfasts, lunches, suppers and snacks that meet minimum federal nutrition standards. Individual eligibility criteria: Eligible children are age 12 or under, migrant children age 15 or under, disabled children of any age; also eligible are chronically impaired and elderly adults. In centers, individuals are eligible to receive free meals/snacks if their household income is below 130% of federal poverty guidelines, or reduced-price meals/snacks if their household income is between 130% and 185% of federal poverty guidelines. Children whose families receive benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Food Distribution Program on Indian Reservations (FDPIR), or Temporary Assistance for Needy Families (TANF) program are automatically eligible for free meals/snacks. Children who are income-eligible for Head Start or Even Start, or who are residents of emergency shelters, also are automatically eligible for free meals/snacks. Adults who receive SNAP, FDPIR, Supplemental Security Income (SSI) or Medicaid benefits are automatically eligible for free meals/snacks. Form and recipient of federal assistance: Cash and commodity support are allocated to state agencies, which distribute benefits to eligible public or private nonprofit centers and sponsoring organizations to subsidize the costs of meals and snacks. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating institutions also receive a small subsidy for meals served at full price to non-needy children and adults. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, Trust Territories of the Pacific, and the U.S. Virgin Islands); American Samoa and the Northern Marianas receive a block grant in lieu of participation in child nutrition programs. Allocation formula: Centers are reimbursed for meals based on the eligibility of participating children and adults for free, reduced-price, or full-price meals/snacks. Reimbursements to day care homes differ depending on whether they are "Tier 1" homes (located in low-income areas or operated by low-income providers) or "Tier 2" homes (not located in low-income areas or operated by low-income providers). Matching or related requirements: None. New obligations (FY2013) : $2,799 million (lower-income components only). Budgetary classification: Mandatory (open-ended entitlement to participating centers and sponsoring organizations). Participation data (most recent available) : In FY2013, average daily attendance was 3.6 million persons; approximately 82% of meals served to these participants were served either free or at reduced price. CRS report: CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer , by [author name scrubbed]. Summer Food Service Program (CFDA #10.559) Authority: Statute: Section 13 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 U.S.C. 1761. Regulations: 7 C.F.R. Part 225. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To help children in low-income areas get necessary nutrition during the summer months when they are out of school. Benefit/service: Meals and snacks. Individual eligibility criteria: Children age 18 or younger and certain individuals with disabilities over the age of 18, who live in low-income areas where at least half the children are from families with incomes below 185% of federal poverty guidelines (open sites), or who are enrolled in an activity program where half the children are from families with incomes below 185% of federal poverty guidelines (enrolled sites), and children from families with incomes below 185% of federal poverty guidelines at participating camps. Automatically eligible are homeless or runaway children and children in Head Start, Early Head Start, Even Start, or state-funded pre-kindergarten programs that have received authorized waivers. Form and recipient of federal assistance: Cash and commodity support are allocated to state educational agencies, which distribute benefits to approved local public or private nonprofit sponsors to subsidize the costs of meals. Meals that are served free receive a higher subsidy than meals served at reduced price. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands); American Samoa and the Northern Marianas receive a block grant in lieu of participation in child nutrition programs. Allocation formula: Inflation-adjusted per-meal reimbursement rates are specified for the type of meal served (free or reduced-price). Matching or related requirements: None. New obligations (FY2013) : $437 million. Budgetary classification: Mandatory (open-ended entitlement to approved sponsors). Participation data (most recent available) : In FY2013, a daily average of 2.4 million children participated. CRS report: CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer , by [author name scrubbed]. Commodity Supplemental Food Program (CFDA #10.565) Authority: Statute: Sections 4(a) and 5 of the Agriculture and Consumer Protection Act of 1973 ( P.L. 93-86 ), most recently reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 612c note. Regulations: 7 C.F.R. Part 247 and 250. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To meet the nutritional needs of low-income elderly persons and pregnant, postpartum, and breastfeeding women, infants, children. Benefit/service: Food packages and nutrition education. Individual eligibility criteria: Eligible elderly participants (60 years or older) must have incomes below 130% of federal poverty guidelines; women, infants (under one year of age) and children (under six years old) may have incomes up to 185% of federal poverty guidelines. Regardless of income, individuals may participate if they are eligible for the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid. Individuals who participate in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) may not also participate in this program. ( P.L. 113-79 reauthorized the program as seniors-only; women, infants and children may continue to participate only if they had been participating prior to implementation of this change.) Form and recipient of assistance: Formula grants and commodity support to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Funding and commodities are allocated among states according to the caseload, or number of slots, allotted to each project, which is based on previous participation levels. Subject to available appropriations, states may request additional caseload slots. Matching or related requirements: None. New obligations (FY2013) : $187 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, a monthly average of 580,000 persons participated. CRS report s : CRS Report R42353, Domestic Food Assistance: Summary of Programs , by [author name scrubbed] and [author name scrubbed]; and CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed]. Nutrition Assistance for Puerto Rico (CFDA #10.566) Authority: Statute: Food Stamp Act of 1977 ( P.L. 95-113 ), most recently reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 2028. Regulations: 7 C.F.R. Part 285. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To improve diets of needy persons living in Puerto Rico. Benefit/service: Nutrition assistance benefits. Benefits are provided through electronic benefit transfers, and at least 75% must be used for food purchases. Individual eligibility criteria: "Needy" is defined by Puerto Rico. Form and recipient of federal assistance: Block grant to Puerto Rico. Allocation formula: An annually indexed amount is specified in law. Matching or related requirements: No match required for costs of benefits; 50% match required for administrative costs. New obligations (FY2013) : $2,001 million (includes $128 million under the American Recovery and Reinvestment Act). Budgetary classification: Mandatory (capped entitlement to Puerto Rico). Participation data (most recent available) : In FY2013, a monthly average of 1.36 million individuals participated. CRS report: CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed]. Food Distribution Program on Indian Reservations (CFDA #10.567) Authority: Statute: Section 4(b) of the Food and Nutrition Act of 2008 ( P.L. 110-246 ), originally enacted by the Food Stamp Act of 1977 ( P.L. 95-113 ), most recently reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 2013(b). Regulations: 7 C.F.R. Parts 250, 253, and 254. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To distribute food commodities to households living on or near Indian reservations, in lieu of the Supplemental Nutrition Assistance Program (SNAP). Benefit/service: Provides an alternative to SNAP for participating Indian reservations by delivering a household food package, which includes specific goods, in lieu of SNAP's electronic benefit transfer. Individual eligibility criteria: Low-income American Indian and non-Indian households that reside on a reservation, and households living in approved areas near a reservation or in Oklahoma that contain at least one member of a federally recognized tribe, may be eligible. Income eligibility rules are similar to the Supplemental Nutrition Assistance Program (SNAP); recipients of certain forms of assistance (e.g., Temporary Assistance for Needy Families, Supplemental Security Income, general assistance) are automatically eligible. Households may not participate in both this program and SNAP simultaneously. Form and recipient of federal assistance: Commodity food assistance and funding for administrative costs to states and Indian tribal organizations. Allocation formula: Administrative funding is allocated among federal regional offices on the basis of each office's share of total national participants and state agencies participating in the program; administering agencies submit applications with a proposed budget. Matching or related requirements: No match for commodity foods; 25% match required for administrative funds (which the Secretary may reduce subject to a compelling justification). New obligations (FY2013) : $100 million. Budgetary classification: Mandatory. Participation data (most recent available) : Average monthly participation in FY2013 was 75,608 individuals. CRS report: CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed]. The Emergency Food Assistance Program (TEFAP) (CFDA #10.568 and #10.569) Authority: Statute: The Emergency Food Assistance Act of 1983 ( P.L. 98-8 ), most recently reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 7501 et seq. Regulations: 7 C.F.R. 251. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To supplement the diets of low-income Americans, including elderly people, by providing them with emergency food and nutrition assistance at no cost. Benefit/service: Food commodities that are distributed to local feeding programs and the administrative costs necessary to store and transport the commodities. Individual eligibility criteria: Eligible individuals must be needy as defined by the state. State criteria must ensure that only households in need of food assistance because of inadequate income receive assistance under the program. At state discretion, income-based criteria may be met through participation in other income-tested health or welfare programs. Form and recipient of federal assistance: Formula grants and commodities to states, which distribute funds and commodities among eligible local feeding organizations. Allows participation by Indian tribal organizations. Allocation formula: Commodities and funding are allocated among states according to a poverty-unemployment formula; 60% is allocated on the basis of a state's share of all persons with income below the poverty level, and 40% is based on a state's share of all unemployed persons. Matching or related requirements: Funds retained by states for administrative costs must be matched with an equal cash or in-kind contribution. States may not reduce their level of spending of their own funds on commodities or services to organizations receiving TEFAP funds in the later of FY1988 or the year the state began administering the TEFAP program. New obligations (FY2013) : $312 million (commodities and administrative costs). Budgetary classification: Mandatory (capped entitlement to states) and discretionary (administrative costs). Participation data (most recent available) : No data available. CRS report s : CRS Report R42353, Domestic Food Assistance: Summary of Programs , by [author name scrubbed] and [author name scrubbed]; and CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed]. Fresh Fruit and Vegetable Program (CFDA #10.582) Authority: Statute: Section 19 of the Richard B. Russell National School Lunch Act; permanently authorized by Section 4304 of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ); 42 U.S.C. 1769a). Regulations: none. Federal administering agency: Department of Agriculture, Food and Nutrition Service. Purpose of program: To make free fruits and vegetable snacks available in low-income elementary schools. Benefit/service: Reimbursement to participating elementary schools for the costs of purchasing fresh fruit and vegetable snacks to be provided during the school day, separately from regular meal service. Individual eligibility criteria: None. Program operates in elementary schools selected by the states, in which 50% or more of the students are eligible for free or reduced-price meals. Priority is placed on schools where the highest proportions of children are eligible for free and reduced-price meals. Form and recipient of federal assistance: Grants to states. Allows participation by territories (Guam, Puerto Rico, and U.S. Virgin Islands). Allocation formula: Each state receives a grant equal to 1% of funds available for the program; remaining funds are allocated among states that participate in the National School Lunch Program on the basis of relative population. The Secretary must ensure that 2008 funding levels are maintained for states that participated in the pilot program at that time. Matching or related requirements: None. New obligations (FY2013) : $165 million. Budgetary classification: Mandatory. Participation data (most recent available) : No data available. CRS report: CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer , by [author name scrubbed]; and CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) , by [author name scrubbed]. Nutrition Program for the Elderly (CFDA #93.045) Authority: Statute: Title III of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 U.S.C. 3030d-21 - g-22. Regulations: 45 C.F.R. Part 1321. Federal administering agency: Department of Health and Human Services, Administration for Community Living, Administration on Aging. Purpose of program: To reduce hunger and food insecurity, promote socialization, and promote the health and well-being of older individuals and delay adverse health conditions through access to nutrition and other disease prevention and health promotion services. Benefit/service: Meals served in congregate settings, home-delivered meals, and related nutrition services (nutrition screening, education and assessment and counseling). Individual eligibility criteria: Individuals age 60 or older and their spouses. Individuals with disabilities younger than 60 who live in housing facilities occupied primarily by the elderly and where congregate meals are served also may receive congregate meals. To be eligible for home-delivered meals, individuals must be homebound or otherwise isolated. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority individuals, those with limited English proficiency, and those living in rural areas. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). A separate nutrition program for Native Americans is authorized under Title VI of the Older Americans Act. Allocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 60 and over). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority individuals. Matching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for nutrition services. New obligations (FY2013) : $765 million (congregate meals, home-delivered meals, and nutrition services incentive program). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, 1,626,532 clients received congregate meals; 851,204 received home-delivered meals; and 29,845 received nutrition counseling. C RS report: CRS Report RS21202, Older Americans Act: Title III Nutrition Services Program , by [author name scrubbed]. Education Indian Education (CFDA #15.026, #15.027, #15.028, #15.042, #15.043, #15.044, #15.046, #15.047, #15.058, #15.059, #15.060, #15.114, #15.130, #15.149, #15.151) Authority: Statute: Snyder Act of 1921 (P.L. 67-85), Johnson-O'Malley Act of 1934 (P.L. 73-167), Indian Adult Vocational Training Act of 1956 (P.L. 84-959), Navajo Community College Act (P.L. 92-189), Indian Self-Determination and Education Assistance Act of 1978 ( P.L. 93-638 ), Tribally Controlled College Assistance Act ( P.L. 95-471 ), Education Amendments of 1978 ( P.L. 95-561 ), Tribally Controlled Schools Act of 1988 ( P.L. 100-297 ), and Tribal Self-Governance Act of 1994 ( P.L. 103-413 ); 25 U.S.C. 13, 309 et seq., 450 et seq., 640a, Chapters 7, 20, 22, 27, 28, and 35. Regulations: 25 C.F.R. Part 30-47, 273, 900-1001. Federal administering agency: Department of the Interior, Bureau of Indian Education and Bureau of Indian Affairs. Purpose of program: To provide comprehensive education programs and services for American Indians and Alaska Natives; to provide quality education opportunities from early childhood through life in accordance with the tribes' needs for educational, cultural and economic well-being in keeping with the wide diversity of Indian tribes and Alaska Native villages as distinct cultural and governmental entities. Benefit/service: Preschool, elementary, secondary, postsecondary and adult education at BIE-funded institutions, public schools, and postsecondary institutions; financial assistance for postsecondary education at accredited institutions. Individual eligibility criteria: Eligible children and postsecondary students are members of federally recognized Indian tribes or at least one-fourth degree Indian blood descendants of such members, and (for elementary and secondary students) live on or near a federal Indian reservation; members of federally recognized tribes who are accepted or enrolled at an accredited institution of higher education and are determined to have financial need by the institution's financial aid office. Form and recipient of federal assistance: Services are provided at BIE schools and institutions, public schools, and tribally controlled colleges and universities; postsecondary assistance is provided directly to students. Allocation formula: Depending on the individual program, funds are allocated to BIE-funded elementary and secondary schools based on number of students and their academic needs, commercial transportation costs, and the number of weighted bus miles driven; to tribes and tribal organizations based on the number of eligible preschool-age children and an administrative cost percentage rate; to tribes, states and public school districts based on historic funding in FY1995 and the number of Indian students served; to tribally controlled colleges based on Indian student counts and previous year allocations; and to BIE postsecondary schools based on prior allocations and unmet need. Matching or related requirements: None. New obligations (FY2013) : $766 million. Budgetary classification: Discretionary. Participation data (most recent available) : In school year 2012-2013, an "average daily membership" of 41,516 students was reported at BIE-funded schools. Early childhood programs served 2,177 children and 2,271 parents in 2012-2013. BIE-funded postsecondary schools enrolled 1,355 students in fall 2012. Tribal colleges enrolled 25,422 students in academic year 2012-2013. CRS report: CRS Report RL34205, Federal Indian Elementary-Secondary Education Programs: Background and Issues , by [author name scrubbed]. Adult Basic Education Grants to States (CFDA #84.002) Authority: Statute: Adult Education and Family Literacy Act, most recently authorized by Title II of the Workforce Innovation and Opportunity Act of 2014 ( P.L. 113-128 , goes into effect on July 1, 2015); 20 U.S.C. 9201 et seq. (29 U.S.C. 3271 et seq. under P.L. 113-128 ). Regulations: 34 C.F.R. 461 et seq. Federal administering agency: Department of Education, Office of Vocational and Adult Education, Division of Adult Education and Literacy. Purpose of program: To assist adults to become literate and obtain the knowledge and skills necessary for employment and self-sufficiency, to assist adults who are parents obtain the educational skills necessary to become full partners in the educational development of their children, to assist adults in completing a secondary school education and (under P.L. 113-128 ) transitioning to postsecondary education. (Under P.L. 113-128 , purpose will also include to assist immigrants and other English language learners in improving their English skills and acquiring an understanding of American government.) Benefit/service: Adult education and literacy services, including workplace literacy services; family literacy services; and English literacy programs. (Under P.L. 113-128 , will also include integrated English literacy and civics education and integrated education and training.) Individual eligibility criteria: Qualified adults are individuals age 16 or older, who are not enrolled or required to be enrolled in secondary school under their state law, and who lack sufficient mastery of basic educational skills to function effectively in society, or who lack a secondary school diploma or equivalent and have not achieved an equivalent level of education, or who cannot speak, read or write the English language. Form and recipient of federal assistance: Formula grants to state agencies (typically state educational agencies), which fund local projects on a competitive basis. Eligible providers include local educational agencies, community-based organizations, volunteer literacy organizations, institutions of higher education, public or private nonprofit agencies, libraries, public housing authorities, other nonprofits with the ability to provide literacy services to adults and families, and consortia of eligible entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands, Palau, and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states based on their relative number of qualified adults. Hold-harmless provisions apply. Matching or related requirements: A 25% nonfederal match is required for states. New obligations (FY2013) : $565 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, there were an estimated 1.7 million participants. CRS report: CRS Report R43789, Adult Education and Family Literacy Act: Major Statutory Provisions , by [author name scrubbed]. Federal Supplemental Educational Opportunity Grants (CFDA #84.007) Authority: Statute: Title IV, Part A, Subpart 3 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 U.S.C. 1070b. Regulations: 34 C.F.R. Parts 673 and 676. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To promote access to postsecondary education for low-income undergraduate students. Benefit/service: Grants to help students with the costs of postsecondary education. Individual eligibility criteria: Eligible students are undergraduate students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Financial aid administrators must give priority in awarding FSEOG aid to students who are Pell Grant recipients and to those with exceptional financial need. Form and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions use federal funds and institutional matching funds to award aid to eligible students. Allows participation by citizens of Palau. Allocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a "base guarantee" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's undergraduate students). Matching or related requirements: Participating institutions must provide a match equal to one-third of the federal funds received. New obligations (FY2013) : $698 million. Budgetary classification: Discretionary. Participation data (most recent available) : In academic year 2013, a total of 1,545,031 students received grants. CRS report s : CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed] and [author name scrubbed]; and CRS Report R43351, The Higher Education Act (HEA): A Primer , by [author name scrubbed]. Education for the Disadvantaged—Grants to Local Educational Agencies (CFDA #84.010) Authority: Statute: Title I-A of the Elementary and Secondary Education Act (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 6301-6339, 6571-6578. Regulations: 34 C.F.R. Part 200. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs. Purpose of program: To ensure that all children have a fair, equal and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency on challenging state academic achievement standards and state academic assessments. Benefit/service: Additional academic support and learning opportunities for students in pre-kindergarten through grade 12 to help low-achieving children master challenging curricula and meet state standards in core academic subjects. Individual eligibility criteria: Within local educational agencies (LEAs), funds are allocated to school attendance areas and schools in rank order based on their number of children from low-income families. Schools in which at least 40% of children are poor may operate schoolwide programs that serve all children. Otherwise, schools must focus services on children who are failing or most at risk of failing state academic standards. Form and recipient of federal assistance: Formula grants to LEAs. Allows participation by territories (Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and Northern Mariana Islands). Allocation formula: Portions of available annual funds are allocated under four different formulas—Basic, Concentration, Targeted, and Education Finance Incentive Grants (EFIG)—although funds are then combined and used for the same purposes by recipient LEAs. Although the allocation formulas have several distinctive elements, the primary factors used in all four formulas are an eligible child count and an expenditure factor. The eligible child count includes children aged 5-17: (a) in poor families; (b) in institutions for neglected or delinquent children or in foster homes; and (c) in families receiving Temporary Assistance for Needy Families payments above the poverty level. Each element of the population factor is updated annually. The expenditure factor is the state average per pupil expenditure for public K-12 education (subject to a minimum of 80% and maximum of 120% of the national average, further multiplied by 0.40), and is the same for all LEAs in the same state. Both the Targeted and EFIG formulas include weighting schemes to increase aid to LEAs with the highest numbers or concentrations of eligible children. The EFIG formula also includes an effort factor, based on average per pupil expenditure for public K-12 education compared to personal income per capita for each state compared to the nation as a whole, and an equity factor, based on variations in average per pupil expenditures among the LEAs in each state. Each formula has a hold-harmless provision (no LEA may receive less than 85%-95% of its previous year grant, depending on the LEA's poverty level and whether the LEA continues to meet the formula's eligibility threshold). All four formulas have state minimum grant provisions. Matching or related requirements: Three requirements apply to total LEA grants under all four formulas: (1) maintenance of effort : recipient LEAs must provide, from state and local sources, a level of funding (either aggregate or per pupil) in the preceding year that is at least 90% as high as in the second preceding year; (2) funds must supplement and not supplant state and local funds that would otherwise be available for the education of disadvantaged pupils in participating schools; and (3) comparability: services provided with state and local funds in schools participating in Title I-A must be comparable to those in non-Title I-A schools of the same LEA. New obligations (FY2013) : $13,757 million. Budgetary classification: Discretionary. Participation data (most recent available) : For school year 2011-2012, about 23 million public and private school students were served (of which about 172,000 or 0.7% were served in private schools). The majority of students (21.6 million or 94.2%) were served through schoolwide programs in public schools. CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Title I Migrant Education Program (CFDA #84.011) Authority: Statute: Title I, Part C of the Elementary and Secondary Education Act of 1965 (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 6391-6399. Regulations: 34 C.F.R. 200 Subpart C. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Migrant Education. Purpose of program: To help reduce educational and other disruptions that result from repeated moves by migratory children; to ensure that migratory children are not penalized by education disparities among states; to ensure that migratory children receive appropriate educational and supportive services; to ensure that migratory students have opportunities to meet the same challenging standards as other students; and to prepare migratory children for a successful transition to postsecondary education or employment. Benefit/service: Education and support services, including academic instruction, remedial and compensatory instruction, bilingual and multicultural instruction, vocational instruction, career education services, special guidance, counseling and testing services, health services, preschool services, professional development, and family literacy instruction. Individual eligibility criteria: Eligible children (or their parent or spouse) are migratory agricultural workers, dairy workers, or fishermen and who, in the preceding 36 months, have moved from one school district to another for employment, or have moved for employment from one administrative area to another in a state that constitutes a single school district, or who live in a school district greater than a specified size and migrate at least 20 miles to a temporary residence to engage in a fishing activity. Form and recipient of federal assistance: Formula grants to state educational agencies, consortia of states and other appropriate entities, or public or private nonprofit agencies, which may make subgrants to local operating agencies that may include local educational agencies and other public and nonprofit entities. Allows participation by Puerto Rico. Allocation formula: Federal funds are allocated by formula, based on each state's per pupil expenditure for education and counts of eligible migratory children, ages 3 through 21, residing within the state. Matching or related requirements: None. New obligations (FY2013) : $373 million (appropriations). Budgetary classification: Discretionary. Participation data (most recent available) : During school year 2012-2013, the program served 617,437 students. (Note: This is a duplicated count; students may be counted more than once as they migrate to different schools during a single school year.) CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Higher Education—Institutional Aid and Developing Institutions (CFDA #84.031, #84.120, #84.382) Authority: Statute: Titles III, V and VII of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ); 20 U.S.C. 1051-1068h and 1101-1103g. Regulations: 34 C.F.R. 606, 607, 608, 637. (Programs include Strengthening Institutions, Strengthening Tribally Controlled Colleges and Universities, Strengthening Alaska Native and Native Hawaiian-serving Institutions, Strengthening Historically Black Colleges and Universities, Strengthening Historically Black Graduate Institutions, Masters Degree Programs for Historically Black Colleges and Universities and Predominantly Black Institutions, Strengthening Predominantly Black Institutions, Strengthening Asian American and Native American Pacific Islander-serving Institutions, Strengthening Native American-serving Nontribal Institutions, Minority Science and Engineering Improvement, Developing Hispanic-serving Institutions, Developing Hispanic-serving STEM and Articulation Programs, and Promoting Postbaccalaureate Opportunities for Hispanic Americans.) Federal administering agency: Department of Education, Office of Postsecondary Education, Institutional Development and Undergraduate Education Programs. Purpose of program: To assist institutions of higher education that serve high percentages of low-income and minority students in improving their management, fiscal operations, and educational quality, to ensure access and equal educational opportunity for low-income and minority students. Benefit/service: Possible activities are broad and depend on the specific program. They may include but are not limited to assistance in planning, faculty development, and establishing endowment funds; administrative management; development and improvement of academic programs; equipment and facilities improvement, acquisition, and construction; debt reduction; staff development and tutoring. Individual eligibility criteria: There are no individual eligibility criteria. Institutional eligibility criteria differ for each program; for example, eligible institutions must be institutions of higher education that have a high enrollment of needy students, have low educational and general expenditures per student, be accredited; be a historically black college or university; be listed in statute; be institutions of higher education with high minority enrollment; or be science-oriented societies or organizations. Form and recipient of federal assistance: Competitive and formula grants to institutions of higher education (and nonprofit organizations in the case of the Minority Science and Engineering Program). Certain grants allow participation by institutions in territories (the College of the Marshall Islands, the College of Micronesia, Palau Community College, institutions of higher education in Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa, and Northern Mariana Islands) and by tribal colleges and universities. Allocation formula: Depending on the program, factors may include Indian student enrollment, enrollment of Pell Grant recipients, number of graduates, number of graduates seeking a higher degree, student enrollment, cost of education per student, and percentage of total degrees awarded to African-American students by the applicant institution. Matching or related requirements: Funds must supplement and not supplant any funds that would otherwise be used for the same purposes. Funds used for endowment must be matched, if permitted. New obligations (FY2013) : $780 million. Budgetary classification: Discretionary and mandatory. Participation data (most recent available) : No data available. CRS report: CRS Report R43237, Programs for Minority-Serving Institutions (MSIs) Under the Higher Education Act (HEA) , by [author name scrubbed]; and CRS Report R43351, The Higher Education Act (HEA): A Primer , by [author name scrubbed]. Federal Work-Study (CFDA #84.033) Authority: Statute: Title IV, Part C of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 42 U.S.C. 2751-2756b. Regulations: 34 C.F.R. Parts 673 and 675. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To assist students in financing the costs of postsecondary education. Benefit/service: Federally subsidized part-time employment for students. Individual eligibility criteria: Eligible students are undergraduate, graduate and professional students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Students must be willing to work to receive Federal Work Study (FWS) assistance. Form and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions combine federal funds and matching funds from FWS employers to compensate eligible students employed in part-time work-study jobs. Allows participation by citizens of Palau. Allocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a "base guarantee" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's students). Matching or related requirements: Student compensation is comprised of a federal share and an employer share. In general, the federal share is 75%, but may range between 50% and 100%. The remaining share is provided by the FWS employer. New obligations (FY2013) : $934 million. Budgetary classification: Discretionary. Participation data (most recent available) : In academic year 2013, a total of 655,626 students participated. CRS report: CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed] and [author name scrubbed]. Federal TRIO Programs (CFDA #84.042, #84.044, #84.047, #84.066, #84.103, #84.217) Authority: Statute: Title IV, Part A, Subpart 2, Chapter 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 U.S.C. 1070a-11 – 1070a-18. Regulations: 34 C.F.R. Parts 642-647. (Federal TRIO programs consist of: Student Support Services, Talent Search, Upward Bound, Educational Opportunity Centers, Staff Training, and Ronald E. McNair Postbaccalaureate Achievement.) Federal administering agency: Department of Education, Office of Postsecondary Education, Student Service. Purpose of program: To motivate and support students from disadvantaged backgrounds through outreach and support programs designed to help them move through the academic pipeline from middle school to postbaccalaureate programs. Benefit/service: Depending on the program, academic instruction; personal, academic and career counseling; tutoring; exposure to cultural events and academic programs; information on the availability of financial and academic assistance available for postsecondary education; assistance in filling out college applications and financial aid request forms; summer internships; research opportunities; stipends; grant aid; and staff development. Individual eligibility criteria: Specific eligibility requirements differ among the TRIO programs but generally require that two-thirds of participants be low-income students who are first-generation college students. Low-income is defined as income no greater than 150% of federal poverty guidelines. The programs also target to varying extents students from educationally underrepresented groups, students with disabilities, low-income students, first generation college students, students at high risk of academic failure, and military veterans. Form and recipient of federal assistance: Competitive grants to institutions of higher education, public and private organizations, secondary schools, and consortia of such entities. Allows participation by agencies or institutions in territories (American Samoa, Puerto Rico, the U.S. Virgin Islands, Micronesia, the Marshall Islands, or Palau). Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $796 million. Budgetary classification: Discretionary and mandatory. Participation data (most recent available) : In FY2013, the programs served a total of 758,212 students. CRS report: CRS Report R42724, The TRIO Programs: A Primer , by [author name scrubbed]. Indian Education Grants to Local Educational Agencies (CFDA #84.060) Authority: Statute: Title VII, Part A, Subpart 1 of the Elementary and Secondary Education Act of 1965 (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 7421-7429, 7491-7492. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Indian Education. Purpose of program: To address the unique education and culturally related academic needs of American Indian and Alaska Native students, including preschool children, so that these students can meet the same challenging state performance standards expected of all students. Benefit/service: Supplementary projects to help Indian children sharpen their academic skills, assist students in becoming proficient in the core content areas, and provide students an opportunity to participate in enrichment programs that would otherwise be unavailable. Funds support such activities as after-school programs, early childhood education, tutoring, and dropout prevention. Individual eligibility criteria: There are no individual eligibility criteria. However, local educational agencies that wish to participate must document that they enroll at least 10 Indian children or that Indian children constitute at least 25% of enrollment. (These thresholds do not apply in Alaska, California, Oklahoma, or to local educational agencies located on or in proximity to an Indian reservation.) Indian children include tribal members, 1 st and 2 nd degree descendants of tribal members, Eskimos, Aleuts, Alaska Natives, and members of Indian groups recognized by the Secretary. Form and recipient of federal assistance: Formula grants to local educational agencies, Bureau of Indian Education schools, and (in certain circumstances) Indian tribes that represent at least 50% of the eligible Indian children in the local educational agency. Allocation formula: Grant amounts are based on the number of Indian children served by the agency or tribe, who are documented as eligible, and the greater of the average per pupil expenditure in the state in which the agency or tribe is located or 80% of the average per pupil expenditure in all states. Matching or related requirements: Funds must supplement and not supplant any funds that would otherwise be used for the same purposes. New obligations (FY2013) : $100 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2014, approximately 476,000 children were eligible to be counted as Indian children for purposes of this program. CRS report s : CRS Report RL34205, Federal Indian Elementary-Secondary Education Programs: Background and Issues , by [author name scrubbed]; and CRS Report R41598, Indian Education Formula Grant Program of the Elementary and Secondary Education Act , by [author name scrubbed]. Federal Pell Grants (CFDA #84.063) Authority: Statute: Title IV, Part A, Subpart 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act of 2008 ( P.L. 110-315 ); 20 U.S.C. 1070a. Regulations: 34 C.F.R. 690. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To promote access to postsecondary education for low-income students. Benefit/service: Need-based grants (size of grant is capped by law) to eligible students at participating institutions of higher education. Individual eligibility criteria: Eligible students may be undergraduates or certain other post baccalaureate students in good academic standing, who demonstrate financial need as determined through analysis of income and asset information provided in their Free Application for Federal Student Aid (FAFSA). This need analysis determines the student's expected family contribution (EFC) toward their education and the amount of federal student aid they may be eligible to receive. Form and recipient of federal assistance: Funds are provided to participating institutions of higher education to pay eligible students; participating institutions also receive an administrative allowance per student. Individual students receive assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allows participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations (FY2013) : $31,887 million. Budgetary classification: Discretionary and mandatory (entitlement to individuals). Participation data (most recent available) : During award year (July-June) 2013-2014, an estimated 8,861,000 students were served. CRS report: CRS Report R42446, Federal Pell Grant Program of the Higher Education Act: How the Program Works and Recent Legislative Changes , by [author name scrubbed]. Education for Homeless Children and Youth (CFDA #84.196) Authority: Statute: Title VII, Subtitle B of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and renamed by the McKinney-Vento Homeless Assistance Act ( P.L. 106-400 ), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 42 U.S.C. 11431 et seq. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs. Purpose of program: To ensure that each child of a homeless individual and each homeless youth has equal access to the same free, appropriate public education, including a public preschool education, as other children and youth. Benefit/service: Comprehensive services to facilitate the enrollment, attendance, and success in school for homeless children and youth, including, among other things, tutoring, supplemental instruction and referral services, as well as services to address barriers such as transportation, immunization, and lack of birth records. Individual eligibility criteria: Eligible children and youth are those who lack a regular, fixed and adequate nighttime residence and include those who are sharing the housing of others due to economic hardship or a similar reason; are living in motels, hotels, trailer parks, or camping grounds due to the lack of alternative adequate accommodations; are living in emergency or transitional shelters; are abandoned in hospitals; or are awaiting foster care placement; have a primary nighttime residence that is a public or private place not designed as a regular sleeping arrangement; are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; or are migratory children who also qualify as homeless. Form and recipient of federal assistance: Formula grants to state educational agencies, which make subgrants to local educational agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act. Matching or related requirements: None. New obligations (FY2013) : $62 million. Budgetary classification: Discretionary. Participation data (most recent available) : In school year 2011-2012, a total of 1,168,354 homeless children were enrolled in school. CRS report: CRS Report R42494, Education for Homeless Children and Youth: Program Overview and Legislation , by [author name scrubbed]. 21 st Century Community Learning Centers (CFDA #84.287) Authority: Statute: Title IV, Part B of the Elementary and Secondary Education Act, established by the Improving America's Schools Act of 1994 ( P.L. 103-382 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 7171-7176. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Academic Improvement and Teacher Quality Programs. Purpose of program: To create community learning centers that provide academic enrichment opportunities during non-school hours to help students meet state and local academic achievement standards, particularly for children who attend high-poverty and low-performing schools. Also offers a variety of additional programs intended to reinforce and complement the students' regular academic program and offers families of participating students opportunities for literacy and related educational development. Benefit/service: Remedial education and academic enrichment learning programs, mathematics and science education activities, arts and music education activities, entrepreneurial education programs, tutoring services, after-school activities for limited-English-proficient students that emphasize language skills and academic achievement, recreational activities, telecommunications and technology education programs, expanded library hours, programs to promote parental involvement and family literacy, academic assistance to students who are truant or suspended or expelled, drug and violence prevention programs, counseling and character education programs. Individual eligibility criteria: Funds must be used to serve students who attend schools that are eligible for schoolwide programs under Title I-A of the Elementary and Secondary Education Act (i.e., schools in which at least 40% of the children are poor) or schools that serve a high percentage of students from low-income families, and the families of such students. Form and recipient of federal assistance: Formula grants to state educational agencies, which make competitive subgrants to local educational agencies, community-based organizations, other public and private nonprofit organizations, or a consortium of the above. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act for the preceding fiscal year. Matching or related requirements: States may require local grantees to match federal funds; however, the match may not exceed the amount of federal funds and may not come from other federal or state funds. The size of the match is adjusted based on the relative poverty of the grantee's target population and the grantee's ability to obtain the match. The match may be in cash or in-kind. New obligations (FY2013) : $1,091 million. Budgetary classification: Discretionary. Participation data (most recent available) : In 2013, a total of 1,875,000 students were served, of whom 930,000 attended for 30 days or more; and 300,000 adult family members were served. CRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR-UP) (CFDA #84.334) Authority: Statute: Title IV, Part A, Subpart 2, Chapter 2 of the Higher Education Act of 1965, established by the Higher Education Amendments of 1998 ( P.L. 105-244 ) and most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 U.S.C. 1070a21-28. Regulations: 34 C.F.R. Part 694. Federal administering agency: Department of Education, Office of Postsecondary Education, Student Service. Purpose of program: To assist low-income students attain a secondary school diploma or equivalent and prepare for and succeed in postsecondary education. Benefit/service: Teacher training, scholarships and early intervention services; for example, financial assistance necessary for attending an institution of higher education, and additional counseling, mentoring, academic support, outreach, and supportive services. Individual eligibility criteria: A cohort of students in at least one grade level of a school in which at least 50% of students are eligible for free or reduced-price lunch; a cohort of students in at least one grade level that reside in public housing; or secondary school students eligible to be counted under the basic formula for Title I-A of the Elementary and Secondary Education Act, eligible under Title IV-B or IV-E of the Social Security Act, eligible for the homeless education program under the McKinney-Vento Act, or considered disconnected. Form and recipient of federal assistance: Competitive grants to states and to partnerships consisting of at least one degree-granting institution of higher education and one or more local educational agencies, and if desired, at least two other partners (such as community organizations, businesses, and public or private agencies or organizations). Allows participation by agencies or institutions in territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: A 50% nonfederal match is required, unless granted a waiver. New obligations (FY2013) : $286 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, the program served a total of 617,437 students. CRS report: CRS Report R43351, The Higher Education Act (HEA): A Primer , by [author name scrubbed]. Rural Education Achievement Program (CFDA #84.358) Authority: Statute: Title VI, Part B of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 7341-7372. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of School Support and Technology Programs. Purpose of program: To help rural and rural low-income school districts meet their state's definition of adequate yearly progress under the No Child Left Behind Act. Benefit/service: Small Rural School Achievement Program (SRSA): Activities authorized under Title I-A (improving the academic achievement of disadvantaged children), Title II-A (teacher and principal training and recruiting), Title II-D (enhancing education through technology), Title III (language instruction for limited English proficient and immigrant children), Title IV-A (safe and drug-free schools), Title IV-B (21 st century community learning centers) and Title V-A (innovative programs) of the Elementary and Secondary Education Act. Rural and Low-Income School Program (RLIS): Teacher recruitment and retention, teacher professional development, educational technology, parental involvement activities, activities under Title IV-A (safe and drug-free schools) and Title I-A (improving the academic achievement of disadvantaged children) and Title III (language instruction for limited English proficient and immigrant children) of the Elementary and Secondary Education Act. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: SRSA: Formula grants to small local educational agencies (LEAs). RLIS: Formula grants to state educational agencies (SEAs) for suballocation to local educational agencies that do not meet the small-size thresholds for SRSA and in which 20% of the children aged 5-17 are from families below federal poverty guidelines. RLIS allows participation by territories (American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands). Allocation formula: Funds are allocated among LEAs (SRSA) and SEAs (RLIS) according to a formula that considers average daily attendance. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations (FY2013) : $170 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, an estimated 4,304 SRSA grants were made to LEAs; 45 RLIS grants were made to states for 2,088 subgrants to LEAs. CRS report: CRS Report R40853, The Rural Education Achievement Program: Title VI-B of the Elementary and Secondary Education Act , by [author name scrubbed]. Mathematics and Science Partnerships (CFDA #84.366) Authority: Statute: Title II, Part B of the Elementary and Secondary Education Act, established by the Hawkins-Stafford Elementary and Secondary School Improvements Act of 1988 ( P.L. 100-297 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 6661-6663. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: To improve the content knowledge of teachers and the performance of students in the areas of mathematics and science. Benefit/service: Enhanced and ongoing professional development of mathematics and science teachers, promotion of strong teaching skills through integrating reliable research methods and technology-based teaching methods into the curriculum, and summer workshops or institutes including follow-up training for elementary and secondary mathematics and science teachers. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: Formula grants to state educational agencies (SEAs), which award funds to partnerships of local educational agencies (LEAs) and institutions of higher education. At a minimum, partnerships must include a high-need LEA and an engineering, mathematics or science department of an institution of higher education. Allocation formula: Funds are allocated among states according to the state's share of children aged 5-17 from families with income below federal poverty guidelines. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations (FY2013) : $141 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2011, more than 56,000 teachers received professional development. CRS report s : CRS Report R42642, Science, Technology, Engineering, and Mathematics (STEM) Education: A Primer , by [author name scrubbed] and [author name scrubbed]; and CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Improving Teacher Quality State Grants (CFDA #84.367) Authority: Statute: Title II, Part A of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 6601-6641. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: To increase student achievement through improving teacher and principal quality and increasing the number of highly qualified teachers, principals and assistant principals in classrooms and schools. Benefit/service: State activities include teacher and principal certification reform, professional development activities, assistance to local educational agencies in teacher and principal recruitment and retention, tenure reform, subject matter testing for teachers, across-state certification reciprocity projects, technology training for teachers, assistance to help teachers become highly qualified, and teacher recruitment and placement clearinghouses. Local activities include assistance to schools in recruitment and retention of highly qualified teachers and principals, use of such teachers to reduce class size, professional development activities, and quality improvement activities such as tenure reform, merit pay and subject-area testing for teachers. Individual eligibility criteria: There are no individual eligibility criteria. Form and recipient of federal assistance: Formula grants to state educational agencies, which make formula-based subgrants to local educational agencies, and to state agencies of higher education, which award competitive grants to partnerships of institutions of higher education and high-need local educational agencies (those with a high number or proportion of poor children). Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Funds are allocated among states and local educational agencies based first on the amounts they received under predecessor programs in 2001; excess funds are allocated according to formulas based on number of children ages 5-17 and number of children ages 5-17 from families with incomes below federal poverty guidelines. Matching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities. New obligations (FY2013) : $2,334 million. Budgetary classification: Discretionary. Participation data (most recent available) : In school year 2012-2013, funds were used to hire an estimated 14,986 teachers. CRS report: CRS Report R41267, Elementary and Secondary School Teachers: Policy Context, Federal Programs, and ESEA Reauthorization Issues , by [author name scrubbed]. College Access Challenge Grants (CFDA #84.378) Authority: Statute: Title VII, Part E, Section 781 of the Higher Education Act of 1965, discretionary funding most recently authorized by the Higher Education Opportunity Act of 2008 ( P.L. 110-315 ) and mandatory funding provided by the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ); 20 U.S.C. 1141. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Postsecondary Education, Student Service. Purpose of program: To foster partnerships among federal, state and local governments and philanthropic organizations through matching challenge grants that are aimed at increasing the number of low-income students who are prepared to enter and succeed in postsecondary education. Benefit/service: Information for students and families regarding the benefits of postsecondary education, postsecondary education opportunities and planning, and career preparation; information on financing postsecondary education and activities to promote financial literacy and debt management; outreach for students at-risk of not enrolling in or completing postsecondary education; assistance in completing financial aid applications; need-based grant aid; professional development for guidance counselors at middle and secondary schools and for financial aid administrators and college admissions counselors at postsecondary institutions, to improve their ability to help students and parents with admissions and financial assistance procedures; and student loan cancellation or repayment, or interest rate reductions, for borrowers employed in a high-need geographic area or high-need profession in the state. Individual eligibility criteria: There are no individual eligibility criteria. However, grantees must give priority for services to students and families with income below the poverty line. Form and recipient of federal assistance: Formula grants to states (or to philanthropic organizations if the state fails to meet nonfederal matching requirements). Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Palau, Puerto Rico, the U.S. Virgin Islands, Micronesia, and the Marshall Islands). Allocation formula: Funds are allocated equally on the basis of each state's relative population of individuals aged 5-17 living below the poverty line, and each state's relative population of individuals aged 15-44 living below the poverty line. Matching or related requirements: A one-third nonfederal match is required. New obligations (FY2013) : $72 million. Budgetary classification: Mandatory and discretionary. Participation data (most recent available) : No data available. CRS report s : CRS Report R43351, The Higher Education Act (HEA): A Primer , by [author name scrubbed]. Reading First and Early Reading First (program no longer funded; formerly CFDA #84.357 and #84.359) Authority: Statute: Title I, Part B, Subparts 1 and 2 of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 U.S.C. 6361-6376. Regulations: no formal program-specific regulations. Federal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs. Purpose of program: Reading First: To ensure that every child can read at grade level or above by no later than grade 3. Early Reading First: To enhance the early language, literacy and prereading development of preschool-aged children, particularly from low-income families. Benefit/service: Reading First: Assistance in selecting and administering reading assessments, selecting and implementing programs of reading instruction based on scientifically based reading research (SBR) that included the essential elements of reading instruction, procuring and implementing SBR-based teaching materials, providing professional development for teachers of grades K-3 and special education teachers of grades K-12, collecting and analyzing data to document program effectiveness and identify successful schools, reporting student progress, promoting reading and library programs, supporting family literacy programs, and training parents as reading tutors. Early Reading First: High-quality oral language and literature rich environments, professional training based on SBR to early childhood staff in early reading development, SBR-based language and literacy activities and instructional materials, and SBR-based reading assessments. Individual eligibility criteria: Reading First: Children in grades K- 3 who may have had reading difficulties, were at risk of referral to special education because of their reading difficulties, had been evaluated but not identified as a child with disabilities, were receiving special education services because they had been identified as having a specific learning disability related to reading, were deficient in essential reading skills, or had limited English proficiency. Early Reading First: No specific eligibility criteria; however, services were targeted toward preschool children from low-income families with limited English proficiency, disabilities, or other special needs, who were also experiencing difficulty with spoken language, prereading and early reading skills. Form and recipient of federal assistance: Reading First: Formula grants to state educational agencies, which awarded funds competitively to local educational agencies. Early Reading First: Competitive grants to local educational agencies eligible for Title I-A ESEA grants, or to one or more public or private organizations acting on behalf of programs that served preschool-age children located in an area served by a Title I-A-eligible LEA, or to a consortium of the above. Reading First allowed participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the Virgin Islands). Allocation formula: Reading First: Funds were allocated among states according to their proportion of children aged 5-17 whose families had income below federal poverty guidelines. Early Reading First: Not applicable. Matching or related requirements: None. New obligations (FY2013) : None. No obligations have been made since FY2009. Budgetary classification: Discretionary. Participation data (most recent available) : In school year 2008-2009, an estimated 1,245,353 students participated in Reading First. In FY2009, grantees proposed to serve a total of 33,278 children and 3,402 educators in Early Reading First. CRS report s : CRS Report R40212, Early Childhood Care and Education Programs: Background and Funding , by [author name scrubbed] and [author name scrubbed]; and CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed]. Academic Competitiveness and Smart Grant Program (program no longer funded; formerly CFDA #84.375 and #84.376) Authority: Statute: Title IV, Part A, Subpart 1, Section 401A of the Higher Education Act of 1965, established by the Higher Education Reconciliation Act of 2005 ( P.L. 109-171 ); 20 U.S.C. 1070a-1. Regulations: 34 C.F.R. Part 691. Federal administering agency: Department of Education, Office of Federal Student Aid. Purpose of program: To help eligible financially needy students finance their postsecondary education by encouraging students to complete a rigorous high school curriculum, maintain a high grade point average (GPA), and major in math and science fields during their undergraduate studies. Benefit/service: Grant aid that, together with any other student aid received, could not exceed the student's cost of postsecondary school attendance. Individual eligibility criteria: Eligible students were undergraduates who attended participating schools, were eligible to receive a Pell Grant, and met other eligibility requirements related to—depending on their year in school—completing a rigorous high school curriculum; majoring in mathematics, science, or selected foreign languages; and maintaining a required minimum GPA. Form and recipient of federal assistance: Funds were provided to participating institutions of higher education to pay eligible students; participating institutions also received an administrative allowance per student. Individual students received assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allowed participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands). Allocation formula: Not applicable. Matching or related requirements: Not applicable. New obligations (FY2013) : None. No obligations have been made since FY2011. Budgetary classification: Mandatory (entitlement to individuals). Participation data (most recent available) : During award year (July-June) 2009-2010, 731,653 students were served. CRS report: CRS Report RL34452, The Ensuring Continued Access to Student Loans Act of 2008 , by [author name scrubbed]. Housing and Development Single-Family Rural Housing Loans (Section 502) (CFDA #10.410) Authority: Statute: Section 502 of the Housing Act of 1949 (P.L. 81-171); 42 U.S.C. 1471 et seq. Regulations: 7 C.F.R. Part 3550 Subpart B, 7 C.F.R. Part 1980, and 7 C.F.R. Part 1940 Subpart L. Federal administering agency: Department of Agriculture, Rural Housing Service. Purpose of program: To assist low-income households in obtaining adequate but modest, decent, safe, and sanitary dwellings and related facilities in rural areas. Benefit/service: Guaranteed or direct loans to assist in purchasing homes; loans also can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including to provide water and sewage facilities. Individual eligibility criteria: For guaranteed loans, individuals may have incomes up to 115% of area median income. For direct loans, individuals must be either low-income (with incomes no higher than 80% of area median) or very low-income (with incomes no higher than 50% of area median). Form and recipient of federal assistance: Guaranteed or direct loans to individuals. Allows participation by residents of territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico and the U.S. Virgin Islands). Allocation formula: Guaranteed loan funds are allocated among states according to factors including the state's share of occupied rural substandard housing units, rural population in very small communities, rural households with incomes between 80% and 100% of area median income, and rural renter households paying more than 35% of income for rent. Direct loan funds are allocated among the states according to factors including the state's share of occupied rental rural substandard units, total rural population, rural population in very small communities, rural households with incomes between 50% and 80% of area median income and those with incomes below 50% of area median income. Matching or related requirements: Not applicable. New obligations (FY2013) : $50 million (budget authority for direct and guaranteed loans). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 162,943 units received assistance. CRS report s : CRS Report RL31837, An Overview of USDA Rural Development Programs , by [author name scrubbed]; and CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. Rural Rental Assistance Payments (Section 521) (CFDA #10.427) Authority: Statute: Section 521 of the Housing Act of 1949, established by the Housing and Urban Development Act of 1968 (P.L. 90-448); 42 U.S.C. 1490. Regulations: 7 C.F.R. Part 3560 and 7 C.F.R. Part 1940 Subpart L. Federal administering agency: Department of Agriculture, Rural Housing Service. Purpose of program: To reduce the rent paid by low-income households in eligible units financed under certain Rural Housing Service programs. Benefit/service: Rental subsidies for low-income tenants provided through payments to eligible property owners; payments make up the difference between the tenant's rental payment to the owner and the approved rent for the unit. Individual eligibility criteria: Eligible tenants must have incomes no greater than 80% of area median income, although most assistance is targeted toward tenants with incomes no greater than 50% of area median. Form and recipient of federal assistance: Direct payments to property owners. Allocation formula: Funding for new rural rental assistance payments is allocated among the states according to each state's share of the rural population, rural housing units that are overcrowded and/or lack plumbing, and poor persons living in rural areas. Matching or related requirements: None. New obligations (FY2013) : $837 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 190,697 units were under contract to be subsidized. CRS report s : CRS Report RL31837, An Overview of USDA Rural Development Programs , by [author name scrubbed]; and CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. Water and Waste Disposal for Rural Communities (CFDA #10.760) Authority: Statute: Section 306 of the Consolidated Farm and Rural Development Act of 1972 (P.L. 92-419), most recently amended and reauthorized by the Agricultural Act of 2014 ( P.L. 113-79 ); 7 U.S.C. 1926. Regulations: 7 C.F.R. Parts 1778-1780. Federal administering agency: Department of Agriculture, Rural Utility Service. Purpose of program: To provide basic human amenities, alleviate health hazards, and promote the orderly growth of the nation's rural areas by meeting the need for new and improved rural water and waste disposal facilities. Benefit/service: Long-term low-interest loans and grants to support the installation, repair, improvement or expansion of rural water facilities. Loan interest rates are based on the economic health of the community and are lowest in communities where the median household income is 80% of the state nonurban median or the poverty level, or less. Individual eligibility criteria: There are no individual eligibility criteria. Eligible communities have populations of 10,000 or less and are unable to finance their projects through other means. Grants are targeted toward projects serving poorer communities. Form and recipient of federal assistance: Loans and formula grants to local governments and public and private organizations. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands) and Indian tribes. Allocation formula: USDA allocates grant funds among its state rural development offices based on each state's rural population, number of households in poverty, and unemployment. Matching or related requirements: Grants and loans are intended to cover no more than 75% of project development costs in communities where median household income is 80% of the state nonurban median or the poverty level, or less; or 45% of project development costs in communities where median household income is higher than 80% but less than 100% of the state nonurban median. New obligations (FY2013) : $524 million. Budgetary classification: Discretionary. Participation data (most recent available) : No data available. CRS reports: CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs , coordinated by [author name scrubbed]; and CRS Report RL31837, An Overview of USDA Rural Development Programs , by [author name scrubbed]. Public Works and Economic Development (CFDA #11.300) Authority: Statute: Section 201 of the Public Works and Economic Development Act of 1965 (P.L. 89-136), most recently reauthorized by the Economic Development Administration Reauthorization Act of 2004 ( P.L. 108-373 ); 42 U.S.C. 3141. Regulations: 13 C.F.R. Part 305. Federal administering agency: Department of Commerce, Economic Development Administration. Purpose of program: To help the nation's most distressed communities revitalize, expand and upgrade their physical infrastructure to attract new industry, encourage business expansion, diversify local economies and generate or retain long-term private sector jobs and investments. Benefit/service: Assistance in the acquisition or development of land and improvements for use for a public works, public service, or development facility; and assistance in the acquisition, design and engineering, construction, rehabilitation, alteration, expansion, or improvement of such a facility, including related machinery and equipment. Individual eligibility criteria: There are no individual eligibility criteria. Eligible projects must be located in areas that have either: low per capita income (80% of the national average or lower); unemployment for the most recent 24-month period that is at least one percentage point higher than the national average; or a special need arising from actual or threatened severe unemployment or economic adjustment problems resulting from severe changes in economic conditions. Projects may be outside such an area if they would create significant employment opportunities for unemployed, underemployed, or low-income residents of such an area. Form and recipient of federal assistance: Competitive grants to economic development districts (i.e., areas designated by EDA which have sufficient size and resources to foster economic development and which have at least one area fitting the income, unemployment or special need criteria described above), states, local governments, institutions of higher education, or public or private nonprofit organizations and associations acting in cooperation with local governments. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Not applicable. However, no more than 15% of available funds may be spent in a single state. Matching or related requirements: In general, the federal share is 50%, plus an additional federal share of no more than 30% based on the relative needs of the area where the project is located. Nonfederal contributions may be in cash or in-kind. At the discretion of the Secretary of Commerce, the federal share may be increased up to 100% for grants to Indian tribes, states or localities that have exhausted their effective taxing and borrowing capacity, or nonprofit organizations that have exhausted their borrowing capacity. New obligations (FY2013) : $97 million. Budgetary classification: Discretionary. Participation data (most recent available) : No data available. CRS report: CRS Report R41241, Economic Development Administration: A Review of Elements of Its Statutory History , by [author name scrubbed]. Supportive Housing for the Elderly (CFDA #14.157) Authority: Statute: Section 202 of the U.S. Housing Act of 1959 (P.L. 86-372), most recently reauthorized by the American Homeownership and Economic Opportunity Act of 2000 ( P.L. 106-569 ); 12 U.S.C. 1701q. Regulations: 24 C.F.R. Part 891. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To help expand the supply of affordable housing with supportive services for the elderly. Benefit/service: Financial assistance for development of supportive housing for the elderly, and rent subsidies for eligible tenants. Individual eligibility criteria: Very low-income households in which at least one member is at least 62 years old at the time of initial occupancy. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size. Form and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income elderly residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations and for-profit general partnerships where the sole general partner is a nonprofit organization. Allows participation by territories (Puerto Rico and the possessions of the U.S). Allocation formula: HUD uses a needs-based formula to allocate funds among HUD multifamily hubs, allocating 85% of funds to metropolitan areas and 15% to non-metropolitan areas, and considering relevant characteristics of the elderly population, such as the number of single elderly renters with incomes below 50% of area median income, and various housing factors. HUD awards funds to eligible applicants on a competitive basis. Matching or related requirements: None. New obligations (FY2013) : $389 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, HUD reported combined households residing in units funded through the Section 202 and Section 811 Supportive Housing for Persons with Disabilities programs. In that year, 142,977 households occupied housing units funded through the two programs. CRS report: CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by [author name scrubbed]. Supportive Housing for Persons with Disabilities (CFDA #14.181) Authority: Statute: Section 811 of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ), most recently reauthorized by the Frank Melville Supportive Housing Investment Act of 2010 ( P.L. 111-374 ); 42 U.S.C. 8013. Regulations: 24 C.F.R. Parts 891 Subparts A, C and D. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To allow persons with disabilities to live as independently as possible in the community by increasing the supply of rental housing with the availability of supportive services. Benefit/service: Financial assistance for development of supportive housing for persons with disabilities, and rent subsidies for eligible tenants. Individual eligibility criteria: Very low-income households (which may include a single individual) in which at least one member is age 18 or older and has a disability, such as a physical or developmental disability or chronic mental illness. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size. Form and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income disabled residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations. Allocation formula: HUD uses a needs-based formula to allocate funds among HUD field offices based on the number of noninstitutionalized persons within the local office jurisdiction who are between the ages of 16 and 64 and have a disability. Field offices award funds to eligible applicants on a competitive basis. Matching or related requirements: None. New obligations (FY2013) : $102 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, HUD reported combined households residing in units funded through the Section 202 and Section 811 Supportive Housing for Persons with Disabilities programs. In that year, 142,977 households occupied housing units funded through the two programs. CRS report: CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities , by [author name scrubbed]. Section 8 Project-Based Rental Assistance (CFDA #14.195) Authority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 U.S.C. 1437f. Regulations: 24 C.F.R. Parts 5, 880, 881, 883, 884, 886 and 891 Subpart E. Federal administering agency: Department of Housing and Urban Development, Office of Housing. Purpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market. Benefit/service: Rent subsidies tied to units in privately-owned multifamily housing properties. Tenants are expected to pay the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. The program pays owners the difference between the tenant contribution and a previously negotiated rent. Individual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 40% of units that become available each year must be given to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income. Form and recipient of federal assistance: Project-based rental assistance contracts between HUD and private property owners. HUD has not had the authority to enter into new contracts since 1983, but does have the authority to renew existing contracts when they expire. There are properties with project-based rental assistance contracts in the territories (U.S. Virgin Islands, Puerto Rico, and Guam). Allocation formula: None. Matching or related requirements: None. New obligations (FY2013) : $8,818 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, 1.174 million housing units were eligible for assistance payments. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) CRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed]. Community Development Block Grants (CFDA #14.218, #14.225, #14.228) Authority: Statute: Title I of the Housing and Community Development Act of 1974 ( P.L. 93-383 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 U.S.C. 5301 et seq. Regulations: 24 C.F.R. Part 570. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low to moderate income. Benefit/service: Assistance with the acquisition of real property, relocation and demolition, rehabilitation of residential and non-residential structures, construction of public facilities and improvements, public services within certain limits, activities related to energy conservation and renewable energy resources, and assistance to nonprofit entities and to profit-motivated businesses to carry out economic development and job creation/retention activities. Individual eligibility criteria: There are no individual eligibility criteria. At least 70% of funds must be used for activities that benefit low- and moderate-income individuals. Low-income is defined as income no greater than 50% of the state or entitlement community's median; moderate-income is defined as income above 50% but no greater than 80% of the state or entitlement community's median. Form and recipient of federal assistance: Formula grants to "entitlement communities" (i.e., principal cities in metropolitan statistical areas, other metropolitan cities with populations of at least 50,000, and qualified urban counties with populations of at least 200,000); and states, which administer funds on behalf of non-entitlement communities (i.e., cities with populations of less than 50,000 and counties with populations of less than 200,000). HUD directly administers the state component of the program for Hawaii, which has elected not to participate in the program. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Of available funds, 70% are allocated to entitlement communities according to a formula that considers various measures of community need, including the extent of poverty, population size, housing overcrowding, age of housing, and lag in population growth as compared to other metropolitan areas. The remaining 30% are allocated to states according to a formula that considers population, poverty, incidence of overcrowded housing, and age of the housing. Matching or related requirements: None. New obligations (FY2013) : $2,971 million (Community Development Formula Grants and Indian Community Development Grants). Budgetary classification: Discretionary. Participation data: No data available. CRS reports: CRS Report R43520, Community Development Block Grants and Related Programs: A Primer , by [author name scrubbed]; and CRS Report R43394, Community Development Block Grants: Recent Funding History , by [author name scrubbed]. Homeless Assistance Grants (CFDA #14.231 and #14.267) Authority: Statute: Title IV of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and most recently reauthorized as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ); 42 U.S.C. Chapter 119, Subchapter IV. Regulations: 24 C.F.R. Parts 576, 578. (Homeless Assistance Grants consist of three programs administered through a consolidated budget account: Emergency Solutions Grants Program (ESG), the Continuum of Care Program (CoC), and the Rural Housing Stability Assistance Program (RHS). Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: ESG: To provide homeless persons with basic shelter and essential support services and prevent at-risk persons and families from becoming homeless. CoC: To promote a community-wide commitment to ending homelessness, provide funding to rapidly house individuals and families experiencing homelessness, and to optimize self-sufficiency among those experiencing homelessness. RHS: To rehouse or improve the housing situations of those experiencing homelessness or in the worst housing situations in the geographic area, stabilize the living situations of those in imminent danger of losing housing, and improve the ability of the lowest income residents in the community to afford stable housing. Benefit/service: ESG: Renovation, rehabilitation or conversion of buildings into homeless shelters, services such as employment counseling, health care and education, assistance with rent or utility payments to prevent homelessness. CoC: Transitional housing for homeless individuals and families for up to 24 months, rent subsidies for permanent supportive housing for eligible individuals and families, rapid rehousing support, supportive services, and funds for community data collection. RHS: Transitional housing, permanent housing, rapid rehousing, data collection, supportive services, homelessness prevention, relocation services for employment, education, or family reunification, short-term emergency housing, and home repairs to make properties habitable. Individual eligibility criteria: ESG: Homeless individuals and families and families, and those at risk of becoming homeless. CoC: Homeless individuals and families, those who will imminently lose housing, families with children and youth defined as homeless under other federal statutes, and, in some cases, homeless individuals and families at risk of homelessness. RHS: All those eligible for the CoC program and, additionally, those in the worst housing situations in the area and the lowest income residents in the community. Form and recipient of federal assistance: ESG: Formula grants to states, metropolitan cities and urban counties. CoC and RHS: Competitive grants to states and local governments, public housing authorities, and private nonprofit organizations. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Allocation formula: ESG: Funds are allocated on the basis of population, poverty population, housing overcrowding, age of housing, and extent of growth lag. CoC and RHS: Not applicable. Matching or related requirements: ESG: Dollar-for-dollar match (although first $100,000 provided to a state need not be matched, and the match does not apply to the territories), which might be in the form of cash or value of buildings, staff salaries or volunteer time. CoC and RHS: Match of 25% of grant funds received at the community level, except funds for leasing; match may be either cash or in-kind. New obligations (FY2013) : $2,086 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, the Homeless Assistance Grants funded 339,487 beds. CRS report s : CRS Report RL33764, The HUD Homeless Assistance Grants: Programs Authorized by the HEARTH Act , by [author name scrubbed]; and CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed]. Home Investment Partnerships Program (HOME) (CFDA #14.239) Authority: Statute: Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ); 42 U.S.C. 12722 et seq. Regulations: 24 C.F.R. Part 92. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To increase the number of families served with decent, safe, sanitary and affordable housing and expand the long-term supply of affordable housing; and to strengthen the ability of states and local governments to provide for housing needs. Benefit/service: Assistance for existing homeowners in repairing, rehabilitating or rebuilding their homes; assistance for homebuyers in the purchase or rehabilitation of a new home; assistance for developers or other organizations in the purchase or rehabilitation of affordable rental housing; and tenant-based rental assistance. Individual eligibility criteria: Recipient households may not have incomes above 80% of area median income. At least 90% of families receiving rental housing and tenant-based rental assistance must have incomes that are no more than 60% of area median income. Form and recipient of federal assistance: Formula grants to states and local participating jurisdictions, which are metropolitan cities or urban counties that meet certain minimum funding thresholds. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Funds are allocated according to a formula that considers various housing quality and affordability factors, as well as certain income-related factors, including the number of older units in the jurisdiction occupied by poor households and the number of poor families in the jurisdiction. Matching or related requirements: Nonfederal matching of 25% is required. New obligations (FY2013) : $919 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, HOME funds contributed to 21,153 completed housing units, and tenant-based rental assistance for 12,762 households. CRS report: CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed]. Housing Opportunities for Persons with AIDS (HOPWA) (CFDA #14.241) Authority: Statute: AIDS Housing Opportunity Act, established by the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ) and most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 U.S.C. 12901-12912. Regulations: 24 C.F.R. Parts 574.3-574.655. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development, Office of HIV/AIDS Housing. Purpose of program: To devise long-term comprehensive strategies for meeting the housing needs of persons with AIDS. Benefit/service: Housing assistance and related supportive services, including housing information services; acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services; new construction (for single room occupancy dwellings and community residences only); project- or tenant-based rental assistance; short-term rent, mortgage, and utility payments to prevent homelessness; supportive services such as health and mental health services, drug and alcohol abuse treatment and counseling, day care, nutritional services, intensive care when required, and aid in gaining access to other public benefits. Individual eligibility criteria: Eligible individuals are HIV-positive or have AIDS, and have incomes no higher than 80% of area median income. Form and recipient of federal assistance: 90% of funds are awarded as formula grants to states and eligible metropolitan statistical areas (MSAs) that meet minimum AIDS case requirements; 10% are competitively awarded to states, local governments, and nonprofit agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Marshall Islands, Micronesia, Northern Mariana Islands, Palau, and the U.S. Virgin Islands). Allocation formula: Of formula funds, 75% (base funding) is awarded to eligible cities (MSAs with population of more than 500,000 and more than 1,500 cumulative reported AIDS cases) and to eligible states (those with more than 1,500 AIDS cases in areas outside of eligible MSAs); and the remaining 25% (bonus funding) is awarded on the basis of AIDS incidence during the past three years to MSAs that have populations of more than 500,000, more than 1,500 cumulative reported AIDS cases, and a higher than average per capita incidence of AIDS. Matching or related requirements: None. New obligations (FY2013) : $302 million. Budgetary classification: Discretionary. Participation data (most recent available) : In program year 2012-2013, 56,440 households received permanent, transitional or emergency housing assistance. CRS report: CRS Report RL34318, Housing for Persons Living with HIV/AIDS , by [author name scrubbed]. Public Housing (CFDA #14.850, #14.866, #14.872, and #14.889) Authority: Statute: Sections 9(d), 9(e), 24 and 30 of the U.S. Housing Act of 1937, as amended (P.L. 75-412); 42 U.S.C. 1437. Regulations: 24 C.F.R. Parts 5 and 901-972. (Public Housing programs include Operating Fund, Capital Fund, and HOPE VI/Choice Neighborhoods.) Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing. Purpose of program: To provide cost-effective, decent, safe and affordable rental housing for eligible low-income families, the elderly, and persons with disabilities; and for HOPE VI/Choice Neighborhoods, to improve the living environment for public housing residents through demolition, rehabilitation and replacement of severely distressed housing units. Benefit/service: Subsidized publicly-owned rental housing units; eligible households pay rent equal to the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. Individual eligibility criteria: Eligible households are low-income (defined as having income at or below 80% of area median income). At least 40% of households admitted each year must be extremely low-income households (defined as having income at or below 30% of area median income). Certain residents are required to participate in an economic self-sufficiency program or contribute 8 hours per month of community service. Form and recipient of federal assistance: Operating and Capital Funds: Formula grants to public housing authorities. HOPE VI/Choice Neighborhoods: Competitive grants to public housing authorities. Includes public housing projects located in territories (Puerto Rico, the U.S. Virgin Islands, and Guam). Allocation formula: Operating Fund: Funds to support ongoing costs of operating public housing are allocated according to a formula intended to make up the difference between the costs of maintaining public housing and the amount of tenant-paid rent received by the public housing authority; amounts are prorated to fit within the amount appropriated annually by Congress. Capital Fund: Funds to support development, financing and modernization of public housing are allocated on the basis of relative need. Matching or related requirements: None. However, an indirect local contribution results from the difference between full local property taxes and payments in lieu of taxes that are made by local housing authorities. New obligations (FY2013) : $5,954 million (operating fund, capital fund, and HOPE VI/Choice Neighborhoods). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 1,091,758 public housing units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) CRS reports: CRS Report R41654, Introduction to Public Housing , by [author name scrubbed]; and CRS Report RL32236, HOPE VI Public Housing Revitalization Program: Background, Funding, and Issues , by [author name scrubbed]. Indian Housing Block Grants (CFDA #14.867) Authority: Statute: Native American Housing and Self-Determination Act of 1996 ( P.L. 104-330 ), most recently reauthorized by the Native American Housing and Self-Determination Reauthorization Act of 2008 ( P.L. 110-411 ); 25 U.S.C. 4101 et seq. Regulations: 24 C.F.R. Part 1000. Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing, Office of Native American Programs. Purpose of program: To provide housing assistance and, to the extent practicable, to assist in the development of private housing finance mechanisms on Indian lands to achieve the goals of economic self-sufficiency and self-determination for tribes and their members. Benefit/service: Housing development, assistance to housing developed under the former Indian Housing Program, housing services to eligible individuals and families, crime prevention and safety, and model activities that provide creative approaches to affordable housing problems. Individual eligibility criteria: Low-income Indian families living on Indian reservations and other Indian lands; low-income is defined as having income no greater than 80% of the area median. Non-low-income families may be served if such families have a need for housing that cannot otherwise be met. Assistance also may be provided to non-Indian families living on Indian reservations or Indian lands if the presence of such families on the reservation or Indian land is essential to the well-being of Indian families and their housing needs cannot reasonably be met otherwise. Housing assistance also may be provided to law enforcement officers if their presence on the reservation or Indian land may deter crime. Form of assistance: Formula grants to federally recognized Indian tribes or their tribally designated housing entity, and a limited number of state recognized Indian tribes funded under prior law. ("State" is defined to include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands, and any other territory or possession of the United States.) Allocation formula: Funds are allocated among tribes according to a two-part formula based on "formula current assisted stock" (housing developed under the former Indian Housing Program and owned or operated by the grantee), and "need" (e.g., Indian households with significant housing cost burdens, households that are overcrowded or lack kitchen or plumbing facilities, and number of Indian households at different levels of low income). Matching or related requirements: None. However, grant recipients must make annual user fee payments to compensate local governments for the costs of providing governmental services or must make payments in lieu of taxes to taxing authorities. New obligations (FY2013) : $627 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, approximately 5,141 units were built, acquired, or rehabilitated. CRS report: CRS Report R43307, The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA): Background and Funding , by [author name scrubbed]. Section 8 Housing Choice Vouchers (CFDA #14.871) Authority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 U.S.C. 1437f. Regulations: 24 C.F.R. Parts 5 and 982. Federal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing. Purpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market. Benefit/service: Tenant-based vouchers that can be used to subsidize the cost of privately-owned rental housing, chosen by tenants in the private market. Tenants are expected to pay an amount toward rent that is at least the greater of 30% of counted income, 10% of gross income, or, in states where applicable, the "welfare" rent. The program pays the balance, up to the payment standard set by the local public housing authority at between 90% and 110% of the HUD-established fair market rent for the unit. Public housing authorities may choose to "project-base" up to 20% of their vouchers, which means the subsidy is attached to a preselected unit of housing. However, tenants living in project-based voucher units are entitled to move with a tenant-based voucher, if they so choose, after one year. Individual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 75% of vouchers that become available each year must go to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income. Form and recipient of federal assistance: Formula grants to public housing authorities. Includes public housing authorities in the territories (Puerto Rico, the U.S. Virgin Islands, Guam and Northern Mariana Islands). Allocation formula: Congress typically specifies the allocation formula in annual appropriations laws. For FY2013, funds to renew existing vouchers were provided to public housing authorities according to their utilization rates and costs from the prior year, adjusted for inflation. Matching or related requirements: None. New obligations (FY2013) : $17,897 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 2.208 million vouchers were in use. CRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed]. Neighborhood Stabilization Program (1, 2, and 3) (no CFDA #) Authority: Statute: Division B, Title III of the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ), Division A, Title XII of the American Recovery and Reinvestment Act ( P.L. 111-5 ), and Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ; 42 U.S.C. 5301 note). Regulations: 24 FR 3501. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To stabilize communities with high rates of abandoned and foreclosed homes. Benefit/service: Assistance with the purchase, rehabilitation, and resale of abandoned and foreclosed homes and residential properties, demolition of blighted structures, and redevelopment of blighted and vacant properties. Individual eligibility criteria: Individuals and families who benefitted from the program had to have incomes no higher than 120% of area median income. At least 25% of appropriations had to be used to purchase or rehabilitate residential structures that would be used to house individuals or families with incomes no higher than 50% of area median income. Form and recipient of federal assistance: Formula grants to states and local governments (NSP-1 and 3). Competitive grants to states and local governments, nonprofit entities, and consortia of for-profit and non-profit entities (NSP-2). Allowed participation by territories (Puerto Rico, Guam, the Northern Marianas, American Samoa and the U.S. Virgin Islands). Allocation formula: Funds were allocated on the basis of the number and percentage of home foreclosures in the state or locality, the number and percentage of subprime mortgages in the state or locality, and the number of homes in default or delinquency in the state or locality (NSP-1 and NSP-3). Matching or related requirements: None. New obligations (FY2013) : None. No obligations since FY2011. Budgetary classification: Mandatory. Participation data (most recent available) : No data available. CRS report s : CRS Report RS22919, Community Development Block Grants: Neighborhood Stabilization Program; Assistance to Communities Affected by Foreclosures , by [author name scrubbed]; and CRS Report R43520, Community Development Block Grants and Related Programs: A Primer , by [author name scrubbed]. Grants to States for Low-Income Housing Projects In Lieu of Low-Income Housing Credit Allocations (no CFDA #) Authority: Statute: Section 1602 of Division B of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Regulations: 31 C.F.R. Part 32. Federal administering agency: Department of Treasury. Purpose of program: To support the construction and rehabilitation of affordable housing typically financed with funds from the Low-Income Housing Tax Credit (LIHTC) program. Benefit/service: Grants were provided in lieu of tax credits to help finance the construction or acquisition and rehabilitation of qualified buildings that would provide rent-restricted rental units to low-income households. Individual eligibility criteria: Qualified projects had to meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income. Form and recipient of federal assistance: Grants to state housing credit agencies. Allowed participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands). Allocation formula: States could elect to exchange for grants all of their unused and returned 2008 tax credit allocation, 40% of their 2009 tax credit allocation, and 40% of any allocation in 2009 made from the national LIHTC pool. Tax credits could be exchanged for grants at a rate of $0.85 on the dollar. Annual tax credit allocations are determined on the basis of each state's population. Matching or related requirements: No matching requirements for the grant program; however, the LIHTC (and this related grant program) is intended to finance only part of a project and is typically combined with other resources. New obligations (FY2013) : None. No obligations since FY2011. Budgetary classification: Mandatory. Participation data (most recent available) : No data available. CRS report: CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit , by [author name scrubbed] and [author name scrubbed]. Tax Credit Assistance Program (no CFDA #) Authority: Statute: Division A, Title XII of the American Recovery and Reinvestment Act ( P.L. 111-5 ). Regulations: no formal program-specific regulations. Federal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development. Purpose of program: To make funds available for capital investments in Low-Income Housing Tax Credit (LIHTC) projects where the additional funds could be spent within specified deadlines. Benefit/service: Assistance was provided to owners of projects who received an award of LIHTCs. Individual eligibility criteria: To qualify for LIHTCs, projects must meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income. Form and recipient of federal assistance: Formula grants to state housing credit agencies, which competitively awarded funds to project owners. Allowed participation by Puerto Rico. Allocation formula: Funds were allocated among states according to each state's percentage of FY2008 HOME awards. Matching or related requirements: None. However, the LIHTC is intended to finance only part of a project and is typically combined with other resources. New obligations (FY2013) : None. No obligations since FY2009. Budgetary classification: Discretionary. Participation data (most recent available) : No data available. CRS report: CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit , by [author name scrubbed] and [author name scrubbed]. Social Services Indian Human Services (CFDA #15.025, #15.113, #15.141, #15.144) Authority: Statute: Snyder Act of 1921 (P.L. 67-85), Indian Self-Determination and Education Assistance Act ( P.L. 93-638 ), Indian Child Welfare Act ( P.L. 95-608 ), and Indian Child Protection and Family Violence Prevention Act ( P.L. 101-630 ); 25 U.S.C. 13, 450 et seq., 1901 et seq., and 3210. Regulations: 25 C.F.R. Parts 20, 23, and 256. (Programs include Social Services, Welfare Assistance, Indian Child Welfare, and Housing Improvement Program.) Federal administering agency: Department of Interior, Bureau of Indian Affairs, Division of Human Services. Purpose of program: To provide financial assistance for basic needs of needy eligible American Indians who live on or near reservations when such assistance is not available from state or local agencies; to fund federally recognized tribal governments to administer welfare assistance programs for American Indian adults and children, to support caseworkers and counselors, and to support tribal programs to reduce incidence of substance abuse and alcoholism in Indian country; to promote stability and security of American Indian tribes and families by protecting American Indian children, preventing separation of American Indian families, and assisting Indian tribes in the operation of child and family service programs; and to eliminate substantially substandard Indian owned and inhabited housing for very low-income Indians living in tribal service areas. Benefit/service: Assistance in processing welfare applications, determining suitable placement of American Indian children in need of foster care, operation of emergency shelters and similar services; cash payments to meet basic needs (i.e., food, clothing, shelter), assistance for nonmedical institutional or custodial care of adults not eligible for other programs, foster home care and nonmedical institutional care for American Indian children in need of protection; counseling, family assistance, protective day care, after-school care, recreational activities, respite care, education and training, foster care subsidies, legal advice and representation, home improvement programs; and renovations, repairs, or additions to existing homes. Individual eligibility criteria: Depending on the program, American Indian adults in need of financial assistance or social services, children in need of foster care, and youth requiring temporary emergency shelter; members of federally recognized Indian tribes who live on or near federally recognized reservations who are in need of financial assistance; American Indian children and families; and Indians who are members of federally recognized tribes. Form and recipient of federal assistance: Discretionary grants to federally recognized Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $100 million. Budgetary classification: Discretionary. Participation data (most recent available) : No data available. Older Americans Act Grants for Supportive Services and Senior Centers (CFDA #93.044) Authority: Statute: Title III, Part B of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 U.S.C. 3030d. Regulations: 45 C.F.R. Part 1321. Federal administering agency: Department of Health and Human Services, Administration for Community Living, Administration on Aging. Purpose of program: To secure and maintain maximum independence and dignity in a home environment for older individuals capable of self-care with appropriate supportive services, to remove individual and social barriers to economic and personal independence for older individuals, and to provide a continuum of care for older individuals. Benefit/service: Supportive services, including health (and mental health), education and training, welfare, informational, recreational, homemaker, counseling, or referral services; transportation services; services to help older individuals use the services and facilities available to them (including language translation services); housing-related services; services to help older individuals avoid institutionalization, legal assistance and other counseling services; activities to attain and maintain physical and mental well-being; health and mental health screenings; preretirement counseling and assistance; ombudsman services for residents of long-term care facilities; services and assistive devices for disabled older persons; employment-related services and counseling; crime prevention and victim assistance; services to identify and meet the needs of low-income older individuals; abuse prevention; health and nutrition education services; coordinated services for mentally impaired older individuals; services for family caregivers; information and training for guardians or representative payees of older individuals; services to facilitate interaction between students and older individuals; in-home services for frail elderly; information about life-long learning programs; and any other services necessary for the general welfare of older individuals. Individual eligibility criteria: Individuals age 60 or older. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority older individuals, those with limited English proficiency, and those living in rural areas. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act. Allocation formula: Funds are allocated among states according to their relative share of the nation's population of older individuals (age 60 or older). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority individuals. Matching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for supportive services and senior centers. New obligations (FY2013) : $348 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, the number of clients participating by type of service were: 452,613 for case management; 148,733 for homemaker services; 108,212 for personal care; 34,384 for chore services; 31,950 for assisted transportation; and 19,269 for adult day care. CRS report s : CRS Report R43414, Older Americans Act: In Brief , by [author name scrubbed] and [author name scrubbed]; and CRS Report RS22549, Older Americans Act: Funding Formulas , by [author name scrubbed]. Older Americans Act National Family Caregiver Support Program (CFDA #93.052) Authority: Statute: Title III, Part E of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 U.S.C. 3030s to 3030s-2. Regulations: 45 C.F.R. Part 1321. Federal administering agency: Department of Health and Human Services, Administration for Community Living, Administration on Aging. Purpose of program: To provide multifaceted systems of support services for family caregivers and grandparents or older individuals who are relative caregivers. Benefit/service: Information to caregivers about available services, assistance to caregivers in gaining access to services; individual counseling, organization of support groups, and caregiver training in the areas of health, nutrition, and financial literacy, and in making decisions and solving problems related to their caregiving roles; respite care to enable caregivers to be temporarily relieved of their caregiving responsibilities; and supplemental services, on a limited basis, to complement the care provided by caregivers. Individual eligibility criteria: Family members or others providing informal care to an older individual, and those providing informal care to individuals of any age with Alzheimer's disease or related disorders. Also, grandparents or older individuals who are relative (non-parent) caregivers to children, including those caring for children of any age with a disability. Priority is given to older caregivers with the greatest social and economic need and to older individuals providing care to individuals with severe disabilities, including children with severe disabilities. Form and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act. Allocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 70 or older). Matching or related requirements: A nonfederal share of 25% is required for services and administrative activities. Federal funds from this program must be used to supplement and not supplant any other federal, state or local funds used for the same purpose. New obligations (FY2013) : $146 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, the number of clients participating by type of service were: 16,175,896 for information services, 593,438 for access assistance; 127,933 for counseling services; 65,885 for respite care; and 33,664 for supportive services. CRS report s : CRS Report R43414, Older Americans Act: In Brief , by [author name scrubbed] and [author name scrubbed]; and CRS Report RS22549, Older Americans Act: Funding Formulas , by [author name scrubbed]. Maternal, Infant, and Early Childhood Home Visiting Program (CDFA #93.505) Authority: Statute: Title V, Section 511 of the Social Security Act, established by Section 2951 of the Patient Protection and Affordable Care Act of 2010 ( P.L. 111-148 ); 42 U.S.C. 711. Regulations: none. Federal administering agency: Department of Health and Human Services, Maternal and Child Health Bureau in the Health Resources and Services Administration, and Administration for Children and Families. Purpose of program: To strengthen and improve programs and activities carried out under Title V of the Social Security Act, to improve coordination of services for at-risk communities, and to identify and provide comprehensive services to improve outcomes for families living in at-risk communities. Benefit/service: Voluntary, evidence-based home visiting programs to promote: maternal and newborn health; prevention of child injuries, child abuse, neglect, or maltreatment, and reduction of emergency room visits; school readiness and achievement; reduction in crime or domestic violence; family economic-self-sufficiency; and coordination and referrals for other community resources and supports. Individual eligibility criteria: An eligible family includes (1) a woman who is pregnant, and the father of her child if he is available; (2) a parent or primary caregiver of a child, including grandparents or other relatives of the child, and foster parents, who are serving as the child's primary caregiver from birth to entry into kindergarten; and (3) a noncustodial parent who has an ongoing relationship with, and at times provides physical care for, the child. Priority for services goes to high-risk eligible families, including those living in at-risk communities (as identified through a statewide assessment) and those who are low-income. Form and recipient of federal assistance: Formula grants and competitive awards to states (or nonprofit organizations in states where the state declines to submit an application). Allows participation by territories (Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa), and Indian tribal organizations. Allocation formula: Not established in law. In practice, HHS awards funds in part according to the jurisdiction's relative share of children under age 5 in families at or below 100% of the federal poverty line. Matching or related requirements: Funds must supplement and not supplant any funds that would otherwise be used for the same purposes. New obligations (FY2013) : $378 million. Budgetary classification: Mandatory. Participation data (most recent available) : During FY2013, approximately 487,000 home visits were made to families receiving services under this program. CRS report: CRS Report R40212, Early Childhood Care and Education Programs: Background and Funding , by [author name scrubbed] and [author name scrubbed]. Child Support Enforcement (CDFA #93.563) Authority: Statute: Title IV-D of the Social Security Act, established by the Social Services Amendments of 1974 ( P.L. 93-647 ); 42 U.S.C. 651-669. Regulations: 45 C.F.R. Chapter 3. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Support Enforcement. Purpose of program: To enforce the support obligations owed by noncustodial parents to their children and the spouse (and former spouse) with whom such children are living through locating noncustodial parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support will be available to all children who request such assistance. Benefit/service: Noncustodial parent location, paternity establishment, establishment of child support orders, review and modification of child support orders, collection of child support payments, distribution of child support payments, and establishment and enforcement of medical support. Services are free for families that are automatically eligible; states may charge a fee of up to $25 for all other families. Individual eligibility criteria: Services are available to parents with custody of a child whose other parent is living outside the home. Services are automatically available for families receiving Temporary Assistance for Needy Families (TANF), federal foster care payments, or Medicaid. Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Guam, Puerto Rico, the U.S. Virgin Islands) and Indian tribes and tribal organizations. Allocation formula: None. Payments to states are based on their eligible expenditures. Matching or related requirements: The federal government reimburses states for 66% of their eligible expenditures. New obligations (FY2013) : $4,278 million. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data (most recent available) : In FY2013 (preliminary data), the total CSE caseload was 15.6 million cases, involving 16.9 million children. CRS report: CRS Report RS22380, Child Support Enforcement: Program Basics , by [author name scrubbed]. Community Services Block Grants (CFDA #93.569) Authority: Statute: Community Services Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) and most recently reauthorized by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 ( P.L. 105-285 ); 42 U.S.C. 9901 et seq. Regulations: 45 C.F.R. Part 96, Subpart I. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To reduce poverty, revitalize low-income communities, and empower low-income individuals and families in rural and urban areas to become fully self-sufficient. Benefit/service: A wide range of activities may be supported to help low-income individuals and families become self-sufficient, find meaningful employment, attain an adequate education, make better use of available income, find and maintain adequate housing, obtain emergency assistance, and achieve greater participation in community affairs; address the needs of youth in low-income communities; and effectively use and coordinate with related programs. Individual eligibility criteria: In general, beneficiaries must have incomes no higher than the federal poverty guidelines, although states may set eligibility criteria at 125% of the poverty guidelines when "it serves the objectives of the block grant." Form and recipient of federal assistance: Formula grants to states. Of funds received by each state, at least 90% must be passed through to "eligible entities," which are primarily community action agencies that had been designated prior to 1981 under the former Economic Opportunity Act or their successor agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes. Allocation formula: Funds are allocated among states based on the relative amount received in each state in FY1981, under a section of the former Economic Opportunity Act. Matching or related requirements: None. New obligations (FY2013) : $635 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, states reported that local agencies served more than 16 million individuals in 6.9 million families. CRS report: CRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding , by [author name scrubbed]. Child Care and Development Fund (CFDA #93.575 and #93.596) Authority: Statute: Child Care and Development Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) and most recently reauthorized by the Child Care and Development Block Grant Act of 2014 ( P.L. 113-186 ); 42 U.S.C. 9858. Section 418 of the Social Security Act, established by the Personal Responsibility and Work Opportunity Reconciliation Act ( P.L. 104-193 ) and most recently reauthorized by the Deficit Reduction Act of 2005 ( P.L. 109-171 ) and extended by FY2015 appropriations law ( P.L. 113-235 ); 42 U.S.C. 618. Regulations: 45 C.F.R. Parts 98 and 99. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Care. Purpose of program: To develop child care programs that best suit the needs of children and parents in each state; to empower working parents to make their own decisions on the child care that best suits their family's needs; to provide consumer education to help parents make informed decisions; to provide child care to parents trying to achieve independence from public assistance; and to help states implement their child care regulatory standards. (Purposes expanded by P.L. 113-186 to also include provision of consumer education to promote parental involvement; assistance to states in delivering high-quality coordinated services that maximize parents' options; assistance to states in improving the overall quality of child care services and programs by implementing health, safety, licensing, training, and oversight standards; improving child care and development of participating children; and increasing the number and percentage of low-income children in high-quality child care settings.) Benefit/service: Subsidized child care services for families provided on a sliding fee scale basis, which may be free for those with incomes below federal poverty guidelines (or, on a case-by-case basis, for those in foster care or receiving or in need of protective services). Child care providers may be paid directly by the state through a grant or contract, or through certificates (also known as vouchers) that parents may use to purchase child care from an eligible provider of their choice. Child care services may include center-based care, group home care, family care, and care provided in the child's own home. Individual eligibility criteria: Eligible children must be under age 13 (or under 19 if disabled or under court supervision), have a parent who is working or attending job training (unless the child is receiving protective services), have family income no greater than 85% of state median income (or lower depending on state policy), and (as amended by P.L. 113-186 ) have no more than $1 million in family assets. States must give priority to very low-income children and children with disabilities, and must target a certain amount of funds to welfare families working toward self-sufficiency or families at risk of welfare dependency. Form and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes, and for certain funds, by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). Allocation formula: Discretionary funds are allocated among states according to each state's proportion of children under age 5, its proportion of all children who receive free or reduced price school lunches, and its relative per capita income. Of mandatory funds, states receive a fixed amount each year based on their spending under predecessor programs in the mid-1990s ("guaranteed" funds). Remaining mandatory funds are allocated according to each state's share of children under age 13. Matching or related requirements: No matching requirement for discretionary funds or "guaranteed" mandatory funds. States must match remaining mandatory funds at their FMAP (federal medical assistance percentage) matching rate. States also must achieve certain maintenance-of-effort targets to qualify for these funds. New obligations (FY2013) : $5,140 million. Budgetary classification: Discretionary (Child Care and Development Block Grant Act) and mandatory (Section 418 of the Social Security Act) (capped entitlement to states). Participation data (most recent available) : In FY2012, the average monthly number of children served by the CCDF was 1.5 million. Preliminary data for FY2013 estimate the average monthly number of children served was 1.46 million.   CRS report: CRS Report RL30785, The Child Care and Development Block Grant: Background and Funding , by [author name scrubbed]. Head Start (CFDA #93.600) Authority: Statute: Head Start Act, established by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) and most recently reauthorized by the Improving Head Start for School Readiness Act of 2007 ( P.L. 110-134 ); 42 U.S.C. 9801 et seq. Regulations: 45 C.F.R. Parts 1301-1311. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Head Start. Purpose of program: To promote school readiness by enhancing the social and cognitive development of children through the provision of educational, health, nutritional, social and other services to children and their families; and (for Early Head Start) to promote healthy prenatal outcomes, enhance the development of infants and toddlers, and promote healthy family functioning. Benefit/service: Comprehensive child development services, including educational, dental, medical, nutritional, and social services to children and their families. Services may be center-based, home-based, or a combination, and may be full- or part-day or full- or part-year. Individual eligibility criteria: Eligible children are those from low-income families (defined as having income below 100% of federal poverty guidelines, receiving public assistance or being a foster child or homeless) or who would be eligible for public assistance in the absence of child care, and homeless children. Up to 10% of participants may not meet these eligibility criteria if they would benefit from the program. An additional 35% of participants may have family incomes between 100% and 130% of federal poverty guidelines, as long as such children are not given higher priority than poor or homeless children. Form and recipient of federal assistance: Formula grants to local public and private nonprofit and for-profit entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands, Palau and the U.S. Virgin Islands) and American Indian and Alaska Native Head Start programs. Allocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is intended to hold grantees harmless at their prior year's level and, when additional funds are available, to award a cost-of-living adjustment, and allocate remaining funds for quality improvement and program expansion. Allocation factors include children under age 5 whose family incomes are below poverty. Matching or related requirements: A 20% nonfederal match is required unless a waiver is granted. New obligations (FY2013) : $7,573 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, the Head Start funded enrollment level was about 903,679 children, of whom approximately 106,726 (or 12%) were in Early Head Start programs. The term "funded enrollment" refers to the number of Head Start slots that are funded, not the total number of children served throughout the year (which would be higher, accounting for turnover). CRS report: CRS Report RL30952, Head Start: Background and Funding , by [author name scrubbed]. Foster Care (CFDA #93.658) Authority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 U.S.C. 672. Regulations: 45 C.F.R. 1355 and 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children's Bureau. Purpose of program: To provide temporary out-of-home care for children who cannot safely remain in their own homes, until the children may be safely returned home; placed permanently with adoptive families, in a legal guardianship, or with a fit and willing relative; or placed in another planned permanent living arrangement. Benefit/service: Payments to foster care providers to cover the costs of children's maintenance (e.g., room and board, clothing and supplies, liability insurance, certain travel expenses); and support for administrative and child placement services intended to promote safety and permanency for children and well-being for children and their families. Individual eligibility criteria: For states to receive federal reimbursement for the maintenance and related costs of providing foster care, children must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations and be placed in foster care settings that meet specified requirements. Children also must have been removed from homes in which they would have been considered "needy" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996. Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate. Matching or related requirements: Maintenance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%. New obligations (FY2013) : $4,133 million. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data (most recent available) : In FY2013, the average monthly number of children served was 158,994. CRS report s CRS Report R42792, Child Welfare: A Detailed Overview of Program Eligibility and Funding for Foster Care, Adoption Assistance and Kinship Guardianship Assistance under Title IV-E of the Social Security Act , by [author name scrubbed]; and CRS Report R42794, Child Welfare: State Plan Requirements under the Title IV-E Foster Care, Adoption Assistance, and Kinship Guardianship Assistance Program , by [author name scrubbed]. Adoption Assistance (CFDA #93.659) Authority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 U.S.C. 673. Regulations: 45 C.F.R. 1355 and 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children's Bureau. Purpose of program: To facilitate the timely placement of children whose special needs (which may include age, membership in a large sibling group or a racial/ethnic minority group, physical or mental disabilities or other circumstances as determined by the state) would otherwise make it difficult to place them with adoptive families. Benefit/service: One-time nonrecurring payments to assist with the costs of adopting a special needs child (e.g., adoption fees, court costs, attorney fees) and ongoing monthly payments to adoptive families; administrative and child placement services intended to promote child safety, permanency and well-being. Individual eligibility criteria: For states to receive federal reimbursement for either nonrecurring or ongoing costs of adoption assistance, the children must have special needs, as defined by the state, which generally would make their placement for adoption difficult. For states to receive federal reimbursement for the ongoing costs of adoption assistance, children also must be eligible for Supplementary Security Income (SSI) or must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations. In addition, children (who are not eligible for SSI) must have been removed from homes in which they would have been considered "needy" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996. (Under P.L. 110-351 , income-related eligibility criteria are phased out for children entering the adoption assistance program beginning in FY2010 and no income eligibility criteria will remain by FY2018.) Form and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands). Allocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate. Matching or related requirements: Adoption assistance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%. New obligations (FY2013) : $2,278 million. Budgetary classification: Mandatory (open-ended entitlement to states). Participation data (most recent available) : In FY2013, the average monthly number of children served was 431,533. CRS report s : CRS Report R42792, Child Welfare: A Detailed Overview of Program Eligibility and Funding for Foster Care, Adoption Assistance and Kinship Guardianship Assistance under Title IV-E of the Social Security Act , by [author name scrubbed]; and CRS Report R42794, Child Welfare: State Plan Requirements under the Title IV-E Foster Care, Adoption Assistance, and Kinship Guardianship Assistance Program , by [author name scrubbed]. Social Services Block Grants (CFDA #93.667) Authority: Statute: Title XX-A of the Social Security Act, established by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ), as amended by the Patient Protection and Affordable Care Act ( P.L. 111-148 ; 42 U.S.C. 1397. Regulations: 45 C.F.R. Part 96, Subpart G. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To provide services directed at the following goals: achieve or maintain economic self-support to prevent, reduce, or eliminate dependency; achieve or maintain self-sufficiency to reduce or prevent dependency; prevent or remedy abuse, neglect or exploitation of children or adults unable to protect their own interests, or to preserve, rehabilitate or reunite families; prevent or reduce inappropriate institutional care; or refer or admit individuals into institutional care when other forms of care are not appropriate or provide services to individuals in institutions. Benefit/service: Services directed at the goals listed above, such as child care services, protective services for children and adults, services for children and adults in foster care, services related to the management and maintenance of the home, day care services for adults, transportation services, family planning services, training and related services, employment services, information, referral, and counseling services, the preparation and delivery of meals, health support services and appropriate combinations of services designed to meet the special needs of children, the aged, the mentally retarded, the blind, the emotionally disturbed, the physically disabled, and alcoholics and drug addicts. Individual eligibility criteria: Eligibility criteria are determined by the states, except that any funds transferred into the Social Services Block Grant from the Temporary Assistance for Needy Families (TANF) program must be used to serve children and their families whose incomes are no greater than 200% of the federal poverty guidelines. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands). Allocation formula: Funds are allocated among states according to their relative population size. Matching or related requirements: None. New obligations (FY2013) : $1,613 million. Budgetary classification: Mandatory (capped entitlement to states). Participation data (most recent available) : In FY2010, nearly 23.7 million individuals (12.2 million children, and 11.5 million adults) received services supported in whole or in part by the SSBG. CRS report: CRS Report 94-953, Social Services Block Grant: Background and Funding , by [author name scrubbed]. Chafee Foster Care Independence Program (CFDA #93.674) Authority: Statute: Section 477 of the Social Security Act, established by the Foster Care Independence Act of 1999 ( P.L. 106-169 ); 42 U.S.C. 677. Regulations: 45 C.F.R. 1356. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children's Bureau. Purpose of program: To help current and former foster youth achieve self-sufficiency. Benefit/service: Educational assistance, vocational training, employment services, life skills training, mentoring, preventive health activities, counseling, and (subject to certain limitations) room and board. Individual eligibility criteria: Children who are likely to remain in foster care until age 18, youth age 18-21 who have aged out of the foster care system, and youth who left foster care at age 16 and older for kinship guardianship or adoption. Form and recipient of federal assistance: Formula grants to states. Allows participation by Puerto Rico. Allocation formula: Funds are allocated among states according to their share of the nation's children in foster care, except that no state may receive less than $500,000 or the amount payable to the state under the predecessor program for FY1998, whichever is greater. Matching or related requirements: A 20% nonfederal match is required. Funds must supplement and not supplant any funds that would otherwise be used for the same general purposes. New obligations (FY2013) : $140 million. Budgetary classification: Mandatory (capped entitlement to states). Participation data (most recent available) : No data available. CRS report: CRS Report RL34499, Youth Transitioning from Foster Care: Background and Federal Programs , by [author name scrubbed]. Emergency Food and Shelter Program (CFDA #97.024) Authority: Statute: Title III of the Stewart B. McKinney Homeless Assistance Act of 1987 ( P.L. 100-77 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 U.S.C. 11331-11346. Regulations: no formal program-specific regulations. Federal administering agency: The program is administered by a National Board, which operates under the auspices of the Department of Homeland Security, Federal Emergency Management Agency. Purpose of program: To provide shelter, food, and supportive services for homeless and hungry individuals nationwide. Benefit/service: Mass shelter, mass feeding, food distribution through food pantries and food banks, one-month utility payments to prevent service cutoff, one-month rent/mortgage payments to prevent evictions or help people leaving shelters to establish stable living conditions. Individual eligibility criteria: Determined by boards that administer the program at the local level. Form and recipient of federal assistance: Formula grants to local boards in eligible local jurisdictions. Local boards further distribute funds among local service providers (called local recipient organizations), which provide direct services to homeless and hungry individuals and families. Eligible jurisdictions are chosen based on measures of population, unemployment and poverty. Some funds are set-aside for states to award to local jurisdictions that don't qualify as eligible jurisdictions but have high levels of need. Allocation formula: Funds are allocated among eligible local jurisdictions based on their number of unemployed persons relative to other eligible local jurisdictions. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). Matching or related requirements: None. New obligations (FY2013) : $114 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 59,751,368 meals were provided; 4,292,341 nights of lodging were provided; 60,123 rent/mortgage payments were made; and 150,376 utility payments were made. CRS report s : CRS Report R42766, The Emergency Food and Shelter National Board Program and Homeless Assistance , by [author name scrubbed]; and CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed]. Legal Services Corporation (no CFDA #) Authority: Statute: Legal Services Corporation of 1974 ( P.L. 93-355 ), most recently reauthorized by the Equal Access to Courts Act ( P.L. 95-222 ); 42 U.S.C. 2996 et seq. Regulations: 45 C.F.R. Part 1600. Federal administering agency: Legal Services Corporation. Purpose of program: To provide equal access to the justice system for individuals who seek redress of grievances and to provide high quality legal assistance to those would be otherwise unable to afford legal counsel. Benefit/service: Legal services in civil cases. Individual eligibility criteria: Eligible individuals must have incomes no greater than 125% of the federal poverty guidelines, with exceptions (up to 200% of poverty) allowed in specified circumstances. Form and recipient of federal assistance: Formula grants to public and private nonprofit entities. Allows participation by territories (American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the U.S. Virgin Islands and any other territories or possessions of the United States). Allocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is based on each state's share of the nation's poverty population. Matching or related requirements: None. New obligations (FY2013) : $343 million. Budgetary classification: Discretionary. Participation data (most recent available) : In FY2012, 809,830 cases were closed. CRS report: CRS Report RL34016, Legal Services Corporation: Background and Funding , by [author name scrubbed]. Employment and Training Community Service Employment for Older Americans (CFDA #17.235) Authority: Statute: Title V of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 U.S.C. 3056 et seq. Regulations: 20 C.F.R. Part 641. Federal administering agency: Department of Labor, Employment and Training Administration. Purpose of program: To enable individuals to become self-sufficient through placement in community service positions and job training. Benefit/service: Part-time temporary community service jobs that pay at least minimum wage, job-related training, and supportive services that are necessary to enable an individual to participate in the program. Individual eligibility criteria: Unemployed individuals age 55 or older with low incomes (defined as no higher than 125% of the federal poverty guidelines). Regulations require priority for certain groups, including veterans and individuals age 60 or older. Regulations also require special consideration to be given to certain groups, including individuals with the "greatest economic and social need." Form and recipient of federal assistance: Formula grants to states and national nonprofit organizations. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and by tribal organizations. Allocation formula: Funds are allocated to states and national organizations according to a three-part formula: a hold-harmless factor (FY2000 level of funding); each state's relative share of individuals age 55 or older; and each state's relative per capita income. Matching or related requirements: A nonfederal share of 10% is required. New obligations (FY2013) : $429 million. Budgetary classification: Discretionary. Participation data (most recent available) : In program year 2012 (July 2012-June 2013), approximately 70,718 low-income workers participated in community service assignments. CRS report: CRS Report RL33880, Funding for the Older Americans Act and Other Aging Services Programs , by [author name scrubbed] and [author name scrubbed]. WIA Adult Activities (CFDA #17.258) Authority: Statute: Chapter 5 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ), to be replaced by Chapter 3 of Title I, Subpart B of the Workforce Innovation and Opportunity Act ( P.L. 113-128 , goes into effect on July 1, 2015); 29 U.S.C. 2861-2864. Regulations: 20 C.F.R. Part 663. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment. Purpose of program: To assist eligible individuals in finding and qualifying for meaningful employment, and to help employers find the skilled workers they need to compete and succeed in business. Benefit/service: Core services, including outreach, job search and placement assistance, and labor market information. Intensive services, including comprehensive assessments, development of individual employment plans and counseling and career planning. ( P.L. 113-128 combines core and intensive services into a single category called career services.) Training services, including occupational skills training and basic skills training. Supportive services, including transportation, child care, housing and needs-related payments in certain circumstances. Individual eligibility criteria: Eligible individuals are at least 18 years old. No additional eligibility criteria apply for core services (or career services under P.L. 113-128 ). For training services (and intensive services prior to implementation of P.L. 113-128 ), individuals must need the services in order to become employed or to obtain or retain a job that allows for self-sufficiency. If funds are limited, priority must go to recipients of cash assistance and other low-income individuals. Low-income is defined as having income below the federal poverty guidelines or 70% of the lower living standard income level, whichever is higher; receiving means-tested public assistance; being a member of a household that receives food stamps; qualifying as homeless; or being a disabled individual whose own income meets the low-income definition but whose family income exceeds it. Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, Marshall Islands, Micronesia, and Palau). Allocation formula: Funds are allocated to states on the basis of a three-part formula: state shares of the national distribution of areas of "substantial" unemployment (unemployment rate of at least 6.5%); "excess" unemployment (rate above 4.5%); and the "disadvantaged" adult population (family income below the federal poverty guidelines or 70% of the lower living standard income level). Matching or related requirements: None. New obligations (FY2013) : $731 million. Budgetary classification: Discretionary. Participation data (most recent available) : During April 2012-March 2013, there were 1,111,555 "exiters" from adult activities, of which 818,539 received core services only, 177,422 received core and intensive services, and 115,594 received training services. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days. CRS report: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]. WIA Youth Activities (CFDA #17.259) Authority: Statute: Chapter 4 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ), to be replaced by Chapter 2 of Title I, Subpart B of the Workforce Innovation and Opportunity Act of 2014 ( P.L. 113-128 , goes into effect on July 1, 2015); 29 U.S.C. 2851-2954. Regulations: 20 C.F.R. Part 664. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment. Purpose of program: To improve educational and skill competencies of youth and develop connections to employers, mentoring opportunities with adults, training opportunities, supportive services, incentives for recognition and achievement, and leadership opportunities. Benefit/service: Strategies to complete secondary school, alternative secondary school services, summer employment, work experience, occupational skill training, leadership development opportunities, supportive services, adult mentoring, follow-up services, and comprehensive guidance and counseling. Individual eligibility criteria: Eligible youth are low-income, ages 14 through 21, and either deficient in basic skills, a school dropout, homeless, a runaway or foster child, pregnant or a parent, or a youth offender. ( P.L. 113-128 revises eligibility categories to include "in-school" youth aged 14-21, and "out-of-school" youth aged 16-24.) Low-income is defined as receiving (or being eligible to receive) cash assistance or food stamps (now the Supplemental Nutrition Assistance Program); having family income no greater than the federal poverty guidelines or 70% of the lower living standard income level; or being homeless, a foster child for whom state or local payments are made, or a disabled person whose income meets the low-income definition but whose family income exceeds it. ( P.L. 113-128 also includes youth living in a high poverty area as meeting the low-income criteria.) Form and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the Marshall Islands, Micronesia, and Palau). Allocation formula: Funds are allocated to states according to a three-part formula: state shares of the national distribution of areas of "substantial" unemployment (unemployment rate of at least 6.5%); "excess" unemployment (rate above 4.5%); and population of "disadvantaged" youth (family income below the federal poverty guidelines or 70% of the lower living standard income level). Matching or related requirements: None. New obligations (FY2013) : $856 million. Budgetary classification: Discretionary. Participation data (most recent available) : During April 2012-March 2013, there were 112,386 "exiters" from youth activities. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days. CRS reports: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]; and CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed]. Social Services and Targeted Assistance for Refugees (CFDA #93.566 and #93.584) Authority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1980 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 U.S.C. 1521-1524. Regulations: 45 C.F.R. Part 400. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement. Purpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible. Benefit/service: Employability and other services that address participants' barriers to employment such as social adjustment services, interpretation and translation services, day care for children, citizenship and naturalization services. Services are designed to enable refugees to obtain jobs within one year of becoming enrolled. Individual eligibility criteria: Refugees, asylees, other specified humanitarian cases, and trafficking victims. Priority goes to newly arriving refugees during their first year in the U.S. who apply for services; refugees who are receiving cash assistance; unemployed refugees who are not receiving cash assistance; and employed refugees in need of services to retain employment or to attain economic independence. Form and recipient of federal assistance: Formula grants to states and competitive grants to public and private nonprofit entities. Allocation formula: State formula grants are based on the number of refugees, asylees, and other eligible cases who arrived in the U.S. not more than 36 months before the start of the fiscal year and who are residing in the state. Matching or related requirements: None. New obligations (FY2013) : $198 million (appropriations). Budgetary classification: Discretionary. Participation data (most recent available) : No data available. CRS report: CRS Report RL31269, Refugee Admissions and Resettlement Policy , by [author name scrubbed]. Foster Grandparents (CFDA #94.011) Authority: Statute: Domestic Volunteer Service Act of 1973, most recently reauthorized by the Serve America Act ( P.L. 111-13 ); 42 U.S.C. 5011. Regulations: 45 C.F.R. Part 2552. Federal administering agency: Corporation for National and Community Service. Purpose of program: To provide opportunities for older low-income people to have a positive impact on the lives of children in need. Benefit/service: Employment (between 15 and 40 hours weekly), with hourly stipend, providing services to children with special or exceptional needs or with conditions or circumstances that limit their academic, social or economic development. Individual eligibility criteria: Eligible individuals must be age 55 or older and, to be eligible to receive a stipend, individuals must have incomes no greater than 200% of federal poverty guidelines. Form and recipient of federal assistance: Discretionary grants to public and private nonprofit entities. Allows participation by entities in territories (American Samoa, Guam, Puerto Rico, the Trust Territories of the Pacific Islands, the U.S. Virgin Islands) and by Indian tribes. Allocation formula: Not applicable. Matching or related requirements: Nonfederal match of 10% required, which may be in cash or in-kind. New obligations (FY2013) : $105 million (appropriations). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, 22,700 "volunteer service years" were reported for the Foster Grandparent program. CRS report: CRS Report RL33931, The Corporation for National and Community Service: Overview of Programs and Funding , by Abigail B. Rudman and [author name scrubbed]. Job Corps (no CFDA #) Authority: Statute: Title I-C of the Workforce Investment Act of 1998 ( P.L. 105-220 ), to be replaced by Title I-C of the Workforce Innovation and Opportunity Act ( P.L. 113-128 , goes into effect on July 1, 2015); 29 U.S.C. 2881-2901. Regulations: 20 C.F.R. Part 670. Federal administering agency: Department of Labor, Employment and Training Administration, Office of Job Corps. Purpose of program: To assist eligible youth who need and can benefit from an intensive program, operated in a group setting in residential and nonresidential centers, to become more responsible, employable, and productive citizens. (Revised by P.L. 113-128 to include assisting eligible youth to connect to the labor force by providing them with intensive social, academic, career and technical education, and service-learning opportunities, in primarily residential centers, so they may obtain secondary school diplomas or postsecondary credentials.) Benefit/service: Education and vocational training, including advanced career training; work experience; recreational activities; physical rehabilitation and development; job placement and counseling; and child care. (Revised by P.L. 113-128 to include work-based learning and driver's education, among other things.) Individual eligibility criteria: Low-income youth aged 16-24 who are one or more of the following: deficient in basic reading, writing or computing skills; a school drop-out; homeless, a runaway, or a foster child; a parent; in need of additional education, vocational training, or counseling to accomplish schoolwork or to secure and hold a job (revised by P.L. 113-128 to a job that leads to economic self-sufficiency). Low-income is defined as a person who receives or whose family receives cash assistance or food stamps (revised to TANF, SNAP or SSI by P.L. 113-128 ), or has income no higher than federal poverty guidelines, is homeless or a foster child, or is a disabled person whose income does not exceed federal poverty guidelines but whose family income does. ( P.L. 113-128 adds eligibility for free/reduced-price lunch to the definition of low-income, and provides that for otherwise eligible veterans, income requirements will not apply if income earned from the military in the preceding six months would exceed the income limit.) Form and recipient of federal assistance: Competitive contracts and interagency agreements with federal, state or local agencies, area vocational education schools or residential vocational schools, or private organizations. Allows participation by Indian tribes and tribal organizations. Allocation formula: Not applicable. Matching or related requirements: None. New obligations (FY2013) : $1,718 million. Budgetary classification: Discretionary. Participation data (most recent available) : In program year 2012 (July 2012-June 2013), total Job Corps enrollment was 40,800. CRS report: CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed]. Energy Assistance Weatherization Assistance (CFDA #81.042) Authority: Statute: Title IV of the Energy Conservation and Production Act of 1976 ( P.L. 94-385 ), most recently reauthorized by the Energy Independence and Security Act of 2007 ( P.L. 110-140 ); 42 U.S.C. 6871 et seq. Regulations: 10 C.F.R. Part 440. Federal administering agency: Department of Energy, Office of Energy Efficiency and Renewable Energy. Purpose of program: To increase the energy efficiency of homes owned or occupied by low-income persons to reduce their total residential energy costs, and improve their health and safety. Benefit/service: Computerized energy audits and diagnostic equipment to determine the most energy-efficient measures for each individual home; labor and materials necessary to install such energy-efficient measures. Individual eligibility criteria: Homes eligible for weatherization assistance must be occupied by persons with income below 200% of the federal poverty guidelines or who have received cash assistance under Temporary Assistance for Needy Families (TANF) or Supplemental Security Income (SSI) in the previous 12 months, or (at state option) who are eligible for assistance under the Low-Income Home Energy Assistance Program (LIHEAP). Form and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes and territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands). Allocation formula: A specified dollar "base" amount is allocated among states; the balance is allocated according to a formula that reflects each state's relative low-income population, climatic conditions, and residential energy expenditures by low-income households in each state. Matching or related requirements: None. New obligations (FY2013) : $182 million (weatherization and intergovernmental activities). Budgetary classification: Discretionary. Participation data (most recent available) : In FY2013, the program made energy improvements in the homes of 46,871 families. CRS report s : CRS Report R42147, DOE Weatherization Program: A Review of Funding, Performance, and Cost-Effectiveness Studies , by [author name scrubbed]; and CRS Report R40913, Renewable Energy and Energy Efficiency Incentives: A Summary of Federal Programs , by [author name scrubbed] and [author name scrubbed]. Low-Income Home Energy Assistance Program (LIHEAP) (CFDA #93.568) Authority: Statute: Low-Income Home Energy Assistance Act, established by Title XXVI of the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) and most recently reauthorized by the Energy Policy Act of 2005 ( P.L. 109-58 ); 42 U.S.C. 8621-8630. Regulations: 45 C.F.R. Parts 96.80-96.89. Federal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services. Purpose of program: To assist low-income households, particularly those with the lowest incomes, that pay a high proportion of their income for home energy, primarily in meeting their immediate home energy needs. Benefit/service: Assistance to households in paying their heating and cooling costs, crisis intervention, home weatherization, and services (such as counseling) to help reduce energy costs. Individual eligibility criteria: States establish their own eligibility criteria within federal parameters. Maximum federal income eligibility is 150% of federal poverty guidelines or, if greater, 60% of state median income. States may not set eligibility at lower than 110% of federal poverty guidelines. States may grant categorical eligibility to households in which at least one member receives benefits under Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), or certain veterans' programs. Form and recipient of federal assistance: Formula block grants and contingency funds to states. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands) and by Indian tribes. Allocation formula: Regular block grant funds are distributed to states based on a three-tier formula depending on the total amount of funds appropriated. Formula factors include total residential energy consumption, temperature variation, low-income heating and cooling consumption, among others; however, the formula also includes two hold-harmless provisions. Contingency funds are awarded by the President based on need. Matching or related requirements: None. New obligations (FY2013) : $3,255 million. Budgetary classification: Discretionary. Participation data: In FY2011, 7.6 million households received heating and/or winter crisis assistance and 1.1 million households received cooling and/or summer crisis assistance. There may be duplication among those receiving heating and cooling assistance. CRS report: CRS Report RL31865, LIHEAP: Program and Funding , by [author name scrubbed].

The Congressional Research Service (CRS) regularly receives requests about the number, size, and programmatic details of federal benefits and services targeted toward low-income populations, and the characteristics of people who participate. This report attempts to identify and provide information about such programs, including their federal spending during FY2008-FY2013. The report does not discuss social insurance programs such as Social Security, Medicare, or Unemployment Insurance, but includes only programs with an explicit focus on low-income people or communities. Tax provisions, other than the refundable portion of two tax credits, are excluded. Key findings include the following: No single label best describes all programs with a low-income focus, and no single trait characterizes those who benefit. Programs are highly diverse in their purpose, design, and target population. Readers should use caution in making generalizations about the programs described in this report. Total federal spending on low-income programs rose sharply between FY2008 and FY2009 as the Great Recession took hold. Spending ultimately peaked in FY2011, dropped in FY2012, and edged up again in FY2013. Total low-income spending in FY2013 totaled $744 billion, significantly higher than the FY2008 level of $561 billion but below the FY2010 level of $750 billion. Peak spending over the six years was $764 billion in FY2011. Health care is the single largest category of low-income spending, accounting for nearly half of the total, and drives overall trends. The single largest program within the health category is Medicaid. Cash aid and food assistance are the next largest categories, with food assistance seeing the largest growth over the six-year period. Other categories (in descending size) are education, housing and development, social services, employment and training, and energy assistance. Most low-income spending (82% in FY2013) is classified in budgetary terms as "mandatory" (or "direct"), which means the amount spent is a function of eligibility and payment rules established by Congress in authorizing laws. Congress determines the amount spent for the remaining "discretionary" programs through the annual appropriations process. Four programs accounted for 65% of low-income spending in FY2013, and 10 programs made up 82%. Medicaid alone contributed 39% of the total. In addition to Medicaid, the top four include the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC). The disabled receive the single largest share of federal low-income spending, based on an analysis of spending for the top 10 programs in FY2011. The disabled received almost a third of such spending, primarily for health care and secondarily for cash aid. Working families with children received the next largest share of spending (including from the EITC and Additional Child Tax Credit), followed by the elderly. The bulk of spending for low-income elderly was in the health category. Less than 12% of total low-income spending in FY2011 went to families with nonelderly nondisabled adults who were not working.

longest

On January 16, 2017, U.S. and Cuban officials signed a memorandum of understanding to deepen bilateral law enforcement cooperation and information sharing. (See " Advancing Engagement ," below.) On January 12, 2017, the Obama Administration announced a major change in U.S. immigration policy by ending the so-called wet foot/dry foot policy in which thousands of undocumented Cuban migrants have entered the United States in recent years. The Administration also announced it was ending the 10-year-old Cuban Medical Professional Parole program, which allowed Cuban medical professionals in third countries to be approved for admittance into the United States. (See " Migration Issues ," below.) On January 9, 2017, U.S. and Cuban officials signed an oil spill preparedness and response agreement for cooperation and coordination to prevent, contain, and clean up marine oil and other hazardous pollution. (See " Advancing Engagement ," below.) On January 5, 2017, the Cuban Commission for Human Rights and National Reconciliation (CCDHRN) reported that there were at least 9,940 short-term detentions for political reasons in 2016, higher than annual levels over the past several years. (See " Human Rights ," below.) On December 23, 2016, President Obama signed into law the National Defense Authorization Act for FY2017 ( P.L. 114-328 ), which continued prohibitions on funding for the closure of the U.S. Naval Station at Guantanamo Bay, Cuba, and restricted FY2017 funding for Cuba's participation in certain joint or multilateral exercises or related security conferences. (See " Diplomatic and Military Engagement " and Appendix A , below.) On December 10, 2016, President Obama signed into law a continuing resolution ( P.L. 114-254 ) providing FY2017 appropriations for most programs at the FY2016 level, minus an across-the-board reduction of almost 0.2% through April 28, 2017. This law affects human rights and democracy funding for Cuba, as well as funding for the Office of Cuba Broadcasting, both of which are funded through Department of State, Foreign Operations, and Related Programs appropriations. The 115 th Congress will face completing action on FY2017 appropriations. (See " U.S. Funding to Support Democracy and Human Rights " and " Radio and TV Martí ," below.) On December 7, 2016, the United States and Cuba held a fifth Bilateral Commission meeting in Havana, with the objective of advancing the normalization process. (See " Advancing Engagement ," below.) On November 25, 2016, Cuba's former long-time ruler Fidel Castro died at 90 years of age. (See " Death of Fidel Castro ," below, and CRS Insight IN10616, Fidel Castro's Death: Implications for Cuba and U.S. Policy .) On October 26, 2016, the U.N. General Assembly approved (as it has since 1991) a resolution urging the United States to lift the embargo on Cuba. For the first time, the United States abstained (along with Israel) and 191 other nations voted in favor. (See " Cuba's Foreign Relations ," below.) On October 14, 2016, President Obama issued a presidential policy directive on the normalization of relations with Cuba, which set forth medium-term objectives and the roles and responsibilities for various U.S. departments and agencies to move forward in the normalization process. (See " Advancing Engagement ," below.) On October 14, 2016, the Treasury and Commerce Departments announced a sixth round of regulatory changes to the Cuban Assets Control Regulations and the Export Administration Regulations that further eased certain economic sanctions. Among the changes were removal of the value limit for the importation of Cuban products (including cigars and rum) by authorized travelers as accompanied baggage for personal use; general authorization waiving the restriction prohibiting foreign vessels from entering a U.S. port for trade for 180 days after calling on a Cuban port for trade purposes; general authorizations for transactions incident to obtaining U.S. Food and Drug Administration (FDA) approval of Cuban-origin pharmaceuticals and for the importation of such pharmaceuticals into the United States; and general authorization to enter into contingent contracts for transactions currently prohibited by the embargo. (See " Increase in Travel, Commerce, and the Flow of Information ," below.) On September 14, 2016, the House Committee on Agriculture held a hearing on "American Agricultural Trade with Cuba." (See " U.S. Exports and Sanctions ," below). On September 29, 2016, President Obama signed into law a full-year FY2017 military construction appropriations measure (Division A of P.L. 114-223 , H.R. 5325 , approved by the Senate and House on September 28, 2016) with a provision continuing a prohibition against funding to carry out the closure or realignment of the United States Naval Station at Guantánamo Bay, Cuba. (See Appendix A .) On September 27, 2016, President Obama nominated Jeffrey DeLaurentis, the current chargé d'affaires of the U.S. Embassy in Havana, to be U.S. ambassador to Cuba. (See " Diplomatic and Military Engagement ," below.) On August 31, 2016, the Department of Transportation finalized a decision for eight U.S. airlines to provide up to 20 regularly scheduled roundtrip flights between Havana and 10 U.S. cities. Regular flights from the United States to Cuban cities other than Havana began in late August, and American Airlines reportedly will be the first to begin direct flights to Havana from Miami in late November. (See " Restrictions on Travel and Remittances ," below.) Political and economic developments in Cuba and U.S. policy toward the island nation, located just 90 miles from the United States, have been significant congressional concerns for many years. Especially since the end of the Cold War, Congress has played an active role in shaping U.S. policy toward Cuba, first with the enactment of the Cuban Democracy Act (CDA) of 1992 ( P.L. 102-484 , Title XVII) and then with the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ). Both measures strengthened U.S. economic sanctions on Cuba that had first been imposed in the early 1960s but also provided roadmaps for a normalization of relations dependent upon significant political and economic changes in Cuba. A decade ago, Congress partially modified its sanctions-based policy toward Cuba when it enacted the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA ( P.L. 106-387 , Title IX) allowing for U.S. agricultural exports to Cuba. Over the past decade, much of the debate in Congress over U.S. policy has focused on U.S. sanctions, especially over U.S. restrictions on travel to Cuba. In 2009, Congress took legislative action in an appropriations measure ( P.L. 111-8 ) to ease restrictions on family travel and travel for the marketing of agricultural exports, marking the first congressional action easing Cuba sanctions in almost a decade. The Obama Administration took further action in April 2009 by lifting all restrictions on family travel and on cash remittances by family members to their relatives in Cuba. In January 2011, the Administration announced the further easing of restrictions on educational and religious travel to Cuba and on non-family remittances. In December 2014, just after the adjournment of the 113 th Congress, President Obama announced a major shift in U.S. policy toward Cuba, moving away from a sanctions-based policy aimed at isolating Cuba to a policy of engagement and a normalization of relations. This report is divided into three major sections analyzing Cuba's political and economic environment, U.S. policy, and selected issues in U.S.-Cuban relations. Legislative initiatives in the 114 th Congress are noted throughout the report, and four appendixes provide a listing of enacted measures and approved resolutions ( Appendix A ), bills receiving some action in 2015 and 2016 ( Appendix B ), and additional bills and resolution introduced in the 114 th Congress ( Appendix C ). For more on Cuba from CRS, see CRS In Focus IF10045, Cuba: U.S. Policy Overview , by [author name scrubbed]; CRS Insight IN10616, Fidel Castro's Death: Implications for Cuba and U.S. Policy , by [author name scrubbed]; CRS Insight IN10466, President Obama's Historic Visit to Cuba , by [author name scrubbed]; CRS Insight IN10369, Pope Francis in Cuba , by [author name scrubbed]; CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations , by [author name scrubbed] and [author name scrubbed]; CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by [author name scrubbed]; CRS Insight IN10514, Financing U.S. Agricultural Exports to Cuba , by [author name scrubbed]; CRS Report R44119, U.S. Agricultural Trade with Cuba: Current Limitations and Future Prospects , by [author name scrubbed]; CRS Legal Sidebar WSLG1586, House Approves Measure to Prevent Return of GTMO to Cuba without Congress's Say So , by [author name scrubbed]; CRS Report R44137, Naval Station Guantanamo Bay: History and Legal Issues Regarding Its Lease Agreements , by [author name scrubbed] and [author name scrubbed]; CRS Legal Sidebar WSLG1405, Can Creditors Enforce Terrorism Judgments Against Cuba? , by [author name scrubbed]; and CRS Report R44714, U.S. Policy on Cuban Migrants: In Brief , by [author name scrubbed]. Cuba became an independent nation in 1902. From its discovery by Columbus in 1492 until the Spanish-American War in 1898, Cuba was a Spanish colony. In the 19 th century, the country became a major sugar producer, with slaves from Africa arriving in increasing numbers to work the sugar plantations. The drive for independence from Spain grew stronger in the second half of the 19 th century, but it only came about after the United States entered the conflict when the USS Maine sank in Havana Harbor after an explosion of undetermined origin. In the aftermath of the Spanish-American War, the United States ruled Cuba for four years until Cuba was granted its independence in 1902. Nevertheless, the United States still retained the right to intervene in Cuba to preserve Cuban independence and maintain stability in accordance with the Platt Amendment that became part of the Cuban Constitution of 1901. The United States subsequently intervened militarily three times between 1906 and 1921 to restore order, but in 1934, the Platt Amendment was repealed. Cuba's political system as an independent nation was often dominated by authoritarian figures. Gerardo Machado (1925-1933), who served two terms as president, became increasingly dictatorial until he was ousted by the military. A short-lived reformist government gave way to a series of governments that were dominated behind the scenes by military leader Fulgencio Batista until he was elected president in 1940. Batista was voted out of office in 1944 and was followed by two successive presidents in a democratic era that ultimately became characterized by corruption and increasing political violence. Batista seized power in a bloodless coup in 1952, and his rule progressed into a brutal dictatorship. This fueled popular unrest and set the stage for Fidel Castro's rise to power. Castro led an unsuccessful attack on military barracks in Santiago, Cuba, on July 26, 1953. He was jailed, but subsequently freed and went into exile in Mexico, where he formed the 26 th of July Movement. Castro returned to Cuba in 1956 with the goal of overthrowing the Batista dictatorship. His revolutionary movement was based in the Sierra Maestra mountains in eastern Cuba and joined with other resistance groups seeking Batista's ouster. Batista ultimately fled the country on January 1, 1959, leading to 47 years of rule under Fidel Castro until he stepped down from power provisionally in July 2006 because of poor health. While Castro had promised a return to democratic constitutional rule when he first took power, he instead moved to consolidate his rule, repress dissent, and imprison or execute thousands of opponents. Under the new revolutionary government, Castro's supporters gradually displaced members of less radical groups. Castro moved toward close relations with the Soviet Union while relations with the United States deteriorated rapidly as the Cuban government expropriated U.S. properties. In April 1961, Castro declared that the Cuban revolution was socialist, and in December 1961, he proclaimed himself to be a Marxist-Leninist. Over the next 30 years, Cuba was a close ally of the Soviet Union and depended on it for significant assistance until the dissolution of the Soviet Union in 1991. From 1959 until 1976, Castro ruled by decree. In 1976, however, the Cuban government enacted a new Constitution setting forth the Cuban Communist Party (PCC) as the leading force in state and society, with power centered in a Political Bureau headed by Fidel Castro. Cuba's Constitution also outlined national, provincial, and local governmental structures. Since then, legislative authority has been vested in a National Assembly of People's Power that meets twice annually for brief periods. When the Assembly is not in session, a Council of State, elected by the Assembly, acts on its behalf. According to Cuba's Constitution, the president of the Council of State is the country's head of state and government. Executive power in Cuba is vested in a Council of Ministers, also headed by the country's head of state and government, that is, the president of the Council of State. Fidel Castro served as head of state and government through his position as president of the Council of State from 1976 until February 2008. While he had provisionally stepped down from power in July 2006 because of poor health, Fidel still officially retained his position as head of state and government. National Assembly elections were held in January 2008, and Fidel Castro was once again among the candidates elected to the 614-member legislative body. (As in the past, voters were offered a single slate of candidates.) On February 24, 2008, the new Assembly was scheduled to select from among its ranks the members of the Council of State and its president. Many observers had speculated that because of his poor health, Fidel would choose not to be reelected as president of the Council of State, which would confirm his official departure from heading the Cuban government. Statements from Castro himself in December 2007 hinted at his potential retirement. That proved true on February 19, 2008, when Fidel announced that he would not accept the position as president of the Council of State, essentially confirming his departure as titular head of the Cuban government. After Fidel stepped down from power, Cuba's political succession from Fidel to Raúl Castro was characterized by considerable stability. After two and a half years of provisionally serving as president, Raúl Castro officially became Cuba's president in February 2008, when Cuba's legislature selected him as president of the 31-member Council of State. While Raúl Castro began implementing economic reforms in 2008, there has been no change to his government's tight control over the political system, and few observers expect such changes to occur with the government backed up by a strong security apparatus. The Cuban Communist Party (PCC) held its sixth congress in April 2011. While the party concentrated on making changes to Cuba's economic model, some political changes also occurred. As expected, Raúl became first secretary of the PCC, officially replacing his brother Fidel. Most significantly, Raúl proposed two five-year term limits for top positions in the party and in the government, calling for systematic rejuvenation, a change that was confirmed by a January 2012 national PCC conference. Also at the 2012 conference, the PCC approved a resolution by which its Central Committee would be allowed to replace up to 20% of its 115 members within its five-year mandate. In February 2013, Cuba held elections for over 600 members of the National Assembly of People's Power, the national legislature, as well as over 1,600 provincial government representatives, both for five-year terms. Under Cuba's one-party system, the overwhelming majority of officials elected are PCC members. Critics maintain that elections in Cuba are a sham and entirely controlled by the PCC. The new National Assembly selected Raúl Castro for a second five-year term as president of the Council of State (Cuba's head of government). In conformity with the new two-term limit for top officials, Castro indicated that this would be his last term, which means that he would serve until February 2018, when he would be 86 years of age. Most significantly, a much younger official, Miguel Díaz-Canel Bermúdez (currently aged 56), was selected to serve as first vice president of the Council of State, replacing then 82-year-old José Ramón Machado, part of the older generation of so-called históricos of the 1959 Cuban revolution. The position of first vice president is significant because, according to the Cuban Constitution, the person holding the office is the official successor to the president. Prior to his appointment, Díaz-Canel—an engineer by training—was serving as one of the Council of State's six other vice presidents. His appointment as the official constitutional successor to Castro represents a move toward bringing about generational change in Cuba's political system. Díaz-Canel became a member of the Politburo in 2003 and also held top PCC positions in the provinces of Villa Clara and Holguín. He became education minister in 2009 until he was tapped to be a vice president of the Council of State. Díaz-Canel has been described in media reports as an experienced manager with good relations with the military and as someone that worked his way up through the party. Some Cuba watchers maintain that Díaz-Canel is still very much in the shadow of Raúl, and has not yet taken on a prominent role, and contend that the Cuban military is perhaps the most important institution to watch as the transition to a post-Castro government unfolds. Under Raúl, who served as defense minister from the beginning of the Cuban revolution until 2008, the Cuban military has played an increasing role in government, with several military officers and confidants of Raúl serving as ministers. Speaking on the 60 th anniversary of the start of the Cuban revolution on July 26, 2013, President Castro asserted that a generational transfer of power had already begun, stating that "there is a slow and orderly transfer of the leadership of the revolution to the new generations." In October 2015, however, Castro stayed with the historical leadership when, after the resignation of 76-year-old Minister of the Interior (MININT) General Abelardo Colomé Ibarra because of health reasons, he replaced Colomé with 77-year-old MININT First Vice Minister General Carlos Fernández Gondín. In September 2015, the Council of State had given Fernández the honorific title of Hero of the Republic because of his role fighting in Angola. The PCC's seventh party congress was held April 16-19, 2016. Few details were made public ahead of the congress, prompting criticism over the lack of information and consultation compared with the 2011 party congress. While some observers expected there to be a preview of forthcoming economic changes, no new reform measures were announced. Raúl Castro noted, however, that Cuba must reestablish a single currency as soon as possible in order to resolve wage and other economic distortions. Castro reported that just 21% of the more than 300 economic guidelines adopted at the 2011 party congress had been implemented. He said that for the 2016-2021 period, 268 guidelines were being proposed for updating the country's economic model, including 193 modified since the 2011 party congress, 31 the same, and 44 new guidelines. Castro reasserted that Cuba would move forward updating its economic model "without haste, but without pause." The slow pace of Cuba's economic reform process, however, demonstrates the government's extreme cautiousness in taking economic actions could have negative social or political consequences. Castro also proposed 60 years of age as the maximum age to join the Central Committee and 70 years of age as the maximum age to assume a leadership position in the party and in state and government institutions and mass organizations. He noted that these changes would be implemented through future reforms to the constitution and that there would be a five-year period of transition for the introduction of these age limits for top positions. In contrast, on the last day of the congress, Castro (currently 85 years of age) and José Ramón Machado Ventura (currently 86 years of age) were reelected as first and second secretaries of the PCC. Both will continue to serve on the 17-member Political Bureau (Politburo)—10 other Politburo members will continue to serve on the ruling body, while 5 new members, including 3 women, were elected, bringing the total number of women to 4. The membership of the Central Committee grew from 116 to 142, with 55 new members younger than 60 years of age. While Castro reiterated his intention to step down as President in February 2018, at this juncture it appears that he will retain his position as first secretary of the PCC. Cuba's former long-time ruler Fidel Castro died on November 25, 2016, at 90 years of age. Although Fidel Castro's historical legacy is significant—regardless of whether one views him positively or negatively—he has not held formal power since he stepped down in 2006. After stepping down, Fidel continued to author essays published in Cuban media that cast a shadow on Raúl's rule. Many Cubans reportedly believe that Fidel encouraged so-called hardliners in Cuba's Communist Party and government bureaucracy to slow the pace of reforms. With Fidel's passing, some Cuban entrepreneurs hope that the pace of reforms might accelerate. Fidel's death points to the generational change that has already begun in the Cuban government and a passing of the older generation of the 1959 revolution. Upon Fidel's passing, President Obama issued a statement extending condolences to Fidel's family and extending "a hand of friendship to the Cuban people." He said that "history will record and judge the enormous impact of this singular figure on the people and world around him." The President acknowledged that while the United States and Cuba have had profound political disagreements, his Administration has "worked hard to put the past behind us, pursuing a future in which the relationship between our two countries is defined not by our differences but by the many things that we share as neighbors and friends...." The Cuban government has a poor record on human rights, with the government sharply restricting freedoms of expression, association, assembly, movement, and other basic rights since the early years of the Cuban revolution. The government has continued to harass members of human rights and other dissident organizations. These include the Ladies in White ( Damas de Blanco ), currently led by Berta Soler, formed in 2003 by the female relatives of the so-called "group of 75" dissidents arrested that year; and the Patriotic Union of Cuba (UNPACU), led by José Daniel Ferrer García, established in 2011 by several dissident groups with the goal of fighting peacefully for civil liberties and human rights. Two Cuban political prisoners conducting hunger strikes have died in recent years, Orlando Zapata Tamayo in February 2010 and Wilman Villar Mendoza in January 2012. Tamayo died after an 85-day hunger strike that he had initiated to protest inhumane conditions in Cuba's prisons. Villar Mendoza died following a 50-day hunger strike after he was convicted of "contempt" of authority and sentenced to four years in prison. Other hunger strikers have included Vladimir Morera Bacallao, discussed below, who conducted a hunger strike for more than 80 days in late 2015, and Guillermo Fariñas, who ended an almost two-month hunger strike in October 2016. While the human rights situation in Cuba remains poor, the country has made some advances in recent years. In 2008, Cuba lifted a ban on Cubans staying in hotels that previously had been restricted to foreign tourists in a policy that had been pejoratively referred to as "tourist apartheid." In recent years, as the government has enacted limited economic reforms, it has been much more open to debate on economic issues. In January 2013, Cuba took the significant step of eliminating its long-standing policy of requiring an exit permit and letter of invitation for Cubans to travel abroad. The change has allowed prominent dissidents and human rights activists to travel abroad and return to Cuba. Political Prisoners. The Cuban government has released a number of political prisoners in recent years. With the intercession of the Cuban Catholic Church, the Cuban government released some 125 political prisoners in 2010 and 2011, including the remaining members of the "group of 75" that were still in prison. In the aftermath of the December 2014 shift in U.S. policy toward Cuba, the Cuban government released another 53 political prisoners (although as noted below, six were rearrested in 2015). Among the 53 released were five jailed dissidents whom Amnesty International (AI) had named as prisoners of conscience in 2013 as well as several other dissidents whose cases AI was following. Two of the five prisoners of conscience, Emilio Planas Robert and Iván Fernández Depestre, had been imprisoned since September 2012 and July 2013, respectively, and had been convicted of "dangerousness" (a preemptive measure defined as the special proclivity of a person to commit crimes). The other three "prisoners of conscience," brothers Alexeis, Django, and Vianco Vargas Martín, were members of UNPACU. They were detained in late 2012 and convicted in June 2014 after a summary trial in which they were charged with "public disorder." Three other dissidents whose cases were followed by AI were released from prison on December 9, 2014—Ladies in White member Sonia Garro Alfonso; her husband, Ramón Alejandro Muñoz González; and a neighbor, Eugenio Hernández. They had been held since March 2012. In 2015, the Cuban government released two additional political prisoners named as prisoners of conscience by Amnesty International, but one of them was rearrested in late 2016. Ciro Alexis Casonova Pérez, who had been placed under house arrest in June 2014 after demonstrating in the streets, was convicted in December 2014 of public disorder and sentenced to one year in prison. In April 2015, AI declared Casonova Pérez a prisoner of conscience, and he was ultimately released in June 2015. Danilo Maldonado Machado (known as El Sexto), a graffiti artist, was unconditionally released from prison in October 2015, after almost 10 months in prison. Although he was never formally charged, Maldonado reportedly was accused of "aggravated contempt" for painting the names Fidel and Raúl on two pigs that he intended to release in Havana's Central Park as part of an art show. Maldonado, who had attended Miami Dade College in 2014 on a scholarship program, went on a hunger strike before his release. On November 26, 2016, however, Maldonado was arrested again after he made a video celebrating the death of Fidel Castro, and he was subsequently again declared a prisoner of conscience by AI, which has called for his immediate and unconditional release. As noted above, 6 of the 53 political prisoners released in December 2014 at the time of the improvement in U.S.-Cuban relations were rearrested in 2015. One of the prisoners, Vladimir Morera Bacallao, detained in April 2015 for hanging a sign outside his home in protest of municipal elections, began a hunger strike in early October 2015 that endured more than 80 days. Going beyond AI's narrow definition of prisoners of conscience, the Cuban government has held a larger number of political prisoners, generally defined as a person imprisoned for his or her political activities. In April 2016, the Havana-based Cuban Commission for Human Rights and National Reconciliation (CCDHRN) estimated that the Cuban government held 82 people imprisoned for political motives (up from 60 people in June 2015), with 11 others released from prison but still on parole—for a total of 93 convicted for political reasons. CCDHRN's report includes dozens of opposition activists, a number of whom are members of UNPACU, as well as those convicted on such charges as hijacking, terrorism, sabotage, other acts of violence, and espionage. The State Department's human rights report on Cuba covering 2015 stated that it was difficult to determine an accurate number of political prisoners because of the Cuban government's lack of transparency, its systematic violation of due process rights, and its continued denial of access to Cuban jails to independent monitors. The report noted, however, that two independent organizations estimated that there were 60 to 70 political prisoners. Short- T erm Detentions. Short-term detentions for political reasons have increased significantly over the past several years, a reflection of the government's change of tactics in repressing dissent away from long-term imprisonment. The CCDHRN reports that there were at least 2,074 such detentions in 2010, 4,123 in 2011, 6,602 in 2012, and 6,424 in 2013. For 2014, the group reported that there were at least 8,899 such detentions, almost 39% higher than the previous year. In 2015, the CCDHRN reported at least 8,616 short-term detentions, with 1,447 in November alone. In 2016, there were at least 9,940 short-term arbitrary detentions for political reasons, higher than annual levels over the past several years. In March 2016, for example, there were 1,416 detentions, including almost 500 detentions during President Obama's visit. Bloggers and Civil Society Groups. Over the past several years, numerous independent Cuban blogs have been established that are often critical of the Cuban government. Cuban blogger Yoani Sánchez has received considerable international attention since 2007 for her website, Generación Y , which includes commentary critical of the Cuban government. In May 2014, Sánchez launched an independent digital newspaper in Cuba, 14 y medio , available on the Internet, distributed through a variety of methods in Cuba, including CDs, USB flash drives, and DVDs. The Catholic Church, which, as noted above, played a prominent role in the release of political prisoners in 2010 and 2011, has been active in broadening the debate on social and economic issues through its publications Palabra Nueva (New Word) and Espacio Laical (Space for Laity). The Church has also played an increasing role in providing social services, including soup kitchens, services for the elderly and other vulnerable groups, after-school programs, job training, and even college coursework. In 2014, the two former editors of Espacio Laical , Roberto Veiga and Lenier Gonzalez, launched an online forum known as Cuba Posible . Estado de SATS , a forum founded in 2010 by human rights activist Antonio Rodiles, has had the goal of encouraging open debate on cultural, social, and political issues. The group has hosted numerous events and human rights activities over the years, but has also been the target of government harassment. In November 2012, Rodiles was arrested and held for 19 days on charges with "resisting authority," but he was released after Amnesty International issued an urgent appeal on his case. In early July 2015, Rodiles was severely beaten for attempting to participate in the weekly protest march of the Ladies in White. Trafficking in Persons. The State Department released its 2016 Trafficking in Persons (TIP) Report on June 30, 2016, and for the second consecutive year Cuba was placed on the Tier 2 Watchlist (in prior years, Cuba had Tier 3 status). Tier 3 status refers to countries whose governments do not fully comply with the minimum standards for combatting trafficking and are not making significant efforts to do so. In contrast, Tier 2 Watchlist status refers to countries whose governments, despite making significant efforts, do not fully comply with the minimum standards and still have some specific problems (an increasing number of victims or failure to provide evidence of increasing anti-trafficking efforts) or whose governments have made commitments to take additional anti-trafficking steps over the next year. The State Department maintained in its 2015 report that Cuba was upgraded to Tier 2 Watchlist status because of its progress in addressing and prosecuting sex trafficking, including the provision of services to sex trafficking victims, and its continued efforts to address sex tourism and the demand for commercial sex. In its 2016 report, the State Department maintained that Cuba remained on the Tier 2 Watchlist for the second consecutive year because the country did not demonstrate overall increasing anti-trafficking efforts compared to 2015. Nevertheless, the 2016 report noted that the Cuban government continued efforts to address sex trafficking, including prosecution and conviction, and the provision of services to victims. The State Department noted that the Cuban government released a report on its anti-trafficking efforts in October 2015; that multiple government ministries were engaged in anti-trafficking efforts; and that the government funded child protection centers and guidance centers for women and families, which served crime victims, including trafficking victims. However, the report also noted that the Cuban government did not prohibit forced labor, report efforts to prevent forced labor, or recognize forced labor as a possible issue affecting Cubans in medical missions abroad. Cuba's economy is largely state-controlled, with the government owning most means of production and employing a majority of the workforce. Key sectors of the economy that generate foreign exchange include the export of professional services (largely medical personnel to Venezuela); tourism, which has grown significantly since the mid-1990s, with 3.5 million tourists visiting Cuba in 2015; nickel mining, with the Canadian mining company Sherritt International involved in a joint investment project; and a biotechnology and pharmaceutical sector that supplies the domestic health care system and has fostered a significant export industry. Remittances from relatives living abroad, especially from the United States, have also become an important source of hard currency, amounting to some $3 billion in 2015. The once-dominant sugar industry has declined significantly over the past 20 years; in 1990, Cuba produced 8.4 million tons of sugar, while in 2016 it produced just 1.6 million tons (compared to 1.9 million tons in 2015). Cuba is highly dependent on Venezuela for its oil needs. In 2000, the two countries signed a preferential oil agreement that until recently provided Cuba with some 90,000 barrels of oil per day, about two-thirds of its consumption. Cuba's goal of becoming a net oil exporter with the development of its offshore deepwater oil reserves was set back significantly in 2012, when the drilling of three exploratory oil wells was unsuccessful. The setback in Cuba's offshore oil development combined with political and economic difficulties in Venezuela have raised concerns among Cuban officials about the security of the support received from Venezuela. Cuba is increasingly focusing on the need to diversify its trading partners and to seek alternative energy suppliers in the case of a cutback or cutoff of Venezuelan oil. Over the years, Cuba has expressed pride for the nation's accomplishments in health and education. According to the United Nations Development Program's 2015 Human Development Report, Cuba is ranked 67 out of 188 countries worldwide and is characterized as having "high human development," with life expectancy at 79.4 years and adult literacy estimated at almost 100%. In terms of economic growth, Cuba experienced severe economic deterioration from 1989 to 1993, with an estimated decline in gross domestic product ranging from 35% to 50% when the Soviet Union collapsed and Russian financial assistance to Cuba practically ended. Since then, however, there has been considerable improvement. From 1994 to 2000, as Cuba moved forward with some limited market-oriented economic reforms, economic growth averaged 3.7% annually. Economic growth was especially strong in the 2004-2007 period, registering an impressive 11% and 12%, respectively, in 2005 and 2006 (see Figure 2 ). The economy benefitted from the growth of the tourism, nickel, and oil sectors and support from Venezuela and China in terms of investment commitments and credit lines. However, the economy was hard hit by several hurricanes and storms in 2008 and the global financial crisis in 2009, with the government having to implement austerity measures. As a result, economic growth slowed significantly. Growth improved modestly from 2010-2014, averaging 2.4% annually during the period, although growth was just 1% in 2014 because of Cuba's challenges in shifting from a centrally planned to a more decentralized economy. Stronger growth of 4.4% returned in 2015, but the Economist Intelligence Unit (EIU) maintains that economic growth dropped to an estimated 0.5% economic growth in 2016 because of austerity measures, lower export earnings, and reduced support from Venezuela. (At the end of 2016, Cuba's economic minister reportedly said that the economy had shrunk 0.9% during the year.) The economic crisis in Venezuela has affected Venezuela's oil exports to Cuba. Looking ahead, the EIU forecasts economic growth of 1% in 2017 and 2.4% in 2018, far less than the 5% that the government and some economists maintain is needed to develop the economy and create new jobs. The government of Raúl Castro has implemented a number of economic policy changes, but there has been some disappointment that more far-reaching reforms have not been forthcoming. As noted above, the government employs a majority of the labor force, almost 80%, but it has been allowing more private sector activities. In 2010, the government opened up a wide range of activities for self-employment and small businesses. There are now almost 200 categories of work allowed, and the number of self-employed has risen from some 156,000 at the end of 2010 to some 507,000 in 2016. Analysts contend, however, that the government needs to do more to support the development of the private sector, including an expansion of authorized activities to include more white-collar occupations and state support for credit to support small businesses. A major challenge for the development of the private sector is the lack of money in circulation. Most Cubans do not make enough money to support the development of small businesses; those private sector activities catering to tourists and foreign diplomats have fared better than those serving the Cuban market. Among Cuba's significant economic challenges are low wages (whereby workers cannot satisfy basic human needs) and the related problem of how to unify Cuba's two official currencies circulating in the country. Most people are paid in Cuban pesos (CUPs), and the minimum monthly wage in Cuba is 225 pesos (U.S. $9), but for increasing amounts of consumer goods, convertible pesos (CUCs) are used. (For personal transactions, the exchange rate for the two currencies is CUP24/CUC1.) Cubans with access to foreign remittances or who work in jobs that give them access to convertible pesos are far better off than those Cubans who do not have such access. In October 2013, the Cuban government announced that it would move toward ending its dual-currency system and move toward monetary unification, but the action has been delayed for several years. In March 2014, the government had provided insight about how monetary unification would move forward when it published instructions for when the CUC is removed from circulation; no date was provided, but it was referred to as "day zero." Currency reform is ultimately expected to lead to productivity gains and improve the business climate, but an adjustment would create winners and losers. As noted above, at the PCC's April 2016 Congress, Raúl Castro called for moving toward a single currency as soon as possible to resolve economic distortions. A significant reform effort under Raúl Castro has focused on the agricultural sector, a vital issue because Cuba reportedly imports some 70%-80% of its food needs according to the World Food Programme. In an effort to boost food production, the government has turned over idle land to farmers and given farmers more control over how to use their land and what supplies to buy. Despite these and other efforts, overall food production has been significantly below targets. In March 2014, Cuba approved a new foreign investment law with the goal of attracting needed foreign capital to the country. The law cuts taxes on profits by half, to 15%, and exempts companies from paying taxes for the first eight years of operation. Employment or labor taxes are also eliminated, although companies still must hire labor through state-run companies, with agreed-upon wages. A fast-track procedure for small projects reportedly will streamline the approval process, and the government has agreed to improve the transparency and time of the approval process for larger investments. It remains to be seen to what extent the new law will attract investment. Over the past several years, Cuba has closed a number of joint ventures with foreign companies and has arrested several executives of foreign companies reportedly for corrupt practices. According to some observers, investors will want evidence, not just legislation, that the government is prepared to allow foreign investors to make a profit in Cuba. In October 2014, the Cuban government issued a list of some 246 projects in which it was seeking some $8.7 billion in investment in such sectors as energy, tourism, agriculture, and industry. Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca reportedly maintained in November 2015 that 40 of these projects were in "advanced negotiations" and that Cuba has signed 36 foreign investment projects since the 2014 investment law was approved, but did not indicate the value of these projects. In November 2015, Malmierca announced a list of 326 projects in which it is seeking $8.2 billion in foreign investment, including new opportunities in health care, tourism, transportation, construction, agriculture, and renewable energy. In December 2015, Cuba reached a Paris Club arrangement with a group of 14 creditor countries to forgive $8.5 billion out of $11.1 billion of debt owed, including late interest. Pursuant to the agreement, Cuba will pay $2.6 billion over a period of 18 years. The creditor countries include Australia, Austria, Belgium, Canada, Denmark, Finland, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, and the United Kingdom. The agreement resolves an outstanding economic challenge for the Cuban government and could make it easier for Cuba to gain access to credit and attract investment. (In 2014, Russia wrote off 90% of Cuba's $32 billion Soviet-era debt. See " Cuba's Foreign Relations " below.) As noted above, no new economic measures emanated from the PCC's seventh party congress held April 16-19, 2016. After the party congress, press articles reported that one of Cuba's leading advocates for economic reforms, Omar Everleny Pérez, was dismissed from his position at the Center for the Study of the Cuban Economy, spreading concern about the Cuban government's retrenchment from its commitment to reform. A number of Cuba's economists are pressing for the government to enact more far-reaching reforms and embrace competition for key parts of the economy and state-run enterprises. They criticize the government's continued reliance on central planning and its monopoly on foreign trade. Cuba's economic potential, according to one analysis, is held back by several factors, including the lack of political will; dilapidated infrastructure; a transportation sector in need of repair and modernization; an inefficient and poorly resourced construction sector; and a government bureaucracy that suffers from morale problems, a weak decisionmaking process, and a lack of familiarity with international practice. During the Cold War, Cuba had extensive relations with and support from the Soviet Union, with billions of dollars in annual subsidies to sustain the Cuban economy. This subsidy system helped fund an activist foreign policy and support for guerrilla movements and revolutionary governments abroad in Latin America and Africa. With an end to the Cold War, the dissolution of the Soviet Union, and the loss of Soviet financial support, Cuba was forced to abandon its revolutionary activities abroad. As its economy reeled from the loss of Soviet support, Cuba was forced to open up its economy and economic relations with countries worldwide. In 2014, Cuba's leading trading partners in terms of Cuban exports were Venezuela (almost 43%), Canada, the Netherlands, and China, while the leading sources of Cuba's imports were Venezuela (almost 40%), China, Spain, Brazil, Mexico, Canada, Italy, the United States, Argentina, and Germany. Russia. Relations with Russia, which had diminished significantly in the aftermath of the Cold War, have been strengthened somewhat over the past several years. In 2008, then-Russian President Dmitry Medvedev visited Havana, while Raúl Castro visited Russia in 2009 and again in 2012. Current Russian President Vladimir Putin visited Cuba in July 2014 on his way to attend the BRICS summit in Brazil. Just before arriving in Cuba, Putin signed into law an agreement writing off 90% of Cuba's $32 billion Soviet-era debt, with some $3.5 billion to be paid back by Cuba over a 10-year period that would fund Russian investment projects in Cuba. In the aftermath of Putin's trip, there were press reports alleging that Russia would reopen its signals intelligence facility at Lourdes, Cuba, which had closed in 2002, but President Putin denied reports that his government would reopen the facility. While trade relations between Russia and Cuba are not significant, two Russian energy companies have been involved in oil exploration in Cuba, and a third announced its involvement in 2014. Gazprom had been in a partnership with the Malaysian state oil company, Petronas, that conducted unsuccessful deepwater oil drilling off Cuba's western coast in 2012. The Russian oil company Zarubezhneft began drilling in Cuba's shallow coastal waters east of Havana in December 2012, but stopped work in April 2013 because of disappointing results. During President Putin's July 2014 visit to Cuba, Russian energy companies Rosneft and Zarubezhneft signed an agreement with Cuba's state oil company CubaPetroleo (Cupet) for the development of an offshore exploration block, and Rosneft agreed to cooperate with Cuba in studying ways to optimize existing production at mature fields. Some energy analysts are skeptical about the prospects for the offshore project given the unsuccessful attempts by foreign oil companies drilling wells in Cuba's deepwaters. In January 2015, as U.S.-Cuba normalization talks were beginning in Havana, a Russian intelligence ship docked in Havana. U.S. officials downplayed the arrival of the ship, maintaining that it was legal and not out of the ordinary. Russian officials publicly welcomed the improvement in U.S.-Cuban relations, although the change in U.S. policy could be viewed as a potential setback for Russian overtures in the region. In early October 2016, a Russian military official maintained that Russia was reconsidering reestablishing a military presence in Cuba (and Vietnam), although there was no indication that Cuba would be open to the return of the Russian military. China. Relations with China have also strengthened in recent years. During the Cold War, the two countries did not have close relations because of Sino-Soviet tensions, but bilateral relations have grown close in recent years, with Chinese trade and investment in Cuba increasing. Chinese President Hu Jintao visited Cuba in 2004 and again in 2008, while Chinese Vice President Xi Jinping visited Cuba in June 2011 and again in July 2014, this time as China's president, after attending the BRICS summit in Brazil. Raúl Castro had also visited China in 2012 on a four-day visit, in which the two countries reportedly signed cooperation agreements focusing on trade and investment issues. During Xi Jinping's 2014 visit, the two countries reportedly signed 29 trade, debt, credit, and other agreements. While in Cuba, the Chinese president said that "China and Cuba being socialist countries, we are closely united by the same missions, ideals, and struggles." European Union. The European Union (EU) and Cuba held seven rounds of talks—two in 2014, four in 2015, and one on March 3-4, 2016—on a Political Dialogue and Cooperation Agreement covering political, trade, and development issues. Ultimately, an agreement was reached after the last round of talks and initialed by Cuba and the EU in Havana on March 11, 2016. In 1996, the EU adopted a Common Position on Cuba, stating that the objective of EU relations with Cuba included encouraging "a process of transition to pluralist democracy and respect for human rights and fundamental freedoms." The position also stipulated that full EU economic cooperation with Cuba would depend upon improvements in human rights and political freedom. The new cooperation agreement, which has to be officially approved by EU governments, would replace the 1996 Common Position. It includes political dialogue and a framework to deepen relations in a number of areas, including trade. Venezuela and Other Latin American Countries. For more than 15 years, Venezuela has been a significant source of support for Cuba. Dating back to 2000 under populist President Hugo Chávez, Venezuela began providing subsidized oil (some 100,000 barrels per day) and investment. For its part, Cuba has sent thousands of medical personnel to Venezuela. In the aftermath of Chávez's death in March 2013, Venezuela's mounting economic challenges since mid-2014 because of the rapid decline in oil prices, and the defeat of the ruling party in Venezuela's December 2015 legislative elections, Cuba has been concerned about the future of Venezuelan financial support. Cuba's economic growth has slowed to a projected 0.5% in 2016, to a large extent due to the decrease in Venezuelan support. With El Salvador's restoration of relations with Cuba in June 2009, all Latin American nations now have official diplomatic relations with Cuba. Cuba has increasingly become more engaged in Latin America beyond the already close relations with Venezuela. Cuba is a member of the Bolivarian Alliance for the Americas (ALBA), a Venezuelan-led integration and cooperation scheme founded in 2004. In August 2013, Cuba began deploying thousands of doctors to Brazil in a program aimed at providing doctors to rural areas of Brazil, with Cuba earning some $225 million a year for supplying the medical personnel. Brazil also has been a major investor in the development of the port of Mariel west of Havana. Since 2012, Cuba has hosted peace talks between the Colombian government and the Revolutionary Armed Forces of Colombia. In early November 2015, Raúl Castro visited Mexico on a trip designed to warm relations and increase economic linkages. C ommunity of Latin American and Caribbean States (C ELAC ) . Cuba became a full member of the Rio Group of Latin American and Caribbean nations in November 2008, and a member of the succeeding CELAC that was officially established in December 2011 to boost regional cooperation, but without the participation of the United States or Canada. In January 2013, Raúl Castro assumed the presidency of the organization for one year, and Cuba hosted the group's second summit in January 2014 in Havana, attended by leaders from across the hemisphere as well as United Nations Secretary General Ban Ki-moon. The Secretary General reportedly raised human rights issues with Cuban officials, including the subject of Cuba's ratification of U.N. human rights accords and "arbitrary detentions" by the Cuban government. Summit s of the Americas. Cuba had expressed interest in attending the sixth Summit of the Americas in April 2012 in Cartagena, Colombia, but ultimately was not invited to attend. The United States and Canada expressed opposition to Cuba's participation. Previous summits were limited to the hemisphere's 34 democratically elected leaders, and the Organization of American States (OAS) (in which Cuba does not participate) has played a key role in summit implementation and follow-up activities. Several Latin American nations vowed not to attend the seventh Summit of the Americas to be held in Panama on April 10-11, 2015, unless Cuba was allowed to participate, and as a result, Panama announced in August 2014 that it would invite Cuba to attend. Cuba's participation was a looming challenge for the Obama Administration, but in December 2014, when President Obama announced a new policy approach toward Cuba, he said that the United States was prepared to have Cuba participate in the summit. Cuba ultimately participated in the summit in Panama, with a historic sidelines meeting between President Obama and President Raúl Castro. (For more on the summit, see CRS Report R43952, Seventh Summit of the Americas: In Brief , by [author name scrubbed].) OAS. Cuba was excluded from participation in the OAS in 1962 because of its identification with Marxism-Leninism, but in 2009, the OAS overturned the 1962 resolution in a move that could eventually lead to Cuba's reentry into the regional organization in accordance with the practices, purposes, and principles of the OAS. While the Cuban government welcomed the OAS vote to overturn the 1962 resolution, it asserted that it would not return to the OAS. International Organizations. Cuba is an active participant in international forums, including the United Nations (U.N.) and the controversial United Nations Human Rights Council. Cuba also has received support over the years from the United Nations Development Programme (UNDP) and the United Nations Educational, Scientific, and Cultural Organization (UNESCO), both of which have offices in Havana. The U.N. has played a significant role in providing relief and recovery from Hurricane Sandy that struck in October 2012. Since 1991, the U.N. General Assembly has approved a resolution each year criticizing the U.S. economic embargo and urging the United States to lift it. In 2015, the vote calling for the United States to lift the embargo occurred on October 27, with 191 votes in favor and 2 votes (Israel and the United States) against. Leading up to the vote, there had been speculation that the United States would abstain. In 2016, the vote on the U.N. resolution took place on October 26, with 191 votes in favor and—for the first time—the United States (and Israel) abstaining. In remarks at the U.N. General Assembly session, Ambassador Samantha Power, the U.S. Permanent Representative to the United Nations, stated that the resolution was "a perfect example of why the U.S. policy of isolation toward Cuba was not working" and that U.S. policy instead had isolated the United States, including at the United Nations. She stated, however, that "abstaining on the resolution does not mean that the United States agrees with all the policies and practices of the Cuban government," adding that the United States was "profoundly concerned by the serious human rights violations that the Cuban government continues to commit with impunity against its own people." Among other international organizations, Cuba was a founding member of the World Trade Organization, but it is not a member of the International Monetary Fund, the World Bank, or the Inter-American Development Bank. In January 2016, the executive president of the Development Bank of Latin America (CAF) stated in an interview that the bank was in the process of looking at a way for Cuba to become a member; the CAF's current membership includes 17 Latin American and Caribbean countries as well as Spain and Portugal. In September 2016, Cuba signed a memorandum of understanding with the CAF with the objective of supporting technical cooperation programs for Cuba's social and economic development and laying the foundation for Cuba's future memberships in the CAF. Compliance with U.N. Sanctions on North Korea. In July 2013, the discovery of a weapons shipment aboard a North Korean ship that had left Cuba on its way back to North Korea raised questions about the nature of Cuban-North Korean relations and about Cuba's compliance with U.N. sanctions against North Korea. Panama had detained the North Korean ship as it prepared to enter the Panama Canal due to suspicion that the ship was carrying illicit narcotics; instead, the ship was found to be carrying military weapons. The U.N. Security Council's Panel of Experts for North Korea visited Panama in August 2013 and issued a report on the incident in March 2014. The Panel of Experts concluded that both the shipment and the transaction between Cuba and North Korea were violations of U.N. sanctions banning weapons transfers to North Korea. In July 2014, the U.N. Security Council imposed sanctions on the operator of the North Korean ship, and the company is now subject to an international asset freeze. U.S. Ambassador to the United Nations Samantha Power described the North Korean ship incident as a "cynical, outrageous and illegal attempt by Cuba and North Korea to circumvent United Nations sanctions." In the early 1960s, U.S.-Cuban relations deteriorated sharply when Fidel Castro began to build a repressive communist dictatorship and moved his country toward close relations with the Soviet Union. The often tense and hostile nature of the U.S.-Cuban relationship is illustrated by such events and actions as U.S. covert operations to overthrow the Castro government culminating in the ill-fated April 1961 Bay of Pigs invasion; the October 1962 missile crisis in which the United States confronted the Soviet Union over its attempt to place offensive nuclear missiles in Cuba; Cuban support for guerrilla insurgencies and military support for revolutionary governments in Africa and the Western Hemisphere; the 1980 exodus of around 125,000 Cubans to the United States in the so-called Mariel boatlift; the 1994 exodus of more than 30,000 Cubans who were interdicted and housed at U.S. facilities in Guantánamo and Panama; and the 1996 shootdown by Cuban fighter jets of two U.S. civilian planes operated by the Cuban-American group Brothers to the Rescue, which resulted in the deaths of four U.S. crew members. Beginning in the early 1960s, U.S. policy toward Cuba consisted largely of isolating the island nation through comprehensive economic sanctions, including an embargo on trade and financial transactions. President Kennedy proclaimed an embargo on trade between the United States and Cuba in February 1962, citing Section 620(a) of the Foreign Assistance Act of 1961 (FAA), which authorizes the President "to establish and maintain a total embargo upon all trade between the United States and Cuba." At the same time, the Department of the Treasury issued the Cuban Import Regulations to deny the importation into the United States of all goods imported from or through Cuba. The authority for the embargo was later expanded in March 1962 to include the Trading with the Enemy Act (TWEA). In July 1963, the Department of the Treasury revoked the Cuban Import Regulations and replaced them with the more comprehensive Cuban Assets Control Regulations (CACR)— 31 C.F.R. Part 515 —under the authority of TWEA and Section 620(a) of the FAA. The CACR, which include a prohibition on most financial transactions with Cuba and a freeze of Cuban government assets in the United States, remain the main body of Cuba embargo regulations and have been amended many times over the years to reflect changes in policy. They are administered by the Department of the Treasury's Office of Foreign Assets Control (OFAC) and prohibit financial transactions as well as trade transactions with Cuba. The CACR also require that all exports to Cuba be licensed by the Department of Commerce, Bureau of Industry and Security, under the provisions of the Export Administration Act of 1979, as amended. The Export Administration Regulations (EAR) are found at 15 C.F.R. Sections 730-774 . Congress subsequently strengthened sanctions on Cuba with enactment of the Cuban Democracy Act (CDA) of 1992 ( P.L. 102-484 , Title XVII), the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ), and the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA ( P.L. 106-387 , Title IX). Among its provisions, the CDA prohibits U.S. foreign subsidiaries from engaging in trade with Cuba and prohibits entry into the United States for any seaborne vessel to load or unload freight if it has been involved in trade with Cuba within the previous 180 days, except pursuant to a Treasury Department license. (In October 2016, the Treasury Department issued a general license for vessels involved in trade with Cuba.) The LIBERTAD Act ( P.L. 104-114 ), enacted in the aftermath of Cuba's shooting down of two U.S. civilian planes in February 1996, combines a variety of measures to increase pressure on Cuba and provides for a plan to assist Cuba once it begins the transition to democracy. Most significantly, the law codified the Cuban embargo, including all restrictions under the CACR. This provision is noteworthy because of its long-lasting effect on U.S. policy options toward Cuba. The executive branch is prevented from lifting the economic embargo without congressional concurrence until certain democratic conditions set forth in the law are met, although the President retains broad authority to amend the regulations therein. Another significant sanction in Title III of the law holds any person or government that traffics in U.S. property confiscated by the Cuban government liable for monetary damages in U.S. federal court. Acting under provisions of the law, however, Presidents Clinton, Bush, and Obama have suspended the implementation of Title III at six-month intervals. Although TSRA authorizes U.S. commercial agricultural exports to Cuba, it also includes prohibitions on U.S. assistance and financing and requires "payment of cash in advance" or third-country financing for the exports. The act also prohibits tourist travel to Cuba. In addition to these acts, Congress enacted numerous other provisions of law over the years that impose sanctions on Cuba, including restrictions on trade, foreign aid, and support from international financial institutions. The government of Cuba also was designated by the State Department as a state sponsor of international terrorism in 1982 under Section 6(j) of the Export Administration Act and other laws because of its alleged ties to international terrorism. (For additional information, see CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations , by [author name scrubbed] and [author name scrubbed].) In addition to sanctions, another component of U.S. policy has consisted of support measures for the Cuban people. This includes U.S. private humanitarian donations, medical exports to Cuba under the terms of the CDA, U.S. government support for democracy-building efforts, and U.S.-sponsored radio and television broadcasting to Cuba. The enactment of TSRA by the 106 th Congress also led to the United States becoming one of Cuba's largest suppliers of agricultural products. Authorization for purposeful travel to Cuba and cash remittances to Cuba have constituted important means to support the Cuban people, although there has been significant congressional debate over these issues for many years. Despite the poor state of U.S.-Cuban relations, there have been several examples of bilateral cooperation over the years in areas of shared national interest. Three areas that stand out are alien migrant interdiction (with migration accords negotiated in 1994 and 1995), counternarcotics cooperation (with increased cooperation dating back to 1999), and cooperation on oil spill preparedness and prevention (since 2011). During its first six years, the Obama Administration continued the dual-track policy approach toward Cuba that has been in place for many years. It maintained U.S. economic sanctions and continued measures to support the Cuban people, such as U.S. government-sponsored radio and television broadcasting and funding for democracy and human rights projects. At the same time, however, the Obama Administration initiated a significant shift in policy toward Cuba beginning in 2009. As part of the policy of reaching out to the Cuban people, President Obama fulfilled a campaign pledge by lifting all restrictions on family travel and remittances. At the April 2009 Summit of the Americas, President Obama announced that "the United States seeks a new beginning with Cuba." While recognizing that it would take time to "overcome decades of mistrust," the President said "there are critical steps we can take toward a new day." He stated that he was prepared to have his Administration "engage with the Cuban government on a wide range of issues—from drugs, migration, and economic issues, to human rights, free speech, and democratic reform." In the aftermath of the Summit in 2009, there was some momentum toward improved relations: in July, the two countries restarted semi-annual migration talks that had been suspended by the United States five years earlier; in September, the two countries held talks on resuming direct mail service. The Obama Administration introduced new measures in 2011 to further reach out to the Cuban people through increased purposeful travel (including people-to-people educational travel) and an easing of restrictions on non-family remittances. Beginning in mid-2013, there was also renewed engagement with Cuba on several fronts, including direct mail service talks, resumed migration talks (that had not taken place for 18 months), and air and maritime search and rescue. In remarks made in November 2013 on policy toward Cuba, President Obama maintained that "we have to be creative ... we have to be thoughtful ... and we have to continue to update our policies." He contended that "the notion that the same policies that we put in place in 1961 would somehow still be as effective as they are today in the age of the Internet and Google and world travel doesn't make sense." Throughout the Obama Administration's first six years, human rights violations in Cuba remained a fundamental concern. President Obama and the State Department continued to issue statements expressing concern about violations as they occurred, including the death of hunger strikers in 2010 and 2012 and targeted repression against dissidents and human rights activists. As noted above, securing the release of Alan Gross from prison in Cuba also remained a top U.S. priority. The State Department maintained that it was using every appropriate channel to press for his release, including the Vatican. On December 17, 2014, just after the adjournment of the 113 th Congress, President Obama announced major developments in U.S.-Cuban relations and unveiled a new policy approach toward Cuba. First, he announced that the Cuban government had released Alan Gross on humanitarian grounds after five years of imprisonment. The President also announced that, in a separate action, the Cuban government released "one of the most important intelligence assets that the United States has ever had in Cuba" in exchange for three Cuban intelligence agents who had been imprisoned in the United States since 1998. Media reports identified the U.S. intelligence asset as Rolando Sarraff Trujillo, a cryptographer in Cuba's Directorate of Intelligence, who reportedly provided information that helped the FBI dismantle three Cuban spy networks in the United States. Most significantly, in the aftermath of having secured the release of Gross and the U.S. intelligence asset, President Obama announced a major shift in U.S. policy toward Cuba, moving away from a sanctions-based policy aimed at isolating Cuba to a policy of engagement. The President said that his Administration will end an outdated approach that, for decades, has failed to advance our interests, and instead we will begin to normalize relations between our two countries. Through these changes, we intend to create more opportunities for the American and Cuban people, and begin a new chapter among the nations of the Americas. The President maintained that the United States would continue to raise concerns about democracy and human rights in Cuba but stated that "we can do more to support the Cuban people and promote our values through engagement." According to the President, "After all, these 50 years have shown that isolation has not worked. It's time for a new approach." The President outlined three major steps to move toward normalization: (1) the reestablishment of diplomatic relations with Cuba; (2) a review of Cuba's designation by the Department of State as a state sponsor of international terrorism; and (3) an increase in travel, commerce, and the flow of information to and from Cuba. When President Obama announced his Cuba policy change, he also indicated that his Administration was prepared to have Cuba participate in the Summit of the Americas to be held April 10-11, 2015, in Panama. The White House emphasized that human rights and democracy would be key themes of the summit and asserted that Cuban civil society must be allowed to participate with civil society from other countries. Cuba's potential participation in the summit had been a policy challenge for the Administration since it had opposed Cuba's participation in the 2012 Summit of the Americas in Colombia. Cuba ultimately participated in the summit in Panama, with President Obama and Cuban President Raúl Castro holding a historic bilateral meeting in Panama on April 11. President Obama stated that "there are still going to be deep and significant differences between our two governments," with the United States continuing to raise concerns around democracy and human rights and Cuba raising concerns about U.S. policy. He maintained, however, that "what we have both concluded is that we can disagree with the spirit of respect and civility, and that over time it is possible for us to turn the page and develop a new relationship in our two countries." Several Cuban dissidents attended and participated in the Civil Society and Social Actors Forum, although there were problems with a reported attack on anti-Castro protestors by Cuban government supporters just ahead of the summit and efforts by Cuban government supporters to disrupt an event in which Cuban dissidents were scheduled to speak. As U.S.-Cuban relations deteriorated in the early 1960s, relations were severed by the Eisenhower Administration in January 1961 in response to the Cuban government's demand to decrease the number of U.S. Embassy staff within 48 hours. In 1977, under the Carter Administration, both countries established Interests Sections in each other's capitals. In 2015, four rounds of talks were held on reestablishing relations, with the U.S. delegation headed by Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson and the Cuban delegation led by Josefina Vidal, director of the North American division of Cuba's Ministry of Foreign Relations. The first round took place on January 22, 2015, in Havana, a day after previously scheduled semi-annual migration talks, and focused on the required steps for the reestablishment of relations, the opening of embassies, and expectations on how the U.S. Embassy in Havana would operate. Subsequent rounds took place on February 27 in Washington, DC; March 16 in Havana; and May 21-22, 2015, in Washington, DC. Issues discussed included staffing numbers, lifting in-country travel restrictions on diplomats, unimpeded shipments for the diplomatic post, and access to the post by Cubans. In other developments, a U.S. government delegation visited Havana March 24-26, 2015, focusing on the development of telecommunications and Internet connections between the United States and Cuba. On March 31, U.S. and Cuban delegations met in Washington, DC, to discuss how they would proceed on a future human rights dialogue. Ultimately, on July 1, 2015, President Obama announced that the United States and Cuba agreed to reestablish diplomatic relations, effective July 20, and to reopen embassies in their respective capitals on the same day. The President maintained that "this is a historic step forward in our efforts to normalize relations with the Cuban government and people." On the same day, Secretary of State Kerry notified Congress, pursuant to Section 7015(a) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2015 (Division J, P.L. 113-235 ), of the plan to redesignate the U.S. Interests Section in Havana as an embassy. That provision of law required congressional notification 15 days in advance before closing or opening a mission or post. On July 20, the U.S. and Cuban Interests Sections in Washington, DC, and Havana, respectively, were converted to embassies. Cuba held a flag-raising ceremony on that day at its embassy attended by Cuban Foreign Minister Bruno Rodriguez. Secretary of State John Kerry visited Havana on August 14, 2015, for a flag-raising ceremony at the U.S. Embassy. This marked the first visit of a U.S. Secretary of State to Cuba since 1945. Cuba had been on the list since 1982 pursuant to Section 6(j) of the Export Administration Act (EAA) of 1979 ( P.L. 96-72 ; 50 U.S.C. Appendix 2405(j) ) and other laws because of its alleged ties to international terrorism and support for terrorist groups in Latin America. On December 17, 2014, President Obama directed Secretary of State Kerry to review Cuba's designation "guided by the facts and the law." The President stated that "at a time when we are focused on threats from al Qaeda to ISIL, a nation that meets our conditions and renounces the use of terrorism should not face this sanction." On April 9, 2015, during a trip to Jamaica ahead of the Summit of the Americas in Panama, President Obama said that the State Department had completed its review and he would soon be making his decision. That occurred on April 14, when the President transmitted to Congress a report justifying the rescission of Cuba's designation as a state sponsor of terrorism. No resolutions of disapproval were introduced in Congress to block the rescission, which took place on May 29, 2015, 45 days after the submission of the report to Congress. Subsequently, to reflect the rescission of Cuba's designation as a state sponsor of terrorism in U.S. regulations, the Treasury Department's Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR) in June 2015 and the Commerce Department's Bureau of Industry and Security (BIS) amended the Export Administration Regulations in July 2015. (For additional information, see " State Sponsor of Terrorism Designation ," below.) The White House announced a number of policy changes to implement this third step. The changes build upon previous steps that President Obama took in 2009, when he lifted all restrictions on family travel and remittances to family members in Cuba, and in 2011, when he took action to increase purposeful travel to Cuba, such as people-to-people educational trips. Just as in 2009 and 2011, the President's new initiative required changes to U.S. embargo regulations administered by the Treasury Department's OFAC (CACR; 31 C.F.R. Part 515 ) and the Department of Commerce's BIS (EAR; 15 C.F.R. Parts 730-774 ). Such changes fall within the scope of the President's discretionary licensing authority to make changes to the embargo regulations. To implement the policy changes to increase travel and commerce, the two agencies issued five rounds of amendments to the CACR and the EAR in January 2015, September 2015, January 2016, March 2016, and October 2016; this was in addition to the regulatory changes noted above related to the rescission of Cuba's designation as a state sponsor of terrorism. The regulations included changes in the following areas: Travel and Remittances. The amended Treasury regulations authorize a general license for the existing 12 categories of authorized travel in the CACR, meaning that travelers who fall under these categories do not have to apply to the Department of the Treasury for permission. Travel agents and air and vessel carriers are also able to provide services for travel to Cuba under a general license. Authorized travelers will also be permitted to use U.S. credit and debit cards as U.S. financial institutions offer these services. Donative remittances to Cuban nationals are authorized without limit; initially the cap was increased from $500 to $2,000 per quarter in January 2015, and then it was removed altogether in September 2015. The regulations also authorize without limit remittances for certain activities related to humanitarian projects, the promotion of civil society, and the development of private businesses. In March 2016, the CACR were amended to permit individuals to travel to Cuba for individual, people-to-people education travel (previously, such trips had to take place under the auspices of an organization). Authorized travelers to Cuba, as well as U.S. travelers to third countries, can bring back Cuban products to the United States for personal use, including alcohol and tobacco products. (Also see " Restrictions on Travel and Remittances ," below.) Trade and Telecommunications. The Commerce regulations expand commercial exports to Cuba of certain goods and services to empower Cuba's nascent private sector, including authorization for certain building materials for private residential construction, goods for use by private-sector Cuban entrepreneurs, and agricultural equipment for small farmers. To implement this change, Commerce's Bureau of Industry and Security (BIS) created a license exception in the Export Administration Regulations (EAR) for "support to the Cuban people," authorizing the export without license of such items described above. This license exception also included the export to Cuba of items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation, and upgrades. The Treasury regulations also revise the definition of "payment of cash in advance" required by TSRA for authorized trade with Cuba to specify that it means "cash before transfer of title" for payment. Certain goods and services produced by independent Cuban entrepreneurs (as determined by the State Department) are eligible to be imported into the United States. In October 2016, OFAC amended the regulations to allow for transactions to obtain U.S. Food and Drug Administration approval of Cuban-origin pharmaceuticals. OFAC also authorized transactions for importation into the United States of FDA-approved Cuban-origin drugs, including marketing, sales, or other distribution. The Commerce regulations permit the commercial export of certain consumer communication devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems; previously such exports were limited to donations. They also permit the export of items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation, and upgrades. An expanded Treasury Department general license authorizes transactions to provide commercial telecommunications services in Cuba or link third countries and Cuba. U.S. companies may establish joint ventures with entities in Cuba to provide telecommunication and Internet-based services and to enter into licensing agreements related to, and to market, such services. An updated general license allows for U.S. persons to make payments to a telecommunications operator located in Cuba for services provided to Cuban individuals. In January 2015, BIS revised the EAR to state a general policy of approval for license applications to export items to Cuba necessary for the environmental protection of U.S. and international air quality, waters, and coastlines, including items related to renewable energy or energy efficiency. In January 2016, BIS expanded the categories of exports that fall under a "general policy of approval" license policy to include certain items for civil aviation and commercial aircraft safety; telecommunications; U.S. news bureaus; human rights organizations and nongovernmental organizations; and agricultural commodities (such as insecticides, pesticides, and herbicides) that fall outside the scope of those allowed under the existing BIS license exception for agricultural commodities covered by TSRA. In January 2016, BIS amended the EAR to include a new category of exports for which licenses will be considered on a case-by-case basis. The new category includes items exported to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people. (For more details, see " U.S. Exports and Sanctions ," below.) In October 2016, OFAC added a general license for authorization to enter into contingent contracts for transactions currently prohibited by the embargo. It also added a general license waiving the restriction in the Cuban Democracy Act of 1992 prohibiting foreign vessels from entering U.S. ports for purposes of loading or unloading freight for 180 days after calling on a Cuban port for trade purposes. BIS also generally authorized by license exception the export of certain consumer goods sold directly to eligible individuals in Cuba for their personal use. Banking and Financial Services. The Treasury regulations permit U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, including payment for U.S. exports and for travel services. In January 2016, U.S. private export financing was authorized for all authorized nonagricultural export trade to Cuba. In March 2016, Treasury permitted U.S. banking institutions to authorize U-turn payments through the U.S. financial system for transactions in which Cuba or a Cuban national has an interest (whereby funds from a bank outside of the United States may pass through one or more U.S. financial institutions before being transferred to a bank outside the United States). Physical Presence. Companies or entities in the following categories are authorized to have a physical presence in Cuba, such as an office, retail outlet, or warehouse: news bureaus; exporters of authorized goods to Cuba; entities providing mail or parcel transmission services; telecommunication or Internet-based service providers; entities organizing or conducting certain educational activities; religious organizations; and carrier and travel service providers. U.S. exports to establish, operate, or support such a physical presence are authorized under a license exception. When the President unveiled his policy changes, he acknowledged that he does not have the authority to lift the embargo because it was codified into law (Section 102(h) of the LIBERTAD Act). However, the President maintained that he looks forward to engaging Congress in a debate about lifting the embargo. As noted above, the LIBERTAD Act ties the lifting of the embargo to conditions in Cuba (including that a democratically elected government is in place). Lifting the overall economic embargo at this time would require amending or repealing the LIBERTAD Act as well as other statutes that have provisions impeding normal economic relations with Cuba, such as the Foreign Assistance Act of 1961, the Cuban Democracy Act of 1992, and the Trade Sanctions Reform and Export Enhancement Act of 2000. For example, as noted above, TSRA denies U.S. exporters access to U.S. government support, prohibits U.S. private commercial financing or credit for agricultural exports, and prohibits tourist travel to Cuba. President Obama traveled to Cuba from March 20 to 22, 2016—the first visit of a U.S. President since Calvin Coolidge visited in 1928. Before the trip, the White House set forth the goals of the visit, stating that the President would build on progress toward normalizing relations, including advancing commercial and people-to-people ties and expressing support for human rights. During his visit (which included Secretary of State Kerry, Agriculture Secretary Vilsack, and Commerce Secretary Pritzker), President Obama announced additional initiatives, including support for collaboration between the U.S. and Cuban agricultural sectors; Cuban participation in the Administration's 100,000 Strong in the Americas Initiative to increase student exchanges; and new partnerships in health, science, and the environment. The President attended an event with Cuban entrepreneurs to demonstrate support for the country's nascent private sector. At the event, he noted such commercial plans as General Electric selling aviation and energy equipment, the Alabama-based Cleber company building tractors in Cuba (this project ultimately was rejected by the Cuban government), Starwood and Marriott planning to operate hotels in joint ventures with Cuba, and Carnival beginning cruise service in May. The President also attended a baseball game between the Tampa Bay Rays and the Cuban national team in a significant demonstration of sports diplomacy. As a reflection of the momentous shift in his Administration's policy toward Cuba, President Obama said during the trip that he had "come here to bury the last remnant of the Cold War in the Americas." The policy shift on Cuba, which has been lauded throughout Latin America, has helped to bolster the image of the United States in the region and solidify the Administration's message that it is committed to sustained engagement and partnership in the Americas. Respect for human rights was a major focus of the visit, and President Obama spoke out strongly on the issue. Just a day before the President's arrival, the Cuban government disrupted the weekly peaceful protest march of the Ladies in White human rights group, again demonstrating the government's severe repression of political dissent. In a joint press conference with President Raúl Castro, President Obama said that the United States would "continue to speak up on behalf of democracy, including the right of the Cuban people to decide their own future" and to "speak out on behalf of universal human rights, including freedom of speech, and assembly, and religion." In contrast, President Castro became defensive when asked about political prisoners in Cuba. President Obama spoke out most forcefully for advancing human rights during his televised speech to the Cuban nation. While maintaining that the United States "will not impose our political or economic system on you," the President said: I believe citizens should be free to speak their mind without fear—to organize, and to criticize their government, and to protest peacefully, and that the rule of law should not include arbitrary detentions of people who exercise those rights. I believe that every person should have the freedom to practice their faith peacefully and publicly. And, yes, I believe voters should be able to choose their governments in free and democratic elections.  Speaking directly to President Castro, President Obama said: I am also confident that you need not fear the different voices of the Cuban people—and their capacity to speak, and assemble, and vote for their leaders. In fact, I'm hopeful for the future because I trust that the Cuban people will make the right decisions. President Obama met for almost two hours with 13 prominent human rights and political activists, including Berta Soler, leader of the Ladies in White; José Daniel Ferrer, leader of the Patriotic Union of Cuba; Elizardo Sánchez, president of the Cuban Commission for Human Rights and National Reconciliation (CCDHRN); and Antonio Rodiles, coordinator of Estado de Sats, a forum to promote cultural, social, and political debate. The meeting itself signaled recognition of the activists. Another participant, human rights activist and independent journalist Miriam Leiva, commented that no head of state visiting Cuba had met with prominent dissidents, "not even the popes." Looking ahead, the extent to which President Obama's trip will spur the pace of the normalization process will depend on several factors. These include, as the President acknowledged during the trip, the extent to which the Cuban government makes progress on human rights issues and the extent to which Cuba takes advantage of the recent regulatory changes to the U.S. embargo. Moreover, as President Obama noted, even if the United States lifted the embargo tomorrow, "Cubans would not realize their potential without change in Cuba." He pointed to such needed changes as making it easier to open a business, allowing workers to get jobs directly with companies that invest in Cuba, eliminating the use of two currencies that separate the types of salaries that Cubans can earn, and expanding Internet access so that Cubans can connect to the wider world. U.S. and Cuban officials have held five Bilateral Commission meetings, the most recent in December 2016, to coordinate efforts to advance the normalization process. These meetings have included a review of progress on shared priorities, such as regulatory issues, telecommunications, science and technology, U.S. property claims, environmental protection and cooperation, human trafficking, human rights, migration, law enforcement, civil aviation, agriculture, culture and education, nonproliferation, and maritime borders. The next Bilateral Commission meeting is scheduled to take place in Havana in December 2016. Among the numerous meetings and agreements that have occurred are the following: U.S. and Cuban officials have held three regulatory dialogues —in October 2015, February 2016, and July 2016—with the U.S. delegations consisting of officials from Commerce, Treasury, and State. According to the State Department, the delegations presented information on the U.S. regulatory changes and addressed ways the two countries can work together within the existing framework of U.S. laws and regulations. With regard to law enforcement cooperation , an inaugural Law Enforcement Dialogue took place in November 2015 in Washington, DC, focusing on such areas of cooperation as counterterrorism, counternarcotics, transnational crime, cybercrime, secure travel and trade, and fugitives. Bilateral technical talks on cybercrime and online fraud took place in February 2016, in Havana. A second Law Enforcement Dialogue took place in Havana in May 2016. Also under the rubric of the Law Enforcement Dialogue, U.S. and Cuban officials held technical exchanges on human smuggling and fraud prevention in February and September 2016, as well as a technical exchange on legal cooperation in September 2016. On January 16, 2017, U.S. and Cuban officials signed a memorandum of understanding to deepen bilateral law enforcement cooperation and information sharing. In June 2016, the United States and Cuba held the first counterterrorism technical exchange in Cuba, which included U.S. officials from several agencies: the State Department, FBI, and Homeland Security (U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement's Homeland Security Investigations). In the environmental arena , the United States and Cuba signed an environmental memorandum on November 18, 2015, for the protection of fish and coral resources. On November 24, 2015, both countries signed a joint statement on environmental cooperation designed to facilitate and guide cooperation on a range of issues, including coastal and marine protection, the protection of biodiversity, climate change, disaster risk reduction, and marine pollution. U.S. and Cuban delegations met June 28-July 1, 2016, in Cuba to advance cooperation on issues affecting the marine environment. With regard to maritime issues , the United States and Cuba signed a memorandum of understanding on hydrography and nautical charting in March 2016 to improve maritime navigation safety. In July 2016, U.S., Cuban, and Mexican delegations met in Mexico to discuss delimiting maritime boundaries of the continental shelf that are more than 200 nautical miles from each country's shore in the eastern Gulf of Mexico, often referred to as the Eastern Gap. On counternarcotics issues , U.S. and Cuban officials held a second dialogue in Washington, DC, in December 2015 (the first occurred in April 2014). At a third counternarcotics meeting held in Havana in July 2016, Cuba and the United States singed a Counternarcotics Arrangement to facilitate additional cooperation and information sharing in efforts against illicit narcotics trafficking. (See " Antidrug Cooperation ," below.) U.S. and Cuban officials have held three discussions on claims , in December 2015, July 2016, and most recently on January 12, 2017. Outstanding U.S. claims include those of U.S. nationals certified by the Foreign Claims Settlement Commission, claims related to unsatisfied U.S. court judgments against Cuba, and claims held by the U.S. government. (See " U.S. Property Claims ," below.) On December 11, 2005, Cuban and U.S. officials announced that they had finalized plans for direct mail service . The service began on March 16, 2016, for the first time in more than 50 years. U.S. and Cuban officials reached a bilateral civil aviation arrangement on December 16, 2015 (signed in February 2016), which will allow U.S. commercial airlines to operate regular flights to Cuba. (See " Restrictions on Travel and Remittances ," below.) With regard to health cooperation , the U.S. Department of Health and Human Services and the Cuban government signed a memorandum of understanding on June 13, 2016, to facilitate cooperation on such diseases as cancer and the Zika virus. On human rights , U.S. and Cuban officials traveled to Havana for the first U.S.-Cuban human rights dialogue in October 2016. U.S. and Cuban officials held an inaugural economic dialogue in Washington, DC, in September 2016, and discussed trade and investment, labor and employment, renewable energy and energy efficiency, small business, intellectual property rights, economic policy, regulatory and banking matters, and telecommunications and Internet access. U.S. and Cuban officials signed an oil spill preparedness and response agreement on January 9, 2017, for cooperation and coordination in an effort to prevent, contain, and clean up marine oil and other hazardous pollution. President Obama issued a presidential policy directive on the normalization of relations with Cuba on October 14, 2016. The directive set forth the Administration's vision for normalization of relations and laid out six medium-term objectives: (1) government-to-government interaction; (2) engagement and connectivity; (3) expanded commerce; (4) economic reform; (5) respect for universal human rights, fundamental freedoms, and democratic values; and (6) Cuba's integration into international and regional systems. The directive also outlined the roles and responsibilities for various U.S. departments and agencies to move the normalization process forward. It noted that the Administration will seek to build support in Congress to lift the embargo and other statutory provisions constraining efforts to normalize economic relations with Cuba. The directive can be viewed as an attempt to keep up the momentum toward normalizing relations in the next Administration and to protect the changes that have been made to date in policy toward Cuba. Over the years, although U.S. policymakers have agreed on the overall objectives of U.S. policy toward Cuba—to help bring democracy and respect for human rights to the island—there have been several schools of thought about how to achieve those objectives. Some have advocated a policy of keeping maximum pressure on the Cuban government until reforms are enacted, while continuing efforts to support the Cuban people. Others argue for an approach, sometimes referred to as constructive engagement, that would lift some U.S. sanctions that they believe are hurting the Cuban people and move toward engaging Cuba in dialogue. Still others call for a swift normalization of U.S.-Cuban relations by lifting the U.S. embargo. Legislative initiatives introduced over the past decade have reflected these three policy approaches. Dating back to 2000, there have been efforts in Congress to ease U.S. sanctions, with one or both houses at times approving amendments to appropriations measures that would have eased U.S. sanctions on Cuba. Until 2009, these provisions were stripped out of final enacted measures, in part because of presidential veto threats. In 2009, Congress took action to ease some restrictions on travel to Cuba, marking the first time that Congress has eased Cuba sanctions since the approval of the Trade Sanctions Reform and Export Enhancement Act of 2000. In light of Fidel Castro's departure as head of government and the gradual economic changes being made by Raúl Castro, some observers had called for a reexamination of U.S. policy toward Cuba. In this new context, two broad policy approaches were advanced to contend with change in Cuba: an approach that called for maintaining the U.S. dual-track policy of isolating the Cuban government while providing support to the Cuban people and an approach aimed at influencing the attitudes of the Cuban government and Cuban society through increased contact and engagement. The Obama Administration's December 2014 change of U.S. policy from one of isolation to one of engagement and moving toward the normalization of relations has highlighted divisions in Congress over Cuba policy. Some Members of Congress lauded the Administration's actions as in the best interests of the United States and a better way to support change in Cuba, while other Members strongly criticized the President for not obtaining concessions from Cuba to advance human rights. Some Members vowed to oppose the Administration's efforts toward normalization, while others have, as in the past, introduced legislation to normalize relations with Cuba by lifting the embargo in its entirety or in part easing some aspects of it. In general, those who advocate easing U.S. sanctions on Cuba make several policy arguments. They assert that if the United States moderated its policy toward Cuba—through increased travel, trade, and dialogue—then the seeds of reform would be planted, which would stimulate forces for peaceful change on the island. They stress the importance to the United States of avoiding violent change in Cuba, with the prospect of a mass exodus to the United States. They argue that since the demise of Cuba's communist government does not appear imminent, even without Fidel Castro at the helm, the United States should espouse a more pragmatic approach in trying to bring about change in Cuba. Supporters of changing policy also point to broad international support for lifting the U.S. embargo, to the missed opportunities for U.S. businesses because of the unilateral nature of the embargo, and to the increased suffering of the Cuban people because of the embargo. Proponents of change also argue that the United States should be consistent in its policies with the world's few remaining communist governments, including China and Vietnam. On the other side, opponents of lifting U.S. sanctions maintain that the two-track policy of isolating Cuba, but reaching out to the Cuban people through measures of support, is the best means for realizing political change in Cuba. They point out that the Cuban Liberty and Democratic Solidarity Act of 1996 sets forth the steps that Cuba needs to take in order for the United States to normalize relations. They argue that softening U.S. policy without concrete Cuban reforms would boost the Castro government, politically and economically, and facilitate the survival of the communist regime. Opponents of softening U.S. policy argue that the United States should stay the course in its commitment to democracy and human rights in Cuba and that sustained sanctions can work. Opponents of loosening U.S. sanctions further argue that Cuba's failed economic policies, not the U.S. embargo, are the causes of Cuba's difficult living conditions. Public opinion polls show a majority of Americans support normalizing relations with Cuba, including a majority of the Cuban American community in South Florida. Statements from President-elect Trump suggest that he might reverse some of the Obama Administration's Cuba policy changes. After Fidel Castro's death in November 2016, the President-elect issued a statement referring to Castro as a "brutal dictator who oppressed his own people for nearly six decades." This statement was followed by a longer message maintaining that "If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate [the] deal." At this juncture, it remains unclear what actions might be taken by the incoming Administration. During the electoral campaign, candidate Trump said he would cancel or reverse President Obama's policy on Cuba unless Cuba took action to improve political and religious freedom and free political prisoners. Since President Obama's policy shift on Cuba was done largely by executive action, President-elect Trump could reverse many of those policies, including the reestablishment of diplomatic relations, the rescission of Cuba's designation as a state sponsor of terrorism, and actions taken to ease restrictions on travel and commerce. As described above, this third step involved regulatory changes to the economic embargo taken by the Treasury and Commerce Departments. The Administration could decide to reverse some or all these changes or to ease or tighten other aspects of the embargo regulations. The Administration also could make changes to other aspects of bilateral government-to-government cooperation and dialogues that have occurred under the Obama Administration. These include a variety of agreements and dialogues on such issues as telecommunications, science and technology, U.S. property claims, environmental protection, human rights, migration, law enforcement, civil aviation, and maritime borders. As noted above, opinion polls have shown that the policy of engagement has largely been popular, which could make it difficult for the incoming Administration to reverse the U.S. policy completely. Burgeoning U.S. business linkages also could make it difficult to reverse current policy. Given that much of the economic embargo on Cuba remains in place (and can be lifted only by Congress), the incoming Administration could choose to let the changes that have already been made remain but refrain from approving any additional easing of restrictions pending economic or political changes in Cuba. For many years, Congress has played an active role in U.S. policy toward Cuba through the enactment of legislative initiatives and oversight on the numerous issues that comprise policy toward Cuba. These include U.S. economic sanctions on Cuba, such as restrictions on travel, remittances, and agricultural and medical exports; terrorism issues, including Cuba's designation as a state sponsor of international terrorism; human rights issues, including funding and oversight of U.S.-government sponsored democracy and human rights projects; funding and oversight for U.S.-government sponsored broadcasting to Cuba (Radio and TV Martí); migration issues; bilateral antidrug cooperation; and U.S. claims for property confiscated by the Cuban government. In reaction to the Administration's Cuba policy changes, some Members attempted to restrict operations of the U.S. Embassy in Havana and U.S. military engagement with the Cuban military through appropriations and defense authorization legislation. U.S. Embassy Operations. At least two U.S. Senators said they would put a hold on any nominee for U.S. ambassador to Cuba, effectively blocking the Senate from voting on a nominee. The absence of a U.S. ambassador at a U.S. Embassy, however, is not an unusual occurrence, with the senior ranking State Department official assuming the title of chargé d'affaires ad interim and responsibility for the day-to-day functioning of the diplomatic post. With the reestablishment of relations, the chief of the U.S. Interests Section in Havana, Jeffrey DeLaurentis, became chargé d'affaires of the U.S. Embassy in Havana. On September 27, 2016, President Obama officially nominated DeLaurentis to become U.S. ambassador to Cuba, although the Senate Foreign Relations Committee did not take up nomination by the end of the 114 th Congress. In its FY2016 budget request, the State Department asked for just over $6 million for the Western Hemisphere Affairs Bureau (WHA) to support expanded operations in Havana, including increased engagement with Cuban civil society and new demands on staff likely to result from an increase in visitors to Cuba. The House Appropriations Committee's FY2016 State Department and Foreign Operations appropriations bill, H.R. 2772 , had a provision in Section 7045(c)(3) that would have prohibited funds for the establishment or operation of a U.S. diplomatic presence in Cuba beyond that which was in existence prior to December 17, 2014, until the President determined and reported to Congress that the requirements and factors specified in the LIBERTAD Act (related to democratic conditions in Cuba) had been met. The Senate Appropriations Committee-approved version of the bill did not include such a provision, and ultimately the FY2016 omnibus appropriations bill, H.R. 2029 , did not include such a provision. The Administration opposed the provision as interfering with its ability to make the best decisions consistent with U.S. national security. In its FY2017 budget request, the State Department requested $3.8 million for WHA to fill nine additional positions and update aging infrastructure at the U.S. Embassy in Havana. According to the request, the positions would include a mix of reporting and support positions to deepen understanding of Cuba's political, social, and economic environment; oversee maintenance upgrades; conduct human rights monitoring and advocacy; and strengthen law enforcement cooperation. The House Appropriations Committee version of the FY2017 State Department and Foreign Operations appropriations measure, H.R. 5912 ( H.Rept. 114-693 ) reported on July 15, 2016, had a provision in Section 7045(c)(1) that would have prohibited funding for the establishment or operation of a U.S. diplomatic presence in Cuba beyond what was in place prior to December 17, 2014. In contrast, the Senate Appropriations Committee-reported version of the measure— S. 3117 ( S.Rept. 114-290 ), reported on June 29, 2016—would, in Section 7045(c)(4), have funded the operation of and infrastructure and security improvements to U.S. diplomatic facilities in Cuba. It also would have funded costs associated with additional diplomatic personnel in Cuba. For FY2017, the U.S. Department of Agriculture also requested $1.5 million for the Foreign Agricultural Service to establish an overseas post in Cuba. The report to the Senate version of the FY2017 agriculture appropriations measure ( S.Rept. 114-259 to S. 2956 ) recommended full funding for the Administration's request. As previously noted, the 114 th Congress did not complete action on FY2017 foreign operations appropriations, but in December 2016 approved a continuing resolution ( P.L. 114-254 ) funding most programs at the FY2016 level, minus an across-the-board reduction of almost 0.2%, through April 28, 2017. Bilateral Military Engagement. Both the House- and Senate-passed versions of the National Defense Authorization Act (NDAA) for FY2017 had different provisions restricting U.S. military interaction with the Cuban military, effectively curbing the Administration's changed policy toward Cuba. The House bill, H.R. 4909 , had a provision in Section 1259B that would have prohibited funds authorized in the act for FY2017 for any bilateral military-to-military contact or cooperation pending certification from the Secretaries of State and Defense, in consultation with the Director of National Intelligence (DNI), that Cuba has fulfilled numerous conditions regarding democracy and human rights, outstanding claims and judgements of U.S. nationals, support to the military and security forces of Venezuela, cessation of the demand for the return of the U.S. Naval Station at Guantanamo Bay, U.S. fugitives, and requirement that Cuban military officials indicted in the United States for the murder of U.S. citizens killed during the 1996 shoot down of two U.S. civilian planes be brought to justice. The Senate version of the NDAA, S. 2943 , had a provision in Section 1204 prohibiting the use of any funds by the Secretary of Defense to invite, assist, or otherwise assure the participation of Cuba in certain joint or multilateral exercises or related security conferences between the United States and Cuba until the Secretary of Defense, in coordination with the DNI, submits to Congress written assurances regarding some of the same conditions cited above in the House bill. These include the Cuban military and security forces' involvement in human rights abuses; Cuban military support to the Venezuelan military and security forces; Cuba's demand for the United States to relinquish control of Guantanamo; and that Cuban military officials indicted in the United States for the 1996 killing of U.S. citizens during the shoot down of two U.S. civilian planes are brought to justice. Both the White House's statement of policy on S. 2943 , issued June 7, 2016, and the Secretary of Defense's letter to Congress on the NDAA strongly objected to the restrictions on U.S.-Cuban military-to-military interactions in Section 1204. Both maintained that restrictions "would hamper pragmatic, expert-level coordination between the United States and Cuba on issues that benefit the United States." As noted, this coordination includes counternarcotics exercises and operations, participation of the Cuban government in security conferences, and monthly talks between the commanding officer of the U.S. Naval Station at Guantánamo Bay and his Cuban counterpart to share information about activities on both sides of the fence to reduce the risk of accidental escalation. According to both documents, "It is in the U.S. national security interest to maintain flexibility in U.S. military-to-military engagement with Cuba due to Cuba's proximity and the many shared challenges faced by the United States and Cuba." Ultimately, in the final version of the FY2017 NDAA ( P.L. 114-328 ) enacted in December 2016, Section 1286 prohibits the Secretary of Defense from authorizing FY2017 funds for the Department of Defense to invite, assist, or otherwise assure the participation of Cuba in certain joint or multilateral exercises or related security conference between the governments of the United States and Cuba until the Secretaries of Defense and State, in consultation with the Director of National Intelligence, submit to Congress written assurances regarding Cuba's fulfillment of conditions for Cuba related to human rights, support to the security forces of Venezuela, cessation of Cuba's demand that the United States relinquish control of the U.S. Naval Station at Guantánamo Bay, and requirement that Cuban military officials indicted in the United States for the murder of U.S. citizens killed during the 1996 shoot down of two U.S. civilian planes are brought to justice. The provision provides exceptions to the funding prohibition for any payments related to the lease agreement or other financial transactions for maintenance and improvements of the military base at Guantanamo Bay, Cuba; any assistance or support of democracy-building efforts; customary and routine financial transactions necessary for the maintenance, improvements, or regular duties of the U.S. mission in Havana; or any joint or multilateral exercise or operation related to humanitarian assistance or disaster response. The conference report to FY2017 NDAA ( H.Rept. 114-840 ) stated that it is the intent of the conferees that the exception related to the Guantanamo base includes periodic contact between appropriate U.S. and Cuban officials concerning the security and management of the naval station commonly referred to as "fence-line talks." Restrictions on travel to Cuba have been a key and often contentious component of U.S. efforts to isolate Cuba's communist government for much of the past 50+ years. Over time there have been numerous changes to the restrictions and for five years, from 1977 until 1982, there were no restrictions on travel. Restrictions on travel and remittances to Cuba are part of the Cuban Assets Control Regulations (CACR), the overall embargo regulations administered by the Department of the Treasury's Office of Foreign Assets Control. Under the George W. Bush Administration, enforcement of U.S. restrictions on Cuba travel increased, and restrictions on travel and on private remittances to Cuba were tightened. Under the Obama Administration, Congress took legislative action in March 2009 easing restrictions on family travel and on travel related to U.S. agricultural and medical sales to Cuba ( P.L. 111-8 , Sections 620 and 621 of Division D). In April 2009, the Obama Administration went further when the President announced that he was lifting all restrictions on family travel as well as restrictions on cash remittances to family members in Cuba. In January 2011, the Obama Administration made a series of changes further easing restrictions on travel and remittances to Cuba. The measures (1) increased purposeful travel to Cuba related to religious, educational, and journalistic activities, including people-to-people travel exchanges; (2) allowed any U.S. person to send remittances to non-family members in Cuba (up to $500 per quarter) and made it easier for religious institutions to send remittances for religious activities; and (3) allowed U.S. international airports to become eligible to provide services to licensed charter flights to and from Cuba. In most respects, these new measures were similar to policies that were undertaken by the Clinton Administration in 1999 but subsequently curtailed by the Bush Administration in 2003 and 2004. As noted above, just after the adjournment of the 113 th Congress, President Obama announced major changes in U.S. policy toward Cuba on December 17, 2014. These changes included the provision for general licenses for the 12 existing categories of travel to Cuba set forth in the CACR: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects (now including microfinancing projects); (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.  Despite the easing of travel restrictions, travel to Cuba solely for tourist activities remains prohibited. Section 910(b) of TSRA prohibits travel-related transaction for tourist activities, which are defined as any activity not expressly authorized in the 12 categories of travel in the CACR ( 31 C.F.R. 515.560 ). Before the policy change, travelers under several of these categories had to apply for a specific license from the Department of the Treasury before traveling. Under the new regulations, both travel agents and airlines are able to provide services for travel to Cuba without the need to obtain a specific license. U.S. credit and debit cards are permitted for use by authorized travelers to Cuba, but the State Department advises U.S. travelers to check with their financial institution to determine whether the institution has established the necessary mechanisms for its issued credit and debit cards to be used in Cuba. Authorized travelers no longer have a per diem limit for expenditures, as in the past, and can bring back goods from Cuba as accompanied baggage for personal use, including alcohol and tobacco. In January 2016, the Treasury Department made additional changes to the travel regulations. Among the changes, authorization for travel and other transactions for transmission of informational materials now includes professional media or artistic productions in Cuba (movies, television, music recordings, and creation of artworks). Authorization for travel and other transactions for professional meetings, public performances, clinics, workshops, athletic and nonathletic competitions, and exhibitions now includes permission to organize these events, not just participation. In March 2016, the Treasury Department again amended the travel regulations to permit travel to Cuba for individual, people-to-people education provided the traveler engages in a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities. Previously, such trips had to take place under the auspices of an organization that sponsors such travel. According to the Treasury Department, the change was intended to make authorized educational travel to Cuba more accessible and less expensive for U.S. citizens and will increase opportunities for direct engagement between Cubans and Americans. Regular Air Service. After several rounds of talks in 2015, U.S. and Cuban officials reached a bilateral arrangement (in a memorandum of understanding, or MOU) on December 16, 2015, permitting regularly scheduled air flights as opposed to charter flights that have operated between the two countries for many years. Transportation Secretary Anthony Foxx traveled to Cuba on February 16, 2016, to sign the arrangement, providing an opportunity for U.S. carriers to operate up to a total of 110 daily roundtrip flights between the United States and Cuba, including up to 20 daily roundtrip flights to and from Havana. On June 10, 2016, the Department of Transportation announced that six U.S. airlines were authorized to provide air service for up to 90 daily flights between five U.S. cities (Miami, Fort Lauderdale, Chicago, Philadelphia, and Minneapolis-St. Paul) and nine Cuban cites other than Havana. JetBlue became the first U.S. airline to begin regularly scheduled flights on August 31, 2016. On July 7, 2016, the department announced a tentative decision for eight U.S. airlines to provide up to 20 regularly scheduled roundtrip flights between Havana and 10 U.S. cities (Atlanta, Charlotte, Fort Lauderdale, Houston, Los Angeles, Miami, Newark, New York [JFK], Orlando, and Tampa); a final decision was made on August 31, 2016. American Airlines became the first to begin direct flights to Havana from Miami in late November 2016. In May 2016, the House Committee on Homeland Security, Subcommittee on Transportation Security, held a hearing on potential security risks from the resumption of regularly scheduled flights from Cuba. Some Members of Congress have expressed concerns that Cuba's airport security equipment and practices are insufficient and that the Administration is rushing plans to establish regular air service to Cuba; other Members views such concerns as a pretext to slow down or block the Administration's efforts to normalize relations with Cuba. Officials from the Department of Homeland Security (including Customs and Border Protection and the Transportation Security Administration) testified at the hearing regarding their work to facilitate and ensure security of the increased volume of commercial air travelers from Cuba. Initially, the Transportation Security Administration (TSA) announced on August 9, 2016, that the United States and Cuba had entered into an aviation security agreement setting forth the legal framework for the deployment of U.S. In-Flight Security Officers, more commonly known as Federal Air Marshals, on board certain flights to and from Cuba. However, during a House Homeland Security hearing on September 14, 2016, a TSA official maintained that the Cuban government had not yet signed the agreement for the regularly scheduled flights but rather only for the charter flights. Ultimately, on September 30, 2016, the initial agreement for the charter flights was amended to make it applicable to the regularly scheduled flights. In July 2016, OFAC granted a license to Bangor International Airport in Maine to provide refueling and services for foreign air carriers making flights to and from Cuba. (Legislation had been introduced in May that would have prohibited restrictions from providing such services [ S. 2990 ].) Ferry and Cruise Ship Service. In May 2015, the Department of the Treasury reportedly issued licenses to several companies to operate ferry services between the United States and Cuba; the services still required Cuban approval, and Cuban facilities need to be developed to handle the services. With regard to cruise ships, the Carnival cruise ship company began direct cruises to Cuba from the United States on May 1, 2016. Carnival had announced in March 2016, that it would offer cruises to Cuba beginning in May. The company had received a Treasury Department license in July 2015 to operate cruises to Cuba and was waiting for Cuban approval to begin such services. It uses smaller ship, accommodating about 700 passengers, under its cruise brand Fathom, which targets people-to-people educational travel. Under the embargo regulations, passengers on cruise ships to Cuba must fall under one of the permissible categories of travel, which does not include tourist travel. In April 2016, controversy ensued over the Carnival cruises when it became known that the Cuban government was not going to allow those born in Cuba to be passengers on cruise ships sailing to Cuba. (A Cuban government regulation dating back to the 1990s prohibited Cuban-born individuals from traveling to and from Cuba by ship.) Protests began against Carnival for agreeing to the terms of the cruises, and a class action lawsuit was filed in federal court in Miami. Secretary of State Kerry called on Cuba to change its "policy and to recognize that if they want a full relationship, a normal relationship, with the United States, they have to live by international law and not exclusively by their own." Carnival subsequently reversed its policy, maintaining that it would accept bookings from all travelers and would delay the start of its cruises unless Cuban authorities allowed cruise ships to operate in the same fashion as air flights. On April 22, the Cuban government ultimately announced that it was changing its policy to allow the entry and exit of Cuban citizens by cruise ship and merchant vessel, an action that allowed Carnival to go forward with its cruises to Cuba. In December 2016, several other cruise ship companies—Royal Caribbean, Norwegian, Azamara Club Cruises, Oceana Cruises, Regent Seven Seas Cruises, and Pearl Seas Cruises—announced that they would be offering cruises to Cuba from the United States in 2017. Remittances. The Obama Administration's change in policy also lifted the cap on the amount of remittances that can be sent by any U.S. person to non-family members in Cuba, so-called donative remittances. Initially the cap was increased from $500 to $2,000 per quarter in January 2015, and then it was removed altogether in September 2015. Authorized travelers may carry an unlimited amount of remittances to Cuba (initially the cap was increased from $3,000 to $10,000, and then removed). Remittances to individuals and independent nongovernmental organizations (NGOs) in Cuba are authorized without limit for humanitarian projects; activities of recognized human rights organizations, independent organizations designed to promote a rapid peaceful transition to democracy, and of individuals and NGOs that promote independent activity to strengthen civil society; and the development of private businesses, including small farms. Pro/Con Arguments. Major arguments made for lifting the Cuba travel ban altogether are that it abridges the rights of ordinary Americans to travel; it hinders efforts to influence conditions in Cuba and may be aiding the Cuban government by helping restrict the flow of information; and Americans can travel to other countries with communist or authoritarian governments. Major arguments in opposition to lifting the Cuba travel ban are that more American travel would support the Cuban government with potentially millions of dollars in hard currency; that there are legal provisions allowing travel to Cuba for humanitarian purposes that are used by thousands of Americans each year; and that the President should be free to restrict travel for foreign policy reasons. With regard to remittances, supporters of the Obama Administration's recent action argue that it can help support civil society and the country's nascent private sector. Those opposed contend that the Cuban regime benefits from increased remittances by the money it accrues from taxes on private sector activity as well as fees for the exchange of U.S. dollars. Legislative Activity. Several legislative initiatives introduced in the 114 th Congress would have lifted remaining restrictions on travel and remittances. Three bills would have lifted the overall embargo, H.R. 274 (Rush), H.R. 403 (Rangel), and H.R. 735 (Serrano) including restrictions on travel and remittances. One bill, H.R. 635 (Rangel), would have facilitated the export of U.S. agricultural and medical exports to Cuba and also lift travel restrictions. Three bills would have focused solely on prohibiting restrictions on travel to Cuba: H.R. 634 (Rangel), H.R. 664 (Sanford), and S. 299 (Flake). A Senate amendment— S.Amdt. 3557 (Flake) to H.R. 636 , the Federal Aviation Administration Reauthorization Act, which was filed but never considered—would have prohibited restrictions on travel to Cuba and related travel transactions. In contrast, two other introduced bills, S. 1388 and H.R. 2466 , would have required the President to submit a plan for resolving all outstanding claims relating to property confiscated by the government of Cuba before taking action to ease restrictions on travel to or trade with Cuba. Two similar bills, H.R. 5728 (reported, amended, by the House Homeland Security Committee on September 13, 2016) and S. 3289 , would have prohibited scheduled passenger air transportation between the United States and Cuba until a study had been completed regarding Cuba's airport security and agreements have been reached with Cuba allowing the U.S. Federal Air Marshal Service to conduct of missions on regularly scheduled flights and providing inspectors of the Transportation Security Administration access to all areas of last point of departure airports in Cuba for security assessments. Efforts to ease and tighten travel restrictions played out in the FY2016 appropriations process, but ultimately no such provisions were included in the FY2016 omnibus appropriations measure ( P.L. 114-113 ). (For more details, see Appendix B below.) In the FY2017 appropriations process, the House and Senate versions of the Financial Services appropriations measure contained contrasting provisions on travel. As noted above, the 114 th Congress did not complete action on FY2017 appropriations. In the House-passed bill, H.R. 5485 ( H.Rept. 114-624 ), Section 132 would have prohibited funding that licenses, facilitates, or otherwise allows people-to-people travel. The measure would have had a significant impact on the expansion of U.S. travel to Cuba that has occurred in recent years, including the recently begun cruise ship travel to Cuba. Another provision in the House bill, Section 134, would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow any financial transaction with an entity controlled, in whole or in part, by the Cuban military or intelligence service or with any officer or immediate family member thereof. This provision could have had a significant effect on U.S. travel to Cuba because the Cuban military has an important role in hotel and other travel services in Cuba. A potential Sanford amendment that had been ruled in order by the House Rules Committee (amendment 47 in H.Rept. 114-639 ) would have prohibited funds in the act from being used to administer or enforce the Cuba embargo regulations or the statutory prohibition on tourist travel. The amendment was ultimately introduced as H.Amdt. 1264 on July 7, 2016, but was subsequently withdrawn. In the Senate version of the FY2017 Financial Services appropriations measure, S. 3067 ( S.Rept. 114-280 ), Section 635 would have prohibited funding in any act to implement any law, regulation, or policy that restricts travel to Cuba. The provision would have had the effect of lifting all restrictions on travel to Cuba. Another provision in the Senate bill, Section 637, would have prohibited funds in the act or any act from being used to implement any law, regulation, or policy that prohibits the provision of technical services otherwise permitted under an international air transportation agreement in the United States for an aircraft of a foreign carrier that is en route to or from Cuba based on the restrictions set forth in the Cuban Assets Control Regulations. (As noted above, OFAC granted a license to Bangor International Airport in Maine in July 2016 to provide refueling and services for foreign air carriers making flights to and from Cuba.) U.S. commercial medical exports to Cuba have been authorized since the early 1990s pursuant to the Cuban Democracy Act of 1992 (CDA; P.L. 102-484 , Title XVII), and commercial agricultural exports have been authorized since 2001 pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA ( P.L. 106-387 , Title IX), but with numerous restrictions and licensing requirements. For medical exports to Cuba, the CDA requires on-site verification that the exported item is to be used for the purpose for which it was intended and only for the use and benefit of the Cuban people. TSRA allows for one-year export licenses for selling agricultural commodities to Cuba, although no U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees are available to finance such exports. TSRA also denies exporters access to U.S. private commercial financing or credit; all transactions must be conducted in cash in advance or with financing from third countries. Cuba purchased more than $5.2 billion in U.S. products from 2001 to 2015, largely agricultural products. For many of those years, the United States was Cuba's largest supplier of agricultural products. U.S. exports to Cuba rose from about $7 million in 2001 to a high of $712 million in 2008, far higher than in previous years. This increase was in part because of the rise in food prices and because of Cuba's increased food needs in the aftermath of several hurricanes and tropical storms that severely damaged the country's agricultural sector. U.S. exports to Cuba declined considerably from 2009 through 2011, rose again in 2012, and have fallen every year since then, amounting to just $180 million in 2015, the lowest level since 2002 (see Figure 3 ). The level of exports in 2015 dropped 40% from the previous year. Looking at the composition of U.S. exports to Cuba from 2012 to 2015, the leading products were poultry, soybean oilcake, soybeans, and corn, although corn exports declined considerably in this period. Poultry has been the leading U.S. export since 2012—accounting for more than 40% of U.S. exports—but the value of poultry exports declined almost 48% in 2015 from the previous year. According to press reports, Cuba reportedly suspended U.S. poultry imports in August and September 2015 because of concerns about the outbreak of bird flu in the United States but resumed purchases in October 2015. In the first nine months of 2016, however, U.S. exports to Cuba amounted to $176 million, a 14% increase compared to the same period in 2015. Poultry exports increased 31% from the same period in 2015 and accounted for almost 47% of total U.S. exports to Cuba. Among the reasons for the overall decline in U.S. exports to Cuba in recent years, analysts cite Cuba's shortage of hard currency; financial support from Venezuela; credits and other arrangements offered by other governments to purchase their countries' products; Cuba's preferences to purchase products from government-controlled entities; and efforts by Cuba to increase the motivation of U.S. companies, organizations, local and state officials, and some Members of Congress to push for further changes in U.S. sanctions policy toward Cuba. Some agricultural experts are skeptical as to whether the Obama Administration's recent changes in policy will lead to a significant increase in U.S. agricultural exports to Cuba, pointing out that other countries will still be able to offer better terms to Cuba than the United States because of restrictions on financing and credit. President Obama's policy changes, as set forth in regulatory changes made to the CACR and EAR, included several measures designed to facilitate commercial exports to Cuba. U.S. financial institutions are permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions. (In July 2015, the Florida-based Stonegate Bank became the first U.S. financial institution to sign a correspondent agreement with a Cuban bank.) U.S. private export financing is permitted for all authorized export trade to Cuba, except for agricultural goods exported pursuant to TSRA. The definition of the term "cash in advance" for payment for U.S. exports to Cuba was revised to specify that it means "cash before transfer of title." In 2005, the Department of the Treasury's Office of Foreign Assets Control had clarified that "payment of cash in advance" meant that the payment for the goods had to be received prior to the shipment of the goods from the port at which they were loaded in the United States. For FY2010 and FY2011, Congress had temporarily overturned OFAC's clarification of the term in omnibus appropriations legislation (Division C, Section 619 of P.L. 111-117 , and continued by reference in Division B, Section 1101 of P.L. 112-10 ). The change means that payment can once again occur before an export shipment is offloaded in Cuba, rather than before the shipment leaves a U.S. port. Commercial exports to Cuba of certain goods and services to empower Cuba's nascent private sector are authorized, including for certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers. Licenses for certain categories of exports are included under a "general policy of approval." These categories include exports for civil aviation and commercial aircraft safety; telecommunications; U.S. news bureaus; human rights organizations and nongovernmental organizations; environmental protection of U.S. and international air quality, waters, and coastlines; and agricultural commodities (such as insecticides, pesticides, and herbicides) that fall outside the scope of those exports already allowed under TSRA. Licenses for exports that will be considered on a case-by-case basis include certain items exported to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people. These items include exports for agricultural production, artistic endeavors, education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation, public transportation, wholesale and retail distribution for domestic consumption by the Cuban people, construction of facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefit the Cuban people. The commercial export of certain consumer communication devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems is authorized; previously such exports were limited to donations. The export of items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation, and upgrades, is also authorized. Companies exporting authorized goods to Cuba are authorized to have a physical presence in Cuba, such as an office, retail outlet, or warehouse. In October 2016, OFAC amended the CACR to add an expanded general license authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions currently prohibited by the embargo and BIS generally authorized certain consumer goods sold directly to eligible individuals in Cuba for their personal use. USDA Reports. In a June 2015 report, the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service noted that "the U.S. share of the Cuban market has slipped dramatically, from a high of 42% in FY2009 to only 16% in FY2014." The report contends that the recent decline in U.S. market share in Cuba "is largely attributable to a decrease in bulk commodity exports from the United States in light of favorable credit terms offered by key competitors." It maintains that the United States has lost market share to those countries able to provide export credits to Cuba. The report concludes that lifting U.S. restrictions on travel and capital flow to Cuba, and the ability for USDA to conduct market development and credit guarantee programs in Cuba, would help the United States recapture its market share in Cuba. Another USDA report published in June 2015 by its Economic Research Service maintained that a more normal economic relationship between the United States and Cuba would allow "U.S. agricultural exports to develop commercial ties in Cuba that approximate their business relationship in other parts of the world" (such as the Dominican Republic) and could "feature a much larger level of U.S. agricultural exports to Cuba." According to the report, increased U.S. exports could include such commodities as milk, wheat, rice, and dried beans, and intermediate and consumer-oriented commodities. USITIC Reports. The U.S. International Trade Commission (USITC) has issued three studies since 2007 examining the effects of U.S. restrictions on trade with Cuba. The agency issued its third and most recent report on April 18, 2016. The Senate Finance Committee initially requested the report in December 2014 to examine effects of U.S. restrictions on trade and travel to Cuba on the export of U.S. goods and services. The USITC held a public hearing on June 2, 2015, that featured private sector and academic witnesses as well as a Member of Congress. In August 2015, the committee asked the that study be expanded to include analysis of existing Cuban non-tariff measures, institutional and infrastructural factors, and other Cuban barriers; the extent to which these barriers would affect the export of goods and services to Cuba; and the aggregate effects of Cuban tariff and non-tariff measures on the ability of foreign firms to conduct business in and with Cuba. According to the findings of the report: U.S. restrictions on trade and travel have reportedly shut U.S. suppliers out of a market in which they could be competitive on price, quality, and proximity. The most problematic U.S. restrictions cited are the inability to offer credit, travel to or invest in Cuba, and use funds sourced and administered by the U.S. government. Cuban nontariff measures and other factors may limit U.S. exports to and investment in Cuba if U.S. restrictions are lifted. These include Cuban government control of trade and distribution, legal limits on foreign investment and property ownership, and politically motivated decisionmaking regarding trade and investment. Absent U.S. restrictions, U.S. exports in several sectors would likely increase somewhat in the short term, with prospects for larger increases in the longer term, subject to changes in Cuban policy and economic growth. U.S. exports could increase further if Cuban import barriers were lowered. If U.S. restrictions were removed, U.S. agricultural and manufactured exports to Cuba could increase to almost $1.8 billion, while if both U.S. restrictions were removed and Cuban barriers lowered, U.S. exports could approach $2.2 billion annually. Legislative Activity. Several legislative initiatives introduced in the 114 th Congress would have lifted or eased restrictions on exports to Cuba. Three bills— H.R. 274 (Rush), H.R. 403 (Rangel), and H.R. 735 (Serrano)—would have lifted the overall embargo, including restrictions on exports to Cuba in the CDA and TSRA. H.R. 635 (Rangel), among its various provisions, had the goal of facilitating the export of U.S. agricultural and medical exports to Cuba by permanently redefining the term "payment of cash in advance" to mean that payment was received before the transfer of title and release and control of the commodity to the purchaser; authorizing direct transfers between Cuban and U.S. financial institutions for products exported under the terms of TSRA; establishing an export promotion program for U.S. agricultural exports to Cuba; prohibiting restriction on travel to Cuba; and repealing the on-site verification requirement for medical exports to Cuba under the CDA. S. 491 (Klobuchar) would have removed various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. S. 1049 (Heitkamp) would have amended TSRA to allow for the financing of agricultural commodities to Cuba. S. 1543 (Moran)/ H.R. 3238 (Emmer) would have repealed or amended various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. The bills would have repealed restrictions on private financing for Cuba in TSRA but would have continued to prohibit U.S. government foreign assistance or financial assistance, loans, loan guarantee, extension of credit, or other financing for export to Cuba, albeit with presidential waiver authority for national security or humanitarian reasons. Under the initiative, the federal government would have been prohibited from expending any funds to promote trade with or develop markets in Cuba, although certain federal commodity promotion programs would be allowed. H.R. 3306 (Rush), would have authorized the export of energy resources, technologies, and related services to Cuba. H.R. 3687 (Crawford), would have permitted U.S. government assistance for U.S. agricultural exports to Cuba as long as the recipient of the assistance was not controlled by the Cuban government; authorized the financing of sales of agricultural commodities; and authorized investment for the development of an agricultural business in Cuba as long as it was not controlled by the Cuban government or did not traffic in property of U.S. nationals confiscated by the Cuban government. In contrast, two other introduced bills, S. 1388 and H.R. 2466 , would have required the President to submit a plan for resolving all outstanding claims relating to property confiscated by the government of Cuba before taking action to ease restrictions on travel to or trade with Cuba. Efforts to ease or tighten restrictions on U.S. exports to Cuba played out in the FY2016 appropriations process, but ultimately no such provisions were included in the FY2016 omnibus appropriations measure ( P.L. 114-113 ). S. 1910 (Boozman), the FY2016 Financial Services appropriations bill, had three provisions easing Cuba sanctions (on financing for U.S. agricultural sales, travel, and vessels trading with Cuba) that could have affected U.S. exports to Cuba. In contrast, House-passed H.R. 2578 , the FY2016 Commerce, Justice, and Science appropriations bill, had a provision that would have attempted to prevent additional categories of exports to Cuba authorized as part of the Administration's policy change on Cuba. (See Appendix B for details.) In the FY2017 appropriations process, House and Senate bills again had provisions that would have tightened and eased economic sanctions on Cuba, but the 114 th Congress did not complete action on FY2017 appropriations. Two FY2017 House appropriations bills ( H.R. 5393 , Commerce, and H.R. 5485 , Financial Services) had provisions that would have again attempted to impose new sanctions that place restrictions on U.S. exports to Cuba. A provision in H.R. 5393 would prohibit funding to facilitate, permit, license, or promote exports to the Cuban military or intelligence service or to any officer of the Cuban military or intelligence service, or an immediate family member thereof. A provision of H.R. 5485 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow any financial transaction with an entity controlled, in whole or in part, by the Cuban military or intelligence service or with any officer or immediate family member thereof. Neither provision would have affected financial transactions for exports permitted under TSRA. Both provisions could have significantly affected the expansion of U.S. exports to Cuba given that the Cuban military, since the 1990s, has become increasingly involved in Cuba's economy and in running numerous companies. The House Rules Committee had made in order a potential amendment to H.R. 5485 (Crawford, listed as amendment 24 in H.Rept. 114-639 ) that would have prohibited funds in the act from being used to implement, administer, or enforce Section 908(b) of TSRA, prohibiting private financing for agricultural sales to Cuba. Ultimately, the amendment was not introduced. In contrast to the House, the Senate version of the FY2017 Senate Financial Services appropriations bill, S. 3067 , had provisions that would have lifted restrictions on financing for agricultural exports to Cuba and on seaborne vessel entry into the United States if the vessel had been involved in trade with Cuba within the previous 180 days, except pursuant to a DOT license. As noted above, in December 2014, President Obama called for the Secretary of State to review Cuba's designation as a state sponsor of terrorism. As set forth in the three terrorist-list provisions of law—Section 6(j) of the Export Administration Act (EAA) of 1979 ( P.L. 96-72 ; 50 U.S.C. Appendix 2405(j) ); Section 620A of the Foreign Assistance Act (FAA) of 1961 ( 22 U.S.C. 2371 ); and Section 40 of the Arms Export Control Act (AECA) ( 22 U.S.C. 2780 )—a country's retention on the state sponsors of terrorism list may be rescinded by the President in two ways. The first option is for the President to submit a report to Congress certifying that there has been a fundamental change in the leadership and policies of the government and that the government is not supporting acts of international terrorism and is providing assurances that it will not support such acts in the future. The second option is for the President to submit a report to Congress, at least 45 days in advance, justifying the rescission and certifying that the government has not provided any support for international terrorism during the preceding six months and has provided assurances that it will not support such acts in the future. President Obama utilized the second option when submitting his report to Congress on April 14, 2015. According to the terrorist-list laws, the rescission would take effect 45 days after the report is submitted to Congress. Of the three terrorist-list statutes, only the AECA has an explicit provision allowing Congress to block, via the enactment of a joint resolution, a removal of a country on the list. The law sets forth an expedited procedure process for the joint resolution, which would have to be approved within the 45-day period. Such a measure would be subject to presidential veto and require a two-thirds vote in each body to override the veto. No resolutions of disapproval were introduced in Congress within the 45-day period, and, accordingly, Secretary of State Kerry rescinded Cuba's designation as a state sponsor of terrorism on May 29, 2015. Notably, on May 11, 2015, Secretary of State Kerry also dropped Cuba from the annual determination, pursuant to Section 40A of the Arms Export Control Act and due by May 15 of each year, identifying countries that are not fully cooperating with United States antiterrorism efforts. Cuba had been designated annually since that annual determination was established in 1997. Countries currently designated as not cooperating fully on antiterrorism efforts are Eritrea, North Korea, Iran, Syria, and Venezuela. Cuba was added to the State Department's list of states sponsoring international terrorism in 1982 pursuant to Section 6(j) of the EAA because of its alleged ties to international terrorism and support for terrorist groups in Latin America, and it remained on the list pursuant to the EAA, the AECA, and the FAA. A range of sanctions are imposed on countries on the terrorism list, including requirements for validated exports licenses (with presumption of denial) for dual-use goods or technology controlled by the Department of Commerce for national security of foreign policy reasons (EAA); a ban on arms-related exports and sales (AECA); and prohibitions on most foreign aid, food aid, or Export-Import Bank or Peace Corps programs (FAA). Despite Cuba's removal from the terrorism list, the extensive array of economic sanctions imposed on Cuba imposed pursuant to other provisions of law, including an embargo on most trade and financial transactions, remain in place. Cuba had a long history of supporting revolutionary movements and governments in Latin America and Africa, but in 1992, Fidel Castro said that his country's support for insurgents abroad was a thing of the past. Cuba's change in policy was in large part due to the breakup of the Soviet Union, which resulted in the loss of billions of dollars in annual subsidies to Cuba and led to substantial Cuban economic decline. In the April 14, 2015, report to Congress, President Obama, following the process set forth in the three terrorist-list provisions of law cited above, certified that the Cuban government "has not provided any support for international terrorism during the preceding 6-month period" and "has provided assurances that it will not support acts of international terrorism in the future." The memorandum of justification accompanying the report maintained that Cuba has taken steps in recent years to fully distance itself from international terrorism and to strengthen its counterterrorism laws. The justification noted that Cuba is a party to 15 international instruments related to countering terrorism and has deposited its instrument of ratification or accession to three additional instruments that have not yet entered into force. The justification stated that in 2013, Cuba committed to work with the multilateral Financial Action Task Force (FATF) to address its anti-money laundering/counterterrorism finance (AML/CTF) deficiencies. Since 2012, Cuba has been a member of the Financial Action Task Force of Latin America (GAFILAT, formerly known as the Financial Action Task Force of South America), a regional group associated with the FATF. As a member, Cuba committed to adopting and implementing the 40 recommendations of the FATF pertaining to AML/CTF standards. In early 2014, Cuba adopted legislation providing for the freezing of assets linked to money laundering or terrorist financing. In October 2014, the FATF welcomed Cuba's progress in improving its regulatory regime to combat money laundering and terrorist financing and addressing strategic deficiencies that the FATF had identified. As a result, the FATF noted that Cuba was no longer subject to the FATF's monitoring and compliance process, but that the country would continue to work with GAFILAT to strengthen its regulatory regime. The justification cited various instances in which Cuba has condemned terrorist attacks around the world, including the 2013 Boston Marathon bombing and the 2015 Charlie Hebdo terrorist attack in Paris. It noted that in 2010, the Cuban government provided information to the U.S. government reiterating its commitment to its international obligations regarding both counterterrorism and nonproliferation, noting instances of information sharing with the United States regarding planned terrorist attacks, and providing assurances that Cuban territory would not be used to organize, finance, or carry out terrorist acts. Most significantly, the justification stated that direct engagement with Cuba permitted the United States to secure additional assurances, delivered April 3, 2015, of Cuba's commitment to renounce international terrorism. According to the justification: In the assurances, Cuba reiterated its commitment to cooperate in combating terrorism, rejected and condemned all terrorist acts, methods, and practices in all their forms and manifestations, and condemned any action intended to encourage, support, finance, or cover up any terrorist acts. The Government of Cuba further committed to never supporting any act of international terrorism, and never allowing its territory to be used to organize, finance, or execute terrorist act against any other country, including the United States. Members of Foreign Terrorist Organizations in Cuba. For a number of years in its annual Country Reports on Terrorism , the State Department has discussed Cuba's provision of safe haven for members of the Basque Fatherland and Liberty (ETA) and the Revolutionary Armed Forces of Colombia (FARC), both U.S.-designated foreign terrorist organizations (FTOs). In the April 2015 justification, the Administration maintained that there was no credible evidence that Cuba has, within the preceding six months, provided specific material support, services, or resources, to members of the FARC or members of the National Liberation Army (ELN), another Colombian FTO, outside of facilitating the peace process between those organizations and the government of Colombia. The Cuban government has been supporting and hosting peace negotiations between the FARC and the Colombian government since 2012. According to the justification, the Colombian government formally noted to the United States that it believes the Cuban government has played a constructive process in the peace talks, and that it has no evidence that Cuba has provided any political or military support in recent years to the FARC or ELN that has assisted in the planning or execution of terrorist activity in Colombia. With regard to ETA, the Administration maintained in the justification that the Cuban government continues to allow approximately two dozen members of ETA to remain in the country, with most of those entering Cuba following an agreement with the government of Spain. The Administration maintained that Spain has requested the extradition of two ETA members from Cuba, and that a bilateral process is underway for the two countries to resolve the matter. Press reports have identified the two ETA members as José Ángel Urtiaga and José Ignacio Etxarte. It maintained that the Spanish government has conveyed to the United States that it is satisfied with this process and that it has no objection to the rescission of Cuba's designation as a state sponsor of terrorism. For all three FTOs—the FARC, ELN, and ETA—the Cuban government maintained in its April 2015 assurances to the U.S. government that it would never permit these groups to use Cuban territory to engage in activities against any country. U.S. Fugitives from Justice. Another issue that has been mentioned for many years in the State Department's annual terrorism report is Cuba's harboring of fugitives wanted in the United States. The 2013 terrorism report (issued in April 2014) maintained that Cuba provided such support as housing, food ration books, and medical care for these individuals. This was reiterated in the Administration's April 2015 justification to Congress. U.S. fugitives from justice in Cuba include convicted murderers and numerous hijackers, most of whom entered Cuba in the 1970s and early 1980s. For example, Joanne Chesimard, also known as Assata Shakur, was added to the FBI's Most Wanted Terrorist list in May 2013. Chesimard was part of militant group known as the Black Liberation Army. In 1977, she was convicted for the 1973 murder of a New Jersey State Police officer and sentenced to life in prison. Chesimard escaped from prison in 1979 and, according to the FBI, lived underground before fleeing to Cuba in 1984. Another fugitive, William "Guillermo" Morales, who was a member of the Puerto Rican militant group known as the Armed Forces of National Liberation (FALN), reportedly has been in Cuba since 1988 after being imprisoned in Mexico for several years. In 1978, both of his hands were maimed by a bomb he was making. He was convicted in New York on weapons charges in 1979 and sentenced to 10 years in prison and 5 years' probation, but escaped from prison the same year. In addition to Chesimard and other fugitives from the past, a number of U.S. fugitives from justice wanted for Medicare and other types of insurance fraud reportedly have fled to Cuba in recent years. While the United States and Cuba have an extradition treaty in place dating to 1905, in practice the treaty has not been utilized. Instead, for more than a decade, Cuba has returned wanted fugitives to the United States on a case-by-case basis. For example, in 2011, U.S. Marshals picked up a husband and wife in Cuba who were wanted for a 2010 murder in New Jersey, while in April 2013, Cuba returned a Florida couple who had allegedly kidnapped their own children (who had been in the custody of the mother's parents) and fled to Havana. However, Cuba has generally refused to render to U.S. justice any fugitive judged by Cuba to be "political," such as Chesimard, who they believe could not receive a fair trial in the United States. Moreover, Cuba in the past has responded to U.S. extradition requests by stating that approval would be contingent upon the United States returning wanted Cuban criminals from the United States. These include the return of Luis Posada Carriles, whom Cuba accused of plotting the 1976 bombing of a Cuban jet that killed 73 people. The Administration's April 2015 justification for removing Cuba from the terrorism list maintains that Cuba agreed to enter into a law enforcement dialogue with the United States that will include discussions with the goal of resolving outstanding fugitive cases. It asserted that "the strong U.S. interest in the return of these fugitives will be best served by entering into this dialogue with Cuba." Pro/Con Arguments . Those supporting the Administration's decision to remove Cuba from the state sponsor of terrorism list maintain that retention on the list was anachronistic and a holdover from the Cold War. They argue that domestic political considerations kept Cuba on the terrorism list for many years, and that Cuba's presence on the list has diverted U.S. attention from struggles against serious terrorist threats. Some supporting the Administration's decision contend that it reinforces the President's broader Cuba policy shift of moving from isolation to engagement, and could result in increased engagement with Cuba on counterterrorism issues and the long-standing issue of U.S. fugitives from justice in Cuba. Some also maintain that Cuba's removal from the list will make it easier for the United States to work with other hemispheric nations on counterterrorism issues. Those who oppose removing Cuba from the terrorism list argue that there is enough evidence that Cuba continues to support terrorism. They point to the government's hosting of members of foreign terrorist organizations such as ETA and the FARC and U.S. fugitives from justice. In particular, some Members contend that Cuba should not come off the terrorist list as long it continues to harbor U.S. fugitives convicted of violent acts in the United States. They also point to Cuba's involvement in an attempted weapons transfer to North Korea in July 2013 in contravention of U.N. sanctions as evidence (see " Cuba's Foreign Relations ," above). Some maintain that the Administration rushed to complete its review of Cuba's designation as a state sponsor of terrorism without consulting Congress. Legislative Activity . In the 114 th Congress, before the rescission of Cuba's designation as a state sponsor of terrorism, H.R. 274 (Rush) had a provision that would have immediately rescinded any determination of the Secretary of State that Cuba has repeatedly provided support for acts of international terrorism. As noted above, no resolutions of disapproval were introduced to block the Administration's rescission of Cuba's designation as a state sponsor of terrorism. On the issue of U.S. fugitives from justice in Cuba, H.Res. 181 (King) would have called for the immediate extradition or rendering to the United States of convicted felon William Morales and all other fugitives from justice who are receiving safe harbor in Cuba in order to escape prosecution or confinement for criminal offenses committed in the United States. H.R. 4772 (Pearce) would have prohibited funding to accept commercial flight plans between the United States and Cuba until Cuba extradites U.S. fugitives from justice. For more than 15 years, the United States has imposed a trademark sanction specifically related to Cuba. A provision in the FY1999 omnibus appropriations measure (§211 of Division A, Title II, P.L. 105-277 , signed into law October 21, 1998) prevents the United States from accepting payment for trademark registrations and renewals from Cuban nationals that were used in connection with a business or assets in Cuba that were confiscated, unless the original owner of the trademark has consented. U.S. officials maintain that the sanction prohibits a general license under the CACR for transactions or payments for such trademarks. The provision also prohibits U.S. courts from recognizing such trademarks without the consent of the original owner. The measure was enacted because of a dispute between the French spirits company Pernod Ricard and the Bermuda-based Bacardi Limited. Pernod Ricard entered into a joint venture in 1993 with Cubaexport, a Cuban state company, to produce and export Havana Club rum. Bacardi maintains that it holds the right to the Havana Club name because in 1995 it entered into an agreement for the Havana Club trademark with the Arechabala family, who had originally produced the rum until its assets and property were confiscated by the Cuban government in 1960. Although Pernod Ricard cannot market Havana Club in the United States because of the trade embargo, it wants to protect its future distribution rights should the embargo be lifted. The European Union initiated World Trade Organization (WTO) dispute settlement proceedings in June 2000, maintaining that the U.S. law violates the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). In January 2002, the WTO ultimately found that the trademark sanction violated WTO provisions on national treatment and most-favored-nation obligations in the TRIPS Agreement. On March 28, 2002, the United States agreed that it would come into compliance with the WTO ruling through legislative action by January 3, 2003. That deadline was extended several times since no legislative action had been taken to bring Section 211 into compliance with the WTO ruling. On July 1, 2005, however, in an EU-U.S. understanding, the EU agreed that it would not request authorization to retaliate at that time, but reserved the right to do so at a future date, and the United States agreed not to block a future EU request. The U.S. Patent and Trademark Office (USPTO) did not process Cubaexport's 10-year renewal of the Havana Club trademark when it was due in 2006 because the Treasury Department's Office of Foreign Assets Control denied the company the specific license that it needed to pay the fee for renewal of the trademark registration. In providing foreign policy guidance to OFAC at the time, the State Department recommended denial of the license, maintaining that it would be consistent with "the U.S. approach toward non-recognition of trademark rights associated with confiscated property" and consistent with U.S. policy to deny resources to the Cuban government in order to hasten a transition to democracy. Almost a decade later, on January 11, 2016, OFAC issued a specific license to Cubaexport, allowing the company to pay fees for the renewal of the Havana Club trademark registration. In November 2015, OFAC had requested foreign policy guidance from the State Department for Cubaexport's request for a specific license. According to the State Department, in evaluating the case, it took into account the "landmark shift" in U.S. policy toward Cuba, U.S. foreign policy with respect to its key allies in Europe, and U.S. policy with regard to trademark rights associated with confiscated property. Two days later, on January 13, 2016, USPTO renewed Cubaexport's trademark registration for Havana Club for the 2006-2016 period. On February 16, 2016, the agency renewed the trademark registration for 10 additional years until 2026. State Department and USPTO officials maintain that the renewal of the Havana Club trademark registration does not resolve the trademark dispute. The State Department notes that there are pending federal court proceedings in which Bacardi has filed suit against Cubaexport to contest the Havana Club trademark ownership in the United States and that OFAC's issuance of a license permitting USPTO to renew the trademark registration will allow the two parties to proceed toward adjudication of the case. Legislative Activity. In Congress, two different approaches have been advocated for a number of years to bring Section 211 into compliance with the WTO ruling. Some want a narrow fix in which Section 211 would be amended so that it applies to all persons claiming rights in trademarks confiscated by Cuba, whatever their nationality, instead of being limited to designated nationals, meaning Cuban nationals. Advocates of this approach argue that it would treat all holders of U.S. trademarks equally. Others want Section 211 repealed altogether. They argue that the law endangers more than 5,000 trademarks of more than 400 U.S. companies registered in Cuba. In the 114 th Congress, identical bills S. 757 (Nelson) and H.R. 1627 (Issa) would have applied the narrow fix so that the trademark sanction applied to all nationals, while several broader bills were introduced with provisions that would have repealed Section 211: H.R. 274 (Rush); H.R. 403 (Rangel); H.R. 635 (Rangel); and H.R. 735 (Serrano). The House Judiciary Committee's Subcommittee on Courts, Intellectual Property, and the Internet held a hearing on February 11, 2016, on the trademark issue as well as on the issue of confiscated property. In the FY2017 appropriations process, two House bills had provisions that would have introduced new sanctions related to Cuba and trademarks, but the 114 th Congress did not complete action on the measures. The House Commerce appropriations bill, H.R. 5393 , had a provision that would have prohibited funds from being used to approve the registration, renewal, or maintenance of a mark, trade name, or commerce name used in commerce that is the same or substantially similar to one used in connection with a business or assets that were confiscated, unless the original owner has expressly consented. This provision would have prohibited the USPTO from spending funds to approve, maintain, or renew such a trademark. The House Financial Services appropriations bill, H.R. 5485 , had a provision that would have prohibited funds from being used to authorize a general or specific license with respect to a mark, trade name, or commerce name used in commerce that is the same or substantially similar to one used in connection with a business or assets that were confiscated unless the original owner has expressly consented. This provision would have prohibited Treasury's OFAC from issuing a general or specific license for the payment of trademark registration fees. However, with regard to the Havana Club case, as discussed above, OFAC issued a specific license in January 2016 for payments related to the renewal of the trademark and the USPTO subsequently renewed the trademark until 2026. In its statement of policy on the bill, the Administration strongly objected to the trademark and other Cuba provisions as undermining the President's policy on Cuba. Since 1996, the United States has provided assistance—through the U.S. Agency for International Development (USAID), the State Department, and the National Endowment for Democracy (NED)—to increase the flow of information on democracy, human rights, and free enterprise to Cuba. USAID and State Department efforts are largely funded through Economic Support Funds (ESF) in the annual foreign operations appropriations bill. From FY1996 to FY2015, Congress appropriated some $284 million in funding for Cuba democracy efforts. In recent years, this included $45.3 million for FY2008 and $20 million in each fiscal year from FY2009 through FY2012, $19.3 million in FY2013, and $20 million in each of FY2014 and FY2015. The Administration's request for FY2016 was $20 million in ESF, and the FY2016 omnibus appropriations measure, P.L. 114-113 , provided that amount in its explanatory statement. The House Appropriations Committee's FY2016 State Department and Foreign Operations appropriations bill, H.R. 2772 , would have provided $30 million to promote democracy and civil society in Cuba and would have provided that no funds could be obligated for business promotion, economic reform, entrepreneurship, or any other assistance that was not democracy-building as expressly authorized in the LIBERTAD Act. The report to the bill ( H.Rept. 114-154 ) would have provided that not less than $8 million would be for NED and that the remaining assistance would be administrated by the State Department and USAID. The Senate Appropriations Committee version of the bill, S. 1725 , would have provided $15 million in ESF for Cuba democracy programs, and $5 million in ESF (notwithstanding any other provision of law) for programs to support private Cuban entrepreneurs, except that no such assistance could be provided for the Cuban government. None of the directives in the House and Senate bills and reports were included in the FY2016 omnibus bill. For FY2017, the Administration requested $15 million in ESF for Cuba democracy and human rights programs, a 25% reduction from FY2016. According to the request, the assistance would support civil society initiatives that promote democracy, human rights, and fundamental freedoms, particularly freedoms of expression and association. The programs would "provide humanitarian assistance to victims of political repression and their families, strengthen independent civil society, support the Cuban people's desire to freely determine their future, reduced their dependence on the Cuban state, and promote the flow of uncensored information to, from and within the island." The House version of the FY2017 State Department and Foreign Operations appropriations bill, H.R. 5912 ( H.Rept. 114-693 ), reported July 15, 2015, would have provided $30 million for democracy promotion for Cuba, double the Administration's request. The bill would also have prohibited funding for business promotion, economic reform, entrepreneurship, or any other assistance that was not democracy building authorized by the LIBERTAD Act of 1996. In contrast, the Senate version of the FY2017 foreign operations appropriations bill, S. 3117 ( S.Rept. 114-290 ), reported June 29, 2016, would have recommended fully funding the Administration's request of $15 million. However, it also would have provided that $3 million be made available for USAID to support free enterprise and private business organizations and people-to-people educational and cultural activities. As noted previously, the 114 th Congress did not complete action on FY2017 appropriations, but it did approve a continuing resolution ( P.L. 114-254 ) in December 2016 funding most foreign aid at the FY2016 level, minus an across-the-board reduction of almost 0.2% through April 28, 2017. Generally, as provided in appropriations measures, ESF has to be obligated within two fiscal years. USAID in the past received the majority of this funding, but the State Department began receiving a portion in FY2004 and in recent years has been allocated more funding than USAID. The State Department generally has transferred a portion of the Cuba assistance that it administers to NED. For FY2014, Congress stipulated that no assistance may be obligated by USAID for any new programs or activities in Cuba ( P.L. 113-76 ). For FY2015 assistance, however, USAID is administering $6.25 million of Cuban democracy assistance, whereas the State Department is administering $13.75 million, with $6.25 million of that transferred to NED. USAID's Cuba program has supported a variety of U.S.-based nongovernmental organizations with the goals of promoting a rapid, peaceful transition to democracy, helping develop civil society, and building solidarity with Cuba's human rights activists. NED is not a U.S. government agency but an independent nongovernmental organization that receives U.S. government funding. Its Cuba program is funded by the organization's regular appropriations by Congress as well as by funding from the State Department. Until FY2008, NED's democratization assistance for Cuba had been funded largely through the annual Commerce, Justice, and State (CJS) appropriations measure, but is now funded through the State Department, Foreign Operations and Related Agencies appropriations measure. According to information provided by NED on its website, its Cuba funding in recent years has been as follows: $1.65 million in FY2011; $2.6 million in FY2012; $3.4 million in FY2013; $3 million in FY2014; and $3.68 million in FY2015. The U.S. Government Accountability Office (GAO) has issued several reports since 2006 examining USAID and State Department democracy programs for Cuba. In 2006, GAO issued a report examining programs from 1996 through 2005 and concluded that the U.S. program had significant problems and needed better management and oversight. According to GAO, internal controls, for both the awarding of Cuba program grants and the oversight of grantees, "do not provide adequate assurance that the funds are being used properly and that grantees are in compliance with applicable law and regulations." Investigative news reports on the program maintained that high shipping costs and lax oversight had diminished its effectiveness. GAO issued a second report in 2008 examining USAID's Cuba democracy program. The report lauded the steps that USAID had taken since 2006 to address problems with its Cuba program and improve oversight of the assistance. These included awarding all grants competitively since 2006, hiring more staff for the program office since January 2008, and contracting for financial services in April 2008 to enhance oversight of grantees. The GAO report also noted that USAID had worked to strengthen program oversight through pre-award and follow-up reviews, improving grantee internal controls and implementation plans, and providing guidance and monitoring about permitted types of assistance and cost sharing. The 2008 GAO report also maintained, however, that USAID had not staffed the Cuba program to the level needed for effective grant oversight. GAO recommended that USAID (1) ensure that its Cuba program office is staffed at the level that is needed to fully implement planned monitoring activities and (2) periodically assess the Cuba program's overall efforts to address and reduce grantee risks, especially regarding internal controls, procurement practices, expenditures, and compliance with laws and regulations. In January 2013, GAO issued its third report on Cuba democracy programs. The report concluded that USAID had improved its performance and financial monitoring of implementing partners' use of program funds, but found that the State Department's financial monitoring had gaps. Both agencies were reported to be taking steps to improve financial monitoring. GAO recommended that the Secretary of State take two actions to strengthen the agency's ability to monitor the use of Cuba democracy program funds: use a risk-based approach for program audits that considers specific indicators for program partners and obtain sufficient information to approve implementing partners' use of subpartners. In April 2014, an Associated Press investigative report alleged that USAID, as part of its democracy promotion efforts for Cuba, had established a "Cuban Twitter" known as ZunZuneo, a communications network designed as a "covert" program "to undermine" Cuba's communist government built with "secret shell companies" and financed through foreign banks. According to the press report, the project, which was used by thousands of Cubans, lasted more than two years until it ended in 2012. USAID, which strongly contested the report, issued a statement and facts about the ZunZuneo program. It maintained that program was not "covert," but rather that, just as in other places where it is not always welcome, the agency maintained a "discreet profile" on the project to minimize risk to staff and partners and work safely. Some Members of Congress strongly criticized USAID for not providing sufficient information to Congress about the program when funding was appropriated, while other Members strongly defended the agency and the program. In August 2014, the Associated Press reported on another U.S.-funded democracy program for Cuba in which a USAID contractor sent about a dozen youth from several Latin American countries (Costa Rica, Peru, and Venezuela) in 2010 and 2011 to Cuba to participate in civic programs, including an HIV-prevention workshop, with the alleged goal to "identify potential social-change actors" in Cuba. The AP report alleged that "the assignment was to recruit young Cubans to anti-government activism under the guise of civic programs." USAID responded in a statement maintaining that the AP report "made sensational claims against aid workers for supporting civil society programs and striving to give voice to these democratic aspirations." On December 22, 2015, USAID's Office of Inspector General issued a review report on USAID's Cuban Civil Society Support Program that examined both the ZunZuneo and HIV-prevention programs. The report cited a number of problems with USAID's management controls of the program and made a number of recommendations, including that USAID conduct an agency-wide analysis to determine whether a screening policy is needed to address intelligence and subversion threats, and if so, develop and implement one. U.S.-government-sponsored radio and television broadcasting to Cuba—Radio and TV Martí—began in 1985 and 1990, respectively. According to the Broadcasting Board of Governors (BBG) FY2017 Congressional Budget Request , Radio and TV Martí and the Martínoticias.com website "inform and engage the people of Cuba by providing a reliable and credible source of news and information." According to the BBG, it is estimated that at least 2.2 million Cubans listen to Radio Martí every week. The BBG maintains that this estimate is based on a Bendixen and Amandi International April 2015 poll that showed that 20% of respondents said they had listened to Radio Martí in the 7 days prior to the interviews. This is far higher than reported in the past for Radio Martí listenership. The BBG's Office of Cuba Broadcasting has significantly expanded its distribution through the Internet, mobile phones, and social media to help reach audiences in Cuba. Until October 1999, U.S.-government-funded international broadcasting programs had been a primary function of the United States Information Agency (USIA). When USIA was abolished and its functions were merged into the Department of State at the beginning of FY2000, the BBG became an independent agency that included such entities as the Voice of America (VOA), Radio Free Europe/Radio Liberty (RFE/RL), Radio Free Asia, and the Office of Cuba Broadcasting (OCB), which manages Radio and TV Marti. OCB is headquartered in Miami, FL. Legislation in the 104 th Congress ( P.L. 104-134 ) required the relocation of OCB from Washington, DC, to South Florida. The move began in 1996 and was completed in 1998. (For more information, see CRS Report R43521, U.S. International Broadcasting: Background and Issues for Reform , by [author name scrubbed].) According to the BBG, the OCB uses multiple web domains and anti-censorship tools such as web-based proxies to reach Internet users in Cuba. Since 2011, the OCB has used SMS messaging to communicate with audiences in Cuba, allowing OCB to "push" information to mobile phone users in Cuba in a manner that is difficult to filter. The OCB's website, martinoticias.com, began streaming Radio and TV Martí programming 24 hours a day in 2013. OCB also maintains an interactive social engagement strategy that utilizes a YouTube channel, Facebook, Twitter, and Google+. Funding. From FY1984 through FY2015, Congress appropriated about $797 million for broadcasting to Cuba. In recent years, funding amounted to $28 million in FY2012, $26 million in FY2013, and almost $27 million in FY2014. The FY2015 request was for $23 million, and Congress ultimately appropriated $27 million in the FY2015 omnibus appropriations measure ( P.L. 113-235 ). For FY2016, the BBG requested $30.3 million for Cuba broadcasting, almost $3.2 million over the amount appropriated in FY2015. This would have included funds for the OCB and the Voice of America (VOA) Latin America Division to begin the process of establishing a new de-federalized Spanish language international media operation that would merge the two entities. Under the plan, the process would be completed in early FY2017, and the new de-federalized organization would be fully operational by mid FY2017 and receive a BBG Grant. Ultimately, the explanatory statement to the FY2016 omnibus appropriations measure, P.L. 114-113 , provided $27.14 million for Cuba broadcasting, almost $3.2 million less than that requested. The explanatory statement noted that it did not include authority or funds requested for the merger of OCB and the Latin America Division of VOA by establishing an independent grantee organization. The report to the House Appropriations Committee's FY2016 State Department and Foreign Operations bill, H.R. 2772 ( H.Rept. 114-154 ), had recommended $28.130 million for Cuba broadcasting, almost $2.2 million less than the request and $1 million more than that provided in FY2015. Section 7045(c) of H.R. 2772 would have prohibited implementation of the proposed restructuring and merger of OCB and VOA's Latin America Division unless specifically authorized by a subsequent act of Congress. The report to the Senate Appropriations Committee version of the bill, S. 1725 ( S.Rept. 114-79 ), recommended $27.130 million for OCB and also did not support or include authority for the merger of OCB and VOA's Latin American Division. For FY2017, the Administration requested $27.1 million for the OCB, about the same amount appropriated in FY2016. The Administration also requested authority for the BBG to establish a new Spanish-language, nonfederal media organization that would receive a BBG grant and perform the functions of the current OCB. The House version of the FY2017 State Department and Foreign Operations Appropriations bill, H.R. 5912 ( H.Rept. 114-693 ), had a provision that would have blocked the Administration's request by prohibiting funding to establish an independent grantee organization to carry out any and all broadcasting and related programs to the Latin American and Caribbean region or otherwise substantially alter the structure of the OCB unless specifically authorized by a subsequent act of Congress. The funding prohibition pertained to merger of the OCB and the Voice of America Latin America Division. The Senate version of the bill, S. 3117 ( S.Rept. 114-290 ), would have provided $27.4 million for the OCB, $300,000 more than the Administration's request. The report to the bill stated that the committee did not support the proposed contractor reduction of $300,000 at the OCB. As previously noted, the 114 th Congress did not complete action on FY2017 appropriations, but it did approve a continuing resolution ( P.L. 114-254 ) providing funding at the FY2016 level for most programs through April 28, 2017, minus an across-the-board cut of almost 0.2%. Oversight. Both Radio and TV Martí have at times been the focus of controversies, including questions about adherence to broadcast standards. There have been various attempts over the years to cut funding for the programs, especially for TV Martí, which has not had much of an audience because of Cuban jamming efforts. From 1990 through 2008, there were numerous government studies and audits of the OCB, including investigations by the GAO, by a 1994 congressionally established Advisory Panel on Radio and TV Martí, by the State Department Office Inspector General (OIG), and by the combined State Department/BBG Office Inspector General. In 2009, GAO issued a report asserting that the best available research suggests that Radio and TV Martí's audience is small, and cited telephone surveys since 2003 showing that less than 2% of respondents reported tuning in to Radio or TV Martí during the past week. With regard to TV Martí viewership, according to the report, all of the IBB's telephone surveys since 2003 show that less than 1% of respondents said that they had watched TV Martí during the past week. According to the GAO report, the IBB surveys show that there was no increase in reported TV Martí viewership following the beginning of AeroMartí and DirecTV satellite broadcasting in 2006.The GAO report also cited concerns with adherence to relevant domestic laws and international standards, including the domestic dissemination of OCB programming, inappropriate advertisements during OCB programming, and TV Martí's interference with Cuban broadcasts. In 2010, the Senate Foreign Relations Committee majority issued a staff report that concluded that Radio and TV Martí "continue to fail in their efforts to influence Cuban society, politics, and policy." The report cited problems with adherence to broadcast standards, audience size, and Cuban government jamming. Among its recommendations, the report called for the IBB to move the Office of Cuba Broadcasting back to Washington, DC, and integrate it fully into the Voice of America. In 2011, GAO issued a report examining the extent to which the BBG's strategic plan for broadcasting required by the conference report to the FY2010 Consolidated Appropriations measure ( H.Rept. 111-366 to H.R. 3288 / P.L. 111-117 ) met the requirements established in the legislation. GAO found that BBG's strategic plan lacked key information and only partially addressed issues raised by Congress, including on estimated audience size and an analysis of other options for disseminating news and information to Cuba. The report stated that the BBG can develop and provide more information to Congress, including an analysis of the cost savings opportunities of sharing resources between Radio and TV Martí and the Voice of America's Latin America Division. On January 12, 2017, the Obama Administration announced another major Cuba policy shift by ending the so-called "wet foot/dry foot" policy in which thousands of undocumented Cuban migrants have entered the United States in recent years. As announced by the President and Secretary of Homeland Security Jeh Johnson, Cuban nationals who attempt to enter the United States illegally and do not qualify for humanitarian relief are now subject to removal. The Cuban government also agreed to begin accepting the return of Cuban migrants who have been ordered removed. The Administration also announced it was ending the special Cuban Medical Professional Parole program, a 10-year-old program allowing Cuban medical professionals in third countries to be approved for admittance into the United States. Background. Cuba and the United States reached two migration accords in 1994 and 1995 designed to stem the mass exodus of Cubans attempting to reach the United States by boat. On the minds of U.S. policymakers was the 1980 Mariel boatlift, in which 125,000 Cubans fled to the United States with the approval of Cuban officials. In response to Fidel Castro's threat to unleash another Mariel, U.S. officials reiterated U.S. resolve not to allow another exodus. Amid escalating numbers of fleeing Cubans, on August 19, 1994, President Clinton abruptly changed U.S. migration policy, under which Cubans attempting to flee their homeland were allowed into the United States, and announced that the U.S. Coast Guard and Navy would take Cubans rescued at sea to the U.S. naval base at Guantánamo Bay, Cuba. Despite the change in policy, Cubans continued fleeing in large numbers. As a result, in early September 1994, Cuba and the United States began talks that culminated in a September 9, 1994, bilateral agreement to stem the flow of Cubans fleeing to the United States by boat. In the agreement, the United States and Cuba agreed to facilitate safe, legal, and orderly Cuban migration to the United States, consistent with a 1984 migration agreement. The United States agreed to ensure that total legal Cuban migration to the United States would be a minimum of 20,000 each year, not including immediate relatives of U.S. citizens. In May 1995, the United States reached another accord with Cuba under which the United States would parole the more than 30,000 Cubans housed at Guantánamo into the United States, but would intercept future Cuban migrants attempting to enter the United States by sea and would return them to Cuba. The two countries would cooperate jointly in the effort. Both countries also pledged to ensure that no action would be taken against those migrants returned to Cuba as a consequence of their attempt to immigrate illegally. In January 1996, the Department of Defense announced that the last of some 32,000 Cubans intercepted at sea and housed at Guantánamo had left the U.S. Naval Station, most having been paroled into the United States. Maritime Interdictions. Since the 1995 migration accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to their country. Those Cubans who reach shore are allowed to apply for permanent resident status in one year, pursuant to the Cuban Adjustment Act of 1966 (CAA, P.L. 89-732). In short, most interdictions, even in U.S. coastal waters, resulted in a return to Cuba, while those Cubans who touch shore were allowed to stay in the United States. This so-called "wet foot/dry foot" policy had been criticized by some as encouraging Cubans to risk their lives in order to make it to the United States and as encouraging alien smuggling. Others maintained that U.S. policy should welcome those migrants fleeing communist Cuba whether or not they are able to make it to land. The number of Cubans interdicted at sea by the U.S. Coast Guard rose from 666 in FY2002 to 2,868 in FY2007. In the three subsequent years, maritime interdictions declined significantly to 422 by FY2010. Major reasons for the decline were reported to include the U.S. economic downturn, more efficient coastal patrolling, and more aggressive prosecution of migrant smugglers by both the United States and Cuba. From FY2011 through FY2016, however, the number of Cubans interdicted by the Coast Guard increased each year, from 985 in FY2011 to 5,228 in FY2016. For FY2016, the number of Cubans interdicted rose almost 79% over interdictions in FY2015 (see Figure 4 ). In FY2017, as of January 4, 2017, the Coast Guard had interdicted 1,265 Cuban migrants at sea. In 2015 and 2016, according to the Department of State, the increase in the flow of maritime migrants reportedly was caused by rumors of a possible change in immigration policy. The U.S. Coast Guard and U.S. Border Patrol have responded by increasing maritime and landside patrols, continuing timely repatriations of migrants interdicted at sea, and implementing a media campaign to dispel rumors about an alleged change in U.S. migration policy. The rise appears to be driven by concerns among Cubans that the favorable treatment granted to Cuban immigrants will end. Arrival of Undocumented Cuban Migrants. According to the State Department, Cubans continue to favor land-based entry at U.S. ports of entry, especially from Mexico. Over the past several years, the number of undocumented Cubans entering by land has increased significantly, with a majority entering through the southwest border. According to statistics from the Department of Homeland Security, the number of undocumented Cubans entering the United States rose from almost 8,170 in FY2010 to 56,178 in FY2016 (see Table 1 ). Between FY2014 and FY2015, the number of undocumented Cubans entering the United States increased by about 66%, while between FY2015 and FY2016, the number increased by just over 36%. In the first quarter of FY2017, from October through December 2016, the number of Cuban migrants amounted to 16,531, with the majority continuing to enter through the southwest border. Until recently, many of the Cuban migrants first flew to Ecuador, which until late November 2015 did not require Cubans to have a visa, and then made their way overland and by boat through Central America and Mexico to the United States (see Figure 5 ). The trip reportedly cost between $5,000 and $15,000, but Cubans resorted to this route because they viewed it as safer than attempting to travel by boat directly from Cuba to the United States. Although this trafficking route is not new for Cubans, the Cuban government's relaxation of its exit rules for its citizens in 2013 (discussed below) and concerns that the United States might change its liberal immigration policy for Cubans prompted a large increase in the number of Cubans making the overland journey. In late November 2015, Ecuador changed its policy of not requiring visas for Cubans in an attempt to stem the flow of Cubans who subsequently seek to travel to the United States. Ecuador's action sparked protests by Cubans at Ecuador's embassy in Havana, whereupon Ecuador decided to grant visas to those Cubans who had already purchased air tickets. In November 2015, tensions in relations between Costa Rica and Nicaragua grew over the issue of the Cuban migrants transiting the region. On November 10, 2015, Costa Rica broke up an alien smuggling ring involved in taking unauthorized Cubans through Costa Rica to the Nicaragua border. Costa Rica initially announced that it would not allow Cubans without visas to enter the country from Panama, but then changed its policy by providing Cubans with temporary visas to transit through Nicaragua. But on November 15, Nicaragua closed its border with Costa Rica to the Cubans headed to the United States, resulting in a swelling number of Cubans stranded in Costa Rica. Costa Rica called for a humanitarian corridor for the Cuban migrants to cross safely, while Nicaragua accused Costa Rica of "unleashing an invasion of illegal Cuban migrants" on Nicaragua. The Cuban government criticized U.S. immigration policy for "stimulating irregular emigration from Cuba toward the United States." Nicaragua echoed Cuba's position, placing blame for the wave of migration on the United States for its policy that attracts Cuban migrants. U.S. officials encouraged the countries involved to seek solutions and expressed concern about the human rights of the migrants, and the United States reportedly pledged up to $1 million (through the International Organization for Migration) to assist Costa Rica in providing for almost 8,000 Cuban migrants stranded in the country. In late December 2015, however, Central American representatives meeting in Guatemala agreed to fly the Cubans in Costa Rica to El Salvador, whereupon the migrants would travel by bus to Guatemala and then to Mexico and onward to the United States. That program began in January 2016, and direct flights to Mexico from Costa Rica were later added as well as flights for some 1,300 Cubans stranded in Panama. Press reports indicate that most of the Cuban migrants in Costa Rica and Panama had departed by mid-March 2016. In April 2016, another wave of Cuban migrants began entering Panama. The Costa Rican government said that it would reinforce its southern border with Panama to prevent the Cuban migrants from entering the country, and it criticized U.S. policy as a magnet attracting irregular Cuban migration. Panama, however, reached an agreement with Mexico in early May 2016 to transfer close to 4,000 Cuban migrants to Mexico by air. Migration Talks. Semiannual bilateral talks are held on the implementation of the 1994-1995 migration accords, alternating between Havana and Washington, DC. According to a State Department press release, the July 2016 round of talks included discussions on maritime and overland migration trends, cooperation between the Centers for Disease Control and Prevention and Cuban physicians, and cooperation between the U.S. Coast Guard and the Cuban Border Guard. The U.S. delegation reiterated its position that Cuba should accept the return of Cuban nationals who have been ordered removed from the United States. In April 2016, the State Department noted an existing backlog of around 28,000 Cuban nationals (with criminal convictions) with unexecuted final orders of removal. For years, the Cuban government has said that that it would not consider the repatriation of additional Cuban nationals until a 1984 repatriation list of 2,746 Cuban excludable aliens is exhausted. The State Department maintains that there are no cases remaining on that list that are viable for removal. The Cuban delegation reiterated its positon that the United States and Cuba would not be able to establish normal migration relations as long as the so-called "wet foot/dry foot" policy existed. Cuba traditionally contended that U.S. policy encourages illegal, unsafe, and disorderly migration as well as alien smuggling and Cubans' irregular entry into the United States from third countries. The delegation also reiterated its opposition to the Cuban Medical Professional Parole Program, a program permitting Cuban doctors and other health personnel on missions in third countries to migrate to the United States. In January 2016, a White House official indicated that the Administration was considering ending the program. Under the program, which began in 2006, more than 7,000 Cuban medical personnel working in third countries have been approved for admittance into the United States. As noted above, the Obama Administration announced on January 12, 2017, that it was ending the "wet foot/dry foot" policy and that Cubans attempting to enter the United State illegally would be subject to removal unless they qualified for humanitarian relief. Cuba agreed to receive back those Cuban nationals ordered removed. The Administration also announced that it was ending the Cuban Medical Professional Parole Program. Cuban Travel Policy Changes. In January 2013, the Cuban government changed its long-standing policy of requiring an exit permit and a letter of invitation from abroad for Cubans to travel abroad. Cubans are now able to travel abroad with just an updated passport and a visa issued by the country of destination, if required. Under the change in policy, Cubans can travel abroad for up to two years without forgoing their rights as Cuban citizens. The practice of requiring an exit permit had been extremely unpopular in Cuba, and the government had been considering doing away with the practice for some time. According to the Department of State, the Cuban government still requires some individuals, such as high-level government officials, doctors, lawyers, and technicians, to obtain permission to travel. In addition, some dissidents out on parole or facing court action have not been permitted to travel aboard, although many prominent dissidents have traveled abroad and returned to Cuba. Ahead of President Obama's visit to Cuba in March 2016, seven dissidents on parole were granted a one-time permission to travel outside the country. Effective August 1, 2013, the State Department made nonimmigrant B-2 visas issued to Cubans for family visits, tourism, medical treatment, or other personal travel valid for five years with multiple entries. Previously these visas had been restricted to single entry for six months, and an extensive visa interview backlog had developed at the U.S. Interests Section in Havana. State Department officials maintain that the change increased people-to-people ties and removed procedural and financial burdens on Cuban travelers. Legislative Activity. In light of Cuba's new travel policy initiated in 2013 making it easier for Cubans to travel abroad and the Administration's efforts to normalize relations with Cuba, some analysts raised questions as to whether the United States should review its policy toward Cuban migrants as set forth in the CAA. Some argued that the normalization of relations would make a special immigration policy for Cubans difficult to sustain. Some critics of current policy also argued that the law was being abused by some recent Cuban immigrants receiving U.S. benefits who travel back and forth between Cuba and the United States regularly. Others pointed to the increasing flow of Cubans into the United States by land and the problems that it has caused in Central America. In the 114 th Congress, H.R. 3818 (Gosnar), would have repealed the Cuban Adjustment Act. The bill would also have prohibited any funding to implement, administer, enforce, or carry out the Cuban Family Reunification Parole Program established in 2007. That program allows certain eligible U.S. citizens and lawful permanent residents to apply for parole for their family members in Cuba. Another initiative, H.R. 4247 (Curbelo)/ S. 2441 (Rubio), introduced in December 2015 and January 2016, respectively, would have provided that certain Cuban entrants would be ineligible to receive refugee/parolee assistance. Finally, H.R. 4847 (Farenthold), introduced in March 2016, would have both repealed the Cuban Adjustment Act and made certain Cuban entrants ineligible to receive refugee/parolee assistance. Cuba is not a major producer or consumer of illicit drugs, but its extensive shoreline and geographic location make it susceptible to narcotics smuggling operations. Drugs that enter the Cuban market are largely the result of onshore wash-ups from smuggling by high-speed boats moving drugs from Jamaica to the Bahamas, Haiti, and the United States or by small aircraft from clandestine airfields in Jamaica. For a number of years, Cuban officials have expressed concerns over the use of their waters and airspace for drug transit and about increased domestic drug use. The Cuban government has taken a number of measures to deal with the drug problem, including legislation to stiffen penalties for traffickers, increased training for counternarcotics personnel, and cooperation with a number of countries on antidrug efforts. Since 1999, Cuba's Operation Hatchet has focused on maritime and air interdiction and the recovery of narcotics washed up on Cuban shores. Since 2003, Cuba has aggressively pursued an internal enforcement and investigation program against its incipient drug market with an effective nationwide drug prevention and awareness campaign. According to the State Department's 2016 International Narcotics Control Strategy Report ( INCSR ), issued March 2, 2016, Cuba has a number of antidrug-related agreements in place with other countries, including 36 bilateral agreements for counterdrug cooperation and 27 policing cooperation agreements. As reported in the INCSR , Cuba reported seizing 962 kilograms of drugs (largely marijuana) in the first eight months of 2015 and detected 33 suspected "go-fast" boats on its southeastern coast. Over the years, there have been varying levels of U.S.-Cuban cooperation on antidrug efforts. In 1996, Cuban authorities cooperated with the United States in the seizure of 6.6 tons of cocaine aboard the Miami-bound Limerick , a Honduran-flag ship. Cuba turned over the cocaine to the United States and cooperated fully in the investigation and subsequent prosecution of two defendants in the case in the United States. Cooperation has increased since 1999, when U.S. and Cuban officials met in Havana to discuss ways of improving antidrug cooperation. Cuba accepted an upgrading of the communications link between the Cuban Border Guard and the U.S. Coast Guard as well as the stationing of a U.S. Coast Guard Drug Interdiction Specialist (DIS) at the U.S. Interests Section in Havana. The Coast Guard official was posted to the U.S. Interests Section in September 2000, and since that time, coordination has increased. According to the 2016 INCSR , Cuban authorities and the U.S. Coast Guard share tactical information related to vessels transiting through Cuban territorial waters suspected of trafficking. The report noted that Cuba also shares real-time tactical information with the Bahamas, Mexico, and Jamaica. It reported that such bilateral cooperation has led to multiple interdictions. In August 2015, for example, Cuban cooperation with the U.S. Coast Guard led to arrest of three Bahamians involved in drug trafficking and the seizure of their go-fast boat. As in past years, the State Department asserted in the INCSR that "Cuba has demonstrated an increased willingness to apprehend and turnover U.S. fugitives and to assist in U.S. judicial proceedings by providing documentation, witnesses, and background for cases in U.S. state and federal courts." Cuba maintains that it wants to cooperate with the United States to combat drug trafficking and, on various occasions, has called for a bilateral antidrug cooperation agreement with the United States. In the 2011 INCSR (issued in March 2011), the State Department acknowledged that Cuba had presented the U.S. government with a draft bilateral accord for counternarcotics cooperation that is still under review. According to the State Department, "Structured appropriately, such an accord could advance the counternarcotics efforts undertaken by both countries." This was reiterated in the INCSR for 2012 through 2014. In the 2015 INCSR , the State Department maintained that the United States and Cuba held technical discussions on counternarcotics in April 2014 and shared information on trends and enforcement procedures. In the 2016 INCSR , the State Department noted that the United States and Cuba held bilateral discussions on law enforcement and counternarcotics cooperation in late 2015 that included current information on trends and enforcement procedures. This second counternarcotics dialogue was held at the headquarters of the Drug Enforcement Administration in Washington, DC, on December 1, 2015, with delegations discussing ways to stop the illegal flow of narcotics and exploring ways to cooperate on the issue. As in the past, the State Department contended in the 2016 INCSR that "enhanced communication and cooperation between the United States, international partners, and Cuba, particularly in terms of real-time information-sharing, will likely lead to increased interdictions and disruptions of illegal drug trafficking." In April 2016, Cuban security officials toured the U.S. Joint Interagency Task Force South (JIATF-South) based in Key West, FL. JIATF-South has responsibility for detecting and monitoring illicit drug trafficking in the region and for facilitating international and interagency interdiction efforts. U.S. and Cuban officials held a third counternarcotics meeting on July 21, 2016, in Havana, with the U.S. side represented by officials from the State Department, the Drug Enforcement Administration (DEA), the U.S. Coast Guard, and Immigration and Customs Enforcement/Homeland Security Investigations. At the meeting, the two sides signed a Counternarcotics Arrangement to further cooperation and information on antidrug efforts. An issue in the process of normalizing relations is Cuba's compensation for the expropriation of thousands of properties of U.S. companies and citizens in Cuba. The Foreign Claim Settlement Commission (FCSC), an independent agency within the Department of Justice, has certified 5,913 claims for expropriated U.S. properties in Cuba valued at $1.9 billion in two different claim programs; with accrued interest, the value of the properties would be some $8 billion. In 1972, the FCSC certified 5,911 claims of U.S. citizens and companies that had their property confiscated by the Cuban government through April 1967, with 30 U.S. companies accounting for almost 60% of the claims. In 2006, the FCSC certified two additional claims in a second claims program covering property confiscated after April 1967. Many of the companies that originally filed claims have been bought and sold numerous times. There are a variety of potential alternatives for restitution/compensation schemes to resolve the outstanding claims, but resolving the issue would likely entail considerable negotiation and cooperation between the two governments. While Cuba has maintained that it would negotiate compensation for the U.S. claims, it does not recognize the FCSC valuation of the claims or accrued interest. Instead, Cuba has emphasized using declared taxable value as an appraisal basis for expropriated U.S. properties, which would amount to almost $1 billion, instead of the $1.9 billion certified by the FCSC. Moreover, Cuba has generally maintained that any negotiation should consider losses that Cuba has accrued from U.S. economic sanctions. Cuba estimates cumulative damages of the U.S. embargo at $121 billion in current prices. Several provisions in U.S. law specifically address the issue of compensation for properties expropriated by the Cuban government. Section 620(a)(2) of the Foreign Assistance Act of 1961 prohibits foreign assistance, a sugar quota authorizing the importation of Cuban sugar into the United States, or any other benefit under U.S. law until the President determines that the Cuban government has taken appropriate steps to return properties expropriated by the Cuban government to U.S. citizens and entities not less than 50% owned by U.S. citizens, or to provide equitable compensation for the properties. The provision, however, authorizes the President to waive its restrictions if he deems it necessary in the interest of the United States. The LIBERTAD Act ( P.L. 104-114 ) includes the property claims issue as one of the many factors that the President needs to consider in determining when a transition government is in power in Cuba and when a democratically elected government is in power. These determinations are linked, respectively, to the suspension and termination of the economic embargo on Cuba. For a transition government, as set forth in Section 205(b)((2) of the law, the President shall take into account the extent to which the government has made public commitments and is making demonstrable progress in taking steps to return to U.S. citizens (and entities that are 50% or more beneficially owned by U.S. citizens) property taken by the Cuban government on or after January 1, 1959, or to provide equitable compensation for such property. A democratically elected government, as set forth in Section 206 of the law, is one that, among other conditions, has made demonstrable progress in returning such property or providing full compensation for such property in accordance with international law standards and practice. Section 103 of the LIBERTAD Act also prohibits a U.S. person or entity from financing any transaction that involves confiscated property in Cuba where the claim is owned by a U.S. national. The sanction may be suspended once the President makes a determination that a transition government is in power, and shall be terminated when the President makes a determination that a democratically elected government is in power. In the 114 th Congress, two House hearings focused on the property claims issue. The House Western Hemisphere Subcommittee of the Committee on Foreign Affairs held a hearing in June 2015, and the House Judiciary Committee's Subcommittee on Courts, Intellectual Property, and the Internet held a hearing in February 2016. To date, U.S. and Cuban officials have held three meetings on claims issues. The first meeting took place in December 2015 in Havana, with the U.S. delegation led by Marcy McLeod, the State Department's Acting Legal Advisor. According to the State Department, the talks included discussions of the FCSC-certified claims of U.S. nationals, claims related to unsatisfied U.S. court judgments against Cuba (reportedly 10 U.S. state and federal judgments totaling about $2 billion), and some claims of the U.S. government. The Cuban delegation raised the issue of claims against the United States related to the U.S. embargo. A second claims meeting was held in July 2016, in Washington, DC, with the U.S. delegation led by Brian Egan, the State Department's legal adviser. According to the State Department, the talks allowed for an exchange of views on historical claims settlement practices and processes going forward. The State Department maintained that the resolution of these claims is a top priority for the normalization of bilateral relations. A third claims meeting was held in Havana on January 12, 2017. Although any change to the government's one-party communist political system appears unlikely, Cuba is moving toward a post-Castro era. Raúl Castro has said that he would step down from power once his term of office is over in February 2018. Moreover, generational change in Cuba's governmental institutions has already begun. Under Raúl and beyond, the Cuban government is likely to continue its gradual economic policy changes, moving toward a more mixed economy with a stronger private sector, although it is uncertain whether the pace of reform will produce major improvements to the Cuban economy. The Cuban Communist Party's seventh congress, held in April 2016, confirmed that Cuba will continue its gradual pace toward economic reform. The Obama Administration's shift in U.S. policy toward Cuba opened up engagement with the Cuban government in a variety of areas. Economic linkages with Cuba will likely increase because of the policy changes, although to what extent is uncertain given that the overall embargo and numerous other sanctions against Cuba remain in place. Moreover, the direction of U.S. policy toward Cuba under the incoming Trump Administration is uncertain, with some statements by President-elect Trump suggesting that he might reverse some of the Obama Administration's policy changes. The human rights situation in Cuba is likely to remain a key congressional concern. Just as there were diverse opinions in the 114 th Congress over U.S. policy toward Cuba, debate over Cuba policy will likely continue in the 115 th Congress, especially with regard to U.S. economic sanctions. Appendix A. Enacted Measures and Approved Resolutions in the 114 th Congress P.L. 114-92 ( S. 1356 ) . National Defense Authorization Act for Fiscal Year 2016. S. 1356 was originally was introduced and passed in the Senate on May 14, 2015, as a bill amending the Border Patrol Agent Pay Reform Act of 2014, but the bill, combined with H.Con.Res. 90 (which directs the Secretary of the Senate to make a technical correction in the enrollment of S. 1356 ), became a vehicle for the National Defense Authorization Act for Fiscal Year 2016. The House approved S. 1356 , amended (370-58) November 5, 2015. The Senate agreed (91-3) to the House amendment of S. 1356 November 10, 2015. The House passed H.Con.Res. 90 November 5; Senate passed, amended, November 10; House agreed to Senate amendment November 16, 2015. S. 1356 was signed into law November 25, 2015. The Joint Explanatory Statement to accompany S. 1356 included the same policy provision regarding the U.S. Naval Station at Guantánamo Bay, Cuba, that was in Section 1036 of the final enrolled version of H.R. 1735 discussed below. The provision prohibits any FY2016 funding for the Department of Defense to be used to (1) close or abandon the U.S. Naval Station at Guantánamo Bay, Cuba; (2) relinquish control of Guantánamo Bay to the Republic of Cuba; or (3) to implement a material modification to the Treaty Between the United States of America and Cuba signed at Washington, DC, on May 29, 1934, that constructively closes the U.S. Naval Station. The provision also requires a report within 180 days from the Secretary of Defense assessing the military implications of the United States Naval Station at Guantánamo Bay, Cuba. P.L. 114-113 ( H.R. 2029 ) . Consolidated Appropriations Act, 2016. H.R. 2029 originally was introduced and reported ( H.Rept. 114-92 ) by the House Appropriations Committee as the Military Construction and Veteran Affairs and Related Agencies Appropriations Act, 2016 on April 24, 2015. The House passed (255-163) the bill on April 30. The Senate Committee on Appropriations reported ( S.Rept. 114-57 ) its version of the bill on May 21, and the Senate passed (93-0) the bill on November 10, 2015. During April 29 House floor consideration, the House approved H.Amdt. 129 by voice vote, which would prohibit the use of funds to carry out the closure or transfer of the U.S. Naval Station at Guantánamo Bay, Cuba. The language became Section 515 of the House bill. The Senate version of the bill did not have a similar provision. H.R. 2029 subsequently became the vehicle for the FY2016 omnibus appropriations bill. On December 16, 2015, the House Appropriations Committee released the text of the Consolidated Appropriations Act, 2016 (House Amendment #1) that provided funding for the 12 annual appropriations bills through FY2016 and also included, among other bills, the FY2016 intelligence authorization measure (nearly identical to H.R. 4127 described below). On December 18, 2015, the House and Senate completed final action on H.R. 2029 , and the President signed the bill into law. With regard to Cuba, the omnibus did not contain any of the controversial Cuba policy riders contained in individual House and Senate appropriation bills ( H.R. 2577 , H.R. 2578 , H.R. 2772 / S. 1910 , H.R. 2995 , and H.R. 3128 , discussed below). The omnibus, did, however, have several Cuba-related provisions (in addition to provisions related to Guantánamo detainees not covered in this report). Division J (Military Construction and Veterans Affairs), Section 13, provides that no funds in the act may be used to carry out the closure or transfer of the United States Naval Station at Guantánamo Bay, Cuba. Division K (State Department and Foreign Operations), Section 7007, continued a long-standing provision prohibiting direct funding for the government of Cuba. Section 7015(f) continued to require that foreign aid for Cuba not be obligated or expended except as provided through the regular notification procedures of the Committees on Appropriations. The explanatory statement to the omnibus measure provided $27.140 million for the Office of Cuba Broadcasting (compared to the Administration's request of $30.3 million). It noted that the agreement did not include authority or funds requested for the merger of the Office of Cuban Broadcasting and the Latin America Division of Voice of America by establishing an independent grantee organization. The explanatory statement also provided $20 million in ESF for democracy programs in Cuba, the same as the Administration's request. Division M (Intelligence Authorization Act for FY2016), Section 512, requires that key supervisory positions at U.S. diplomatic facilities in Cuba are occupied by U.S. citizens, and also requires a report on progress on that issue and on the use of locally employed staff in U.S. diplomatic facilities in Cuba. Section 513 provides that each diplomatic facility that is constructed or undergoes a construction upgrade in Cuba shall include a sensitive compartmented information facility. P.L. 114-223 ( H.R. 5325 ). Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Re sponse and Preparedness Act . H.R. 5325 originally was introduced as the Legislative Branch Appropriations Act, 2017, in May 2016 and passed by the House in June 2016. Subsequently, in September 2016, the bill became the vehicle for a continuing resolution funding federal agencies and programs until December 9, 2016, as well as full-year FY2017 Military Construction appropriations. Section 130 (Division A covering military construction appropriations) provides that none of the funds may be used to carry out the closure or realignment of the United States Naval Station at Guantánamo Bay, Cuba. Senate passed (72-26) with and amendment September 28, 2016. House agreed (342-85) to the Senate amendment. Signed into law September 29, 2016. P.L. 114-328 ( S. 2943 ). National Defense Aut horization Act for F iscal Year 2017 . S. 2943 introduced and reported by the Senate Armed Services Committee ( S.Rept. 114-255 ) May 18, 2016. Senate passed (85-13) June 14, 2016. House passed, amended, July 7, 2016, with the language of H.R. 4909 , which separately had been reported by the House Committee on Armed Services ( H.Rept. 114-537 ) May 4, 2016 and passed by the House (277-145) May 18, 2016. Conference report ( H.Rept. 114-840 ) on S. 2943 filed November 30, 2016; House agreed (375-34) to the conference report December 2, 2016, and the Senate agreed (92-7) December 8, 2016. Signed into law December 23, 2016. Section 1286 prohibits the Secretary of Defense from authorizing FY2017 funds for the Department of Defense to invite, assist, or otherwise assure the participation of Cuba in certain joint or multilateral exercises or related security conference between the governments of the United States and Cuba until the Secretaries of Defense and State, in consultation with the Director of National Intelligence, submits to Congress written assurances regarding Cuba's fulfillment of conditions for Cuba related to human rights, support to the security forces of Venezuela, cessation of Cuba's demand that the United States relinquish control of the U.S. Naval Station at Guantánamo Bay, and requirement that Cuban military officials indicted in the United States for the murder of U.S. citizens killed during the 1996 shoot down of two U.S. civilian planes are brought to justice. The provision provides exceptions to the funding prohibition for any payments related to the lease agreement or other financial transactions for maintenance and improvements of the military base at Guantanamo Bay, Cuba; any assistance or support of democracy-building efforts; customary and routine financial transactions necessary for the maintenance, improvements, or regular duties of the U.S. mission in Havana; or any joint or multilateral exercise or operation related to humanitarian assistance or disaster response. The conference report to the bill stated that it is the intent of the conferees that the exception related to the Guantanamo base includes periodic contact between appropriate U.S. and Cuban officials concerning the security and management of the naval station commonly referred to as "fence-line talks." (Both the White House's statement of policy on S. 2943 , issued June 7, 2016, and the Secretary of Defense's letter to Congress on the NDAA, issued July 13, 2016, had objected to the restrictions on U.S.-Cuban military-to-military interactions, noting that the restrictions would hamper pragmatic expert level coordination between the United States and Cuba, including the monthly fence talks.) Section 1035 continues provisions from the FY2016 NDAA prohibiting the use of funds in FY2017 for the realignment of forces at or closure of the U.S. Naval Station at Guantánamo, Bay, Cuba, or the implementation of a modification to a 1934 treaty that would constructively close the naval station. The House-passed version of S. 2943 also had a provision in Section 1099B that would have prohibited modification, abrogation, abandonment, or other related actions with respect to U.S. jurisdiction and control of the U.S. Naval Station at Guantánamo Bay, Cuba, without congressional action. However, the conference report to S. 2943 did not include the provision in the final version of the law. (The language in the provision was identical to H.R. 4678 , cited below, which was reported out of the Committee on Foreign Affairs in March 2016. For additional information, see CRS Legal Sidebar WSLG1586, House Approves Measure to Prevent Return of GTMO to Cuba without Congress's Say So , by [author name scrubbed].) S.Res. 418 (Collins). Introduced April 12, 2016; reported by Senate Committee on Foreign Relations without written report April 28, 2016; Senate passed by Unanimous Consent May 10, 2016. The resolution recognizes several women leaders worldwide, including Yoani Sánchez of Cuba, for their selflessness and dedication to their respective causes. Appendix B. Other Actions in 2015 and 2016 H.R. 636 (Tiberi). Federal Aviation Administration Reauthorization Act of 2016. The bill was originally introduced in the House as the Small Business Tax Relief Act of 2015 on February 2, 2015. House passed February 13, 2015. Senate floor consideration began April 7, 2016, using the vehicle to reauthorize the Federal Aviation Administration. Senate passed, amended, April 19, 2016. Several potential Senate amendments related to U.S. policy toward Cuba were filed but not considered. S.Amdt. 3557 (Flake) would have prohibited restrictions on travel to Cuba and travel transactions. S.Amdt. 3528 (Rubio) and S.Amdt. 3722 (Rubio) introduced April 13, 2016, would have provided that certain Cuban entrants would be ineligible to receive refugee/parolee assistance. S.Amdt. 3568 (Collins) would have permitted transit stops in the United States by foreign air carriers traveling to or from Cuba. S.Amdt. 3725 (Flake) would have authorized air carriers to provide service between the United States and Cuba for citizens of other countries with itineraries that begin and end outside the United States. S.Amdt. 3789 (Rubio), S.Amdt. 3790 (Rubio), and S.Amdt. 3791 (Rubio) would have added limitations to other amendments, with the limitations related to the extradition of certain criminals from Cuba and compensation for U.S. property confiscated by the Cuba government. H.R. 1735 (Thornberry) . National Defense Authorization Act for Fiscal Year 2016. Introduced April 13, 2015; reported by House Committee on Armed Services, H.Rept. 114-102 , May 5, 2015. House passed (269-151) May 15, 2015. Senate passed (71-25), with an amendment, June 18, 2015. Conference report ( H.Rept. 114-270 ) filed September 29, 2015. House agreed (270-156) to conference October 1, 2015; Senate agreed (70-27) October 7, 2015. President vetoed measure October 22, 2015. Section 1036 of the enrolled bill would prohibit any FY2016 funding for the Department of Defense to be used to (1) close or abandon the U.S. Naval Station at Guantánamo Bay, Cuba; (2) relinquish control of Guantánamo Bay to the Republic of Cuba; or (3) to implement a material modification to the Treaty Between the United States of America and Cuba signed at Washington, DC, on May 29, 1934, that constructively closes the U.S. Naval Station. Section 1036 would also require a report within 180 days from the Secretary of Defense assessing the military implications of United States Naval Station Guantánamo Bay, Cuba. For final action, see P.L. 114-92 ( S. 1356 ) above. H.R. 2577 (Diaz-Balart). Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2016. Introduced and reported ( H.Rept. 114-129 ) by the House Committee on Appropriations May 27, 2015. House passed (216-210) June 9, 2015. Reported by the Senate Committee on Appropriations June 25, 2015 ( S.Rept. 114-75 ). As approved by the House, Section 193 would have provided that no funds in the bill could be used to facilitate scheduled flights to Cuba if they land or pass through property confiscated by the Cuban government. The amendment appeared aimed at preventing the introduction of new regular scheduled air carrier service to Cuba, but it would not have affected air charter service between the United States and Cuba. Section 414 would have prevented funds in the bill from being used by the Federal Maritime Administration or the Administrator of the Maritime Administration to issue a license or certificate for a commercial vessel that docked or anchored within the previous 180 days within 7 miles of a port or property that was confiscated by the Cuban government. The provision appeared aimed at impeding licensing for the establishment of passenger ferry/cruise service to Cuba. During June 4, 2015, House floor consideration, the House rejected H.Amdt. 404 (Lee) by a vote of 176-247, which would have prohibited the implementation or enforcement of the Cuba provisions. The Administration's statement of policy on the bill said that the Administration strongly objected to the two Cuba provisions "that would restrict flights and cruise ships from going to Cuba and would place unnecessary restrictions on options for educational, religious, or other permitted travel to Cuba." The Senate version of the bill did not have Cuba sanctions provisions. For final action, see P.L. 114-113 ( H.R. 2029 ), the FY2016 omnibus bill, above. H.R. 2578 (Culberson). Commerce, Justice, Science and Related Agencies Appropriations Act, 2016. Introduced and reported ( H.Rept. 114-130 ) by the House Committee on Appropriations May 27, 2015. House passed (242-183) June 3, 2015. Reported by the Senate Committee on Appropriations June 16, 2015 ( S.Rept. 114-66 ). As approved by the House, Section 540 would have prohibited Commerce Department funds from being used to facilitate, permit, license, or promote exports to Cuba's Ministry of the Revolutionary Armed Forces (MINFAR), the Ministry of the Interior (MININT), any subsidiaries of these two ministries, and any officers of these ministries or their immediate family members. The provision would have affected additional categories of exports to Cuba authorized as part of the Administration's policy change on Cuba. It would not have affected the export of agricultural commodities, medicines, or medical goods permitted under TSRA. During June 3, 2015, House floor consideration, the House rejected H.Amdt. 308 (Farr), by a vote of 153-273, which would have struck Section 540 from the bill. The Administration's statement of policy on the bill said that the bill included highly objectionable provisions, including nongermane foreign policy restrictions related to Cuba that prohibit funding "to facilitate, permit, license, or promote exports to the Cuban military or intelligence service." The Senate version of the bill did not contain Cuba sanctions provisions. For final action, see P.L. 114-113 ( H.R. 2029 ), the FY2016 omnibus measure, above. H.R. 2772 (Granger)/ S. 1725 (Graham) . Department of State, Foreign Operations, and Related Programs Appropriations Act, 2016. H.R. 2772 introduced and reported ( H.Rept. 114-154 ) by the House Committee on Appropriations June 15, 2015. S. 1725 introduced and reported ( S.Rept. 114-79 ) by the Senate Appropriations Committee July 9, 2015. Before consideration of the bill by the full House Appropriations Committee, the Administration wrote a letter to the chair and ranking Member of the committee on June 10, expressing serious concerns about the legislation. Among its concerns, the Administration maintained that the bill "includes provisions that would restrict Administration activities relating to Cuba, including the establishment or operation of a U.S. diplomatic presence in Cuba beyond what was in existence on December 17, 2014, interfering with the Executive Branch's ability to make the best decisions consistent with our national security." Among the Cuba provisions in the House and Senate versions: Section 7007 of both the House and Senate versions would continue to prohibit direct funding for the government of Cuba. Section 7015(f) of both the House and Senate versions would continue to require that foreign aid for Cuba not be obligated or expended except as provided through the regular notification procedures of the Committees on Appropriations. Section 7031(c) of the House bill would not have allowed for a waiver for restrictions against eligibility for entrance into the United States with respect to officials of the Cuban government and their immediate family members from Cuba (including members of the Cuban military and high-level officials of the Cuban Communist Party) whom the Secretary of State has credible information have been involved in significant corruption, including corruption related to the extraction of natural resources or a gross violation of human rights. The report to the House bill would have directed the Secretary of State, for the purposes of implementing Section 7031(c) and applying Presidential Proclamation 7750, to consider the confiscation of properties belonging to American companies by corrupt Cuban officials as having serious adverse effects on international activity of U.S. businesses and on the national interests of the United States. The Senate bill did not have a similar provision. Section 7045(c)(1) of the House bill would have provided $30 million to promote democracy and civil society in Cuba, $10 million above the Administration's request, and would have provided that no funds could be obligated for business promotion, economic reform, entrepreneurship, or any other assistance that is not democracy-building as expressly authorized in the LIBERTAD Act. The report to the House bill would have provided that not less than $8 million of the $30 million shall be for the National Endowment for Democracy; that remaining funds should be administrated by the State Department's Bureau of Democracy, Human Rights and Labor (DRL), Bureau of Western Hemisphere Affairs (WHA), and USAID; and that grants exceeding $1 million shall be awarded only to organizations with experience promoting democracy inside Cuba. Section 7045(c) of the Senate bill would have provided $15 million in ESF for Cuba democracy programs, and $5 million in ESF (notwithstanding any other provision of law) for programs to support private Cuban entrepreneurs, except that no such assistance may be provided for the Cuban government. In addition, the report to the Senate bill stated that the committee expected a portion of the $50.5 million to promote Internet freedom in Section 7078 of the bill to be used to support Internet freedom in Cuba. Section 7045(c)(2) of the House bill would prohibit funding to establish an independent grantee organization to carry out any and all broadcasting and related programs to the Latin America and Caribbean region, including Cuba, or substantively alter the structure of the Office of Cuba Broadcasting. The report to the House bill recommended not less than $28.130 million for the Office of Cuba Broadcasting, almost $2.2 million less than the Administration's $30.3 million request and $1 million more than that provided in FY2015. During House Appropriations Committee consideration, an amendment offered by Representative Serrano to shift $5 million from Cuba broadcasting to efforts to counter Russian media was rejected by a vote of 18-33. The report to the Senate bill, S. 1725 ( S.Rept. 114-79 ), recommended $27.130 million for OCB, and also did not support or include authority for the merger of OCB and VOA's Latin American Division. Section 7045(c)(3) of the House version would have prohibited funds for the establishment or operation of a U.S. diplomatic presence, including an embassy, consulate, or liaison office in Cuba beyond that which was in existence prior to December 17, 2014, until the President determined and reported to Congress that the requirements and factors specified in Section 205 of the LIBERTAD Act (related to Cuba having a transition government) have been met. The Administration requested just over $6 million for the conversion of the current U.S. Interests Section in Havana to an embassy, pending the reestablishment of diplomatic relations. The Senate version did not have such a provision. For final action, see P.L. 114-113 ( H.R. 2029 ), the FY2016 omnibus, above. H.R. 2995 (Crenshaw)/ S. 1910 (Boozman). Financial Services and General Government Appropriations, 2016. H.R. 2995 introduced and reported ( H.Rept. 114-194 ) July 9, 2015. S. 1910 introduced and reported ( S.Rept. 114-97 ) July 30, 2015. The House bill had three Cuba provisions that would have blocked part of the Administration's policy shift on Cuba related to travel and the importation of goods from Cuba, and would have introduced an additional sanction on financial transactions with Cuba. In contrast, the Senate bill had three provisions that would have lifted U.S. sanctions on Cuba related to travel, financing for U.S. agricultural exports, and shipping. As introduced, H.R. 2995 had three Cuba provisions that would have blocked some of the Administration's policy changes toward Cuba. The House Appropriations Committee approved a draft bill (30-20) on June 17, 2015. Before its approval, a Lowey amendment offered to remove various riders, including the Cuba provisions, was rejected by a vote of 19-31. Before consideration of the bill by the full House Appropriations Committee, the Administration wrote a letter to the chair and ranking Member of the committee on June 16, maintaining that the Administration "strongly opposes language in the bill affecting foreign relations with Cuba, including funding prohibitions on nonacademic educational exchanges." According to the letter, "This language would result in a reduction of people-to-people interactions and as such is counter to the Administration's policy to increase overall travel and the flow of information and resources to private Cubans. This provision is an unwarranted restriction on purposeful travel to Cuba." The three Cuba provisions in H.R. 2995 included the following: Section 130 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow people-to-people educational travel to Cuba. Section 131 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow the use, purchase, trafficking, or import of property confiscated by the Cuban government. The provision appeared aimed at prohibiting the importation of alcohol and tobacco products by authorized U.S. travelers as accompanied baggage. In January 2015, the Obama Administration amended the embargo regulations to authorize the importation of no more than $100 of tobacco and alcohol products combined as part of an overall limit of up to $400 worth of goods from Cuba as accompanied baggage for personal use. These value restrictions were lifted by Treasury Department in October 2016, so that only normal limits on duty and tax exemptions apply for merchandise imported as accompanied baggage for personal use. Section 132 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow financial transactions with Cuba's Ministry of the Revolutionary Armed Forces (MINFAR), the Ministry of the Interior (MININT), their subsidiaries, and any officers of these ministries or their immediate family members. The restrictions would not have applied to financial transactions with respect to exports permitted under TSRA. This provision would have introduced a new economic sanction that potentially could significantly have impeded U.S. financial transactions with Cuba given that the Cuban military, since the 1990s, has become increasingly involved in Cuba's economy and running numerous companies. In contrast, S. 1910 had three Cuba provisions that would have lifted several U.S. sanctions on financing for U.S. agricultural exports, travel, and shipping. The provisions were approved as amendments during the Senate Appropriations Committee's July 23, 2015, markup of the bill. Section 638 of the bill would have repealed the prohibition on financing agricultural sales to Cuba in TSRA, including the requirement that payment for such products shall be only be payment of cash in advance or financing by third country financial institutions. The provision was added by a Boozman amendment approved by the full committee by voice vote. Section 641 of the bill would have lifted restrictions on travel to Cuba. It would have prevented any funding "to implement any law, regulation, or policy that prohibits or otherwise restricts travel, or any transaction incident to travel, to or from Cuba by any citizen or legal resident of the United States." The provision further stated that any such law, regulations, or policy would cease to have any force or effect on and after the date of the enactment of the act, but would not limit the authority of the President to restrict travel or any transaction incident to such travel, if the restriction was important to U.S. national security or to protect human health or welfare. The provision was added to the bill by a Moran amendment approved by a vote of 18-12. Section 642 of the bill would have repealed a provision in the Cuban Democracy Act that prohibits a vessel that enters a Cuban port to engage in trade from loading or unloading any freight in the United States within 180 days after departing Cuba, except pursuant to a Treasury Department license. The provision was added to the bill by a Tester amendment approved by voice. For final action, see P.L. 114-113 ( H.R. 2029 ), the FY2016 omnibus measure, above. H.R. 3128 (Carter )/ S. 1619 (Hoeven) . Department of Homeland Security Appropriations Act, 2016. Introduced and reported ( H.Rept. 114-215 ) by the House Appropriations Committee July 21, 2015. The full committee had approved the bill on July 14, 2015. Senate Appropriations Committee reported S. 1619 June 18, 2015 ( S.Rept. 114-68 ). Section 559 of the House bill would have prohibited funds in the bill from being used to approve, license, facilitate, authorize, or otherwise allow the trafficking or import or property confiscated by the Cuban government. The provision appeared in part aimed at prohibiting the importation of alcohol and tobacco products by authorized U.S. travelers as accompanied baggage. Before consideration of the bill by the full House Appropriations Committee, the Administration wrote a letter to the committee expressing concern about "highly problematic ideological riders," including "a provision that prohibits funds to be used allow property confiscated by the Cuban government to enter the United States." The Senate bill did not have Cuba sanctions provisions. For final action, see H.R. 2029 , the FY2016 omnibus bill, above. H.R. 4678 (Royce). United States Naval Station Guantánamo Bay Preservation Act. The bill would have prohibited modification, abrogation, abandonment, or other related actions with respect to U.S. jurisdiction and control of the U.S. naval station. Introduced March 3, 2016; Committee on Foreign Affairs reported by unanimous consent March 15, 2016 ( H.Rept. 114-496 ). H.R. 4974 (Dent) / S. 2806 (Kirk)/ H.R. 2577 (Diaz-Balart) . Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017. H.R. 4974 introduced and reported by the House Committee on Appropriations ( H.Rept. 114-497 ) April 15, 2016; House passed (295-129) May 19, 2016. S. 2806 introduced and reported by the Senate Committee on Appropriations ( S.Rept. 114-237 ) April 18, 2016. H.R. 2577 was approved by the House in 2015 (see above) as the FY2016 transportation appropriations measure, but in 2016, the Senate used it as the vehicle for the FY2017 transportation ( S. 2844 ) and military construction ( S. 2806 ) appropriations measures as well as Zika funding. The Senate approved H.R. 2577 May 19, 2016, with an amendment substituting the language of S. 2844 and S. 2806 , amended, as well as Zika funding. The House agreed to the Senate amendment, but with its own amendment, on May 26, 2016, which included military construction appropriations and Zika funding, but not transportation appropriations. Conference report ( H.Rept. 114-640 ) filed in House June 22, 2016. House agreed (293-171) to the conference June 23. Senate failed (52-46) to invoke cloture September 6, 2016. Section 130 of the conference report to H.R. 2577 ( H.Rept. 114-640 ) would have provided that none of the funds made available by the act may be used to carry out the closure or realignment of the United States Naval Station, Guantánamo Bay, Cuba. For final action, see P.L. 114-223 ( H.R. 5325 ), above. H.R. 5054 (Aderholt)/ S. 2956 (Moran). Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2017. H.R. 5054 introduced and reported ( H.Rept. 114-531 ) by the House Committee on Appropriations April 26, 2016. S. 2956 introduced and reported ( S.Rept. 114-259 ) May 19, 2016. The report to the Senate bill recommended $1.5 million (as requested by the Administration) for the Foreign Agricultural Service to establish an overseas post in Cuba. The House bill or report did not address the issue. H.R. 5393 (Culberson)/ S. 2837 (Shelby). Commerce, Justice, Science and Related Agencies Appropriations Act, 2017. S. 2837 introduced and reported ( S.Rept. 114-239 ) by the Senate Appropriations Committee April 21, 2016. H.R. 5393 introduced and reported ( H.Rept. 114-605 ) by the House Appropriations Committee June 7, 2016. The House bill had two Cuba provisions. Section 537 would have prohibited funds in the act from being used to facilitate, permit, license, or promote exports to the Cuban military or intelligence service or to any officer of the Cuban military or intelligence service, or an immediate family member thereof. It would not have affected the export of goods permitted under the Trade Sanctions Reform and Export Enhancement Act of 2000. Similar to a provision in the House-passed FY2016 Commerce appropriations measure, H.R. 2578 , this provision would have introduced a new sanction that would restrict additional categories of exports to Cuba authorized as part of the Administration's policy changes on Cuba. The provision could have significantly affected the expansion of U.S. exports to Cuba given that the Cuban military, since the 1990s, has become increasingly involved in Cuba's economy and running numerous companies. The Administration's statement of policy on H.R. 2578 said that the bill included highly objectionable provisions, including non-germane foreign policy restrictions to Cuba. Section 538 would have prohibited funds in the act from being used to approve the registration or renewal of, or maintenance of, a mark, trade name, or commercial name, used in commerce that is the same or substantially similar to a mark, trade name, or commercial name used in connection with a business or assets that were confiscated unless the original owner has expressly consented. The provision would have introduced a new sanction prohibiting the U.S. Patent and Trademark Office (USPTO) from approving, maintaining, or renewing such a trademark. With regard to the Havana Club case, however, the USPTO renewed the trademark registration in February 2016 until 2026. H.R. 5485 (Crenshaw) / S. 3067 (Boozman). Financial Services and General Government Appropriations, 2017. H.R. 5485 introduced and reported ( H.Rept. 114-624 ) by the House Committee on Appropriations June 15, 2016. House approved (239-185) on July 7, 2016, with four Cuba-related provisions. The Administration's statement of policy on the bill stated that the Administration "strongly objects" to the four provisions, maintaining that they "would severely undermine the President's policy on Cuba that aims to improve the lives of the Cuban people and advance U.S. interests through expanded travel, commerce, and the free flow of information." Section 132 would have prohibited funds in the bill to approve, license, facilitate, authorize, or otherwise allow, whether by general or specific license, people-to-people educational travel to Cuba described in 31 C.F.R. 565(b)(2) . In its statement of policy, the Administration said that the provision "would result in a reduction of people-to-people interactions on purposeful travel to Cuba and as such is counter to the Administration's policy to increased overall travel and the flow of information and resources to private Cubans." The Administration stated that "the provision is an unwarranted restriction on purposeful travel to Cuba by U.S. citizens." Section 133 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow the use, purchase, trafficking, or import of property confiscated by the Cuban government. In its statement of policy, the Administration maintained that the provision "could severely chill authorized U.S.-Cuba commerce designed to support the Cuban people." Section 134 would have prohibited funding to approve, license, facilitate, authorize, or otherwise allow any financial transaction with an entity owned or controlled, in whole or in part, by the Cuban military or intelligence service or with any officer of the Cuban military or intelligence service, or an immediate family member thereof, but the restrictions would not apply to financial transactions with respect to exports permitted under the Trade Sanctions Reform and Export Enhancement Act of 2000. In its statement of policy, the Administration maintained that the provision "is overly broad and, as written, could significantly undermine the ability for U.S. persons to engage in otherwise authorized business in order to more effectively support the Cuban people." Section 135 would have prohibited funds to be used to authorize a general license or approve a specific license under 31 C.F.R. 801 or 31 C.F.R.527 with respect to a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner has expressly consented. The provision would have introduced a new sanction prohibiting the Treasury Department's Office of Foreign Assets Control from issuing a general or specific license to allow for the payment of trademark registration fees. An existing trademark sanction in the FY1999 omnibus appropriations measure (§211 of Division A, Title II, P.L. 105-277 ) prevents the United States from accepting payment for trademark registrations and renewals from Cuban nationals that were used in connection with a business or assets in Cuba that were confiscated, unless the original owner of the trademark has consented. U.S. officials maintain that sanction prohibits a general license for transactions or payments for such trademarks. In January 2016, however, OFAC issued a specific license for payments related to the renewal of the Havana Club trademark, and the USPTO subsequently renewed the Havana Club trademark for the 2006-2016 period and then for 10 additional years until 2026. Before House floor consideration, the House Rules Committee approved a structured rule ( H.Rept. 114-639 to H.Res. 794 ) on June 21, 2016, for the consideration of H.R. 5485 that made in order two potential Cuba amendments easing sanctions: A Crawford amendment, listed as amendment 24 in H.Rept. 114-639 , would have prohibited funds in the act from being used to implement, administer, or enforce a prohibition against private financing of U.S. agricultural sates to Cuba. The amendment ultimately was not introduced. A Sanford amendment, listed as amendment 47 in H.Rept. 114-639 , would have prohibited funds in the act from being used to administer or enforce 31 C.F.R. Part 515 (the Cuban Assets Control Regulations) or Section 910(b) of TSRA with respect to any travel or travel-related transaction. The amendment was offered on July 7, 2016, as H.Amdt. 1264 but subsequently was withdrawn. S. 3067 introduced and reported ( S.Rept. 114-280 ) by the Senate Appropriations Committee June 16, 2016, with four Cuba-related provisions. Section 634 would have amended the Trade Sanctions Reform and Export Enhancement Act of 2000 to allow for the financing of agricultural exports to Cuba. It would also eliminate a provision in the Cuban Democracy Act of 1992 prohibiting a seaborne vessel entry into the United States if it has been involved in trade with Cuba within the previous 180 days, except pursuant to a Treasury Department license. Section 635 would have prohibited funding in the act or any other act used to implement any law, regulation, or policy that prohibits or otherwise restricts travel, or any transaction incident to travel, to or from Cuba by any citizen or legal resident of the United States. Section 636 would have prohibited funds in the act from restricting the export of consumer communication devices and other telecommunications equipment to Cuba, the provision of telecommunications services to Cuba, or the establishment of facilities to provide telecommunications connecting Cuba with another country; financing any such activity; or entering into, performing, or making or receiving payments under a contract with any individual or entity in Cuba with respect to the provision of telecommunications services involving Cuba or persons in Cuba. Section 637 would have prohibited funds in the act or any act from being used to implement any law, regulation, or policy that prohibits the provision of technical services otherwise permitted under an international air transportation agreement in the United States for an aircraft of a foreign carrier that is en route to or from Cuba based on the restrictions set forth in the Cuban Assets Control Regulations. H.R. 5634 (Carter) / S. 3001 (Hoeven) . Department of Homeland Security Appropriations Act, 2017. Introduced and reported ( H.Rept. 114-668 ) by House Committee on Appropriations July 6, 2016. Section 540 of the House bill would have prohibited funds in the bill from being used to approve, license, facilitate, authorize, or otherwise allow the trafficking or import or property confiscated by the Cuban government. When a similar provision was included the FY2016 Homeland Security Appropriations bill, H.R. 3128 , the Administration wrote a letter to the committee expressing concern about "highly problematic ideological riders," including "a provision that prohibits funds to be used allow property confiscated by the Cuban government to enter the United States." The Senate version of the FY2017 bill, S. 3001 , did not include such a provision. H.R. 5728 (Katko ) / S. 3289 (Rubio). Cub an Airport Security Act of 2016 . Similar but not identical bills. Both bills would have prohibited scheduled passenger air transportation between the United States and Cuba until a study was completed regarding security measures and equipment at Cuba's airports, the Government Accountability Office conducted an audit of that report, and the Secretary of Homeland Security established agreements with Cuba allowing the Federal Air Marshal Service to conduct missions on regularly scheduled flights between the United States and Cuba and allowing Transportation Security Administration inspectors to access all areas of last point of departure airports in Cuba for the purposes of security assessments. The bills also would have amended Section 44907 of Title 49 of the U.S. Code to clarify the role of the Secretary of Homeland Security regarding security standards at foreign airports. H.R. 5728 introduced July 12, 2016; referred to the Committee on Homeland Security and in addition to the Committee on Foreign Affairs. Homeland Security Committee reported (amended) by voice vote September 13, 2016. S. 3289 introduced September 6, 2016; referred to Senate Committee on Commerce, Science, and Transportation. H.R. 5912 (Granger) / S. 3117 (Graham). Department of State, Foreign Operations, and Related Programs Appropriations Act, 2017 . H.R. 5912 was introduced and reported by the House Appropriations Committee on July 15, 2016 ( H.Rept. 114-693 ). The House Appropriations Committee had released a draft version of the bill on June 22, 2016. Among the bill's Cuba provisions are the following: Section 7007 would continue to prohibit direct funding for the government of Cuba. Section 7015(g) would continue to require that foreign aid for Cuba appropriated in the act not be obligated or expended except as provided through the regular notification procedures of the Committees on Appropriations. Section 7045(c)(1)(A)(i) would have prohibited funding for the establishment or operation of a U.S. diplomatic presence in Cuba beyond what was in place prior to December 17, 2014, including the hiring of additional staff, unless necessary for protecting the health, safety, or security of diplomatic personnel or facilities in Cuba. Section 7045(c)(1)(A)(ii) would have prohibited funding for the facilitation of the establishment of diplomatic mission of Cuba in the United States beyond that which was in existence prior to December 17, 2014. Section 7045(c)(1)(A)(iii) would have prohibited funding to support locally employed staff in contravention of Section 515 of the Intelligence Authorization Act for FY2016 (Division M of P.L. 114-113 ), which requires that key supervisory positions at U.S. diplomatic facilities in Cuba to be occupied by U.S. citizens. Section 7045(c)(1)(B) would have provided that the funding limitations in Section 1045(c)(1)(A) should not apply to democracy-building efforts for Cuba or if the President determines and reports to Congress that the Cuban government has met conditions set forth in Section 205 of the LIBERTAD Act of 1996. Section 7045(c)(2) would have prohibited funding to establish an independent grantee organization to carry out any and all broadcasting and related programs to the Latin American and Caribbean region or otherwise substantially alter the structure of the Office of Cuba Broadcasting (OCB) unless specifically authorized by a subsequent act of Congress. The funding prohibition also pertained to the merger of the OCB and the Voice of America Latin America Division. Section 7045(c)(3) would have provided $30 million for democracy promotion for Cuba to promote and strengthen civil society (double the Administration's request of $15 million) but would have prohibited funding for business promotion, economic reform, entrepreneurship, or any other assistance that was not democracy building authorized by the LIBERTAD Act. On June 29, 2016, the Senate reported its version, S. 3117 ( S.Rept. 114-290 ). Among the bill's Cuba provisions are the following: Section 7045(c)(1) would have provided not more than $15 million for democracy programs for Cuba, fully funding the Administration's request. Of that amount, as set forth in Section 7045(c)(2), not less than $3 million would have been available for USAID to support free enterprise and private business organizations and people-to-people educational and cultural activities. The report to the bill would have required a report from the Secretary of State assessing Internet access in Cuba, including a description of Internet access and use in both urban and rural areas and an assessment of the effectiveness of Cuban government efforts to block access to the Internet. Section 7045(c)(4) would have funded the operation of, and infrastructure and security improvements to, U.S. diplomatic facilities in Cuba, as well as costs associated with additional diplomatic personnel in Cuba. Section 7045(c)(5) would have provided that U.S. payments to the Inter-American Development Bank (up to $2.5 million during FY2017) not be withheld if the bank awards grants related to assistance to facilitate transparency, private sector development, and other structural reforms of the Cuban economy. S. 1705 (Burr)/ H.R. 2596 (Nunes)/ H.R. 4127 (Nunes). Intelligence Authorization Act for FY2016. S. 1705 introduced and reported ( S.Rept. 114-83 ) by the Senate Select Committee on Intelligence July 7, 2015. Section 512 would require certain efforts to replace and reduce the number of locally employed staff serving at U.S. diplomatic facilities in Cuba. Section 513 would provide that each diplomatic facility that is constructed or undergoes a construction upgrade in Cuba shall include a sensitive compartmented information facility. H.R. 2596 introduced June 1, 2015, and passed (247-178) June 16, 2015. The bill did not have similar provisions related to Cuba found in the Senate bill. H.R. 4127 was introduced November 30, 2015, and passed (364-58) December 1, 2015. As approved, H.R. 4127 had provisions in Sections 512 and 513 that were similar, although not identical to the Cuba provisions in S. 1705 described above. For final action, see P.L. 114-113 ( H.R. 2029 ), the FY2016 omnibus, above. Appendix C. Additional Bills and Resolutions in the 114 th Congress H.Res. 181 (King, NY). Among its provisions, the resolution would have called for the immediate extradition or rendering to the United States of convicted felon William Morales and all other fugitives from justice who are receiving safe harbor in Cuba in order to escape prosecution or confinement for criminal offenses committed in the United States. Introduced March 26, 2015; referred to the Committee on Foreign Affairs. H.Con.Res. 126 (Walker). The resolution would have expressed the sense of Congress that Cuba should issue a state of apology and agree to cease human rights violations in order for any embargo or economic restraints to be lifted. Introduced March 23, 2016; referred to the Committee on Foreign Affairs. H.R. 274 (Rush). United States-Cuba Normalization Act of 2015. The bill would have removed provisions of law restricting trade and other relations with Cuba; authorized common carriers to install and repair telecommunications equipment and facilities in Cuba and otherwise provide telecommunications services between the United States and Cuba; prohibit restrictions on travel to and from Cuba and on transactions incident to such travel; directed the U.S. Postal Service to take actions to provide direct mail service to and from Cuba; called on the President to conduct negotiations with the government of Cuba to settle claims of U.S. nationals for the taking of property by the Cuban government and for securing the protection of internationally recognized human rights; extended nondiscriminatory trade treatment to the products of Cuba; prohibited limits on remittances to Cuba; and rescinded the designation of the Cuban government as a state sponsor of international terrorism. Introduced January 12, 2015; referred to the Committee on Foreign Affairs, in addition to the Committees on Ways and Means, Energy and Commerce, Judiciary, Financial Services, Oversight and Government Reform, and Agriculture. H.R. 403 (Rangel). Free Trade with Cuba Act. The bill would have removed provisions of law restricting trade and other relations with Cuba; authorized common carriers to install and repair telecommunications equipment and facilities in Cuba and otherwise provide telecommunications services between the United States and Cuba; prohibited restrictions on travel to and from Cuba and on transactions incident to such travel; directed the U.S. Postal Service to take actions to provide direct mail service to and from Cuba; and called on the President to conduct negotiations with the government of Cuba to settle claims of U.S. nationals for the taking of property by the Cuban government and for securing the protection of internationally recognized human rights. Introduced January 16, 2015; referred to the Committee on Foreign Affairs, in addition to the Committees on Ways and Means, Energy and Commerce, the Judiciary, Financial Services, Oversight and Government Reform, and Agriculture. H.R. 570 (McCollum). Stop Wasting Taxpayer Money on Cuba Broadcasting Act. The bill would have repealed the Radio Broadcasting to Cuba Act (22 U.S.C. 1465 et seq.) and the Television Broadcasting to Cuba Act (22 U.S.C. 1464aa et seq.). Introduced January 27, 2015; referred to the Committee on Foreign Affairs. H.R. 634 (Rangel). Export Freedom to Cuba Act of 2015. The bill would have provided that travel to and from Cuba by U.S. citizens and residents, and any transactions incident to such travel, shall not be regulated or prohibited. Introduced February 2, 2015; referred to the House Committee on Foreign Affairs. H.R. 635 (Rangel). Promoting American Agricultural and Medical Exports to Cuba Act of 2015. Among its provisions, the bill would have permanently redefined the term "payment of cash in advance" to mean that payment is received before the transfer of title and release and control of the commodity to the purchaser; authorized direct transfers between Cuban and U.S. financial institutions for products exported under the terms of TSRA; established an export promotion program for U.S. agricultural exports to Cuba; permitted nonimmigrant visas for Cuban nationals for activities related to purchasing U.S. agricultural goods; repealed a trademark sanction related to Cuba in a FY1999 omnibus appropriations measure (§211 of Division A, Title II, P.L. 105-277 ); prohibited restrictions on travel to Cuba; and repealed the on-site verification requirement for medical exports to Cuba under the CDA. Introduced February 2, 2015; referred to the Committee on Foreign Affairs, in addition to the Committees on Ways and Means, the Judiciary, Agriculture, and Financial Services. H.R. 654 (Jolly) / S. 2559 (Burr). Naval Station Guantánamo Bay Protection Act. Identical bills would have prohibited the modification, termination, abandonment, or transfer of the lease by which the United States acquired the land and waters containing Naval Station, Guantánamo Bay, Cuba, unless the President notifies Congress before, and after such notification, Congress enacts a law authorizing that modification, termination, abandonment, or transfer. H.R. 654 introduced February 2, 2015; referred to the Committee on Foreign Affairs. S. 2559 introduced February 22, 2016; referred to the Committee on Armed Services. H.R. 664 (Sanford). Freedom to Travel to Cuba Act of 2015. The bill would have prohibited the President from prohibiting or regulating travel to or from Cuba by U.S. citizens or legal residents, or any of the transactions incident to such travel, including banking transactions. Introduced February 2, 2015; referred to the Committee on Foreign Affairs. H.R. 735 (Serrano). Cuba Reconciliation Act. The bill, among its provisions, would have lifted the trade embargo on Cuba. It would have removed provisions of law restricting trade and other relations with Cuba; authorized common carriers to install and repair telecommunications equipment and facilities in Cuba and otherwise provide telecommunications services between the United States and Cuba; prohibited restrictions on travel to and from Cuba and on transactions incident to such travel; and directed the U.S. Postal Service to take actions to provide direct mail service to and from Cuba. Introduced February 4, 2015; referred to the Committee on Foreign Affairs, in addition to the Committees on Ways and Means, Energy and Commerce, Financial Services, the Judiciary, Oversight and Government Reform, and Agriculture. H.R. 738 (Serrano). Baseball Diplomacy Act. The bill would have waived certain prohibitions with respect to nationals of Cuba coming to the United States to play organized professional baseball. Introduced February 4, 2015; referred to the Committee on Foreign Affairs, in addition to the Committee on the Judiciary. H.R. 1782 (Smith, NJ). Cuba Human Rights Act of 2015. Among its provisions, the bill would have expressed the sense of Congress that the U.S.-Cuba relationship should not be changed, nor should any federal law or regulation be amended, until the Cuban government ceases violating the human rights of the Cuban people. Introduced April 14, 2015; referred to the Committee on Foreign Affairs. H.R. 3306 (Rush). Promote Opportunities With Energy Resources for Cuba Act (or POWER Cuba Act). Would have authorized the export of energy resources, energy technologies, and related services to Cuba. Introduced July 29, 2015; referred to the Committee on Energy and Commerce, and in addition to the Committee on Foreign Affairs. H.R. 3687 (Crawford). Cuba Agricultural Exports Act. Introduced August 6, 2015; referred to the Committee on Foreign Affairs, and in addition, to the Committees on Financial Services and Agriculture. The bill would have amended TSRA to permit U.S. government assistance for agricultural exports under TSRA, but not if the recipient assistance would be an entity controlled by the Cuban government; authorized the financing of sales of agricultural commodities; and authorized investment for the development of an agricultural business in Cuba as long as it is not controlled by the Cuban government or does not traffic in property of U.S. nationals confiscated by the Cuban government. H.R. 3818 (Gosnar). Ending Special National Origin-Based Immigration Programs for Cubans Act of 2015. Introduced October 23, 2015; referred to the House Committee on the Judiciary. The bill would have repealed the Cuban Adjustment Act (P.L. 89-732) and would have prohibited any funding to implement, administer, enforce, or carry out the Cuban Family Reunification Parole Program established in 2007. H.R. 4247 (Curbelo)/ S. 2441 (Rubio). Cuban Immigrant Work Opportunity Act of 2015. Identical bills would have amended the Refugee Education Assistance Act of 1980, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and the Immigration and Nationality Act to make Cuban nationals who enter the United States on or after the enactment of this act ineligible for refugee/parolee assistance. H.R. 4247 introduced December 15, 2015; referred to the Committee on Education and the Workforce and to the Committee on Ways and Means. S. 2441 introduced January 12, 2016; referred to the Senate Committee on Finance. H.R. 4772 (Pearce). Justice Before Commerce Act of 2016. The bill would have prohibited the use of federal funds to accept commercial flight plans between the United States and Cuba until Cuba extradites fugitives from justice from the United States located in Cuba. Introduced March 17, 2016; referred to the Committee on Transportation, and in addition to the Committee on Foreign Affairs. H.R. 4847 (Farenthold). Correcting Unfair Benefits for Aliens Act of 2016 or CUBA Act of 2016. The bill would have repealed the Cuban Adjustment Act and amended the Refugee Education Assistance Act of 1980, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and the Immigration and Nationality Act to make Cuban nationals who enter the United States on or after the enactment of this act ineligible for refugee/parolee assistance. Introduced March 23, 2016; referred to the Committee on the Judiciary, and in addition to the Committees on Education and the Workforce and Ways and Means. S.Res. 26 (Durbin). The resolution would have commended Pope Francis for his leadership in helping to secure the release of Alan Gross and for working with the Governments of the United States and Cuba to achieve a more positive relationship. Introduced January 13, 2015; referred to the Committee on Foreign Relations. S.Res. 226 (Cruz). The resolution would have e xpressed the sense of the Senate that the street in front of the Cuban Embassy in Washington, DC, should be designated as "Oswaldo Payá Way" in honor of the Cuban political and human rights activist. Introduced July 21, 2015; referred to the Committee on Homeland Security and Governmental Affairs. S.Res. 584 (Cruz). The resolution would have acknowledged the peaceful hunger strike of Cuban political dissident Guillermo Fariñas, applauded his bravery and commitment to human rights, and expressed solidarity with him and his cause. Introduced September 28, 2016; referred to the Committee on Foreign Relations. S. 299 (Flake). Freedom to Travel to Cuba Act of 2015. The bill would have prohibited the President from regulating travel to or from Cuba by U.S. citizens or legal residents, or any of the transactions incident to such travel, including banking transactions. Introduced January 29, 2015; referred to the Committee on Foreign Relations. S. 491 (Klobuchar). Freedom to Export to Cuba Act of 2015. The bill would have repealed or amended many provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. Introduced February 12, 2015; referred to the Committee on Banking, Housing, and Urban Affairs. S. 757 (Nelson)/ H.R. 1627 (Issa) . No Stolen Trademarks Honored in America Act. Identical bills would have modified a 1998 prohibition (Section 211 of Division A, Tile II, P.L. 105-277 ) on recognition by U.S. courts of certain rights to certain marks, trade names, or commercial names. The 1998 prohibition or sanction prevents trademark registrations and renewals from Cuban or foreign nations that were used in connection with a business or assets in Cuba that were confiscated, without the consent of the original owner. The bill would have applied a fix so that the sanction would have applied to all nationals and would have brought the sanction into compliance with a 2002 World Trade Organization dispute settlement ruling. S. 757 introduced March 17, 2015; referred to Committee on the Judiciary. H.R. 1627 introduced March 25, 2015; referred to the Committee on the Judiciary. S. 1049 (Heitkamp). Agricultural Export Expansion Act of 2015. The bill would have amended TSRA to allow financing by U.S. persons of sales of agricultural commodities to Cuba. Introduced April 22, 2015; referred to the Committee on Banking, Housing, and Urban Affairs. S. 1388 (Vitter)/ H.R. 2466 (Rooney). Cuba Normalization Accountability Act of 2015. The bill, among its provisions, would have required the President to submit a plan for resolving all outstanding claims relating to property confiscated by the government of Cuba before taking action to ease restrictions on travel to or trade with Cuba. S. 1388 introduced May 19, 2015; referred to the Committee on Banking, House, and Urban Affairs. H.R. 2466 introduced May 20, 2015; referred to the House Committee on Foreign Affairs. S. 1389 (Udall) / H.R. 3055 (Cramer). Cuba Digital and Telecommunications Advancement Act of 2015 (Cuba DATA Act). Among its provisions, the bill would have authorized exportation of consumer communications devices to Cuba and the provision of telecommunications services to Cuba and repealed certain provisions of the Cuban Democracy Act of 1992 and the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996. S. 1389 introduced May 19, 2015; referred to the Senate Committee on Foreign Relations. H.R. 3055 introduced July 14, 2015; referred to the House Committee on Foreign Affairs and to the House Committee on Energy and Commerce. S. 1489 (Rubio)/ H.R. 2937 (Nunes). Cuban Military Transparency Act. Section 4 would have prohibited financial transactions with MINFAR or MININT, any agency or entity controlled by those two entities or which those entities own more than a 25% share, or senior members of those two ministries. Section 5 would have included, in the State Department rewards program under the State Department Basic Authorities Act of 1956, rewards for information leading to the arrest or conviction in any country of any individual responsible for or aiding in the February 1996 attack on the aircraft of U.S. persons in international waters by the Cuban military. Section 6 would have provided that the Attorney General shall seek to coordinate with the International Criminal Police Organization (INTERPOL) to pursue the location and arrest of U.S. fugitives in Cuba, including current and former members of the Cuban military. Sections 7 and 8 would have required reports to Congress on the role of MINFAR and MININT in the economy and foreign relationships of Cuba and on the use of confiscated property by these two entities. S. 1489 introduced June 3, 2015; referred to the Senate Committee on Foreign Relations. H.R. 2937 introduced June 25; referred to the House Committee on Foreign Affairs, and in addition to the Committee on Financial Services. S. 1543 (Moran ) / H.R. 3238 (Emmer). Cuba Trade Act of 2015. Among its provisions, the bill would have repealed or amended many provisions of law restricting trade and other relations with Cuba, including in the CDA, the LIBERTAD Act, and TSRA. It would have repealed restrictions on private financing for Cuba in TSRA, but continued to prohibit U.S. government foreign assistance or financial assistance, loans, loan guarantee, extension of credit, or other financing for export to Cuba, albeit with presidential waiver authority for national security or humanitarian reasons. The federal government would have been prohibited from expending any funds to promote trade with or develop markets in Cuba, although certain federal commodity promotion programs would have been allowed. S. 1543 introduced June 10, 2015; referred to the Committee on Banking, Housing, and Urban Affairs. H.R. 3238 introduced July 28, 2015; referred to the Committee on Foreign Affairs and in addition to the Committees on Ways and Means, Financial Services, and Agriculture. S. 1999 (Nelson). Caribbean Oil Spill Intervention, Prevention, and Preparedness Act. Introduced August 5, 2015; referred to the Committee on Commerce, Science, and Transportation. Among the bill's provisions, Section 201 would have required the Administrator of the National Oceanic and Atmospheric Administration to develop and apply hydrodynamic modeling of the ocean currents and meteorological modeling of the Straits of Florida; and would have amended the National Marine Sanctuaries Act (16 U.S.C. 1935(b)) to require the Secretary of State to take appropriate action to negotiate oil pollution prevention and response and protection of the marine resources of the Gulf of Mexico and Straits of Florida. Section 202 would have amended the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)) to require that a bidder for an oil or gas lease that is conducting oil or gas operations in the territorial sea, on the continental shelf, or within the exclusive economic zone of Cuba be denied an oil or gas leases unless the bidder submits an oil spill response plan for its Cuban operations that includes one or more worst-case scenario oil discharge plans, and evidence that the bidder has sufficient financial and other resources necessary for removal, response costs, and damages to respond to a worst-case-scenario oil discharge in its Cuba operations or that poses a substantial threat to enter the marine environment of the United States. Section 204 would have required, not later than 180 days, the Secretary of the department in which the Coast Guard is operating to carry out an oil spill risk analysis and planning process for the development and implementation of oil spill response plans in the Straits of Florida and the Gulf of Mexico originating in waters beyond the territorial jurisdiction of the United States. S. 2990 (Collins). Introduced May 25, 2016; referred to Senate Committee on Banking, Housing, and Urban Affairs. The bill would have prohibited the President from preventing foreign air carriers traveling to or from Cuba from making transit stops in the United States for refueling and other technical services based on restrictions set forth in the Cuban Assets Control Regulations (31 C.F.R. Part 515).

Cuba remains a one-party communist state with a poor record on human rights. The country's political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was characterized by a remarkable degree of stability. In 2013, Raúl began his second and final five-year term, which is scheduled to end in February 2018, when he would be 86 years of age. Castro has implemented a number of market-oriented economic policy changes over the past several years. An April 2016 Cuban Communist Party congress endorsed the current gradual pace of Cuban economic reform. Few observers expect the government to ease its tight control over the political system. While the government has released most long-term political prisoners, short-term detentions and harassment have increased significantly over the past several years. U.S. Policy Congress has played an active role in shaping policy toward Cuba, including the enactment of legislation strengthening and at times easing various U.S. economic sanctions. U.S. policy over the years has consisted largely of isolating Cuba through economic sanctions, while a second policy component has consisted of support measures for the Cuban people, including U.S. government-sponsored broadcasting and support for human rights and democracy projects. In December 2014, President Obama announced a major shift in U.S. policy toward Cuba, moving away from a sanctions-based policy toward one of engagement and a normalization of relations. The President maintained that the United States would continue to raise concerns about democracy and human rights in Cuba, but he emphasized that the United States could do more through engagement than isolation. The policy change included the restoration of diplomatic relations (July 2015); the rescission of Cuba's designation as a state sponsor of international terrorism (May 2015); and an increase in travel, commerce, and the flow of information to Cuba. In order to implement this third step, the Treasury and Commerce Departments eased the embargo regulations five times (most recently in October 2016) in such areas as travel, remittances, trade, telecommunications, and financial services. The overall embargo, however, remains in place, and can only be lifted with congressional action or if certain conditions in Cuba are met, including that a democratically elected government is in place. With the goal of advancing the normalization process, President Obama visited Cuba in March 2016, the first visit of a U.S. President to Cuba in almost 90 years. On January 12, 2017, President Obama announced a change in U.S. immigration policy by ending the special treatment for undocumented Cuban migrants entering the United States. Legislative Activity The Obama Administration's shift in Cuba policy has spurred strong interest in Congress. Some Members lauded the initiative as in the best interest of the United States and a better way to support change in Cuba, while others criticized the President for not obtaining more concessions from Cuba to advance human rights and protect U.S. interests. In the 114th Congress, numerous legislative initiatives were introduced on both sides of the policy debate. In 2015, five FY2016 House appropriations bills had Cuba provisions that would have blocked some of the Administration's policy changes and introduced new economic sanctions, and one Senate appropriations bill had provisions that would have eased certain economic sanctions. Ultimately, none of these provisions were included in the FY2016 omnibus appropriations measure, P.L. 114-113. In 2016, three FY2017 House appropriations measures (Commerce, H.R. 5393; Financial Services, H.R. 5485; and Homeland Security, H.R. 5634) had provisions that would have blocked some of the Cuba policy changes, and one FY2017 Senate appropriations measure (Financial Services, S. 3067) had provisions lifting restrictions on travel and financing for agricultural exports. In addition, the Senate version of the FY2017 State Department and Foreign Operations appropriations bill, S. 3117, would have funded U.S. diplomatic facilities in Cuba and additional personnel costs and would have fully funded the $15 million request for democracy programs. In contrast, the House version of the bill, H.R. 5912, would have prohibited assistance for expanding the U.S. diplomatic presence in Cuba and provided $30 million for democracy programs. The 114th Congress did not complete action on FY2017 appropriations, but it did approve a continuing resolution (P.L. 114-254) in December 2016 funding most programs at the FY2016 level, minus an across-the-board reduction of almost 0.2% through April 28, 2017. The 115th Congress will face completing action on FY2017 appropriations. With regard to the U.S. Naval Station at Guantánamo Bay, both the FY2016 and the FY2017 military construction appropriations measures, P.L. 114-113 and P.L. 114-223, have provisions prohibiting funding for the station's closure. Both the FY2016 National Defense Authorization Act (NDAA), P.L. 114-92, and the FY2017 NDAA, P.L. 114-328, also have prohibitions on funding for the closure of the U.S. Naval Station at Guantanamo Bay, Cuba. P.L. 114-328 also restricts FY2017 funding for Cuba's participation in certain joint or multilateral exercises or related security conferences. (See Appendix A.) Several other bills introduced in the 114th Congress would have lifted or eased sanctions: H.R. 274, H.R. 403, and H.R. 735 (overall embargo); H.R. 634, H.R. 664, and S. 299 (travel); H.R. 635 (agricultural and medical exports and travel); S. 491 and S. 1543/H.R. 3238 (some embargo restrictions); S. 1049 (financing of agricultural sales); S. 1389/H.R. 3055 (telecommunications); H.R. 3306 (energy resources and technologies); H.R. 3687 (agricultural exports and investment); and S. 2990 (foreign carriers traveling to or from Cuba). Other bills would have increased restrictions on engagement with Cuba: S. 1388/H.R. 2466 (travel and trade); S. 1489/ H.R. 2937 (Cuban military and intelligence); and H.R. 4772 and H.R. 5728/S. 3289 (U.S. flights). For more on these on other bills and resolutions, see Appendix C.

longest

Congress has been interested in detecting nuclear weapons and the special materials needed to make them for many years, especially since 9/11. Nuclear detection has many applications for countering nuclear terrorism and nuclear proliferation, such as securing nuclear weapons and materials in U.S., Russian, and other nuclear facilities, tracking materials at border crossings and choke points, screening maritime cargo containers, and examining actual or suspect nuclear sites. The United States currently uses several types of nuclear detection equipment. All have significant shortcomings. Some work only at very short range; some cannot identify the material emitting radiation, which can lead to false alarms and interrupt commerce; some depend on operator skill, and may be defeated by a clever smuggler or a sleepy operator; and some are easily defeated by shielding. In an effort to overcome such problems, Congress has funded a pipeline of advanced-technology research, development, and acquisition. This report seeks to help Congress understand this technology. It discusses the science of detecting nuclear weapons and materials, describes nine advanced U.S. technologies selected to illustrate the range of projects in the pipeline, and offers observations for Congress. The report does not compare technologies. The inclusion of the nine technologies should not be taken to mean that CRS judges them to be better than the hundreds of others not considered here. The report does not discuss the controversial Advanced Spectroscopic Portal because a detailed discussion of it could draw attention from the other technologies considered here. The scope of this report excludes the organization of the government for dealing with nuclear detection, the role of intelligence and law enforcement in detecting terrorist nuclear weapons, detection of radiological dispersal devices (such as "dirty bombs"), the role of nuclear forensics in attributing an attack to its perpetrator, response to a nuclear attack, and the architecture of a national nuclear detection system. Nor does it discuss possible means by which terrorists might acquire a bomb, or whether they could make a bomb on their own. Much has been written on these topics. While many who are concerned with nuclear detection focus on thwarting nuclear terrorism, this report focuses on technology per se. It avoids extensive discussion of means to counter detection to avoid classified information. Nuclear detection technology has a dual role in thwarting a terrorist nuclear attack—deterrence and defense. Deterrence means dissuasion from an action by threat of unacceptable consequences. Terrorists may be deterred from a nuclear strike by one of the few consequences unacceptable to them: failure. Detection systems would raise that risk. These systems could also make a terrorist nuclear strike too complex to succeed. But other factors would also have these effects: the difficulty of fabricating a bomb, the chance that law enforcement or intelligence would detect efforts to obtain a bomb, the possible inability to detonate a purloined bomb, and the risk that scientists recruited for the plot would defect. Such risks would disappear, however, if terrorists were given a bomb and operating instructions. They would then only need to mount a smuggling operation. In that case, the role of nuclear detection systems would change: they would become the main defense. As background for understanding the detection technologies in Chapter 2, this chapter outlines nuclear detection science. The Appendix provides more detail. Detection focuses on weapons and the nuclear materials that fuel them. Weapons can be small. In the Cold War, the United States built high-yield weapons several feet long, atomic demolition munitions that a soldier could carry, and nuclear artillery shells. A terrorist-made weapon would probably be larger. Nuclear weapons require fissile material, atoms of which can fission (split) when struck by fast or slow neutrons ; pieces of this material can support a nuclear chain reaction. The fissile materials used in nuclear weapons are uranium, isotope 235 (U-235), and plutonium, isotope 239 (Pu-239). The Atomic Energy Act of 1954 designates them as "special nuclear material" (SNM). Uranium in nature is 99.3% U-238 and 0.7% U-235; U-235 must be concentrated, or "enriched." Uranium enriched to 20% U-235 is termed highly enriched uranium, or HEU, but nuclear weapons typically use uranium enriched to 90% or so. In this report, HEU refers to this weapons-grade enrichment level. Weapons-grade plutonium, or WGPu, is also a mix of isotopes, at least 93% Pu-239. According to one account by five nuclear weapon scientists from Los Alamos National Laboratory, it would take 26 kg of HEU or 5 kg of WGPu to fuel a bomb, amounts that would fit into cubes 11 cm or 6 cm, respectively, on a side. Nuclear detection makes extensive use of photons, packets of energy with no rest mass and no electrical charge. Electromagnetic radiation consists of photons, and may be measured as wavelength, frequency, or energy; for consistency, this report uses only energy, expressed in units of electron volts (eV). Levels of energy commonly used in nuclear detection are thousands or millions of electron volts, keV and MeV, respectively. The electromagnetic spectrum ranges from radio waves (some of which have photon energies of 10 -9 eV), through visible light (a few eV), to higher-energy x-rays (10 keV and up) and gamma rays (mostly 100 keV and up). X-ray photons and gamma-ray photons of the same energy are identical. However, they are generated in different ways. Gamma rays originate in processes in an atom's nucleus. Each radioactive isotope that emits gamma rays does so in a unique energy spectrum, as in Figure 1 , which is the only way to identify an isotope outside a laboratory. A detector with a form of "identify" or "spectrum" in its name, such as Advanced Spectroscopic Portal or radioactive isotope identification device, identifies isotopes by their gamma-ray spectra. X-rays originate in interactions with an atom's electrons. Many detection systems use x-ray beams, which can have higher energies than gamma rays and thus are more penetrating. X-ray beams are often generated through the bremsstrahlung process, German for "braking radiation," which works as follows. An accelerator creates a magnetic field that accelerates charged particles, such as electrons, which slam into a target of heavy metal. When they slow or change direction as a result of interactions with atoms, they release energy as x-rays whose energy levels are distributed from near zero to the energy of the electron beam. They do not exhibit spectral peaks like gamma rays. For purposes of this report, a signature is a property by which a substance (in particular, SNM) may be detected or identified. This section presents several signatures. The Appendix and Chapter 2 discuss others. Atomic number, abbreviated "Z," is the number of protons in an atom's nucleus. It is a property of individual atoms. In contrast, density is a bulk property, expressed as mass per unit volume. In general, the densest materials are those of high Z. These properties may be used to detect uranium and plutonium. Uranium is the densest and highest-Z element found in nature (other than in trace quantities); plutonium has a slightly higher Z (94), and its density varies from slightly more to slightly less than that of uranium. Some detection methods discussed in Chapter 2, such as effective Z, make use of Z, and some, such as radiography and muon tomography, make use of Z and density combined. An object's opacity to a photon beam depends on its Z and density, the amount of material in the path of the beam, and the energy of the photons. Gamma rays and x-rays can penetrate more matter than can lower-energy photons, but dense, high-Z material absorbs or scatters them. Thus a way to detect an object, such as a bomb, in a container is to beam in x-rays or gamma rays to create a radiograph (an opacity map) like a medical x-ray. Radioactive atoms are unstable and give off various types of radiation; the types of use for nuclear detection are gamma rays and neutrons. Gamma rays . Gamma-ray spectra are well characterized for each isotope. Figure 1 and Figure 2 show spectra for HEU and WGPu. Each point on the spectrum shows the number of photons emitted (vertical axis) at each energy level (horizontal axis). Background gamma radiation is ubiquitous. Since many materials, including SNM, emit gamma radiation, elevated levels of gamma radiation may or may not indicate the presence of SNM, but careful analysis of the total gamma-ray spectrum, as discussed in Chapter 2 under GADRAS, may reveal the presence of SNM. Of particular interest, uranium that has been through a nuclear reactor picks up a very small amount of uranium-232, which decays through intermediate steps to thallium-208. The latter has a half-life of 3 minutes, and its decay produces a gamma ray of 2.614 MeV (as shown in Figure 1 ), one of the highest-energy gamma rays. As a result, it is distinctive as well as highly penetrating, facilitating detection. Neutrons . Atoms of some heavy elements fission. Of the naturally occurring elements, only U-238 spontaneously fissions at an appreciable rate. Fission releases neutrons. U-235 emits few neutrons, but because U-238, the other main component of HEU, emits some, 1 kg of HEU emits 3 neutrons per second, so it provides a weak signature. Plutonium emits on the order of 60,000 neutrons per kg per second depending on the mix of plutonium isotopes. Unlike gamma rays, neutrons do not have a characteristic energy spectrum by which an isotope can be identified. Detection involves using detector elements to obtain data, converting data to usable information through algorithms, and acting on that information through concept of operations, or CONOPS. Detectors, algorithms, and CONOPS are the eyes and ears, brains, and hands of nuclear detection: effective detection requires all three. Since photons and neutrons have no electrical charge, their energy is converted to electrical pulses that can be measured. This is the task of detectors, discussed next. The pulses are fed to algorithms. An algorithm, such as a computer program, is a finite set of logical steps for solving a problem. For nuclear detection, an algorithm must process data into usable information fast enough to be of use to an operator. It receives data from a detector's hardware, such as pulses representing the time and energy of each photon arriving at the detector. It converts the pulses to a format that a user can understand, such as displaying a gamma ray spectrum or flashing "alarm." Every detector uses one or more algorithms. Improvements to algorithms can contribute as much as hardware improvements to detector capability. CONOPS may be divided into two parts. One specifies how a detection unit is to be operated to obtain data. Elements include: How many containers must the unit scan per hour? How close would a detector be to a container? Shall the unit screen cargo in a single pass, or shall it be used for primary screening, with suspicious cargo sent for a more detailed secondary screening? A second part details how the data are to be used. Elements include: What happens if the equipment detects a possible threat? Which alarms are to be resolved on-site and which are to be referred to off-site experts? Under what circumstances would a port or border crossing be closed? More generally, how is the flow of data managed, in both directions? What types of intelligence information do inspectors receive, and how do data from detection systems flow to federal, state, and local officials for analysis or action? While this report does not focus on CONOPS because it is not a technology, it is an essential part of nuclear detection. Detectors require a signal-to-noise ratio high enough to permit detection. That is, they must extract the true signal (such as a gamma-ray spectrum) from noise (such as spurious signals caused by background radiation). Two concepts are central to gamma-ray detector sensitivity: detection efficiency and spectral resolution. Efficiency refers to the amount of signal a detector records. Radiation intensity (e.g., number of photons per unit of area) diminishes with distance. Since a lump of SNM emits radiation in all directions, using a detector that is larger, or that is closer to the SNM, increases the fraction of radiation from the source that impinges on the detector and thereby increases efficiency. Another aspect is the fraction of the radiation striking the detector that creates a detectable signal. A more efficient detector collects data faster, reducing the time to screen a cargo container. Spectral resolution refers to the sharpness of peaks in a gamma-ray spectrum. A perfect detector would record a spectrum as vertical "needles" because each radioactive isotope releases gamma rays only at specific energies. Since detectors are not perfect, each energy peak is recorded as a bell curve. The narrower the curve, the more useful the data. Polyvinyl toluene (PVT), a plastic used in radiation detectors that can be fielded in large sheets at low cost, is efficient but has poor resolution. It can detect radiation, but peaks from gamma rays of different energies blur together, which can make it impossible to identify an isotope. Figure 3 shows the spectra of 90% U-235 and background radiation as recorded by a PVT detector. In contrast, high-purity germanium (HPGe) produces sharp peaks, permitting clear identification of specific isotopes. These detectors are expensive, heavy, have a small detector area, and must be cooled to extremely low temperatures with liquid nitrogen or a mechanical system, making them less than ideal for use in the field. Figure 4 shows the spectrum of Pu-239 as recorded by detectors with better resolution than PVT. Sensitivity can be improved. (1) One type of detector is cadmium-zinc-telluride (CZT) crystals. Better crystals and better ways to overcome their limitations have improved sensitivity. The peak on the right of each spectrum in Figure 5 shows the cesium-137 spectrum taken with CZT detectors that, for the years indicated, were at the high end of sensitivity. (2) Detectors build radiography images or gamma-ray spectra over time. With more time, a detector can collect more data, in the form of gamma rays or neutrons. More data improve separation of signal from noise and reduce false alarms. Longer scan times improve accuracy but impede the flow of commerce, costing money, so a balance is sought between these two opposed goals. (3) Increasing the spatial resolution of a detector improves sensitivity: This is easily demonstrated in the example of a shielded versus unshielded radiation detector. Unshielded detectors are sensitive to radiation impinging on it in all directions, which is characteristic of the nature of naturally-occurring background radiation. By adding shielding, a detector's field-of-view can be controlled, and background radiation levels reduced, increasing the signal-to-noise ratio for the detector in the direction the detector is aimed. Nuclear detection uses neutrons and photons in various ways. Because either neutrons or photons can readily penetrate most materials, they are the main forms of radiation used to detect radioactive material passively, such as by sensing radiation coming out of a cargo container. Gamma rays and x-rays can be used in an active mode to probe a container for dense material through radiography, which creates an x-ray-type image. Neutrons of any energy level, and photons above about 5.6 MeV, can be beamed into a container to induce fission in SNM. Fission results in the emission of neutrons and gamma rays, which can be detected. Gamma rays do not have an electrical charge, but an electrical signal is needed to measure them. There are two main ways to turn a gamma ray into electrical energy. One is with a scintillator material, such as PVT. When a gamma ray interacts with this material, it emits many lower-energy photons of visible light. A photomultiplier tube converts them to electrons, then multiplies the electrons to generate a measurable pulse of electricity whose voltage is proportional to the number of lower-energy photons, which in turn is proportional to the energy deposited by the gamma ray. An electronic device called a multi-channel analyzer sorts the pulse into a "bin" depending on its energy and increases the number of counts in that bin by one. A software package draws a histogram with energy on the horizontal axis and counts on the vertical axis. The histogram is the gamma-ray spectrum for that isotope. In contrast, a semiconductor material, such as HPGe, turns gamma rays directly into an electrical signal proportional to the gamma-ray energy deposited. A voltage is applied across the material, with one side of the material the positive electrode and the other the negative electrode. When a gamma ray interacts with the material, it knocks electrons loose from the semiconductor's crystal lattice. The voltage sweeps them to the positive electrode. Their motion produces an electric current whose voltage is proportional to the energy of each gamma ray. Each pulse of current is then sorted into a bin depending on its voltage and the spectrum is computed as described above. A common neutron detector is a tube of helium-3 gas linked to a power supply, with positively and negatively charged plates or wires in the tube. In its rest state, current cannot pass through the helium because it acts as an insulator. When a low-energy neutron passes through the tube, a helium-3 atom absorbs it, producing energetic charged particles that lose their energy by knocking electrons off other helium-3 atoms. Positively charged particles move to the negative plate; electrons move to the positive plate. Since electric current is the movement of charged particles, these particles generate a tiny electric current that is counted. Neutron count is an important way to identify SNM because SNM and U-238 emit neutrons spontaneously in significant numbers. Few other sources do. Neutron spectra are of little value for identifying isotopes. They do not have lines representing discrete energies, and neutrons lose energy as they collide with low-Z material, blurring their spectra. However, helium-3 has become extremely scarce, and neutron detection systems for homeland security would require so much of it that alternatives are being sought, such as boron-10. Photons of high enough energy can penetrate solid objects, but are scattered or absorbed by dense objects (or a sufficient thickness of less-dense material). This is the basis for radiography. For cargo scanning, x-rays or gamma rays are beamed through a container, and a detector on the other side records the number of photons received in each pixel. An algorithm then creates an opacity map of the contents. While a bomb would present a sizable image, dense objects in a container might mask a piece of SNM. An enemy could use various means in an effort to defeat detection systems. One such means is shielding. Gamma rays may travel many feet through such low-Z material as wood, food, and plastic, but high-Z material absorbs and deflects them. Conversely, low-Z material absorbs and scatters neutrons, but they pass more readily through higher-Z material. Different amounts of material are needed to attenuate gamma rays depending on their quantity and energy level. Gamma rays from WGPu are sufficiently energetic and plentiful that they are difficult to shield, while a layer of lead would shield gamma rays from HEU, especially if it had not been through a reactor and, in consequence, had not picked up uranium-232, as discussed above. This distinction is of practical significance. Press reports indicate that Iran is using centrifuges to enrich uranium from chemical forms derived from uranium ore, which have not been through a reactor. Sources of radiation other than SNM complicate detection. Background radiation from naturally occurring radioactive material, such as thorium and uranium, is present everywhere, often in trace amounts. Cosmic rays generate low levels of neutrons. Some commercial goods contain radioactive material, such as ceramics (which may contain uranium) and kitty litter (which may contain thorium and uranium). Other radioactive isotopes are widely used in medicine and industry. Enemy attempts to defeat one type of detection system may complicate a plot or make it more detectable. (1) It is harder to defeat systems that detect multiple phenomena than a system detecting one phenomenon only. For example, shielding a bomb with lead to attenuate gamma rays would create a large, opaque image on a radiograph. For this reason, Congress mandated that U.S.-bound containers loaded in foreign ports be "scanned by nonintrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel." (2) An enemy could attempt salvage fuzing, which would detonate a weapon that sensed attempts to detect it, such as with photon beams, or to open it. However, salvage fuzing could detonate a weapon by accident; if it were scanned overseas; or in a U.S. port, where it would do much less damage than in a city center. (3) Attempts to smuggle HEU into the United States to avoid detection of a complete bomb would require fabricating the weapon inside this nation, which could require such activities as smuggling in other weapon components and purchasing specialized equipment, and could run the risk of accidents, any of which could provide clues to law enforcement personnel. The United States deploys various technologies, such as the following, to detect nuclear weapons or SNM. They are available but have important drawbacks. These devices, about the size and shape of a pager, can detect radiation at close distance to alert individuals to the presence of elevated levels of radiation. They may use any of several types of detector material. They are lightweight and inexpensive, but cannot identify the material causing an alarm. Many of these devices use large sheets of plastic scintillator material, such as PVT, to detect radiation coming from a vehicle. RPMs were deployed soon after 9/11 because they were available at moderate cost. However, PVT cannot identify the source of radiation. Yet many items in everyday commerce contain radioactive material. As a result, some RPMs produce many false alarms, which may require considerable effort to resolve, delaying the flow of commerce. Newer versions have some isotope identification capability. These devices are typically hand-held. They have software that can identify a radioisotope by its gamma-ray spectrum. The most capable of these devices use a crystal of high-purity germanium, a semiconductor material, and are considered the "gold standard" of all identification devices. Such devices are heavy and delicate, and must be cooled with liquid nitrogen or by mechanical means, limiting their usability in the field. They have a relatively short range for detecting radiation sources with low radioactivity, notably shielded HEU, making them unsuitable as the primary method of screening cargo containers. These devices send high-energy photons through cargo containers to create a radiographic image of the contents. The radiograph is scanned, either automatically or by an operator, to search for nuclear weapons, contraband, stowaways, and other illicit cargo. While a nuclear weapon would show up as a white (or black) image on the radiograph and would be clearly visible if hidden in a shipment of low-Z material like food or paper, an operator might overlook it if it were in a shipment of other large, dense objects or jumbled items of various sizes and densities. A small piece of SNM might also be overlooked. Many nuclear detection technology projects are under way in the United States and elsewhere. This section discusses nine U.S. technologies selected to include different (1) agencies sponsoring projects (the Defense Threat Reduction Agency (DTRA), an agency of the Department of Defense (DOD); the Domestic Nuclear Detection Office (DNDO), an agency of the Department of Homeland Security (DHS); and the National Nuclear Security Administration (NNSA), an agency of the Department of Energy (DOE)), (2) organizations performing the work (national laboratories, industry, universities, and collaborations between them), (3) types of technology (materials, algorithms, simulation, systems), (4) physical principles (muon tomography, radiography, stimulated emission of radiation, nuclear resonance fluorescence), (5) distances between the detector and the object being scanned (near and far), and (6) levels of maturity (in use for many years but constantly updated, near deployment, and anticipated to be available for deployment in several years). This section does not consider technologies in the earliest stages of development because it is too soon to tell how they will pan out. The discussion of each technology includes several categories: The problem that the technology addresses Technology background Description of the technology Potential benefits that the technology offers Status, schedule, and funding Scientific, engineering, cost and schedule, and operational risks Potential gains by increased funding Potential synergisms The last three categories require some explanation. Risks: The discussion presents potential benefits of the technologies. It does not present "cons." That would be premature because development programs address problems. Instead, each section discusses risk. There are several categories of risk. Scientific problems may thwart a technology. Even if it is scientifically sound, it may be hard to engineer into a workable system. Even if it can be engineered, it may be unaffordable, or take too long to develop. Even if it can surmount these hurdles, problems encountered in field use may render it unattractive. Potential gains by increased funding: In preliminary discussions, project managers asserted they would, if given more funds, use the added funds to solve problems or exploit opportunities. CRS therefore asked managers of all nine technologies considered in this report how they would spend more money as a way to probe for problems and opportunities with their projects. Would they pursue several promising routes to a technology instead of pursuing only one at the outset? Would they buy more equipment so they could speed up the work? Would they hire more staff? This analysis applies only to the nine technologies discussed in this report. It is not intended to focus authorization or appropriation consideration solely on them. Other technologies not considered here might realize larger (or smaller or no) gains through increased funding. Potential synergisms: As the technology descriptions show, many systems have common elements, such as certain types of detectors or algorithms, and work on one technology may contribute to others or have applications beyond current plans. This report now discusses each of the nine technologies using the above format. As of January 2010, DTRA and DNDO terminated the nanocomposite scintillator project. This section, therefore, will not be updated further, but continues in this report because it contains valuable information on nuclear detection. Two small parts of the project, both described below, are continuing as separate projects: the development of application-specific integrated circuits for detecting "thermal" (very low energy) neutrons and identifying gamma-ray spectra simultaneously, and an effort to use nanocomposite scintillator material for neutron detection. Scintillator materials are used to detect, and in some cases identify, gamma rays. Higher-performance scintillators are more expensive, harder to manufacture, and fragile; scintillators that are less costly, easier to manufacture, and more rugged offer lower performance. At issue: can the desirable qualities of each type be combined to achieve better performance at lower cost? Scintillators are materials that, when struck by photons of higher energy, such as gamma rays, capture this energy and release it as photons of lower energy, usually visible light. The material should capture as much of the energy of each photon striking it as possible in order to build an accurate photon energy spectrum and thus identify the material emitting the photons. Ideally, a photon should deposit its full energy in the scintillator material, a so-called full energy interaction. It is also important that the deposited energy be efficiently converted into photons of visible light, which are then counted to determine energy. There are two main types of scintillators. Inorganic scintillators (those not containing carbon) are typically single crystals, such as sodium iodide (NaI) with a small amount of thallium added. The probability of full energy interaction increases sharply with atomic number (Z) of the scintillator material, and is high for inorganic crystals. The more energy from each photon a scintillator absorbs and then gives off, the better the correlation between energy input and output, and the more precise the spectrum that can be constructed. As a result, a device using an inorganic crystal has a good ability to identify the radioactive material producing a gamma-ray spectrum. There are several drawbacks. The area of a detector that is sensitive to gamma rays is small (limited to the size of a crystal), so the detector must be close to the object to be searched or must scan for longer time so it can receive more gamma rays. They are fragile; dropping one can destroy it. Many inorganic crystals absorb water and are sensitive to light, so they must be protected from environmental conditions. NaI crystals are easy to grow, but cost about $3 per cubic centimeter (cc) of crystal. Other, higher-resolution scintillators are harder to grow, are more costly, and are sensitive to moisture. For NaI, light output varies strongly with temperature, so the temperature must be stabilized or the data corrected. Organic scintillators have the opposite set of properties. They can be made of plastic, such as PVT. As such, they are easy and cheap to make, and are much less fragile than crystals. They can be produced in bulk, making them suitable for deployment in large sheets, such as for radiation portal monitors. On the other hand, since they are composed mostly of hydrogen and carbon, both very low Z elements, they are very inefficient at absorbing the total energy of gamma rays. As a result, as Figure 3 shows, peaks in PVT-produced gamma ray spectra are indistinct at best, making such spectra of little or no value for identifying radioisotopes. A research project under way at Los Alamos National Laboratory, the Nanocomposite Scintillator Project, seeks to combine the advantages of both types of scintillator materials to overcome the disadvantages of each. The principle is that "nanocrystals," crystals 2 to 5 nanometers in diameter (1 nanometer = 1 billionth of a meter), of certain inorganic scintillator materials can capture most of the energy from photons, thus offering nearly the performance of single large crystals, if packed densely enough in plastic. The resulting mixture also has the desirable features of plastic. The crystals are lanthanum bromide mixed with cerium, or cerium bromide. The modified polystyrene plastic is a scintillator material, so it increases the amount of energy converted to a detectable signal. In operation, when a gamma-ray photon strikes this material, its energy is absorbed by nanocrystals and the plastic, raising some atoms to a higher energy level. These atoms give off this energy as photons in the visible and near-visible regions of the electromagnetic spectrum ("optical photons"). A photodetector, an electronic component that generates many electrons for each photon it receives, amplifies the signal and converts it from an optical signal to an electronic signal that can be counted. The number of optical photons generated corresponds to the energy level of the photon striking the material. A multi-channel analyzer counts the optical photons, determines the energy level of the photon striking the material, and increases the count of photons of that energy level by one, by this process creating a gamma-ray spectrum. Edward McKigney, the principal investigator, believes that nanocomposite scintillator material will be able to discriminate between neutrons and gamma rays. He asserts that simulations support this case. The project has obtained data from experiments using the plastic without nanocrystals and nanocrystals without the plastic, and from the literature, and has used these data in simulations. Basic physics calculations also support this case. Neutrons generate protons when they strike the plastic, and gamma rays generate electrons. The plastic responds differently to protons and to electrons; the same is true of the nanocrystals. However, as of August 2008 the project had not conducted experiments demonstrating the ability of the material to detect neutrons and to differentiate between them and gamma rays. McKigney states that because the crystals are tiny, growing them is not difficult and is much less costly than growing large whole crystals of these materials. The material can be fabricated at an industrial scale, he says, further reducing cost. He estimates that this material potentially offers the performance of $300/cc material (e.g., lanthanum bromide) at a cost of 50 cents/cc. Because the material acts as a plastic, it is rugged and flexible, and can be made in large sheets, according to McKigney, increasing the sensitivity of a detector using it. It would operate at ambient temperatures. The project has several components. The largest is to develop nanocomposite scintillator material. There are several smaller components: process scale-up; electronics development; detector design; and basic research for a more advanced material. The budget for the entire project is as follows. Early research started in 2004. Los Alamos provided $65,000 in initial funds in FY2005. The laboratory and DNDO provided $1.2 million for FY2006 and $1.6 million for FY2007. Los Alamos, DNDO, and DTRA provided $4.6 million for FY2008 and are projected to provide $5.5 million for FY2009. The project seeks to deliver a small cylinder (1 inch in diameter and 1 inch high) of the material, and to characterize its performance, by December 2008. Anticipated costs are $4 million for FY2009 for the nanocomposite scintillator component. The goal for the end of FY2009 is to have a pilot-scale demonstration of the scintillator material and to start transferring its technology to industry. This material would be optimized for gamma-ray detection. As of July 2009, the schedule for this demonstration had slipped by 6 to 12 months. Fabrication of this material requires finding chemicals that can coat the surface of the nanocrystals so they can disperse properly in the plastic while optimizing other properties. The nanocrystals must be packed densely in the plastic to increase sensitivity and resolution. As of May 2008, researchers had reached a packing level of 6% (by volume), with a goal of 50%. It remains to be seen if they can meet this goal. Packing crystals densely in plastic will change some properties of the plastic, so care must be taken to minimize this problem. Another source of risk is that, as of August 2008, the project had not reached high enough packing levels to allow for measurements to determine the sharpness of gamma-ray peaks in spectra generated by this material. The project plans to conduct experiments on this point by December 2008. Such measurements are expected to reduce scientific risk. However, unexpected nanoscale physics could impair energy resolution. In that case, the particle structure would have to be engineered to mitigate the effects; at worst, these effects might degrade performance. (1) When developing the plastic-crystal composite, attention must be paid to ensuring that the material can be made with industrial processes used to manufacture other plastics. (2) The chemical reaction that occurs in manufacturing plastic gives off heat, potentially creating hot spots that would impair the performance of the material. This is not a problem for very small quantities. At the other end of the scale, for industrial production, the problem is well understood and chemical engineering solutions have been implemented for decades. A concern is whether a solution can be devised for pilot-scale production. The project is not mature enough to provide a firm estimate of the cost of the material produced on an industrial scale. The cost estimate cited above is based on the cost of procuring the raw materials and assumes that the energy cost for processing is low. Inflation in energy would not be expected to increase cost sharply, but cost of the product is sensitive to the cost of cerium, a rare earth element. The manufacturing processes are similar to those used for such consumer goods as fabric softeners and disposable plastic water bottles, so unit cost arguably should not be high. However, the cost estimate excludes the cost of fixed infrastructure; how much that would add to unit cost depends on infrastructure cost and the number of units produced. Transferring the technology to a commercial partner by the end of FY2009 depends on resolving potential scientific and engineering problems in a timely manner and finding the right partner. The project is not far enough along to make a firm estimate of schedule beyond FY2009. In any project, it is possible to develop a product only to have it fail in everyday use. This project is trying to minimize this risk. It is trying to design robustness into the material, such as by (1) using a plastic that is soft and rubbery rather than brittle, (2) ensuring that the material will be effective across the temperature range to which it will be exposed, and (3) ensuring that the detector and packaging are compatible so that, for example, the detector material will not expand so much as to crack its casing. The project's total budget is about $5.5 million per year. McKigney states that he could "usefully employ a total budget of up to $12M/year to reduce the time to deployment of these technologies" in several ways. (1) The project is pursuing, with about one-third of its total funding, a separate basic research project to develop a scintillator material approaching the resolution of high-purity germanium detectors with the cost and processing characteristics of plastic. More funds could accelerate this project, according to McKigney. He cautions that this project might take a decade or more and has much greater scientific risk than the current nanocomposite scintillator project. (2) The project uses equipment available at Los Alamos, but he states that staff could save time if they had their own equipment. (3) It would be difficult to fabricate a single large panel (e.g., 50 cm wide by 20 cm thick by 90 cm long) of detector material. Further, a panel segmented into tens to thousands of tiny panels produces the optimum tradeoff between cost and effectiveness and can provide data on the position of a radioactive source. Each panel element would need its own electronics channel, so application-specific integrated circuits must be custom-designed, which could take two or three years. With more funding, he asserts, the project could develop these chips and the scintillator material concurrently, saving time. Recognizing this leverage, DTRA provided about $150,000 for this purpose spread over 2½ years beginning in May 2008. McKigney states that additional funding would accelerate this schedule. (4) Hiring more chemists, electrical engineers, and others would accelerate these projects, according to McKigney. (1) This material offers the greatest benefit in detectors that use large panels of scintillator material, such as some under development as discussed below. (2) By offering greater sensitivity and greater resolution, this material could provide better data for algorithms to process, permitting the development of simpler, more capable algorithms. (3) Nanocomposite scintillator material may be able to measure neutron and gamma ray energies. As such, it might be possible to use it in a detection system instead of separate means of detecting each particle type. (4) Some companies are considering systems that use tubes filled with helium-3 gas to detect neutrons. However, helium-3 is scarce, and there may not be enough to support large-scale use of these tubes. Nanocomposite scintillator material might be an alternative for neutron detection. In a carefully controlled laboratory environment, a radioisotope can be readily identified by matching its gamma ray spectrum to one in a library of spectra. At a port or border crossing, a spectrum would be complicated by radiation from many sources and by attenuation caused by cargo and other materials. At issue: How can the signal from SNM be extracted from a gamma ray spectrum, and how can this capability be improved? Nuclear detection hardware receives much attention, but data from the hardware—e.g., pulses of various energies from gamma rays—are unintelligible until processed by software. Indeed, software in the form of algorithms is the "brains" of a detector. An algorithm, such as a computer program, is a finite set of logical steps for solving a problem. For nuclear detection, an algorithm must process data into usable information fast enough to be of use to an operator. Algorithms are designed to assure a low rate of false positives, which impede commerce, and a near-zero rate of false negatives, which could let a terrorist weapon into the United States. For gamma-ray identification, an algorithm creates equations to model "radiation transport," the movement of radiation through material. A detector will record gamma rays from all sources—background radiation, items in ordinary commerce, radioisotopes that terrorists might include in a shipment to confuse analysis, and a nuclear weapon or SNM. Many uncertainties affect an algorithm. Gamma rays lose energy as they interact with matter, altering their spectra depending on the type and thickness of the materials they pass through, and the initial energy of a gamma ray. Random fluctuations in the number of counts in each gamma-ray energy bin create statistical uncertainties, especially if the number of counts is low. The composition and thickness of materials between the radiation source and the detector (cargo, shielding, container wall, air, etc.) is not known. The equations may not exactly represent the detector dimensions or the shielding configuration because approximations are made to reduce complex environments to a set of equations that can be more readily computed. Dean Mitchell of Sandia National Laboratories has developed an applications package, "Gamma Detector Response and Analysis Software," or GADRAS. Development of GADRAS started in 1985 for use in the Remote Atmospheric Monitoring Project (RAMP), which used low-resolution detectors to analyze airborne radionuclides. Beginning in 1996, automated isotope identification was developed within GADRAS to process spectroscopic data collected at border crossings to support interdiction of radioactive materials. Work on the current version of GADRAS started in 2001. In earlier versions, it was seen as acceptable to spend a month analyzing an individual spectrum; in the wake of 9/11, in order to be of value for screening commerce, GADRAS had to be modified to process data quickly while minimizing false positives and false negatives. As of April 2010, the GADRAS application included six radiation analysis algorithms, gamma ray and neutron detector response functions, and support for radiation transport calculations. To identify radioactive sources creating a gamma-ray spectrum, GADRAS matches an entire gamma ray spectrum against one or more known spectra. Figure 6 illustrates this approach. Many other algorithms focus on peaks in gamma ray spectra because they are the most obvious features. In contrast, GADRAS analyzes the full spectrum for several reasons. (1) Peaks may overlap, making source identification ambiguous. (2) Most counts in a gamma-ray spectrum are often outside the peaks, in which case using only peak data would ignore most of the data. For example, less than 3% of the counts in a spectrum for U-238 occur in the 1.001-MeV peak, the most prominent feature of its spectrum. (3) Counts outside the peaks help characterize the composition and thickness of intervening material. Since gamma rays interact with these materials, characterizing the materials improves the accuracy with which the gamma-ray spectrum as read by a detector can be linked back to the gamma-ray source. Arriving at a solution consistent with all the data increases confidence in the result. (4) The absence of counts in a region of a spectrum can be a clue to the identity of radioactive materials. (5) Using the entire spectrum helps analyze data from scintillators having low energy resolution because low resolution often precludes identification of peaks in the spectrum, and helps analyze spectra of weak sources. GADRAS also uses neutron flux data. Since neutrons pass more readily through high-Z material and gamma rays pass more readily through low-Z material, different materials, such as in a container, will affect the total radiation output differently. As a result, using both gamma ray and neutron data improves the analysis. GADRAS has been in use since 1986. Since 9/11, more operators have used it in a wider range of applications. In response, the software is continually upgraded to support new types of radiation sensors, provide new capabilities, and meet new performance requirements. According to Mitchell, "One of the new features is the ability to support the analysis of data that is collected with neutron multiplicity counters. This capability enables inclusion all of the data collected by gamma-ray detectors and various types of neutron detectors into a unified analysis algorithm." One goal is to make GADRAS more automated so that less skill is required to operate it. Another goal is to make it faster. A current effort focuses on improving sensitivity to SNM and reducing the false alarm rate. In the past, some sacrifices were made to fidelity of the analysis in order to gain speed; now, with faster computers, it should be possible to improve the analysis while increasing speed; this approach is being investigated. Another approach to reducing false alarms is to examine radiation sensor data collected in 2005 on cars entering the Lincoln Tunnel between New York City and New Jersey. According to Mitchell, the data included 50 to 60 false alarms. Mitchell and other researchers at Sandia are trying to determine what caused the false alarms in order to modify GADRAS to correct for these problems. The main application of GADRAS is to support "Triage/Reachback" analysis. A radiation detection operator in the field, such as a Customs and Border Protection (CBP) officer, who finds a vehicle or cargo container that presents a suspicious radiation signature that cannot be easily resolved, can send the detection data (such as a gamma ray spectrum) to the Laboratories and Scientific Services section of CBP for a more detailed analysis. That analysis uses GADRAS. Similarly, if that service is unable to resolve the matter, it can send the data to a secondary Reachback at the nuclear weapons laboratories, which also use GADRAS. By analyzing a complete gamma ray spectrum, GADRAS increases the accuracy of determining whether a cargo container or other item is carrying SNM, reducing the risk of false positives and false negatives. Using neutron count data in addition to gamma ray spectra further improves capability. GADRAS has been used for cargo inspection since 1998. Software upgrades are released every two months or so. There is no line item for GADRAS development. Mitchell estimates that Sandia is spending perhaps $600,000 in FY2010 to continue to develop GADRAS. DTRA stated in 2008, "The DTRA in concert with NNSA is currently proposing development of the next generation of GADRAS as part of a potential [memorandum of understanding] between the organizations. The effort would emphasize the revision algorithms, update to Vista compliant software, and increasing portability for field use." Since upgrades are ongoing, developers face such scientific problems as how to improve equations to characterize the response of detector material to radiation. Such problems are not a major risk to continued development of GADRAS, Mitchell states. Another risk is that the gamma-ray signal from shielded HEU may be so low that even a high-quality algorithm cannot identify the HEU. The major risk to GADRAS development comes from the programming language that is used for the graphical user interface (GUI). The GUI for the current version of GADRAS is written in a Microsoft language called Visual Basic Version 6 (VB6). VB6 functions under current versions of Windows, including the most recent, Vista. Microsoft, however, no longer maintains VB6, so it is not necessarily compatible with new compilers, often leaving no effective upgrade path for large application programs like GADRAS. User feedback indicates that some GADRAS components do not function properly in Vista. While minor changes may resolve the latter problem, the current GUI may not run under a future version of Windows. GADRAS is a large program, and current funding does not support the effort that would be required to update it. Since upgrading GADRAS is a low-budget activity, it entails little cost risk. No near-term requirements impose significant schedule risks. However, it would take one to two years to revise the GUI. Making this revision in advance of a change of operating systems would enable users to use GADRAS without interruption when they switch to the new operating system. Since GADRAS has been in existence for many years, and since it is used mainly by scientists and technicians rather than by operators in the field, there is little risk that it will fail in everyday use. The risk that an upgrade will cause a problem is reduced by careful testing. Other risks are the possibility that GADRAS would not run on future versions of Windows operating systems, and that conversion would not be made before an operating system that would not run GADRAS is introduced. Some have said that GADRAS is a complicated program to use; accordingly, the CONOPS for GADRAS is that it is used mainly for Reachback rather than in the field. Mitchell states that perhaps $600,000 a year for two years would allow Sandia to hire a few programmers who could convert GADRAS to use current compilers in order to avoid potential disruptions associated with new operating systems. A related task is documentation of the Application Programs Interface. This documentation would enable other users, such as at other laboratories, to develop new applications that can access capabilities that are incorporated into the Dynamic Link Library, which performs most of the computations in GADRAS. This increased access would reduce the cost and development time for new applications. (1) GADRAS might improve the performance of systems that induce fission and detect the resulting radiation. (2) By gaining more information from the gamma ray spectrum, it might reduce the gamma ray or neutron flux needed to induce fission and the dose resulting from fission, thereby increasing worker safety. (3) More computation power would permit more sophisticated iterations of GADRAS to be developed, or would permit GADRAS to run faster, or both. (4) Increased computation power, especially smaller and more capable computers, might enable GADRAS to be modified for use in the field with radiation detection equipment, permitting quicker resolution of suspicious containers and vehicles. Reachback would then be used only for the hardest-to-resolve cases. (5) GADRAS could be modified to improve the performance of radioisotope identification devices (RIIDs). DTRA states that it "is currently funding development of a more portable version of GADRAS ... that is intended to be resident on certain RIID systems, such as handheld HPGe system produced by Ortec." (6) Improved scintillator materials can be expected to provide better data inputs to GADRAS, enabling a further reduction in false negatives and false positives. Universities, companies, and government laboratories are working to develop such materials. Developing equipment to detect terrorist nuclear weapons and SNM requires many choices. It would be of great value to evaluate how they affect cost and performance before committing to a system. However, many combinations and tradeoffs are possible, and it would be prohibitively expensive and time-consuming to run enough trials for each to make a valid comparison among them. When faced with similar choices, such as in designing a car, corporations typically run huge numbers of simulated trials using computer models that take significant investment to develop and maintain. At issue: How can computer modeling contribute to the development of nuclear detectors, and what are its limitations? A detector should maximize the probability of detecting an actual threat (a true positive) while minimizing the probability of detecting a nonexistent threat (a false alarm, or false positive). For a given technology, these objectives cannot be achieved simultaneously—an improvement in either one comes only at the expense of the other. A receiver operator characteristic (ROC) curve, such as Figure 7 , illustrates this relationship. By relating the true positive and false positive rates, the curve defines the performance of a receiver (in signal processing, where the term "ROC" originated) or of nuclear detection equipment. ROC curves show that the probability of a true positive and a false positive go up together. This is logical; one could eliminate false alarms by turning off the detector, or could be sure of detecting every threat by having the detector alarm whenever the slightest trace of radiation is detected, which, given omnipresent background radiation, would be all the time. The peril of failing to detect an actual threat is clear. At the same time, law enforcement and commercial interests are intolerant of false alarms because these alarms require a major effort, diverting officers to the scene and possibly unloading a cargo container or closing a border crossing. Further, in the real world, numerous false alarms may cause operators to ignore all alarms or set the detector to be less sensitive, reducing the false alarm rate but also increasing the likelihood of missing an actual threat. This tradeoff is shown in Figure 7 by moving from point C, with a high probability of detection but a high false alarm rate, to point B, with intermediate values for both, to point A, with a low false alarm rate but a low probability of detection. Figure 8 shows three ROC curves to illustrate several concepts. (1) Moving from curve A to curve B to curve C shows the performance of a hypothetical detector improving over time, perhaps as a different detector material is used or an algorithm is modified. The improvement can be visualized by moving upward (line 1), which shows an increase in the true positive rate for a given false positive rate, or by moving from right to left (line 2), which shows a reduction in the false positive rate for a given true positive rate. (A diagonal line from lower right to upper left would show improvement in both.) (2) A, B, and C could represent differences in performance of one detector under different conditions, such as changes in the background, different operating conditions (e.g., scan time), or different benign materials in a container. (3) The curves could characterize the performance of three competing detectors. Note that actual ROC curves have more complex shapes than the notional curves shown. They may even cross over each other, indicating that one option is not uniformly better than another, requiring consideration of further tradeoffs. Many variables affect detector performance. Some are operational, such as scan time, the detector's target (containers, cars, trucks, trains), the distance between detector and target, and environmental conditions (background radiation, season, temperature). The detector is to detect SNM or nuclear weapons, yet the signatures on which it will focus may be accompanied by radiation from innocent sources and background radiation, and may be shielded inadvertently or deliberately. There are choices for the active elements of a detector, the algorithm used, and specific subroutines. These choices affect detector performance. Many combinations of these variables are possible. To gain enough data to make a ROC curve statistically valid, many trials would need to be performed for each combination of controllable variables (operating setup, detector, and algorithm) against many targets, each generating its own radiation signature. Each event in which a vehicle or container passes through the detection system is called an "encounter." It would be prohibitively expensive and time-consuming to run many encounters for each of thousands of combination of controllable variables, but it would be of great value to have the resulting data in order to compare, improve, or choose between detection systems and their components. Computer modeling can help. Modeling creates mathematical representations of the real world, varies the inputs, and calculates the outputs. In the case of nuclear detection, the real world consists of controllable variables (operational scenario, detector, and algorithm) and uncontrolled variables (signals from radioactive material). The performance of a modeled detector can be illustrated using ROC curves as described above. Running the model to simulate many encounters for each combination of controllable variables provides enough observation points to generate a statistically significant ROC curve. This process is repeated for many combinations of variables. The resulting data show the user how change to variables affects performance, and permit comparing one detector against another. Computer-generated "data" for nuclear detection encounters are always imperfect, as discussed below. As a result, the adequacy with which the models represent reality is always at issue, and model developers devote great effort to improving that representation. Modeling can also be used to evaluate requirements for elements of a detection system. For example, a model was used to study the spectral resolution (see "Principles of detection," above) required of a detector material to distinguish the gamma-ray spectra of threat sources from non-threat sources. According to a report on this project, "To capture the range of gamma-ray sources and shielding configurations found in commerce, we generated simulated populations of 1000 or more spectra, each with 3000 energy channels." Clearly, it would have been costly and time-consuming to generate the data experimentally. DNDO has established an ongoing program, Detection Modeling and Operational Analysis (DMOA), that the national laboratories and private sector contractors carry out. It builds models that characterize the variables noted above, i.e., the operational scenario, the radiation signals, the detector, and the signal-processing algorithm. Creating mathematical representations of the first three takes an immense amount of work because each is so complex. Alternative algorithms are simulated as part of the overall detection performance modeling. (Algorithm development requires a great deal of work, but is not within the scope of DMOA, which focuses on simulations.) For example, modeling a gamma-ray spectrum requires taking into account various sources of radiation and types of shielding. A DMOA study of real-world data found that the spectra from cargo differed between spring-summer and fall-winter; the study speculated that a different mix of products shipped in the two periods caused the difference. The model processes data on the operational scenario, radiation signals, and the detector to create a gamma-ray spectrum that is sent to the algorithm. The algorithm does not "know" the difference between a spectrum generated in the real world or by computer, and processes both in the same way. Since the difference is the source of the data, the key to simulation is generating the gamma-ray spectrum (signal plus noise) that goes to the algorithm. The greater the fidelity with which the model mimics real-world inputs, the better it represents system performance. Modeled performance, as measured by detection probability and false alarm rate, can be summarized in a ROC curve in the same way as empirically measured performance. The modeling effort also includes assessing the sensitivity of detector performance to changes in operational scenarios, detector hardware, and algorithms. One DMOA effort in 2006 focused on four main areas to improve its models. This effort illustrates the work undertaken to improve the fidelity of models and how this work requires detailed knowledge of the components being modeled. Evaluation benchmarks. Providing a basis for comparing systems requires a reference set of threat objects and shielding. Previously, this set included plutonium, HEU, and other threats, as well as different levels of shielding. In 2006, DMOA added new threats and shieldings to the reference set. It also developed a reference set of objects for detection by radiography. Background and nuisance source modeling. According to DMOA, "Background radiation and nuisance source population characteristics generally dictate detection threshold settings through their impact on innocent alarm rates. Characterization of these factors is critical to evaluating the performance of radiation detection systems." DMOA used real-world data to develop a model of the distribution of naturally occurring radioactive material. Data from the model were then compared with another set of real-world data to check the validity of the model. Operational analysis. DMOA used real-world data to compare the performance of several algorithms. One result was to "highlight the sensitivity of system performance to the detection algorithm used." Detector resolution study. DMOA studied the resolution needed to distinguish threats from other sources of radiation. The analysis, though preliminary, found that there is a benefit by having better resolution than that offered by sodium iodide, but that improving resolution beyond a certain point would offer marginal benefit. Modeling offers advantages compared to obtaining data from the real world . (1) A model permits construction of statistically significant ROC curves. It is not uncommon to require a false alarm rate of one in ten thousand or lower; statistical validation of performance at this level would require hundreds of thousands or millions of experiments. It would be costly and time-consuming to conduct field trials using a single combination of variables in order to build one statistically significant ROC curve, let alone conducting field trials for thousands of combinations of variables that represent the range of conditions. A model permits running many thousands of simulated encounters in less than a day to explore the range of encounters a detector may face. Once the model has been constructed, validated, and implemented, the cost of these computer runs is very low. (2) A model and a test program are complementary. The test program generates data for the model, and the model can steer the test program by indicating what tests would be of greatest value for improving the predictive power of the model. (3) A model permits exploration of encounters that might occur in the real world but that could not be conducted because of cost, safety, or difficulty. For example, it would be unthinkable to place a nuclear weapon in commercial traffic to test detectors, but the only facilities where such testing could be done, notably the Nevada Test Site, have characteristics very different than those of ports or border crossings. As another example, it might be desirable to see whether a protracted period of heat or high humidity would impair how a detector would function, but it would be much easier to replicate such conditions through modeling. (4) A model permits comparison of components of an encounter, such as which algorithm better processes the data for a given gamma-ray spectrum. (5) A model permits analysis of alternatives and clarification of tradeoffs before committing to a specific design, helping to inform billion-dollar decisions. DMOA is an ongoing program. When DNDO was established, DMOA became an explicit element within the System Architecture program. It has been funded within that program at approximately $2 million per year. The amount funded by all DNDO offices on related detection modeling is on the order of five times that of the Architecture program. Other detection modeling is done for other purposes by other offices within DNDO, as well as by DOE and DOD. However, since modeling activities are inherently cross-cutting and support many technology development and assessment projects, it is difficult to estimate total spending on modeling in the federal budget. While no model can be perfect, the key risk is that the model's output (for example, gamma ray spectra that the model generates) might differ significantly from data that would have been obtained from actual field trials. Part of this risk concerns modeling the underlying science. Some aspects are known in detail, such as the radiation spectrum of U-235. But there are uncertainties. HEU is not pure U-235, so the spectrum will be somewhat different from that of U-235. Some shielding can be modeled precisely, such as a centimeter of lead. But the defense (the modeling design team) does not know what shielding, if any, the attacker might use. A cargo container can hold many types of cargo, each of which interferes with radiation transport differently. Different arrangements of the cargo place different amounts and types of material between source and detector, affecting gamma ray spectra. Any model makes approximations and simplifications, sometimes to allow the simulations to run faster, or simply because more fidelity for certain phenomena are judged unnecessary or unwarranted. This creates further risk that the model might not sufficiently represent reality. There are other risks. Items included in the model may not be selected accurately. Systematic errors may arise, such as differences between spring-summer and fall-winter cargo. Adding detailed radiation sources with additional shielding, types of cargo, and detector details may increase the realism of the model, but also add complexity, opening the door to additional errors. Models are complex mathematical approximations of reality. Yet real-world data are often limited, perhaps covering too narrow a range of conditions. DMOA uses statistical methods to transform a real-world data set into data for different detectors and conditions. As a DMOA report states, "LLNL [Lawrence Livermore National Laboratory] has developed a procedure for generating a statistical model of a nuisance source population ... based on measured data. ... The statistical model developed provides a basis for simulating an unlimited number of random samples in nuisance sources for a population assumed to be similar to that underlying the measured data." A difficulty is in validating the model. Various isotopes cause background radiation, and DMOA observes that "there is no simple standard procedure to compare multivariate populations." Models may also manipulate data by adding in, or "injecting," spectra from well-characterized radiation sources like HEU or WGPu to computed spectra of cargo typical of normal commerce to see how well an algorithm can detect threat material in cargo. However, that approach may be an inadequate representation of reality. It is arguably unlikely that terrorists would include a nuclear weapon or SNM in a random cargo container if they chose that vector; rather, they might arrange the cargo to help evade detection. Simulation developers have not modeled such deliberate arrangements of cargo because that would require thinking about how to model adversary behavior, something outside their expertise. It might be desirable to have terrorism experts modify some injections to reflect adversary behavior. Most funds spent on DMOA are for staff salaries, so the likelihood of unanticipated cost increases appears low. However, this assumes that computing hardware required to run the models quickly is already paid for. If terrorists planned to bring a nuclear weapon or SNM into the United States, they would presumably try to evade detection, leading to an offense-defense competition. It would be essential for this nation to stay ahead. That task involves much effort by many entities. For modeling, the task would be to upgrade means of evasion included in the model in time to stay ahead of the threat. This would depend in part on inputs from intelligence services, such as data on specific threats, but also on advances in characterizing background radiation, developing algorithms, developing statistical means of transforming or validating data, and the like. The program is paced by resources available. The risk is that progress in nuclear detection, including modeling, will not be fast enough to defeat the threat. Law enforcement and commercial interests are intolerant of false alarms. The false alarm rate often drives detector settings and choice of detection systems, and increasing the true positive rate also increases the false positive (false alarm) rate. While a model can explore the tradeoff and optimum balance between true and false positive rates, a risk is that systematic errors, incorrect data transformations, and incomplete accounting for background radiation would cause the model to generate a setting that is less than optimal. In some cases, this problem can be overcome by making adjustments in the field, but in other cases, such as the choice of detector material, adjustments may not be possible. At present, the DMOA efforts at the national laboratories and private sector contractors are distributed throughout their organizations. Most staff members who work on detection modeling do so only part time. Some modeling tools (simulation codes, databases, and algorithms) tend to be somewhat informal, developed by various groups for specific needs. According to Richard Wheeler, Lead for Homeland Security Analysis, Global Security Directorate, Lawrence Livermore National Laboratory, added funding in this area could enable the designation of full-time staff, development of standardized modeling tools, acquisition of dedicated computing resources, establishment of rigorous peer review of the models, formal coordination of related efforts sponsored by DOE, DOD, and other agencies, and generation of new databases essential for model validation. While analysis of detector performance against realistic threats is sensitive or classified, many advances in modeling and modeling tools could be made in an open environment, including the academic community. Wheeler states that more funds could support a more substantial engagement of university researchers. Simulation does not detect anything by itself, but is by its nature synergistic with other aspects of nuclear detection. It has as its purposes improving many elements of detection systems, whether deployed or under development; helping to integrate hardware and software into a system; optimizing systems and CONOPS; and informing decisions on the most cost-effective mix of systems to acquire. Current radiography systems have important limitations in their ability to detect SNM in cargo containers. A small amount of dense material may be inconspicuous if shipped in a container filled with dense or random objects. SNM could also be placed inside dense objects for camouflage. Another difficulty of detecting SNM in containers is that an operator may fail to see a threat. At issue: Can radiography take advantage of different characteristics of SNM to detect it in cargo? And can a system evaluate radiographic images automatically to reduce dependence on operator judgment? In an effort to overcome these limitations, DNDO is conducting R&D on advanced radiography systems under the Cargo Advanced Automated Radiography System (CAARS) program. CAARS involves three technical approaches to radiography, each with a different contractor. (As noted below, DNDO terminated the contract for the American Science and Engineering, Inc., system in March 2009.) This section and the next two discuss these systems. It must be emphasized at the outset that these systems are under development. As a result, no deployable CAARS systems exist, so diagrams and performance specifications presented in these sections must be viewed as goals that are yet to be demonstrated in commercially available equipment. Customs and Border Protection (CBP) raises several concerns about CAARS, as described under "operational risks and concerns," below. CBP, a component of the Department of Homeland Security, is a front-line agency whose officers perform such missions as operating border crossings and inspecting cargo entering the United States at seaports, airports, and land crossings. Two types of commercially available equipment for scanning cargo containers have been widely used since 2002. One type, radiation portal monitors, passively detects radiation coming from a container. Another type, radiography equipment, creates x-ray-type images of a container; examples include the Rapiscan Classic Eagle and the SAIC VACIS. This type is more relevant to CAARS. Radiography equipment works as follows. A cargo container is driven between two components of the equipment, or the equipment moves over a stationary container. One component produces gamma rays from a highly radioactive substance like cobalt-60 or cesium-137, or x-rays from a linear accelerator. These photons emerge in a thin vertical fan-shaped beam and pass through the side of the container. On the other side of the container, an array of detector material records photon intensity levels, which correlate to opacity, pixel by pixel. A computer assembles the pixels into a radiograph. A black or white spot indicates an area that is opaque to photons of the energy used. Key limitations of such systems are that they cannot differentiate between different types of material and cannot pick out threats from clutter. While a complete nuclear weapon might or might not be noticed, detection probability decreases as the threat object becomes smaller, so it would be difficult for current radiography systems to detect a small piece of HEU. A different physical principle enables a radiography system to search for materials with high atomic number (Z). Both the L-3 and SAIC CAARS systems utilize this principle. They use one or two linear accelerators to generate 6-MeV electrons and x-rays with energies from 0 to 6 MeV and, in the same manner, x-rays with energies from 0 to 9 MeV (abbreviated in this section as 6-MeV x-rays and 9-MeV x-rays). The former have the greatest number of photons at around 2 MeV; the latter, at about 3 MeV. (The third CAARS system utilizes a different principle.) Photons of these two energies interact with matter differently. Six-MeV x-rays scatter when they strike electrons. The amount of scattering is a function of the electron density of the material, so it increases with Z. As a result, high-Z material is more opaque to 6-MeV x-rays than is low-Z material, and creates a bright or dark spot on a radiograph. Figure 9 , top panel, is a radiograph taken with 6-MeV x-rays. Nine-MeV x-rays interact more strongly with an atom's nucleus. When a nucleus absorbs a photon, it releases energy in the form of an electron-positron pair. This effect is proportional to Z squared. Thus high-Z material is much more opaque to 9-MeV x-rays (many fewer get through the material being interrogated because they are absorbed) than to 6-MeV x-rays. The L-3 and SAIC CAARS exploit this difference to create a so-called dual-energy radiograph, in which each pixel represents the ratio of opacity of that pixel to 9-MeV and 6-MeV x-rays. To create the radiograph, an algorithm assigns different colors to different ratios; in the middle panel of Figure 9 , higher-ratio pixels are darker. Pixels with ratios above a certain value indicate high-Z material. While there is no absolute physical threshold between medium- and high-Z material, CAARS uses Z>72 as the threshold for high-Z material; elements with Z>72 include tungsten, gold, lead, uranium, and plutonium. Pixels of such material could be presented in a separate radiograph, as in the bottom panel of Figure 9 . However, these data by themselves are not sufficient to trigger an alarm. A typical cargo container has many overlapping objects, so another algorithm is needed to separate them from each other. Still another algorithm utilizes the foregoing data to calculate the size and Z of individual objects, and on that basis determines whether to trigger an alarm. High-energy x-rays could also exploit a characteristic of U-235 and Pu-239 (as well as of U-238 and thorium-232, non-threat materials that are relatively uncommon in commerce): they fission when struck by photons with an energy above approximately 5.6 MeV. As discussed in the Appendix , the resulting fission products decay over many seconds, producing prompt and delayed neutrons and gamma rays. High-energy x-rays may thus be used to detect high-Z material in general and SNM in particular. However, CAARS does not utilize this characteristic. This section focuses on the least complex and lowest-risk CAARS system, which is being developed by L-3 Communications Corporation. As Figure 10 shows, it would use a concrete enclosure to minimize the radiation exclusion zone. The enclosure is 160 ft long in order to process two trucks at a time in 3 minutes so as to meet the CAARS throughput requirement of 40 containers per hour. The system would use one linear accelerator to generate 6-MeV electrons and (through the bremsstrahlung process) x-rays with energies from 0 to 6 MeV and, in the same manner, another accelerator to generate x-rays with energies from 0 to 9 MeV. A container would remain stationary as the beam is moved on a gantry over the truck. On the other side of the container are two detector arrays, one particularly sensitive to 6-MeV x-rays and the other to 9-MeV x-rays. Each array would record successive vertical slices of an opacity map of the container. The slices would be combined into a dual-energy radiograph as described above. If CAARS works as DNDO anticipates, it could automatically detect high-Z materials while providing standard radiographs so that it would have potentially little or no impact on CBP operations, such as efforts to identify "traditional" contraband (drugs, guns, explosives). As such, CAARS could, if successful, integrate the SNM detection mission with CBP's historical mission of detecting other illegal materials. DNDO anticipates that the automated detection of high-Z materials would not slow down the pace of screening, which could continue to be determined by the rate at which operators can examine radiographic images for detection of normal contraband, though CBP expresses concerns on this point, as discussed below. CAARS technology is being designed to scan at least 40 40-foot containers an hour. DNDO anticipates that it would have a 90% probability of detecting 100 cc of high-Z material (such as a cube 4.6 cm, or 1.8 inches, on a side), and a false alarm probability less than 3 percent, both with 95% confidence. DNDO does not count detection of high-Z material as a false alarm because such material may be used to shield SNM. Another possible benefit of the CAARS program is that it is developing novel technologies and advancing the state of the art; even if no CAARS systems were to be deployed, scientific and technical advances made through this program could be of value to future detection systems. Comparing the L-3 and SAIC systems, the latter takes up less space, an important consideration for CBP at seaports where space is limited, but the latter has finer resolution, an important consideration for CBP in searching for traditional contraband. In September 2008, Vayl Oxford, Director of DNDO, described developments with the CAARS program as follows: Consistent with any rigorous development and acquisition program, DNDO conducted system requirement reviews in November 2006 and preliminary design reviews in late May and June 2007 to assess the maturity of the CAARS technology. As a result, DNDO found that the technology was more difficult to implement than originally anticipated and determined that the technology should be demonstrated so that its full performance capability could be established prior to acquisition. It was also determined that the CAARS units, as currently designed, are too large and complex to be operationally effective. Finally, since 2006, there have been several technical advances in currently-deployed or soon-to-be-deployed NII systems that might provide some, but not all, of the desired capability. Accordingly, DNDO undertook a "course correction" in April 2008 and modified the three CAARS contracts to remove the "acquisition" component of the contracts, yet retain the demonstration and the test and evaluation (T&E) components of the contracts to allow collection of the required performance data. According to Joel Rynes, Program Manager, CAARS Program, DNDO, the L-3 CAARS project completed its Critical Design Review (CDR) milestone in July 2008. The CDR marks the point at which the design has been completed and DNDO can give the contractor approval to begin fabrication of the prototype. As of February 2009, the prototype was being assembled in Las Vegas. It produced its first image in May 2009. The plan called for L-3 to collect data with the system for four or five months to develop the algorithm for discriminating between high-Z and lower-Z material. DNDO conducted Technology Demonstration and Characterization (TD&C) in February and March 2010 to characterize the performance of the prototype. The other CAARS programs are discussed in their respective sections below. Part of the course correction was establishment of the Joint Integrated Non-Intrusive Inspection (JINII) Program—"joint" because the project is a collaboration between DNDO, CBP, and the DHS Directorate for Science and Technology, and "integrated" because it seeks to detect both traditional contraband and high-Z material. It is "non-intrusive inspection" (NII) in the sense CBP uses the term, namely, CBP personnel could clear containers, without physically having to open them, with high confidence that they do not contain contraband or SNM. JINII has two main components. One is CAARS. The other is a test campaign by DNDO to examine the ability of existing, commercially available radiography systems to detect high-Z material by means of operators visually inspecting radiographs. This is distinct from CAARS, which is intended to highlight suspicious areas automatically. In addition, systems have been developed outside of the CAARS program that have a limited capability—which DNDO anticipates would be less than that of CAARS—to detect high-Z objects in cargo automatically. One of these systems, the Rapiscan Eagle Portal, completed TD&C in September 2009. DNDO states that if tests demonstrate this limited capability with commercial off-the-shelf systems, deploying such systems could place capability in the field sooner than would be the case by using only CAARS systems. CBP already deploys the Rapiscan Eagle, which uses an accelerator (6 MeV in some versions, 4 MeV in others) to generate a radiographic image of a cargo container. The version that was tested through JINII has an added algorithm, "Auto-Z," that is designed to detect high-Z material in cargo and indicate the location of such material on a radiograph automatically. In contrast to either CAARS candidate, it would cost less, would use the current supporting infrastructure, and would require little added operator training. According to Rynes, the algorithm should be able to detect a 400-cc cube of high-Z material (7.37 cm, or 2.9 inches, on a side) nearly as well as CAARS candidates, but could not detect a 100-cc cube of high-Z material (4.65 cm, or 1.8 inches, on a side) as well as they could. In March 2010, DNDO completed its Technology Demonstration and Characterization (TD&C) testing for the L-3, Rapiscan, and SAIC systems and put the CAARS follow-on program on hold. DNDO expects the TD&C to provide data to quantify the performance and cost of these three systems so that it can perform a cost-benefit analysis that would consider both high-Z and traditional contraband detection, helping it decide how to proceed. DNDO could recommend future development, operational testing, acquisition, or some combination, of the various systems. If DNDO, CBP, and Congress judge the L-3 or SAIC systems to be more cost-effective than existing systems, one or more systems with CAARS-level capability could be further developed or acquired through a competitive process yet to be determined. With TD&C completed, the status of the test equipment as of May 2010 was as follows, according to Rynes,: Significant portions of the AS&E CAARS material have been distributed to other DNDO projects. The SAIC CAARS system is being dismantled and significant portions of the material are being distributed to other DNDO projects. The L-3 CAARS system is being dismantled and stored for potential installation at a later date. This would be [done] outside of the CAARS program. The Rapiscan Eagle remains installed at Moffett Field [CA]. It has funding to stay there through FY11. The budget for the entire CAARS program is: FY2006, $16.3 million; FY2007, $26.4 million; FY2008, $31.8 million; and FY2009, $26.1 million. The CAARS program per se ended in FY2009, to be replaced by a followon DNDO-CBP program to advance CAARS technology so that it can be deployed in the field. FY2010 funding for this program is $15.2 million. The L-3 system is intended to be the least complex and lowest-risk CAARS system. The scientific risk to its hardware is low because it uses commercially available accelerators and detectors. The software risk is potentially higher because algorithms to sort high-Z and low-Z materials on a radiograph automatically have not been fully developed and have only been modeled in a simulated environment, not tested in an actual operational one. The other two CAARS technologies are more complicated, so their scientific risk may be greater. The concept has been demonstrated in the laboratory, but it remains to be shown that it can be scaled up to the size CBP needs to scan containers. For example, can the algorithm to sort pixels into high-Z and lower-Z bins handle large enough quantities of data in a timely manner? At high enough energy levels, an accelerator can produce neutrons that require a large amount of shielding. The x-rays generated by the accelerator can also scatter from interactions with the cargo, also requiring shielding. A large footprint for shielding could preclude deployment of detection systems at some ports. At issue: Can radiation be kept low enough that the footprint does not become excessively large? Slipping the CAARS schedule through the "course correction" to permit more time for R&D could make it easier to meet the new schedule, reducing schedule risk. More R&D could also reduce cost risk. On the other hand, scientific risk could result in cost and schedule risk. Another cost and schedule risk is that work on three projects would reduce effort devoted to any one system, delaying each system (as compared to the schedule possible if the full funding had been applied to only one system) and increasing the cost of the total program. For example, it could be argued that a more efficient use of funds would be to focus only on the L-3 system because its development is furthest along. On the other hand, a multi-pronged approach may offer countervailing advantages. The simpler technology could (presumably) be deployed quickly, adding capability quickly and providing a hedge against failure of more advanced systems. More-capable systems could be deployed later, reducing the time pressure to develop them. Conversely, pursuing several approaches hedges against the prospect that the simpler system might encounter unanticipated problems that delay it to the point where it and a more advanced system could be deployed at about the same time. Whether these advantages justify the higher cost is always a matter of debate. CBP notes that other companies are developing systems to detect high-Z material outside of the CAARS program, and argues that, because of the operational concerns discussed next, the money spent on CAARS could be better spent on such systems. DNDO points out that the JINII program is developing and evaluating some of these systems. (1) A 3% false alarm rate, if achieved, would place a large burden on CBP CONOPS, as it would require responding to many false alarms. Alternatively, as discussed in the section on computer modeling, a high false alarm rate could lead operators to ignore alarms or to raise the threshold for alarms, increasing the likelihood of missing an actual threat. (2) Joel Rynes, Program Manager, CAARS Program, DNDO, states that an operator could clear some false alarms without intrusive inspection, such as by inspection of radiography images, reducing the rate of alarms requiring intrusive inspections to well below 3%. At issue is whether there is enough confidence in operator judgment with these methods to avoid intrusive inspections. (3) The system does not differentiate between SNM and other high-Z material; adding non-SNM high-Z alarms to false alarms boosts the non-SNM alarm rate and, presumably, the rate of alarms requiring intrusive inspections. Without a way to differentiate between SNM and other high-Z material, can CAARS meet its goal of having "little or no impact on CBP operations"? On the other hand, is any high-Z material suspicious and worthy of inspection, so that non-SNM high-Z alarms should not be counted as false alarms? (4) A CAARS program goal is automated detection of small amounts (100 cc) of high-Z material through 10 inches of steel, with a follow-on goal of penetrating 16 inches of steel. Is that a reasonable goal? If not, what is the maximum thickness of steel commonly found in cargo containers and what energy level of photons would be required to penetrate it? How would the added shielding required by equipment that generates photons greater than 9 MeV affect deployment at ports, where space is at a premium? Or would no practical energy level suffice to penetrate that much steel? Alternatively, would a simple "Bucky collimator," as described under "Background" in this section, make radiography much more effective? (5) The radiation produced by CAARS, or other high energy imaging systems, even at low levels, may cause interference with radiation portal monitors that have already been installed. It is important to minimize this interference, though it can readily be eliminated by turning off the accelerator when portal monitors are in use. CBP raises other operational concerns. The first concern applies to the L-3 and AS&E CAARS systems; the others apply to all three. (1) Because of an apparent miscommunication between DNDO and CBP, DNDO thought that the dimensions of a one-of-a-kind CBP radiography system, 60 x 160 ft, were acceptable to CBP for large-scale acquisition, some 300 to 500 units nationwide. The L-3 and AS&E CAARS systems would use a concrete enclosure of that size (see Figure 10 ) for radiation containment. However, CBP states that no unit that size would fit in U.S. seaports, and that only four or five ports of entry on the U.S.-Mexican border could accommodate the units. (2) CBP expresses concerns that the radiation emitted by radiography equipment such as CAARS could require a large exclusion zone to protect workers. In contrast, radiation portal monitors emit no radiation, but passively sense radiation emitted by radioactive material. (3) CBP is concerned that total scan time would create an immense delay for container traffic entering the United States from seaports or land border crossings. While DNDO's goal is to have CAARS scan a container in 15 seconds, CBP notes that the time when the scanning unit is on is only a small part of the total time a scan requires. It points to the following sequence: a driver would pull a truck with a container into the scanning enclosure (depicted in Figure 10 ); the driver would leave the truck and go to a radiation-protected facility; the scanning equipment would move over the stationary container at a precisely controlled speed; the truck and container would be scanned; and the driver would reenter the truck and drive it out of the enclosure. This sequence, CBP estimates, could take 5 minutes. Thomas Winkowski, Assistant Commissioner, Office of Field Operations, CBP, provided was emphatic on the need to minimize delays. Not referring specifically to CAARS, he said that rebooting and reinstalling software on some systems "can take seven or eight minutes. That's the kiss of death in my business from the standpoint of delays." Regarding CAARS, he said that CBP was "at the table" with DNDO in discussing requirements. But what our concern was was that the footprint was too big ... and the throughput, you know, for all your trucks to go through a car wash type system, as I call it, and the driver comes out, and you do your scan—that realistically presents a tremendous amount of problems from cycle time. So our position was that we really needed a different technology that was more flexible and that didn't have such a big footprint and require so much handling. Rynes stated that concerns such as the foregoing raised by CBP were among the reasons for the CAARS course correction and the establishment of the JINII program. Rynes states that added funds could improve CAARS in several ways: (1) Further development could reduce the size of CAARS systems so they would be more readily deployable at ports. (2) Money spent (by CAARS or another project) to improve detector efficiency could permit a less-powerful electron source to suffice, further reducing the requirements for shielding. (3) Added funds could improve algorithms to automate the processing of radiographs. (4) JINII is just beginning to develop algorithms to detect contraband automatically to increase the rate at which containers are inspected. Added funds would accelerate this development. (5) Added funds could expedite better integration and data fusion of CAARS with already-deployed radiation portal monitors. The preceding paragraph discussed synergisms by which technology developments could improve CAARS capabilities. Another synergism concerns the use of neutrons or high-energy photons to induce fission to discriminate SNM from other high-Z material. DNDO issued a broad agency announcement in March 2008 to develop this capability. The CAARS candidates do not include technology for this purpose. For example, they do not count neutrons or gamma rays that would be generated by photofission even though 9-MeV photons can cause that effect. However, CAARS might possibly draw on such work in the future. The "problem" and "background" information for the L-3 system, as described above, are the same as for the SAIC system. Science Applications International Corporation (SAIC) developed a system (unnamed) as part of the CAARS program. That program completed Technology Demonstration and Characterization of the competing systems in March 2010, and as of April 2010 the future of CAARS was unclear. However, SAIC is competing to apply the technology it developed under CAARS to another DHS program as described below. SAIC's basic CAARS system uses an electron accelerator developed by Accuray Corporation. The accelerator is "interleaved"—a single unit produces pulses of electron beams alternating between 6 and 9 MeV. Each pulse lasts 3 microseconds, with 2.5 milliseconds between pulses. These beams strike a copper target and generate photons with a spectrum of energies up to the highest energy of the electron beam, though lower-energy photons are filtered out. During a scan, the photons pass through a cargo container in a vertical fan-like beam. On the other side of the container is a detector array composed of multiple detector elements arranged in thin vertical bands. Each element records an opacity image of a narrow horizontal "stripe" of the container. An algorithm combines the stripes into a dual-energy radiograph, as described in the L-3 section. The system automatically flags for further inspection areas of high-Z material and areas with too much dense material for the photons to penetrate. Figure 11 illustrates the configuration of a unit. One key to this system is that the proprietary detector operates at a photon flux (number of photons per unit time) one-hundredth that of conventional cargo imaging systems. A lower flux enables the accelerator to be much more compact. Accelerators with high photon flux require a high-Z material, typically tungsten, for the bremsstrahlung target because it can withstand the high heat from the electron beam. Such accelerators also use high-Z material to shield the photon beam. However, photons with energies greater than approximately 6 MeV produce photoneutrons (neutrons knocked off atoms by high-energy photons) when they strike high-Z materials, with the number of such neutrons increasing as energy increases. The heat generated by the beam with lower photon flux is low enough that copper can be used instead of tungsten. Copper is one of a few metals with a threshold greater than 9 MeV for producing photoneutrons. As a result, SAIC states, its system produces virtually no photoneutrons, eliminating the need for large concrete structures for neutron shielding. Further, since the system has a low beam flux, SAIC states that the need for shielding from x-rays that scatter in the cargo is greatly reduced. Another key to the system is the dual-energy interleaved accelerator. Three aspects are especially consequential. First is the ability to construct this type of accelerator; previous efforts by Varian Medical Systems, funded by SAIC in 2004, had poor X-ray beam stability. Second, this accelerator uses a lower beam flux, with the advantages just discussed. Third, the number of photons per pulse ("dose repeatability") varies by a very small amount, less than 0.4%, far below the required variance of less than 5 %. While the goal of CAARS is to find high-Z material while not interfering with efforts by CBP inspectors to find traditional contraband (drugs, guns, money, etc.), the better-than-expected dose repeatability enabled the system to differentiate approximately 15 bands of Z from carbon (Z=6) to uranium (Z=92), an atomic number resolution of about six (e.g., the difference between oxygen, Z=8, and silicon, Z=14). This contrasts with the ability to find only materials with Z greater than 72, as in Figure 9 . On a radiograph in various shades of gray, the difference may not be apparent at all, but if each Z band is represented by a different color, different materials display much more clearly, as Figure 12 shows. Colors are assigned to Z bands arbitrarily, producing a "false color" or "pseudocolor" radiograph, so called because the colors bear no relationship to the color of materials being radiographed. How does reducing the variance increase the number of Z-bands? Dual-energy radiography finds the thickness, as measured by each of the two beams, of the material recorded for each pixel. For example, it finds the number of photons (in this case, x-rays) transmitted through a cargo container, and then received at the detector that measures the number of photons at each pixel. An algorithm calculates the ratio of the two thicknesses and displays this ratio as an image in colors or grayscale, pixel by pixel. Thickness ratios are calibrated before each scan. Because the number of x-rays varies from pulse to pulse, the output end of the accelerator has an x-ray dose meter to correct for this variance. However, this correction can introduce large errors in the ratios measured at some pixels because the correction applies only to the beam output and not to the beam as received at different points. If there were no variance at all in the output (number of x-rays per 6-MeV beam and per 9-MeV beam), this correction would not be needed, eliminating this error source and increasing the number of Z bands that can be displayed. At the same time, even with zero variance, the number of Z-bands that can be displayed is limited, and can be reduced, by such factors as the size and thickness of objects being radiographed, and by the mix of objects of different Z numbers that a beam might pass through for a given pixel. Two of CBP's concerns with equipment to detect possible terrorist nuclear weapons or fissile material are that that mission is added on top of the mission of detecting traditional contraband, adding to the workload of CBP front-line operators, and that the equipment does not help detect contraband. Yet in contrast to nuclear weapons or material, contraband is a constant threat, with criminals attempting to smuggle in many tons of it every day, and often succeeding. The ability to separate pixels into many bands by Z would address these concerns, as it would help an operator find typical contraband hidden in a cargo container as well as high-Z material. Such contraband has a Z of less than 72, so the ability to find high-Z material does not contribute to finding contraband. In contrast, dividing pixels into many Z-bands facilitates the detection of anomalies, such as guns (Z~26) hidden in a shipment of water (Z~10). Further, the current software enables the operator to choose colors with which to tag different Z-bands in order to make shapes stand out. Algorithms to highlight suspicious shapes could also be developed. Greatly reducing neutron flux offers several potential advantages. (1) Worker exposure to neutrons is reduced. (2) Lower flux requires less shielding, thereby reducing cost and footprint. (3) If the basic system is augmented by the capability to detect neutrons and gamma rays resulting from photofission, neutron detectors in this system would be able to detect neutrons when the beam is on because of the low neutron background. SAIC claims that its CAARS system is the only one with this capability. Since most neutrons released by fission of SNM are "prompt" (released immediately), the prompt neutron signal is much larger, and thus easier to detect, than that of delayed neutrons. Fission of SNM generates high-energy neutrons; by adding detectors that can discriminate between neutrons on the basis of their energies, SAIC expects that its system will be able to determine if a high-Z object is SNM. (4) The accelerator is very compact, 80 cm in length, also reducing footprint. (5) The system is designed to flag high-Z material automatically, reducing the burden on operators and the risk of operator error. Another benefit of the system is that it occupies considerably less space than do the L-3 and AS&E systems, an important factor for locations, such as seaports, where space is at a premium. SAIC is developing its basic system under contract to DNDO. According to Rynes, the SAIC system has been making substantial progress since its Critical Design Review in April 2008, as follows. The system has been built and has been collecting images. (Images are what an operator sees.) As of February 2009, it was collecting data for developing the data-processing algorithm. As of July 2009, a test unit had been built and SAIC was refining its algorithms. Technology Demonstration and Characterization was completed in December 2009. The Accuray interleaved x-ray source is the key to making the overall system smaller, a major criterion for CBP. Rex Richardson, Vice President and Principal Scientist, SAIC, said in May 2009, "We have resolved all of the initial start-up issues related to the Accuray compact X-ray source and the source is now performing beyond expectation. Hence I think I am confident in saying that the 'higher risk' aspect of the SAIC program has now been resolved and we are collecting the 'higher benefit.'" He stated in February 2009 that SAIC is "at the near-production prototype stage and can produce pilot test units for deployment at ports and border crossings in a few months" and that SAIC is "now imaging full cargo loads at our design speed of 33 inches per second." In February 2009, SAIC estimated unit price of its system at $4 million to $7 million, depending on terms of procurement such as number of units ordered, delivery schedule, and warranty agreements. In September 2008, DNDO did not elect to fund SAIC's proposal for an advanced technology demonstration of the add-on capability to its CAARS system discussed earlier, to detect shielded SNM by detecting radiation released by fission of SNM induced by high-energy x-rays. As of April 2010, the status of the SAIC program was as follows. Without funds to continue its program, SAIC disassembled its CAARS test unit and was disposing of the government-owned material under DNDO supervision. Meanwhile, SAIC was adapting its technology to a truck-mounted design in response to Broad Agency Announcement 10, Non-Intrusive Inspection and Automated Target Recognition Technologies, or "CanScan," issued by the DHS Directorate for Science and Technology. One element of CanScan supports development of a next-generation mobile cargo imaging system for CBP operators to use at seaports and border points of entry. If it is awarded a contract under CanScan, SAIC anticipates that it would develop a prototype that would integrate its CAARS dual-energy technology with such techniques as neutron active interrogation for materials identification, and that it would deliver a production-ready prototype truck platform to CBP within three years of contract award. This system required completing the interleaved accelerator, yet its development was challenging. As a result, it involved more scientific risk than the L-3 system, which uses two separate accelerators, one for each energy level. An earlier attempt to develop an interleaved accelerator encountered a problem with the stability of the electron beam, with energies varying by a factor of two. The SAIC CAARS system requires that the Accuray accelerator demonstrate that it can repeatedly generate electrons of two energy levels, each within a narrow energy band. As of May 2009, the accelerator was operating beyond expectations, greatly reducing if not eliminating its development as a source of technical risk. As noted, accelerator continued to operate beyond expectations, which among other things enabled the system to complete Technology Demonstration and Characterization in December 2009. Typical cargo imaging systems have a resolution of 3 mm to 5 mm (i.e., they can display details that are 0.12 to 0.20 inch in any dimension). The design of the SAIC system results in resolution of 7 mm to 9 mm. DNDO has set a standard of detecting 100 cc of SNM (e.g., a cube 4.6 cm on a side), so the significance of this loss of resolution is not clear for SNM detection, though it would probably reduce the system's ability to detect other contraband. CBP prefers finer resolution to help spot contraband. SAIC responds that it can achieve 5-mm resolution by using more detectors, albeit at higher cost; that such fine resolution is not absolutely required for scanning cargo containers; and that false-color imaging would have great value for discerning contraband. Another concern is the extent to which different thicknesses of materials or different materials together in a container would reduce the number of Z-bands that the system can display. (1) CBP insists that scanning should interfere with the flow of commerce as little as possible. In response, DNDO requires the system to scan containers at a rate of 2.7 ft per second, the speed needed to scan a 40.5-ft container in 15 seconds. (This time refers to the actual time when a container is being scanned, as distinct from the requirement to process 40 containers per hour, which includes time for a container to move to and from the scanning equipment.) The 15-second requirement imposes a burden on the system. Improving the performance of the system at a given scan speed and photon output would require a significant redesign and additional cost. On the other hand, some ask, since radiographs of containers must still be scanned visually by operators to search for contraband, which may take more than 15 seconds, is a 15-second scan time needed, or could that requirement be relaxed? (2) The system uses an interleaved accelerator that has proven to be technically feasible, but there is as yet no assurance that it will be available at the quantity, schedule, and cost needed to make the system competitive. (3) At a unit price of perhaps $5 million or more, some ask, is the system too costly to deploy in large numbers? Uncertainties about the final configuration of the deployed system could affect operations. Space is at a premium in many U.S. and foreign ports. If a more powerful accelerator is needed in order to obtain finer resolution, it could require more space, more shielding, and more standoff distance, and might increase concern among port workers about radiation exposure. An alternate means of obtaining finer resolution would be to add more detectors, which would increase cost but not radiation. SAIC states that with added funds it could (1) integrate detection of photofission with CAARS radiography, (2) hire more software engineers to speed development of algorithms to improve the system's ability to differentiate between materials; and (3) pursue application of the system to detect contraband. Added funding would also allow SAIC to apply its CAARS technology to the CanScan program. SAIC believes that there is significant potential for its dual-energy radiography technology to help detect contraband and explosives because it can differentiate between organic materials, which have a low Z, and most metals. Improved scintillator material being developed by several teams of scientists might be of use to the SAIC system. Similarly, algorithms being developed for other gamma-ray detectors or radiography units might have elements similar to those being developed by SAIC. This system addresses the same problem as the L-3 and SAIC CAARS. Note: On March 10, 2009, DNDO terminated the contract with American Science and Engineering, Inc. (AS&E) to continue developing this system. DNDO views the technology incorporated in this system as holding some promise, but states that development of this technology requires additional basic research. Accordingly, this section will not be updated further. AS&E is developing a CAARS system that would utilize a different physical principle than the L-3 and SAIC systems. Its core technology is "EZ-3D TM ," developed by Passport Systems, Inc. The term is an abbreviation for "effective" (i.e., average or approximate) Z (atomic number) of the material being detected, located in three dimensions. It is intended to exploit the principle that when x-rays are beamed at an object, the number of x-ray photons that scatter backwards (in the opposite direction from the beam) is strongly proportional to the object's Z. When x-rays strike high-Z material, they knock pairs of electrons and positrons off atoms. (Positrons are electrons with a positive charge.) These electrons and positrons travel in all directions. When they strike other atoms, they create bremsstrahlung photons (x-rays) that also travel in all directions. By arranging photon detectors so that they detect x-rays scattered at a backwards angle (>90 degrees) from the beam, they could detect these x-rays and not x-rays from the beam. The number of these backscattered x-rays and their energy distribution (as shown in Figure 13 ) is an indicator of Z. In an ideal situation—for pure chemical elements, and with no intervening material—the number of x-rays is approximately proportional to Z to the fourth power, so that number is enormously higher for high-Z material than for medium-Z material. In the real world, most goods shipped (e.g., wood, steel, plastic, electronics) are not pure elements and differ in size and shape, and a container may hold mixed types of cargo. As a result, experiments have shown, the effect is somewhat less. The effect of Z on number and energy of backscattered x-rays is the key to EZ-3D; Figure 13 shows, for five elements, the difference in backscattered spectra as Z increases. This graph shows the number of backscattered photons (vertical scale) at each energy level (horizontal scale) recorded by a detector. The vertical scale is logarithmic, so vertical increments are larger than they appear. The plots are for five elements, from top to bottom, with Z: U, uranium, 92; Pb, lead, 82; Sn, tin, 50; Fe, iron, 26; Al, aluminum, 13. "Normalized 511" means that the graphs are "normalized" at 511 keV. That is, for each element, the number of counts at 511 keV is multiplied by the factor needed to set the count to a specified number (the same number is used for all elements in a scan) and counts at each other energy level for that element are multiplied by the same factor. This facilitates comparison across elements. For the region between roughly 600 keV and 1300 keV, the graph shows a difference between uranium and lead, and a larger difference between lead and tin. The distribution of points in the graph depends on the energy of the electron beam used to generate the x-rays via the bremsstrahlung process. For this graph, the beam has an energy of 2.8 MeV. Since almost all the x-rays have energies far below that level, with the peak number of x-ray photons at 300 keV, the number of counts diminishes at higher energy levels. For this graph, beyond about 1300-1800 keV, depending on the element, the number of background counts exceeds the number of backscattered counts, so that counts at and beyond those levels provide no useful data. Stephen Korbly, Director of Science at Passport Systems, Inc., describes the proposed design and operation as follows. A truck would pull a cargo container through the inspection unit at slow speed, 2.5 feet per second (1.7 mph). The container would first pass through a radiography unit to identify areas of dense cargo for the EZ-3D beam to examine in more detail. The container next would pass through the EZ-3D unit. There, a Rhodotron would generate a 9-MeV electron beam. This beam would travel through a series of electromagnets so as to steer the beam downward toward the container. The beam is designed to move back and forth transversely across the top of the cargo container to interrogate a "slice" of the container, as shown in Figure 14 . If the system were to detect a volume of dense cargo, the beam could dwell on that volume longer to gather more data. The electron beam would strike a water-cooled metal target, producing a spray of x-rays through the bremsstrahlung process. The x-rays would pass through a metal sheet that filters low-energy x-rays from the beam because they are of little value for detection but would increase radiation dose to the cargo. The remaining x-rays pass through a collimator, a slab of heavy metal with vertical holes drilled in it, so that only those x-ray photons traveling in the desired direction, downward, can pass through, forming a beam traveling in one direction. Collimation removes from the beam those x-rays traveling in other directions that would interfere with detection by scattering in the cargo or traveling directly from the x-ray generator to the detectors without going through the cargo. The x-ray beam would pass downward through the cargo, generating other x-rays as described above, some of which scatter backwards. Very few other photons do so. Sodium iodide detectors are placed so as to detect these backscattered x-rays. The detectors are collimated so their field of view intersects with an x-ray beam. Figure 14 illustrates this configuration. The intersection of a beam and a detector's field of view forms a voxel. This intersection of two lines locates the voxel in two dimensions; the position of the "slice" of the container being examined locates the voxel in the third dimension. Each detector records the number of individual x-ray photons it detects in each voxel. AS&E expects the system to be able to scan a standard 40-foot cargo container for high-Z material in 15 seconds. Since the backscattered photons would pass through other cargo between the x-ray generator and a voxel, and between a voxel and a detector, the system is designed to account for, and subtract, the effects of this other cargo. Scanning a container produces radiography and backscatter data on how each voxel attenuates x-rays. An algorithm would integrate and analyze both types of data. In effect, to reconstruct the contents of a container, it would create a hypothesis about what is in the container where, and would calculate how closely the hypothesis matched the data. The algorithm would then alter the hypothesis iteratively until it provided a best fit with the data. The system is designed to alarm automatically when it detects voxels containing high-Z material and meeting other conditions. For example, the algorithm might alarm only if it detected a number of contiguous voxels of high-Z material so that it would not alarm each time it detected, say, a lead sinker. The process would repeat for each slice of the container. Korbly states that the algorithm has been shown to work in laboratory demonstrations. (1) Jeffrey Illig, the CAARS project manager at AS&E, stated in October 2008 that the AS&E CAARS would, if successful, look at 3-D voxels, rather than 2-D pixels; the latter approach, in effect, provides the average Z of an x-ray traveling through the entire width of a container as in the L-3 and SAIC CAARS systems. As a result, he says, the AS&E system is expected to generate more data by breaking the volume being inspected into smaller units, simplifying the task of the detection algorithm. (2) Joel Rynes, Program Manager of DNDO's CAARS program, said that the EZ-3D effect is more specific to high-Z materials than is dual-energy radiography, potentially improving performance, though it will not be able to discriminate between (for example) lead and uranium within the scan time and dose to cargo limits required. (3) The system is designed so that, if its radiography unit detects an area of dense material, it could direct the EZ-3D x-ray beam to spend more time scanning that area, further reducing the probability of a false positive or false negative. (4) Illig says that the system is designed to specify the location of a suspicious object in three dimensions; as a result, CBP personnel would know where to look in a secondary inspection, easing their task and reducing the time that a container is delayed for inspection. (5) If the system works as anticipated, it is claimed, it would automatically alarm on high-Z material, making it easy to use. (6) Because the x-ray beam is aimed downward, much of it would be absorbed by the ground, reducing the amount of x-radiation that escapes and reducing shielding requirements. AS&E has been working on its CAARS system since late 2006 under a contract that DNDO awarded for system development in September 2006. (The L-3 CAARS section provides the total cost of DNDO's three CAARS projects.) In early 2008, DNDO changed the goal of the CAARS program from system acquisition to an advanced technology demonstration (ATD). Passport Systems has conducted numerous laboratory experiments at the University of California, Santa Barbara, to develop EZ-3D using the university's 5.3-MeV accelerator to generate x-rays to scan a 4 ft x 4 ft x 4 ft volume containing objects used to simulate commercial cargo. DNDO conducted a Critical Design Review (CDR) of the AS&E CAARS in October 2008, i.e., a review of the specifications for all components of the system and the links between them. DNDO approved the system's design at that time. As a result, the design is locked in and AS&E is able to begin to order hardware to assemble an ATD prototype system. Illig stated in early October that the system's design was complete and that, if the CDR is successful, AS&E would begin assembling a full-scale ATD system in November 2008. AS&E would also construct a shielded-room facility to develop the system in its anticipated production configuration. AS&E anticipates obtaining the first data from this ATD system in April 2009. After several months of developmental testing, AS&E would turn the prototype system over to DNDO so that agency could characterize and evaluate the system's performance using its own containers, cargo, and targets. If that phase is completed successfully, DNDO would decide whether to test the prototype under operational conditions, such as having CBP personnel operate it at a port of entry. Successful completion of that phase, in turn, would lead to a decision by DNDO on whether or not to purchase and deploy the system. Illig stated that AS&E could deliver the first production unit around the end of CY2010, with full-scale production commencing in CY2012; it projects the cost of its CAARS system at $8 million to $10 million per unit, assuming a buy of 25 units. However, Rynes states: DNDO has no plans at present to purchase and deploy the CAARS systems. We will use prototypes of the three CAARS systems to collect data to feed a cost-benefit analysis that could lead to future procurements by DHS. The AS&E CAARS prototype will be a full-scale laboratory prototype that would still take substantial work to get it ready for a port environment. It will take less work to get the SAIC and L-3 prototypes ready for a port deployment. The AS&E system has always been the high risk, high benefit solution. Rynes stated that as of February 2009, development of the AS&E CAARS system was on hold due to technical issues that AS&E is trying to resolve. This report discusses this cost-benefit analysis under "status, schedule, and funding" in the L-3 CAARS section. (1) In theory, the system could differentiate between different high-Z materials, such as uranium vs. lead, if the materials were pure chemical elements and certain other conditions were ideal. In practice, so doing would take longer than differentiating between high- and medium-Z material, and impurities and interference from other cargo could make differentiation between different high-Z materials very difficult at best, so any high-Z material in a container could require a secondary inspection, delaying that container. (2) A container can include many types of cargo, and there is no requirement to declare the arrangement of the cargo. It would appear very difficult to develop an algorithm that can reliably eliminate x-rays scattered by cargo between the voxel being interrogated and a detector and reconstruct the locations of different chemical elements within a cargo container. (1) The system has not been demonstrated in a full-up configuration. Passport Systems, a Massachusetts company, uses an accelerator in California for its experiments, and these experiments use a lower-powered accelerator (5.3 MeV) than the Rhodotron (9 MeV). What risks, if any, are associated with shifting from a lower- to a higher-powered accelerator? (2) The integration of a linear accelerator for radiography and a Rhodotron for EZ-3D has not been demonstrated. (3) Passport Systems has simulated the performance of EZ-3D by gathering radiography data separately, bringing these data to the EZ-3D experimental facility in California, merging ("injecting") the radiography data into the EZ-3D data, and feeding the merged data into the cargo reconstruction algorithm. As with any simulation, one might ask how accurately the simulation reflects reality. (4) Will the AS&E system be able to meet the intended scan speed? There is always a risk of problems of this sort when one scales up from a laboratory demonstration system to an operational system. (5) Rhodotrons take a long time to build, and very few have been built. For example, AS&E has the world's 18 th unit. Could the manufacturer, Ion Beam Applications (IBA), a Belgian company, build them faster and cheaper? IBA has told AS&E that if IBA gets a large order, it would build a facility in the United States to assemble Rhodotrons. Could it ramp up production in a new facility without major hurdles? (1) If AS&E received a contract for multiple (e.g., 25) production units, could IBA ramp up its Rhodotron production facility on schedule? (2) The AS&E system is expected to be costly, and a main component of cost is the Rhodotron, at €2 million to €5.7 million apiece for single units. Will IBA be able to reduce Rhodotron cost through research and through quantity production? (1) Illig states that AS&E has extensive experience in designing systems and their user interfaces for CBP and other front-line users, but that AS&E has not consulted with CBP on the design of its CAARS system. Is that cause for concern, or is the user interface fairly standard by now so that extensive consultation is not needed prior to operational testing? (2) Illig states that the footprint of the unit is 60 ft by 160 ft mainly because it uses concrete walls for radiation shielding. The footprint is a concern for port operators because space is at a premium at ports; it is less of a concern at land border crossings. Illig states that the length could be reduced to perhaps 40-50 ft by 120 ft by using some means other than a truck to pull containers through the system; is that reduction sufficient? (3) The system generates radiation in two ways. A radiography unit uses a 6-MeV linear accelerator, aimed horizontally across a cargo container, to generate x-rays (through the bremsstrahlung process). Illig states that there is a "beam dump" to absorb x-rays on the other side of the container, and that the accelerator is pulsed, so that it is off most of the time, reducing the shielding needed. However, some x-rays scatter off detectors and cargo. The Rhodotron is on all the time, and will generate 9-MeV electrons, but is aimed downward so that the Earth absorbs most of the resulting x-rays. Further, the bremsstrahlung process generates x-rays in all directions; will the shielding be adequate? Accordingly, CBP and port personnel will be concerned about the amount of radiation that escapes. Will AS&E be able to provide satisfactory assurances on this point? Illig states that added funding would allow AS&E to build a test cell that had a Rhodotron and a linear accelerator for radiography together so that it could obtain actual data. That, he says, would permit engineers to develop algorithms to integrate both types of data using actual data. Added funds, he said, would also let AS&E purchase more test articles, conduct tests on more cargo configurations, and increase test time, all of which would characterize system performance better and reduce risk. According to Illig, as part of the ATD for CAARS, AS&E would build a facility integrating backscatter and radiography technologies. This facility could provide a testbed for Passport Systems' nuclear resonance fluorescence technology and, more generally, for research into resolution of alarms caused by possible shielded nuclear material. Similarly, Rynes believes that the facility could have various applications: The AS&E CAARS prototype is being installed at MIT's Bates Linear Accelerator Center. The AS&E x-ray source (9 MeV, continuous wave) provides a capability that does not exist in the United States. After the CAARS program is complete, DNDO must dispose of all equipment procured under the contract. One option proposed is to keep the source at the Bates Center and establish the source as a "user facility" where researchers can come in to do experiments (e.g., NRF measurements at 9 MeV or experiments with prompt photofission). Another option is to let AS&E keep the source to use in a possible follow-on system (e.g., pilot deployment of a modified CAARS design). It is too soon to make this decision; it depends on how well the AS&E CAARS system performs in its upcoming tests. Nuclear weapons or SNM may be hidden in cargo containers, automobiles, or elsewhere. Radiography might detect a fully assembled nuclear weapon but might miss a small piece of HEU, depending on its size and shape, and passive radiation detection might or might not detect lightly shielded HEU, depending on such factors as the amount of HEU, the thickness and type of shielding, and whether it contained trace amounts of uranium-232, which has a high-energy (2.614-MeV) gamma ray from thallium-208 associated with its decay. Beams of neutrons or high-energy x-rays or gamma rays hold the potential to detect SNM by itself or in complete weapons by inducing fission. But the radiation emitted by such beams could require shielding and some standoff distance, possibly making it impractical where space is at a premium. Other properties of SNM are its high density and high Z. Such materials cause much greater deflection of muons, a naturally occurring subatomic particle, than do lower-density, lower-Z materials. Detection using muon tomography (MT) would not use a radiation source, avoiding concerns about radiation exposure or salvage fuzing. Yet while MT has been demonstrated in the laboratory, it remains to be seen if it can be converted to a system that will work in the real world. At issue: Is muon tomography an operationally feasible means of detecting nuclear weapons or SNM in the presence of clutter from actual cargo? Is it a cost-effective means of detecting high-Z material in vehicles with people inside them, and in cargo at ports of entry and choke points, without affecting the flow of commerce? Muons are heavy subatomic particles generated when cosmic rays strike atoms in the Earth's upper atmosphere. Most muons travel at over 95% of the speed of light. Given their speed and mass, they are highly energetic, with a mean energy of 3 billion electron volts. As such, they are highly penetrating. For example, they can penetrate 1.3 m of lead or 15 m of water. About 1 muon strikes each square centimeter of the Earth's surface per minute. Matter deflects muons, with the degree of deflection determined statistically by the density and Z of the matter. As it happens, there is large separation between the average angle of deflection resulting from low-Z, low-density material in commerce, like food or plastic, and medium-density, medium-Z material like steel, and between the latter and high-Z, high-density material like tungsten, lead, or SNM. Tomography divides a solid object into many parts, determines a characteristic (e.g., density) of each part, and assembles the parts into an image of the object. A medical CAT (computed axial tomography) scan, for example, creates images of each slice (about 1 to 10 mm wide) of the body part being scanned. Muon tomography measures the trajectory of each individual muon before it enters a cargo container and again after it exits. In simplest terms, the intersection of the trajectories indicates the angle of deflection (and thus high, medium, or low density and Z) and the point of deflection, though the trajectory is more complex because a muon interacts with many atoms as it passes through a container. An algorithm integrates data from numerous muon trajectories to form a three-dimensional image of the container based on the density and Z of its contents. The statistical difference in deflection between high-Z, high-density material and other material, combined with muons' high penetrating power, is the basis for an MT system to detect SNM, whether in weapons or by itself. Decision Sciences International Corporation (DSIC) is developing an MT system for use with vehicles and containers. (DSIC changed its name from Decision Sciences Corporation in August 2009.) Development began through a Cooperative Research and Development Agreement (CRADA) with Los Alamos National Laboratory (LANL). Figure 15 is a schematic drawing of the system. The prototype works as follows. To determine the track of muons, it uses "drift tubes," which are similar in shape to fluorescent light tubes. They are made of aluminum, with a wire running lengthwise through the center of each tube, and are filled with a mixture of gases typically used in drift tubes. The tubes are arranged in arrays. Each array consists of 12 cross-hatched layers of tubes, alternating between 2 layers in the "x" direction and 2 in the "y" direction. A positive charge is applied to the wires. A muon that strikes the gas in a drift tube creates a trail of free electrons, which are drawn ("drift") to the wire by the positive charge at a known speed. These tubes measure the distance between the wire and a muon's closest approach to the wire. Two layers of "x" tubes establish a "y" measurement, and two layers of "y" tubes establish an "x" measurement. Combining data from each set of 4 tubes establishes a point on a muon's trajectory, and the system uses 3 points to define the trajectory. DSIC had originally planned to have the tubes in a "tunnel" configuration, as illustrated on the left side of Figure 15 , with arrays of drift tubes on the top, bottom, and sides of the object being examined to determine the incoming and exiting trajectories of individual muons, but has instead decided to use a "top/bottom" configuration, as shown on the right side of the figure, with arrays on top and bottom only. This configuration would be less costly than the tunnel, but it would require up to 10% more scan time because muons entering from or exiting to the side would not be counted. That increase could be reduced by using multiple units arrayed side by side to scan multiple lanes of traffic so as to record the tracks of more muons entering and exiting the object being examined. As with any detection system, total throughput (e.g., number of tractor-trailer trucks exiting a port per hour) could be increased by deploying more units. Also in this configuration, units are only as wide as a lane of traffic, unlike many other systems. DSIC views this as important because space is severely limited at many ports and, even where it is not, it could be difficult to rearrange traffic lanes to accommodate wider detection equipment. For MT to work, the system must identify each muon uniquely so it can match entry and exit tracks. According to DSIC, the system's electronics can do this because muons travel at essentially the speed of light, and entry and exit tracks occurring at the same time are easily matched up. The electronics can keep up with the tracks, since the rate at which muons strike the drift tubes is far lower than the rate at which the electronics can process muon signals. Some 3,000 muons strike the drift tube array each second, and the electronics can read a muon hit in a millionth of a second. The odds of two muons striking a drift tube within a millionth of a second are 3000 out of 1,000,000, or 0.3 percent, so MT can uniquely identify a single muon 99.7% of the time. If no matter at all were present between the top and bottom drift tube arrays, a muon's exit track would be a straight-line continuation of its entry track. If a muon interacted at only one point, the intersection of the two tracks would indicate the angle and point of deflection of an individual muon. The point of deflection would locate a voxel, and the angle of deflection would indicate "scattering density," a combined measure of Z and density of the material in that voxel. In practice, a muon interacts with all matter along its path, displacing the exit track from a straight line. The amount of displacement provides information on the scattering density, location, and thickness of the material. From these data, an imaging algorithm calculates the degree of scattering of muons for each voxel and creates a 3-D image of the contents of the object being scanned. Resolution of the scan increases with time, as Figure 16 shows, as each pair of muon tracks adds data. The image is displayed on a computer screen and can be rotated so the viewer can visualize it as if in three dimensions, as Figure 17 shows. Based on computer simulations and laboratory tests conducted in early 2010 using prototype equipment, DSIC states that MT can differentiate between high-Z and medium-Z material, so it can pick out HEU hidden in a cargo of steel parts, or even hidden as a piston inside an engine. Based on tests conducted in early 2010 with its prototype scanner, DSIC estimated in April 2010 that its system would take less than 1 minute to clear most containers with 95% confidence; that it could automatically detect a cube of unshielded SNM 5 cm on a side in a container in that time; and that it could automatically detect that cube inside shielding (e.g., a larger cube) in less time. Others disagree, as discussed under "Scientific risks and concerns," below. DNDO observed, "These performance results are not supported by data collected during the DNDO TRR [test readiness review] demonstration conducted January 11-14, 2010." As with any system, increasing scan time would increase confidence while having a greater impact on the flow of commerce. The DSIC scanner can also detect gamma rays because they produce a signal different from muons when they strike drift tubes. According to DSIC, when a gamma ray strikes an aluminum drift tube, it knocks electrons off the aluminum, which ionize atoms in the gas inside the drift tubes. These electrons drift to the central wire and are recorded. The system can differentiate between electrons generated by gamma rays and by muons, it is claimed, because the muon-tracking algorithm can compute a track for muon-generated electrons but not for gamma-generated electrons, as the latter do not pass through a drift tube. A gamma-ray count above background levels would be suspicious, though there are many innocent gamma-ray emitters in commerce. A low count might reduce suspicions, though vehicles in adjacent lanes could suppress background gamma rays. The scanner has no spectroscopic capability, so it cannot identify the source of gammas by their spectra. However, DSIC argues that its scanner uses the presence or absence of gammas to reduce scan time. By way of background, HEU that has been through a nuclear reactor picks up a small amount of uranium-232, which has an extremely energetic gamma ray (2.614 MeV) from thallium-208 associated with its decay, making it very hard to shield. Even if HEU has not been through a reactor, such as if it has been produced by centrifuge from natural uranium, it will have some uranium-238, which has a gamma ray of 1.001 MeV. DSIC states: The gamma signal from any HEU has a 1.001-MeV component from its uranium-238 content. Even for uranium enriched to 93 percent uranium-235, with 7 percent uranium-238, shielding 1.001-MeV gammas so they fall below the system's detection threshold of about 20,000 gammas per second requires about 1.4cm of lead. This increases the size of the threat object we're searching for with muon tomography to almost 9 cm in diameter, compared with 6 cm for a 2-kg cube of unshielded HEU. Since the number of muons passing through an object is proportional to its area, about 2.25 times more muons will pass through the larger object than the smaller one. This means muon tomography can clear the shielded package 2.25 times faster than the bare HEU. Because only some fraction of containers emits gammas, this allows us to clear the vast majority of containers for the large threat package in 1/2.25 the time (26 seconds). If we were to search for the bare HEU every time, the average time to clear would be around 60 seconds. This makes a huge difference in our throughput rates. Containers with cluttered scenes or potential shielding objects would require longer scan times, but these scenes should be rare. Throughput is determined by the average scan time, so averaging a majority of 26-second scans with a few 60- or 90-second scans would have little effect on throughput. We don't know the number of occurrences in commerce of these types of cluttered scenes, so our next step is to scan containers in the flow of actual commerce and adjusting our scan procedures according to what we find. DSIC also states that, because its system has several thousand drift tubes, which function as detector elements, it can provide a general location of gamma-ray emitters in a container, helping to distinguish between point sources like a small amount of plutonium and distributed sources like kitty litter. It further claims that this capability can help clear false positives and determine which parts of a container warrant closer examination by the system's muon tomography element. DNDO finds the argument that gamma-ray detection capability adds to the efficacy of muon tomography to be unconvincing. "The attenuation of 1-MeV gamma rays by 1.4 cm of lead can also be achieved by about 2 cm of iron or 6 cm of aluminum or 16 cm of water; in other words, the HEU sample can be easily shielded by innocuous materials commonly found in cargo and effectively invisible to the MT system." As a result, DNDO argues, gamma-ray detection capability would probably not reduce MT scan time in actual cargo, much less in a container in which terrorists had arranged the cargo so as to reduce the probability of detecting a nuclear bomb. DNDO prefers that DSIC would concentrate on proving the concept of MT before trying to augment it with detection of other types of radiation. Based on testing, improvements in electronics to reduce noise, and computer modeling, DSIC anticipated in April 2010 that MT would be able to distinguish between SNM and medium-Z materials in under a minute. Also in that month, DSIC estimated that perhaps 2 to 5 minutes would be needed to distinguish between HEU and lead and about twice that to distinguish HEU from tungsten. These figures are about half those of estimates made in July 2009. An extended scan of a container would be easier, less costly, less intrusive, and faster than unloading a container, inspecting its contents, and reloading it, a process that could easily take hours. Christopher Morris, a physicist at Los Alamos who has done extensive research on MT, stated, If muons were to identify a shielded container, I would advise taking as long as reasonable (perhaps ~1 hour) to survey a container with muon tomography before taking the risk of any invasive action. In this longer scanning time, one should be able to provide detailed images of the configuration of a threat object, estimate its yield if it is in a weapon configuration, distinguish between different high-Z materials radiographically, and carefully study the passive radiation signatures. This might avoid triggering a salvage-fuzed weapon. Detection might be made faster and more accurate by an algorithm that would subtract the known part of an image, making it easier to focus on suspicious objects. A library would be constructed with MT images of many models of trucks, cars, containers, and trailers. When a truck entered the MT system, a scanner would read its license plate. The algorithm would call up the MT image of that truck from the library, and would subtract that image, voxel by voxel, from the image of the truck generated by the MT system, leaving an image only of the cargo and any anomalous objects in the truck itself. According to DSIC, scans performed on several vehicles have demonstrated the efficacy of this approach. Some, though, question whether the algorithm could handle correctly any variant to the vehicle (e.g., a modification to the engine). As of May 2010, DSIC had constructed models of several vehicles and was evaluating their utility. The library of vehicles will grow as scans of various vehicle models are performed. This library is not a critical piece of the technology for scanning cargo containers, but would be of more value for scanning passenger cars. To improve its ability to detect SNM, DSIC had initially designed a prototype scanner with the ability to detect neutrons as well as muons and gamma rays. However, DSIC felt that the ability to track muons and to detect and locate gamma ray emitters sufficed As of April 2010, it had postponed plans to use its system to detect neutrons while keeping it as an option. The optional neutron detection capability would use drift tube walls coated with boron-10. Absence of neutrons may help clear false positives, though hydrogenous cargo could absorb neutrons, preventing them from being detected. There are few sources of neutrons in commerce; accordingly, the presence of neutrons would be suspicious. (1) Because it uses naturally occurring muons, muon tomography does not use a source to generate radiation, so it does not require shielding or a standoff distance to protect workers from radiation. (2) Since it does not generate radiation, it cannot harm people or damage the contents of containers, so it could be used at land border crossings to search cars for SNM while the passengers are inside, speeding the flow of traffic. (3) Because it does not generate radiation, it cannot trigger salvage-fuzed weapons. (4) DSIC claims that MT is very unlikely to show a mass of high-Z material where none exists, though DNDO stated that DSIC did not demonstrate this at the TRR. Reducing the false alarm rate is important to CBP because each alarm, whether true or false, may require considerable effort to clear. (5) Because muons are highly penetrating, they can be used to detect high-Z material even when shielded. (6) The detection algorithm is intended to detect, locate, and alarm for high-Z material automatically, greatly reducing the need for human interpretation. The display algorithm shows the operator where high-Z material is located and may provide information about its shape. (7) The top/bottom configuration is narrow enough to scan trucks leaving seaports within existing lanes, avoiding the need to modify traffic patterns. In 1995-1996, LANL built and tested a small MT prototype (6 ft by 6 ft scan area) to demonstrate the detection of high-Z materials. Based on simulations and test data, DSIC and LANL signed a CRADA in May 2007 to commercialize LANL's MT technology. Since then, DSIC has provided about $7 million to LANL as part of the agreement. Under this funding, LANL and DSIC staff built a larger scanner, 12 ft high by 12 ft wide by 16 ft long, large enough to scan a portion of an SUV, that was operated at LANL from October 2008 to mid-June 2009 for a cost of $1 million. Vehicles were tested in the device with various clutters as well as medium- and high-Z materials. DSIC moved the scanner to its headquarters in Poway, CA, and modified it to a top-bottom configuration 12 ft high by 16 ft wide by 24 ft long, large enough to scan SUVs, automobiles, and 20-foot shipping containers. DSIC canceled a Test Readiness Review (TRR) scheduled for April 2009 because of problems with the muon tracking algorithm and because the decision algorithms needed further development and testing. As of July 2009, DSIC planned to conduct a TRR in late September or early October 2009. A TRR shows whether the system is ready to begin a Proof-of-Concept (PoC) demonstration, the last phase of Exploratory Research at DNDO. DNDO conducted a TRR in January 2010 at DSIC's facility in Poway, CA. R. Leon Feinstein, DNDO program manager for near-term testing of the DSIC MT prototype, described the results as follows: The goal of the TRR was to determine if the MT prototype was ready for a DNDO-sponsored Proof-of-Concept (PoC) demonstration that would more fully characterize and evaluate MT technology. Following the TRR, DNDO's test team concluded that the DSIC MT system was not ready for the PoC demonstration. The team recommended that DSIC continue with its planned hardware and decision algorithm upgrades, addressing issues identified by the test team that limit the functionality and performance of the MT prototype. DSIC had already recognized these needed upgrades and fixes at the time of the TRR, and planned to complete them by the end of May 2010. DNDO will conduct a second TRR after the following conditions have been met: (1) DSIC must complete its proposed upgrades and fixes; and (2) the DSIC TRR Report (a contract deliverable) must be revised, re-submitted and approved by DNDO. DNDO rejected DSIC's first draft TRR report of February 8, 2010, for the following reasons. (1) It described demonstrations and measurements that the DNDO test team neither observed nor recorded. (2) It focused on gamma-ray detection results that were not part of the TRR and were not observed or recorded by the DNDO team. (3) It did not address numerous anomalies and instabilities in the image reconstruction and decision algorithm for detection of high-Z, high-density metals. These anomalies and instabilities are quite serious and were carefully recorded by the test team during the TRR and briefed to DSIC at the TRR conclusion. DSIC did not address these issues in its first test report, such as by providing a technical explanation and possible mitigation strategies. (4) Many comments and conclusions in the report are inconsistent with observations by the test team and are not backed up with empirical data or technical analysis. A concern is that terrorists might be able to counter MT. For example, they might try to smuggle uranium through a detector in pieces below the system's detection threshold, but that would risk exposing the plot to detection many times. Alternatively, since MT indicates the Z and density of a voxel, it might be possible to reduce those characteristics of HEU by forming it into pellets and mixing them with a low-Z substance. These techniques, however, would require fabricating HEU into a weapon-usable shape within the United States, introducing considerable difficulty and providing clues to the plot. U.S. nuclear weapons use hollow pits, in which a hollow shell of SNM is imploded to form a supercritical mass, initiating a nuclear explosion. Other nations might use this method as well. If terrorists were to obtain a state-made hollow-pit nuclear weapon, MT might not detect a pit of this type if the SNM shell were thin enough and voxels large enough that SNM did not fill most of a voxel. Also at issue is the amount of time required for a scan. The Royal Society, the U.K. national academy of science, issued a report in March 2008 based on a meeting with dozens of experts from many nations, and stated, The key limiting factor is the time required for muon radiography, up to several hours to image only a cubic foot of a block of iron. According to a detector concept being developed by Los Alamos National Laboratory (LANL), it would take four minutes to image a cargo container. However, this would require detector panels perhaps the size of a large room. Moreover, once a shielded source has been identified it may take several hours to unpack the cargo to locate it. DSIC responds that since these concerns were raised, it has made significant advances in extraction of signal from muon scattering data, such as using 3-D images (tomography) rather than 2-D images (radiography). It also claims that increasing scan time from 1 to 5-10 minutes may permit differentiation between SNM and other high-Z material, avoiding the need to unpack a cargo container. According to another analysis, "only a few scattered muons are required to determine Z accurately enough to distinguish among the major groups of Z [high, medium, and low] with high confidence, and the value of Z is conveniently displayed as a color image." In contrast, Feinstein said in May 2010, It takes many muons to distinguish with high confidence high concentrations of high-Z nuclei found in actinide metals [e.g., uranium and plutonium] from, say, iron and lead in a cargo filled with medium-Z clutter, particularly in a vertical direction. A 10x10x10 [cubic centimeter] voxel at sea level would be penetrated by about 200 muons on the average in 2 minutes of interrogation. The minimal amount of time to discriminate a liter of SNM from a liter of lead has not yet been determined or demonstrated in a densely cluttered cargo environment. MT estimates the nuclear charge concentration in each reconstructed image voxel and, hence, cannot detect high-Z material that is significantly diluted by air or other low density, low to medium Z material in the same voxel; and will not have sufficient sensitivity to discriminate SNM from DU [depleted uranium, i.e., uranium with most U-235 removed] and other relatively high-Z material. Robert Mayo, Program Manager, SNM Movement Detection/Radiation Sensors, and Advanced Materials Programs, Office of Nonproliferation R&D, NNSA, raised other concerns in 2008: While muon tomography has been demonstrated to locate regions of interest in cargo that contains dense material, its material identification abilities are limited. What's more, quite large sized detection equipment, much more so than in other detection systems, is required, making MT rather impractical for many nonproliferation and national security applications. Most critically, however, MT is likely to require rather long scan times to adequately resolve dense images in cargo with a reasonable rate of false alarms. For these reasons, it is considered impractical as a screening technique. There are much more practical threat material identification and characterization tools being developed by various agencies of the federal government including passive spectroscopic and active detection technologies, as well as advanced radiography, all of which could be advanced and operationalized much more quickly with increased support. DSIC claimed in May 2010 that data from actual tests (as distinct from modeled data) do not support the concerns raised in the preceding two paragraphs. The MT system as it stood in April 2010 will incorporate gamma-ray detection (though not identification) as well as muon detection, and retains the option to incorporate neutron detection as well. This plan raises several questions. First, how valuable is the gamma-ray detection capability for reducing scan time? DSIC's plan is that if the scanner detects gamma rays, it would look for an unshielded SNM source rather than a shielded one. Since the latter would be larger than the former because of shielding, and since MT could find a large object more easily than a small one, the argument goes, this procedure would reduce scan time. But there are many sources of gamma rays in cargo. There is also background gamma radiation from such sources as uranium. What fraction of cargo containers in actual commerce contain gammas? DSIC plans to conduct scans on containers in the flow of commerce to help answer this question. Second, what confidence could there be that absence of a gamma-ray signal would permit a reduced scan time? DSIC suggests that scan time could be reduced to 26 seconds. Yet as Figure 16 shows, a 30-second scan of a car contains a considerable amount of clutter. Clearing cluttered scenes in 30 seconds would probably not be a concern for a container full of lettuce, paper towels, or water bottles, but could be a problem for a container with dense metal objects like car parts. Third, helium-3 is the "gold standard" of neutron detection, but given the shortage of it, DSIC worked with Los Alamos to use boron-10 compounds in the tubes for neutron detection, resulting in a much lower cost to add neutron and gamma capability to the scanner. Could boron-10 be expected to work adequately—not as well as helium-3, but adequately—for neutron detection? If not, might some other combination of gases work adequately? Is the schedule too optimistic? In October 2008, DSIC stated that development was proceeding at a rapid pace. It envisioned production after the third-generation prototype was built and field-tested at an operational facility. It stated that the detection algorithms were being modified into a form suitable for operational use. DSIC planned a third-party test validation and life expectancy analyses and experiments. As of October 2008, DSC planned to complete all these steps by the end of 2010. Earlier, DSIC had planned to complete them by the end of 2009. As of July 2009, the schedule had been delayed for several reasons, such as moving the detector to a sea-level location (from Los Alamos, NM, to Poway, CA). As of July 2009, DSIC expected to complete the proof-of-concept demonstration for DNDO in November 2009, to begin construction of a commercial scanner in January 2010, to perform field testing during 2011, and to have the scanner commercially available in 2012. As of April 2010, DSIC stated that that schedule remained current. It had begun design and component testing to increase deployability, manufacturability, and lifetime of its system. The schedule risk is that a system in prototype development must complete many steps before it could be commercially available, yet a problem with any step could delay the schedule. A related concern is whether it is appropriate for DSIC to develop a schedule for commercialization before completing its TRR and PoC demonstration successfully and then moving to an Advanced Technology Demonstration effort. The latter would provide a full characterization of system performance, giving DNDO the data it would need to conduct tradeoff studies for potential applications. One operational issue is the clearing of alarms due to innocuous high-Z objects. MT is expected to differentiate between high-Z material and low- or medium-Z material faster than it could differentiate between various types of high-Z material, such as tungsten vs. uranium, though estimates of scan times differ. However, Feinstein stated, "MT is likely a poor choice to discriminate uranium from tungsten. SNAR [shielded nuclear alarm resolution] technologies will likely do this more reliably and much faster. Further, all SNAR signatures have passed their PoC demonstration and evaluation." If MT proves able to differentiate between SNM and other high-Z material as well as its developers anticipate, then performing an extended-time secondary scan of a container to resolve a high-Z alarm would be faster, simpler, and less costly than unpacking a container. This anticipation, though, is based on experiments using medium-scale laboratory equipment. If experiments find that MT cannot differentiate between SNM and other high-Z material as well as anticipated, then more intrusive means might be required. However, Katz estimates that these alarms would be few and could be cleared easily: I think the false positive rate would be a small fraction of a percent. There just aren't that many lead or tungsten ingots in commerce. When they are shipped they sit on pallets on the floor of a container (strapped down) and the rest of the container is empty. 30 tons of lead fills about 2.7 m^3 [cubic meters] out of the 64 m^3 container volume, so it is mostly empty space. A quick look is enough for secondary inspection. While this approach would reduce the burden of clearing high-Z alarms (for other systems as well as MT), the concern regarding nuclear smuggling is not clearing ingots of tungsten or lead shipped in this manner, but detecting SNM hidden in cargo. Further, the false alarm (false positive) rate depends on the threshold that DSIC chooses for detecting small amounts of SNM. Smaller voxels and lower thresholds might be needed to reduce false negatives, but as voxel size and threshold decrease, the false positive rate will inevitably increase, as discussed under " Computer Modeling to Evaluate Detection Capability ." Another issue is the importance of reducing scan time from 60 to 26 seconds. The concept of operations that DSIC envisions as of April 2010 is to use MT with a low-energy (1-MeV) x-ray source for radiography in a primary inspection mode, and to use MT to clear questionable containers in a secondary inspection mode. But CBP agents would probably need more than 26 seconds to examine a radiograph visually for signs of contraband, which in this case would be done in primary inspection. Regarding secondary inspection, a multi-minute scan time is acceptable, as one alternative, unloading a container for inspection, would take much longer, though other alternatives are under development, such as those in DNDO's Shielded Nuclear Alarm Resolution program. A related issue is why DSIC is considering a low-energy x-ray system when higher-energy x-rays, in the range of 6 to 9 MeV, are considerably more penetrating. A former concern was that many ports could not accommodate an MT system as wide as the original tunnel configuration. In response, DSIC designed a top/bottom scanner the width of existing truck lanes at ports. DSIC states that added funds would enable it to improve the detectors and detection algorithms to provide more detailed imaging; incorporate sensors for additional signatures into the MT system to detect more threats and contraband; expedite the integration of gamma ray, neutron, and muon signals; develop the CONOPS that governs how the system would be used; and enhance and expedite engineering and manufacturing of the production version. Added funds, DSIC says, would also support development of a library of MT images of different vehicle types, as discussed above. The detection algorithm draws on those used for positron emission tomography, a medical technique to image bodily processes. DSIC is working with the positron emission tomography/single photon emission computed tomography imaging group at the University of California, Davis, to develop advanced imaging techniques. DSIC states, "These algorithms will be applied to detection of SNM in our system and will feed back into the development of algorithms for medical imaging and lesion identification." Another role for MT may be as a secondary inspection system for x-ray inspection, such as for containers at seaports. A low-energy x-ray system could quickly clear containers carrying low-density material but not necessarily containers carrying thick, dense cargo. In such cases, MT could interrogate the dense regions for SNM. DSIC claims, "In this role, the scan time requirements imposed on a primary system would be reduced, while still maintaining an effective, high-throughput primary scan and a secondary [scan] that is far less costly and labor intensive than unloading the cargo." MT may help detect SNM in other applications. The Coast Guard is concerned that small boats could enter a port carrying a nuclear bomb. This is of particular concern for Miami, which small boats could reach from the Bahamas. Because muons penetrate about 15 meters of water, it might be possible to construct a muon detection system for boats, with an array of detectors above the water and several meters under water to detect entry and exit tracks of muons. Boats would stop in this array, perhaps for several minutes, while a tomographic image was built up. This application appears scientifically feasible, though engineering it would be considerably more difficult than for a land-based system. Another application might be detection of stowaways or contraband by locating suspicious voids in medium-Z material. MT would be of use in detecting radiological material, such as might be used to make a "dirty bomb," or radiological dispersal device. Such materials are not high Z. Two such materials often mentioned are cobalt-60 and cesium-137. Cobalt has a Z of 27, and cesium has a Z of 55. However, because of their intense radioactivity, a large amount of dense shielding, such as lead, would be required to block gamma rays. For example, it would take a lead sphere two feet in diameter to shield most of the gammas from 0.11 cc of cobalt-60; MT, like existing x-ray systems, could readily detect such shielding. Nuclear resonance fluorescence (NRF), described below, seeks to detect SNM in containers. At issue: Is NRF a useful approach for this task? NRF may address a second problem. Discovery of a nuclear weapon in a cargo container would require an urgent effort to disable it and to gather forensic data. Both efforts would benefit from detailed information about the weapon's design. Several techniques can provide such information. Radiography or MT can show the shape and location of components; discovering that the weapon had a thermonuclear stage, for example, would show that it was manufactured by a nation and could have much higher explosive yield than a terrorist-made bomb. Interrogation using neutrons or high-energy gamma rays can provide information about SNM. NRF may be able to provide different types of data. Knowing what kind of chemical explosive the weapon contained, or combining information on location of electronics with information on their chemical composition, or knowing the mix of isotopes and impurities in SNM, would aid in dismantlement or might point to the source of the weapon. At issue: Is NRF a useful approach to determining the materials in a weapon? When atoms of a given element are illuminated with photons above an energy threshold unique to that element, their electrons absorb the photons' energy and move to a higher energy level, a so-called "excited" state. The electrons then drop back to their normal state, emitting photons that are slightly less energetic than the inbound photons. For example, certain elements or minerals illuminated with ultraviolet light (which is more energetic than visible light but less so than gamma rays) give off visible light. This emission of light is called fluorescence. A different type of fluorescence provides more detailed information. Each isotope has a unique combination of numbers of protons and neutrons in its nucleus, so it vibrates at unique frequencies (the resonant frequencies). When the nucleus is struck by a photon at precisely that energy level—sometimes to within a few hundredths of an electron volt in a beam with photon energies spread over a range of 1 MeV or more—it will absorb the photon and move to an excited state. The nucleus then reverts to its initial state, giving off photons very slightly less energetic than those that it absorbed. This process is known as nuclear resonance fluorescence, or NRF. NRF produces a gamma-ray spectrum unique to each isotope (though different than the gamma-ray spectrum produced by radioactive decay). Identifying the spectrum of the emitted photons identifies the element and isotope. This is of particular importance in differentiating between fissile U-235, which can be made into a nuclear weapon, and non-fissile U-238, which cannot. Unlike the use of neutrons or high-energy photons to stimulate the emission of neutrons or photons in SNM, NRF causes fluorescence in almost all isotopes of elements with Z>2 (helium), so it can identify a wide range of materials, not just SNM and other radioactive isotopes. For example, if nuclear material is shielded by lead, the identification of the various lead isotopes and their ratios may provide information as to where the lead was mined. Technical experts consulted for this report were aware of no other technology that permits identification of a weapon's materials without opening the weapon. CBP could also use NRF to identify other contraband and to check customs manifests. Absorption of photons creates an additional signature. X-rays are generated in a broad spectrum of energies without sharp peaks. If a beam of such photons is sent through a cargo container or other object, and the detector on the other side can record the energy of each transmitted photon, a hole or "notch" in the spectrum at a certain energy level means that some particular material has absorbed photons at that energy level through NRF and then subsequently re-emitted the absorbed photons at about the same energy level. Since NRF photons are emitted in all directions, only a small fraction of them reach the detector. The energy level of the notch indicates what material is present. For example, the notch for U-235 occurs at 1.73 MeV. To detect NRF, an accelerator generates a beam of x-rays, a photon detector records the radiation spectrum generated by the material being interrogated, and an algorithm matches NRF peaks against a library of such peaks. Photons resulting from NRF are differentiated from the incoming photon beam because the latter produces a broad continuum of photon energies while photons generated by NRF produce very narrow peaks. Further, the photon beam travels in a forward direction, while the NRF signal is emitted in all directions, so a photon detector placed behind and to the side of the material being interrogated (relative to the direction of the photon beam) detects photons traveling backward from the beam direction, which are mainly NRF photons. Figure 18 illustrates this geometry. DNDO is studying another approach to NRF using a beam of photons having a single energy level ("monoenergetic photons") near that needed to induce NRF in a particular isotope. At present, that method is technically difficult, costly, and requires large and delicate equipment, making it unwieldy for deployment in the field. However, according to DNDO, this method has been verified experimentally and the Stanford Linear Accelerator Center has demonstrated one type of accelerator technology "that might lead to a mono-energy photon source that could be compacted into a 20-foot cargo container." Passport Systems, Inc., is developing an NRF imaging system, Passport MAX (Material Advanced Inspection), under contract to DNDO to detect SNM in cargo containers. It uses a commercial electron accelerator with a beam that can be varied from 2 to 10 MeV, depending on the materials and containers being searched, to produce a photon beam with energies ranging from several hundred keV to the maximum energy of the electron beam. The beam is collimated; as it scans a container, it excites nuclei in its path that emit photons. A germanium gamma-ray detector views the emitted photons scattered backwards from one region at a time, records their energies, and constructs a spectrum. The intersection of the collimated beam with the detector's view creates a voxel, and the spectrum shows the type and quantity of each isotope in that voxel. An algorithm constructs a three-dimensional image of the container's contents. Passport MAX would include other detector subsystems as well: EZ-3D, as described under AS&E CAARS; a radiography imager; and an NRF detector that detects notches in the transmitted photon spectrum. Passport Systems indicates that this approach could also be used to scan smaller items such as an aircraft cargo container or a terrorist nuclear weapon. Because the NRF imaging component can examine only one region of interest at a time, the CONOPS envisions using the other components of Passport MAX to locate volumes of interest, and then using NRF to interrogate them. According to Passport Systems, "the complete system would scan a 40 ft container for SNM in an average of about 15 seconds. If there were indeed SNM in a container it may take longer (minutes) to identify the material as SNM. However, we anticipate that the actual number of containers with SNM would be very small." For detecting a terrorist nuclear weapon or SNM: (1) The system would identify each isotope, and would alarm on threat substances, with no operator input required. (2) While GADRAS must account for all the spectral data, the algorithm required for the Passport system need only account for spectral peaks, making for a simpler algorithm. (3) The system is to identify most isotopes that CBP finds in contraband, eliminating some false alarms that occur with radiation portal monitors, such as from radioactive potassium. (4) An NRF-based system can scan a cargo container quickly for SNM and high-Z shielding material. The average scan rate for the EZ-3D mode is 15 seconds, but the system would automatically adjust the speed at which individual containers are scanned. If it detected little attenuation of the beam, it would scan faster. Conversely, if EZ-3D identified a region of interest, the system would reposition the container to analyze that region using NRF and photofission signatures and would likely increase scan time for that container. The impact of such delays on average throughput rate would depend on such factors as CONOPS and number of anomalies in containers being scanned. (5) Passport Systems states that laboratory experiments and simulations predict that Passport MAX will be able to meet the scanning requirement that DNDO has set for CAARS, i.e., that it would have a 90% probability of detecting 100 cc of high-Z material, and a false alarm probability less than 3%, both with 95% confidence. For characterizing a nuclear weapon: (1) This system could determine the composition of a nuclear weapon. These data would be of value for disabling a weapon and for nuclear forensics. (2) An NRF-based system can identify the isotopic composition of uranium or plutonium and any impurities, which would be of value in nuclear forensics. (3) A potential difficulty with radiation detection is that large quantities of shielding in a container may block photons or neutrons as they enter and leave the container. The shielding problem would diminish if this system were used against an already-identified terrorist nuclear weapon because the weapon would be shielded only by its casing. (4) A bremsstrahlung source generates photons over a wide range of energies, and detectors are able to record a similarly wide range of emitted photons. As a result, the system could identify multiple materials quickly. From 2004 to 2008, DHS awarded Passport Systems several contracts totaling $8.4 million to build a proof-of-concept (PoC) scanner that is fully integrated and functional. In 2005, the contract was transferred from the DHS Homeland Security Advanced Research Projects Agency to DNDO for management. According to Feinstein, The NRF PoC system demonstration and evaluation completed on August 4-6, 2008. The primary purpose of this PoC test is to demonstrate full functionality and automation. This requires all critical components to operate as specified in an integrated architecture similar to an operational scanner. The Passport PoC subscale system successfully demonstrated its ability to automatically select high-Z [regions of interest] with EZ-3D and auto-identify the isotopic content of [these regions] with NRF. This was accomplished with a variety of cargo and with a mixed set of high-Z material and contraband. Other NRF applications are still being explored including cargo manifest-checking and forensics. Most of the major hardware components that the system uses—accelerator, detector, computer, and display—are commercially available. Passport Systems estimates that its system will be available for commercial delivery by mid-2010 at a unit cost of $5 million to $10 million depending on system configuration. Feinstein states, however, that that system "will not have completed the DHS phased-milestones of development, testing, evaluation and cost-benefit analysis" by that time. He further states that DNDO is developing enabling technologies, such as improved accelerators and detectors, "that, if successful, could significantly reduce the overall size and cost [of the NRF system] (by more than a factor of two) as well as improve its performance and speed," though such technologies would not likely be ready for use in a commercial system by mid-2010. In September 2008, DNDO awarded Passport Systems a contract worth up to $9.3 million to build a full-scale prototype unit for an Advanced Technology Demonstration (ATD) of the NRF system under DNDO's Shielded Nuclear Alarm Resolution program. This contract runs for 2½ years. The ATD scanner is intended to demonstrate performance on cargo containers and is the continuation of the previously demonstrated proof-of-concept (PoC) installation built by Passport at the University of California at Santa Barbara (UCSB), also under DNDO contract. Many organizations have been conducting research into NRF to address national and homeland security issues since 2004. Lawrence Livermore National Laboratory (LLNL), Pacific Northwest National Laboratory (PNNL), and Passport Systems have collaborated to characterize the NRF response of U-235 and of Pu-239. PNNL has developed a computer model of NRF and has used simulations from it to reproduce results from laboratory measurements; Los Alamos National Laboratory is developing another such model. Duke University, Idaho National Laboratory, Idaho State University, LLNL, PNNL, Passport Systems, Purdue University, and University of California at Berkeley are conducting basic research on NRF. Passport Systems built its proof-of-concept prototype at University of California at Santa Barbara in order to use the accelerator in that university's free electron laser facility, and PNNL and Duke University conducted NRF measurements on U-238 and Pb-208 using the High Intensity Gamma Source at Duke as a source of nearly-single-energy photons. (1) A key scientific task is to conduct more experiments to identify the energy levels at which materials of interest undergo NRF. In particular, it would be useful to measure NRF spectra of isotopes of uranium and plutonium other than U-235 and Pu-239, and to measure spectra of materials used in nuclear weapons of other nations (e.g., for alloys) for purposes of nuclear forensics. (2) Another task is to develop the algorithms to identify materials quickly based on their NRF energies. (3) The Passport MAX geometry is designed to improve the signal-to-noise ratio by focusing on photons scattered backwards as a result of NRF, thus avoiding most of the photons generated by the interrogation beam, which travel in a forward direction. However, beam photons may have an energy range of nearly 10 MeV, while the energy range of photons that produce NRF in a particular isotope may be only a few hundredths of an electron volt. As a result, only one out of a few hundred million photons may have an energy level that produces NRF in that isotope, making it hard to detect NRF-generated photons. On the other hand, if the NRF system is tuned correctly, very few photons of the same energy as the NRF photons scatter backwards to the detector, facilitating detection by increasing signal-to-noise ratio. (4) While NRF has routinely been used to detect gram samples, the limitations of the detectable mass of various isotopes has apparently not been quantified, so it is not clear that NRF can be used to detect microgram (or smaller) quantities of all isotopes, possibly limiting the applicability of NRF to nuclear forensics. (1) More work is needed to develop the detection algorithms. (2) The accelerator for this system, called a Rhodotron, is built to order, and it may take the manufacturer a year to build one; unless the manufacturer can build them much faster, it would be difficult to procure Passport MAX units in quantity. As of February 2010, Passport Systems was building a prototype of a high duty cycle accelerator that could be produced more rapidly. In addition, since the accelerator footprint would be much smaller than that of the Rhodotron, Passport MAX would become smaller, which Passport Systems argues would make it or other NRF-based scanners much more attractive for mobile operations. (3) Once the tasks noted under "scientific risks and concerns" are completed, an engineering task would be to integrate hardware and software into an operational system, requiring many tradeoffs between cost, performance, and schedule. This may be particularly complicated for Passport MAX given the many separate detector units it uses, as shown in Figure 18 . A demonstration of the full-scale ATD scanner under the Shielded Nuclear Alarm Resolution program is scheduled for 2010-2011; if successful, it would significantly reduce this risk. The projected unit cost, $5 million to $10 million, is at a level that might preclude ordering large numbers of units. Regarding schedule, as of 2008 it was difficult to predict when an early-stage development program would become commercially available given the work that remained to be done and the possibility of unanticipated problems. As of March 2010, Passport MAX had progressed from early-stage development to Advanced Technology Demonstration (ATD), with construction of the ATD unit scheduled to begin in 2010. As it has progressed, the amount of work remaining and the range of potential problems have decreased, so risk to schedule has decreased as well. Also as of March 2010, DNDO continued to fund enabling technologies, such as low-cost/high-resolution detectors and high duty cycle accelerators, that may, if successful, significantly reduce the cost and size of the commercial system and increase its NRF performance speed. As a result, Passport Systems stated that if the MAX ATD scanner demonstration is successful in 2010, the company could deliver a commercial version of that system in 2011. The system would need to be large enough to hold a tractor-trailer truck. The Rhodotron used in the Passport MAX generates a considerable amount of radiation that requires containment. To meet a radiation safety requirement of no standoff zone, the system is completely enclosed, and a preliminary estimate by Passport is that it would be 90 to 100 ft long; 20 to 30 ft wide at its widest point, where the detection equipment is located; and several stories high at that point. These dimensions are dictated by the requirement to scan a container that is 40 ft long, 9 ft wide and 14.5 ft high. A system for smaller objects would be correspondingly smaller. Passport states that the enclosure will reduce the radiation dose outside the system to levels low enough to not require an exclusion zone. On the other hand, the system is quite large using existing commercial off-the-shelf technologies, which could be a problem in ports where space is at a premium. Passport Systems, a small company, does not have some key equipment of its own; for example, it is using an accelerator at the University of California at Santa Barbara as the photon source for its prototype. Added funds, Passport says, would enable it to buy needed equipment, advance supporting technologies, and hire more staff for engineering, algorithm development, and manufacturing. The prototype Passport MAX uses a considerable amount of expensive off-the-shelf hardware; with added funds, Passport says it could design less costly components specifically for use in its system. (1) NRF could help identify illicit cargo in addition to SNM, such as explosives or chemical weapons. (2) NRF could help verify the manifest (list of contents) of a cargo container. (3) NRF might be used in nuclear forensics to identify rapidly the materials present in radioactive debris from the detonation of a terrorist nuclear weapon. (4) In nuclear nonproliferation applications, it could be used to analyze the isotopic composition of spent nuclear fuel. (5) New detector material could improve the sensitivity and resolution of the system, reducing the amount of electrical energy needed to run it and the amount of shielding needed, thereby reducing acquisition and operational costs. It is hard enough to detect SNM at a range of several meters. Yet the ability to detect SNM or nuclear weapons at a kilometer or more, or in territory to which access is denied, would have great value in the fight against nuclear terrorism, such as locating SNM along a smuggling route, in a distant vehicle or facility, or in ships at sea, or finding a terrorist nuclear bomb in a city. This capability would also help protect military forces by enabling detection of terrorist attempts to use a nuclear weapon to destroy a military base or a carrier battle group. Making the task harder still, SNM might be shielded, and these missions would require a high search rate because of the need to scan a large area quickly or because SNM might be visible to the system for only a brief time. A system to perform this mission would be of value. At issue: Can a system be designed and deployed to detect SNM at an operationally useful standoff distance and search rate? The Defense Threat Reduction Agency (DTRA), a unit of DOD, is pursuing capabilities to increase the distance at which SNM can be detected, with the goal of increasing it to 1 km or more. DTRA states its rationale as follows: DTRA/DoD's motivation for pursuing Active Interrogation arises from the context in which a search for nuclear material would be conducted—potentially in a hostile environment over large areas (due to limited intelligence pinpointing the exact location of the material). DTRA/DoD is also challenged by the need to make the deployed equipment robust/well engineered enough to survive a range of harsh environments which is different from equipment use in a static mode at a border checkpoint. A scientific panel said, "Radiation attenuation due to shielding is an exponential process and so even moderate amounts of shielding can have significant effects. At 10 metres, the radiation emissions of shielded gamma ray and neutron sources are at, or below, natural background rates in almost all cases." DTRA states, "The only way to overcome this physical reality is to stimulate the radiation emitted by SNM to a level many times above background. This can be done, for example, by using a beam of high energy photons to artificially induce photofission, and then detecting the resulting fission signatures. Beams of other types of radiation also have the potential to increase these detectable signatures through other reactions with the SNM." As of April 2010, DTRA was continuing its investigation of the use of protons for active detection, including how a proton beam interacts with various materials and how to integrate passive detection and imaging methods with active interrogation beams. DTRA is sponsoring several remote-detection systems. This section considers the Photonuclear Inspection and Threat Assessment System (PITAS), a project funded by DTRA and conducted by Idaho National Laboratory (INL). In 2008, PITAS was DTRA's remote-detection system closest to deployment; in April 2010 DTRA stated, "In FY10, a project was initiated to build the Integrated Standoff Inspection System (ISIS) to provide a robust system for the standoff detection of special nuclear material. This effort builds on the successful work of the PITAS project, while allowing the PITAS to continue to support experiments in the area of active detection." Data from PITAS will "allow a comparison of experimental results with simulation results." In April 2010, DNDO awarded Raytheon a contract for $20.5 million for R&D on ISIS; DNDO made no other awards for this effort. Minimum requirements ("threshold") for ISIS include distance from accelerator to target greater than 100 m, with a goal of 1,000 m; distance from target to detector greater than 50 m, with a goal of 500 m; detection time less than 10 min, with a goal of less than 1 min; and maximum weight 8 tons and transportable by commercial aircraft, with a goal that one helicopter could transport the system. In May 2010, DNDO stated that the current timeline calls for a demonstration of ISIS in FY2012, and that it has no estimate of the schedule beyond then. Because the contract for ISIS R&D was awarded in April 2010, little information is available on that program. Further, as noted, ISIS builds on the work for PITAS. Accordingly, this section continues to focus on PITAS. Figure 19 shows schematic and cutaway views. The main hardware components are an accelerator and detectors. PITAS would use a powerful linear accelerator, capable of generating a 30-MeV electron beam, to create x-rays that would be aimed at the target. These x-rays have a range of energies, with the maximum equal to that of the electron beam. Air attenuates lower-energy x-rays in the beam, so the target would be struck by x-rays well above the energy needed to induce photofission. Detectors might be located in the same unit as the accelerator. However, radiation spreads out (and diminishes in intensity) as the square of the distance, and the atmosphere would absorb many neutrons and gamma rays, so detection can be more effective if the detectors are separated from the accelerator and placed near the target. For example, detectors might be placed next to a smuggling route or on unmanned aerial vehicles with the accelerator some distance away. The x-ray beam would be used in a pulsed mode with the detectors attempting to detect SNM signatures, such as delayed neutrons and gamma rays (see Appendix ), in the intervals when the beam is off. If PITAS or a follow-on system like ISIS works as anticipated, it would enable the United States to detect SNM at standoff range for the first time. This capability could be used for counterproliferation, counterterrorism, and force protection. As of April 2010, PITAS is to remain available as an experimental tool for at least the next few years. It will be used to address issues associated with field use of accelerator-based technologies, such as ruggedness and reliability. There are plans to improve PITAS diagnostic equipment in 2010 to support research. Funding levels for experiments with PITAS are not publicly releasable. (1) By one calculation, even a collimated x-ray beam could not place enough x-ray photons on a small piece of SNM in the target (such as a cargo container) to induce a detectable set of unique signals under ideal conditions. Trying to detect SNM at a distance under real-world conditions, such as a container being towed by a truck along a winding road, would be even more difficult. (2) How effective would shielding be at stopping inbound x-rays or protons and outbound neutrons and gamma rays resulting from fission? (3) Gamma rays and neutrons resulting from fission of SNM would radiate in all directions, spreading out with distance. A source that caused 1,000 photons per second to strike a detector 1 meter square at a distance of 1 meter would cause only 1 photon to strike that same detector every 1,000 seconds at a distance of 1 km—disregarding attenuation by the air. Yet enough photons must strike the detector to be detected and to be differentiated from background sources. Regarding neutrons, fission generates many fewer neutrons than gamma rays, and the low-Z atoms in the air would attenuate neutrons strongly. Would enough gamma rays and neutrons reach the detectors to be detected? Another concern is that very little research has been done on remote detection. As a result, the developers of PITAS would have to conduct field tests to determine what signals the beam generates in SNM and how to detect them, and would have to develop algorithms to process the data. As of April 2010, DTRA continues to use PITAS to investigate technologies (including radiation sources and detectors) to extract threat signatures from natural and beam-generated background. One candidate neutron detector for PITAS is helium-3 drift tubes, which have a thin metal wall and a wire stretched lengthwise down the middle of the tube. Would these tubes be rugged enough to deploy as part of a mobile system that might operate in difficult terrain and extremes of weather and temperature? More generally, can the entire system be made compact enough to operate under such conditions, yet sensitive enough to operate effectively? Since 2008, as noted earlier, it has become apparent that demand for helium-3 far exceeds supply. Accordingly, DTRA is considering other materials to detect neutrons, such as boron-10 and lithium-6. With PITAS having transitioned to an experimental support program, cost and schedule risks and concerns are much less salient than would be the case for a deployment-oriented program. DTRA does not have any specific information to provide on this topic. The accelerator would generate beams of very high energy, and might not be heavily shielded in many mobile applications. It thus poses some radiation risk to the operator. Could radiation exposure be made low enough? Whether the risk is deemed acceptable would depend on exposure, which in turn depends on radiation output, frequency of use, and shielding, and on the urgency of the mission. Regarding the latter point, detecting SNM that intelligence indicated was being smuggled along a known route for sale to terrorists would justify more exposure risk than would monitoring that route on a routine basis. Further development of accelerators might reduce the shielding required. DTRA remains interested in reducing the size of particle accelerator technology for ease of deployment. DTRA further notes, "Several National Council on Radiation Protection & Measurements (NCRP) scientific committees in which DTRA participates or monitors are currently convened (SC 1-18 and SC 1-19) to examine the use of ionizing radiation for the standoff detection of SNM." Beyond PITAS, DTRA is contemplating another remote-detection system for which, it asserts, added funds would shorten the schedule by several years. That project would use a proton beam with very high energies. DTRA regards it as very promising because, it believes, these protons may be able to defeat shielding at 1 km. As of August 2009, DTRA maintained that this project would be paced by investment. DTRA stated that since most of the technical risk is at the start of the project, more funds would permit exploration of many paths simultaneously so that potential pitfalls and opportunities could be identified at an early stage. However, in May 2010, DTRA said that it "is still investigating use of a high energy proton beam as an active interrogation source, but there are no near-term projects which warrant accelerated funding at this point." PITAS or a follow-on system could be used in support of the Proliferation Support Initiative, which seeks to stop shipments of nuclear weapons and other weapons of mass destruction worldwide. For example, a system of this type could help search a ship suspected of carrying nuclear weapons, SNM, or uranium ore. Such systems might benefit from improved scintillator material for detecting radiation. They require a material with substantial (but not extreme) resolution that is rugged enough to deploy under harsh conditions and inexpensive enough to deploy a large panel in order to capture more of the signal. In 2010, DNDO issued a broad agency announcement seeking in part to develop such materials. Equipment commercially available at the time of the 9/11 attacks was limited in its capability. PVT radiation detectors could detect radiation but could not identify isotopes, and shielding SNM might defeat detection. Radiographic equipment could reveal dense objects, but relied on operator skill to flag potential threats. It might be possible to hide a nuclear artillery shell in a cargo of dense objects, and it would be difficult to pick out a small piece of SNM. Resolving alarms required time-consuming methods, such as using hand-held radioisotope identification devices or unpacking a container. Capabilities of existing systems can be improved incrementally, such as by using different detector material, computers, algorithms, or CONOPS (e.g., scan time). Systems now under development have the potential to reduce false positives (speeding the flow of commerce) and false negatives (improving security). Fission that neutrons or x-rays induce in SNM generates unambiguous signals. Dual-energy radiography detects high-Z material automatically. EZ-3D reveals high-Z material hidden in medium-Z material, and might be able to differentiate SNM from other high-Z material. These approaches detect useful signatures, but have drawbacks as well, such as low signal strength, complexity, high cost, or large size. The task is to utilize these signatures and minimize drawbacks in a system that can be fielded. Other technologies, such as improved detector material and improved algorithms, also have the potential to improve detection capability. It is difficult to predict the schedule of new detection technologies . In March 2008, the Royal Society, drawing on a workshop of experts, issued a report on nuclear detection that found, "In the medium term (5-10 years), there are promising opportunities to develop new technologies, such as muon detection systems. In the long term (10-20 years) detection could benefit from advances in nanotechnology and organic semiconductors." In 2008, the company developing the muon tomography system thought the system could be commercially available in 2011. As of early 2010, that date had slipped to 2012 and the company had not passed its Test Readiness Review, a step to indicate whether a system is ready for its proof-of-concept demonstration. In 2008, some thought that nanocomposite scintillator technology could be available for transfer to industry by September 2009, but the project was canceled in January 2010. It is difficult to evaluate prospects for R&D projects . Based on tracking the technologies presented in this report, it appears extremely difficult to evaluate how likely an R&D project is to succeed, even for the agencies that fund them, and one should not confuse a technical explanation and briefing slides with prospects for success. To succeed, a project must overcome many hurdles between concept and deployment. (1) The concept has to be scientifically sound. This is not always a given for projects that push the state of the art. (2) Even if scientifically sound, the underlying science must be transformed into a prototype through engineering. But materials may prove impossible to develop; laboratory-scale proof-of-concept equipment, where size and complexity are not a concern, may prove difficult to shrink in size; and algorithms may be unstable or may be confused by background radiation. (3) The prototype must be made into a system that is rugged enough to survive the bumps, vibrations, heat, cold, rain, humidity, dust, salt air, gasoline fumes, and whatever else people and nature may throw at it. (4) There must be a workable concept of operations: if it takes 1000 seconds to perform a scan, or if the false positive and false negative rates are too high, or if the operator cannot use the equipment easily, the equipment is useless. (5) The system must be affordable, however defined. It is hard to predict if a concept will make it past the next hurdle, let alone all five (and any others). Here are several examples drawn from this report. Nanocomposite scintillators held the promise of being a gamma-ray detection material that would be sensitive, yet inexpensive and easy to produce on a large scale. Early research started in 2004, but DNDO and DTRA terminated the project in 2010. The AS&E CAARS project appeared promising, but encountered unspecified technical problems and DNDO terminated it; however, some of its technology is being applied to another project. Conversely, SAIC's CAARS depended on the development of an "interleaved" accelerator, one that could switch x-ray beams between two energy levels many times a second. An earlier attempt to develop such an accelerator failed, but SAIC's subcontractor, Accuray, was able to develop one that exceeded requirements by a substantial margin, contributing to the system's ability to differentiate among up to 15 bands of Z rather than simply indicating whether material in a cargo container was high-Z or not. This enhanced capability could help CBP agents search for contraband as well as SNM. It is easier, less costly, and potentially more effective to accelerate a program in R&D than in production. DTRA believes that a significant increase in funding for proton beam technology, a standoff detection technology in early R&D, might shorten time to deployment by several years by enabling researchers to consider many technical alternatives simultaneously to determine the most promising approach faster. It is hard to attain large schedule gains by accelerating production; such gains may entail high cost, such as multiple shifts or more production lines; and a rush to production may cause a project to fail. While R&D projects may also fail, more risk is tolerable in R&D because the investment is much less. A modest amount of money spent in R&D can avoid looming problems. For example, GADRAS, a widely used algorithm for detecting SNM and other materials, runs on the standard Microsoft Windows operating system (OS) for personal computers. Microsoft introduces new generations of OSs from time to time. Typically, new OSs will support programs written for several generations of previous such systems. However, the Graphic User Interface (GUI) for GADRAS is written with the Visual Basic 6.0 compiler, which Microsoft no longer supports. At some point, Microsoft will likely introduce a new OS that will no longer support applications that are written with this compiler; GADRAS would then be unavailable to its users until it is updated. According to Dean Mitchell, who created GADRAS, updating that algorithm to run on current-generation OSs would avoid that problem, at a cost of perhaps $1 million a year for two years. R&D that leads to products that many systems can use may have a large impact on detection capability. Many detector systems have common elements—an accelerator, gamma-ray detector material, computers, algorithms—so improving any of these "building blocks" might improve the capability of many detector systems, including those in the field. Improved gamma-ray detector material can improve sensitivity, reduce cost, or both. An improved algorithm can boost performance. A more powerful computer permits the use of a more powerful algorithm, which may reduce false positives and false negatives. On the other hand, it may not be possible to upgrade systems simply by swapping new components for old. Edward McKigney listed possible difficulties in the (hypothetical) case of upgrading systems by substituting higher- for lower-performance detector material: (1) Detector modules that cannot detect light with high efficiency would need to be redesigned. This is particularly relevant for existing portal monitors that use plastic scintillator material, where the optical design is poor. (2) Electronics for converting signals from detectors into data for algorithms ("readout electronics") that are not suitable for high-resolution readout and analysis, or are mismatched for the technology (such as if the old electronics read electrical charge while the new ones read optical signals), would have to be replaced. (3) Data analysis algorithms that cannot process signals from the new detector module would have to be replaced. (4) The volume of data from the new detector module might be greater than the existing algorithms, data transmission system or computers could handle, requiring new computers, algorithms, data transmission system, or some combination. (5) Electrical power systems would have to be changed if the power requirements for the old and upgraded systems did not match. So, at the extremes, it might be possible to upgrade only the detector module, or the only features of the old system that would remain after an upgrade would be the wide spot in the road and the guard shack. I would recommend that the next generation of detector systems should be more modular so upgrades could be done while retaining as much of the value of deployed systems as possible. Synergisms may arise between technologies. Beams of neutrons or high-energy gamma rays used to induce fission in SNM may harm some products, expose stowaways to high doses of radiation, and require shielding to protect workers. Improved detector material and algorithms could lower the amount of radiation required for this technique, perhaps making it more usable for scanning containers. Technical advances can place two systems in competition unexpectedly. Work is underway on several systems designed to induce fission as a way of detecting SNM. CAARS was not begun as a system of this sort. However, DNDO is investigating a technology add-on to give it that capability. If work proceeds on that path, CAARS and other such systems could be in competition. Competition at the R&D level may be desirable. William Hagan, Assistant Director, Transformational and Applied Research, DNDO, states, if we can squeeze additional functionality out of a system, we want to do that. This will cause various approaches to be in competition for achieving a capability at the R&D stage but that is what we want to do so we can drive towards the most effective. More generally, I think that having multiple organizations pursuing the same R&D goal is a good thing because it allows for different approaches or more capable organizations to compete for the objective. This is a very effective mechanism in R&D. A classic recent example is the race to decode the human genome. Another is the race for commercial space flight. This kind of competition goes on all the time in the basic research community and I think we should encourage it. There is, of course, some limit to this, but we are far from that limit right now for radiation detection. The competitive position of systems in R&D may change over time . Technology development is dynamic. This report presents several examples. The SAIC CAARS overcame a key technical hurdle, the development of an interleaved accelerator, resulting in better performance than expected. The AS&E CAARS encountered problems that led to its termination. The Rapiscan Eagle, with an added algorithm to detect high-Z material, became a competitor to CAARS through the JINII program. Decision Sciences Corporation addressed problems with the original concept for its muon tomography scanner, such as using boron-10 instead of helium-3 in drift tubes because of the latter material's scarcity and designing a top/bottom scanner rather than a top/bottom/both sides scanner to make the footprint more compatible with traffic lanes at ports. " Concept of operations " (CONOPS) is crucial to the effectiveness of detection systems. CONOPS details how a detection system would be operated to gather data and how the data would be used. Without it, a detection system would be valueless. Since CONOPS and systems are mutually dependent, the design of each must take the capabilities and limitations of the other into account. Current equipment to detect and identify SNM makes use of two main signatures of this material, opacity for radiography to detect SNM, and gamma-ray emissions for spectroscopy to detect and identify SNM. However, as discussed in Chapter 2 and the Appendix , SNM has many signatures in addition to opacity and gamma-ray emissions, and some systems under development attempt to make use of these other signatures. If systems utilizing these other signatures were to be deployed, methods that might be used in an attempt to hide or mask opacity and gamma-ray signatures would not necessarily defeat these systems under development—complicating any terrorist attempts to smuggle nuclear weapons or SNM into the United States. At the same time, these future systems tend to be more costly and complex than current systems; whether the added benefits are worth the added costs is a political decision. Detection systems have their limits. Systems to detect SNM at close range, such as at ports and land border crossings, are generally not applicable to detection of terrorists smuggling a weapon across a remote stretch of border. But that is not a flaw of the detection system. Detectors can work at "points," i.e., places where people or cargo may enter the United States legally. There, detectors attempt to find SNM or weapons that may be hidden in cargo. In contrast, at "lines," the vast distances between "points" along coasts or borders, any entry is illegal, so interdiction is a matter of law enforcement. Effective intrusion detection systems (TV cameras, seismic monitors) coupled with a CONOPS that provides rapid response may suffice, though they have a long way to go to become effective. At the same time, standoff radiation detection systems that have yet to be developed, mounted along borders at natural choke points or smuggling routes, might be of value for this mission. Congress has supported a broad portfolio of detection R&D projects that has created a pipeline with technologies expected to become available for operational systems from near-term to long-term. These systems exploit many signatures in addition to those of currently deployed systems, offering Congress the prospect of improved detection capability and a broader menu of choices. Several technical factors may influence the choice among technologies to support. For example: (1) Projects will advance at different rates. (2) Projects may benefit differently from an advance in a related technology. (3) As a project moves from research to development to deployment, cost and capability may vary from early projections. Congress may wish to reevaluate current deployment decisions if it concludes that significantly more capable systems will be available in a year or two. Of course, any such decision would depend on comparing such factors as cost, footprint, ease of use, production rate, and the like for competing systems, and caution is necessary in assessing contending claims. On the other hand, it is difficult for Congress to choose among contending technologies. Each requires evaluation in such terms as cost, scan time, ease of use, reliability, schedule, footprint, radiation exposure, spatial resolution, and ability to thwart shielding. Yet these data are difficult to obtain. Some are proprietary. Some are unknown: schedules may slip and costs rise, or technical advances may cause the opposite to occur. Developers of a technology tend to be its advocates, and see the strengths of their technology and a path to overcome its weaknesses. Even if these data can be obtained, it is necessary to weight data elements to support a choice among contending technologies. With many variables to be traded off against each other, how are weights to be assigned, and who decides? And can this weighting system function despite weaknesses in the data? Congress has focused much attention on preventing terrorists from smuggling nuclear weapons or SNM into the United States in cargo containers. For example, P.L. 110 - 53 , Implementing Recommendations of the 9/11 Commission Act of 2007, Section 1701, states, "A container that was loaded on a vessel in a foreign port shall not enter the United States (either directly or via a foreign port) unless the container was scanned by nonintrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel." While terrorists might attempt to smuggle in a nuclear weapon by other means, developing technology to scan containers at seaports is a reasonable place to start. Container-scanning technology can be modified for use in other situations, such as monitoring air cargo containers or passenger cars, which are easier to scan because they can contain much less shielding. Developing and deploying detection equipment for use at seaports ensures ruggedness and ease of use adequate for real-world applications, and forces governments at all levels to plan CONOPS. More generally, some could argue that it is impossible to prevent terrorists from smuggling nuclear weapons into the United States, so there is no point in spending large sums in a futile effort. Congress has rejected that approach, and has appropriated, in total, billions of dollars to deploy available systems and to support R&D on advanced technologies. Supporters of the R&D and deployment approach assert that it offers several advantages. It has provided some capability quickly, increasing the odds of detecting weapons or SNM. An important example of this is the rapid deployment of passive radiation detectors to scan maritime cargo containers. This limited detection capability would help deter terrorists and would complicate plans to smuggle in weapons or SNM. Initial deployments provide data of use to subsequent deployments. They help refine what throughput, robustness, etc., front-line inspectors require of a system. They help refine CONOPS. They help define desirable features of an architecture. These results can make future technologies, systems, and architectures more effective. It has created an R&D pipeline that is intended to generate a steady stream of new technologies and systems. The resulting improvements in individual technologies, operations, and architectures can improve overall system effectiveness. As technologies become more capable, they can plug gaps in the current architecture. For example, remote detection might offer a way to monitor choke points in the United States or overseas that terrorists might pass through in transporting SNM or weapons. Congress may wish to address gaps and synergisms in this portfolio. For example: Gaps: Several systems may use helium-3 tubes for neutron detection, yet the supply is limited. Alternatives are available, but the longer developers take to switch to these alternatives, the longer it would take to deploy their systems because of the need to incorporate different detectors, modify algorithms, and test the revised system. Other gaps include sensors that can detect SNM at long range (e.g., over 100 m), sensors that can operate autonomously in remote areas, and large but inexpensive detectors that can distinguish SNM from other radioactive material. Synergisms: A component, algorithm, or material developed for one system may be applicable to another. Projects are under way to develop more sensitive materials to detect gamma rays and neutrons. These materials can be used in systems that induce fission in SNM. Their improved sensitivity permits a smaller source (e.g., an accelerator) to generate the interrogation beam, reducing cost, complexity, and radiation dose. Similarly, if detector material offers only fair resolution of gamma ray spectra, then peaks in a spectrum may blur, requiring a complicated algorithm to deal with the uncertainties. Sharper resolution from improved materials would reduce these uncertainties, permitting simpler algorithms to be used. More powerful computers could support faster, more powerful algorithms, reducing scan time, false positives, and false negatives. Minimizing gaps and maximizing synergisms have the potential to lead to more capable systems faster and at lower cost. Companies that considered using helium-3 for neutron detection might expedite deployment and reduce costs by sharing effort to develop an alternative neutron detector for their common use. Information on progress in developing more sensitive detector material would permit companies to incorporate such materials into their systems sooner, also speeding deployment and lowering costs. Is there a way that development could be shared or licensed so that companies, especially those working on government-funded projects, could avoid duplicating effort? And could this be done while retaining the benefits of competition? In considering the Advanced Spectroscopic Portal, Congress and the Government Accountability Office examined in detail whether DNDO had followed proper procedures for testing competing systems. An alternative means by which Congress could address testing is to direct the executive agency in charge of a system to conduct specified tests. These tests would need to be designed, and perhaps overseen, by experts not affiliated with the relevant agency, company, or laboratory. Congress has ample access to the technical expertise required. The relevant congressional committees could consult with individual experts or with groups that have a long history of providing independent technical advice to the government, such as the American Association for the Advancement of Science, the JASON defense advisory group, the National Academy of Sciences, the National Council on Radiation Protection and Measurements, and the National Institute of Standards and Technology. In this way, Congress could seek a fair comparison between systems on variables of interest, such as scan times or the ability to detect specified targets in containers with specified cargoes, enhancing confidence in the test results and decisions based on them. Other alternatives exist. Congress could require DHS to establish an independent test and evaluation unit; obtain an outside review of DHS test and evaluation procedures; require DNDO to provide detailed reporting of each step in the acquisition process as it occurs; or provide for an external review of a program. Ongoing improvement in U.S. detection capabilities produces uncertainties for terrorists that seem likely to increase over time, adding another layer of deterrence beyond that of the capabilities themselves. Capability of fielded equipment may be upgraded. Terrorists may not know the capability or availability of future detectors. More advanced technologies should improve detection capability. It should be harder for terrorists to evade new systems than current ones. Detection may affect terrorists in another way. A nuclear weapon would be of immense value to them. Therefore, increasing the risk of detection would have a much greater deterrent effect for them than for drug smugglers, where detection and confiscation of drugs are part of the cost of doing business. The multiplication of technical obstacles to a successful terrorist attack may thus help deter an attack or an attempt to undertake a project to launch one. At the same time, it is important to avoid the " fallacy of the last move. " Herbert York, a former Director of Defense Research and Engineering, coined this term to argue that in the Cold War nuclear arms race, one side's actions typically led to countervailing actions by the other side. The same principle applies to nuclear detection. This report suggests that some U.S. detection systems nearing readiness for deployment are more capable than current detectors. Yet if terrorists were to attempt to bring a nuclear weapon or SNM into the United States, they could use various techniques to evade detection by such systems, though these techniques might complicate the plot and increase the risk of detection by non-technical means. Further, the threat might increase in various ways, such as if new terrorist groups emerged or if more nations built nuclear power plants or nuclear weapons. For such reasons, Congress has funded, and executive agencies are pursuing, R&D with short- and longer-term time horizons. Also for such reasons, the global nuclear detection architecture may need to be updated from time to time. Thus, while the United States has an immense technical advantage in a competition of detection vs. evasion, and a pipeline of increasingly more capable technologies, it is important to recognize not only the dynamic aspects of advances in detection capabilities but also the dynamic aspects of the competition. Detectors must detect complete weapons, which can be quite small. During the Cold War, the United States made 155 mm and 8 inch (diameter) nuclear artillery shells. The United States made even smaller atomic demolition munitions, and there have been reports of Soviet-era "suitcase bombs." A weapon that terrorists fabricated without state assistance would surely be less sophisticated and, as a result, probably much larger. Detectors must also detect the types of uranium and plutonium used in nuclear weapons. The type of uranium used in weapons is harder to detect than plutonium because it emits much less radiation; it is also much easier to fabricate into a weapon component. It is important to detect small quantities of these materials in order to interdict stolen and smuggled materials because small quantities suffice to fuel a bomb. According to a widely quoted report by five nuclear weapon scientists from Los Alamos National Laboratory, it would take 26 kg of uranium, or 5 kg of plutonium (both of types discussed later) to fuel an atomic bomb. These masses would fit into cubes 11.2 cm or 6.3 cm, respectively, on a side. The ability to detect even smaller masses would help thwart nuclear smuggling. How is it possible to find weapons or materials among the vast amount of cargo that reaches the United States each day? Fortunately, there are many clues. Nuclear detection makes extensive use of photons. Photons are packets of energy with no rest mass and no electrical charge. Electromagnetic radiation consists of photons, and may be measured as wavelength, frequency, or energy; for consistency, this report uses only energy, expressed in units of electron volts (eV). Levels of energy commonly used in nuclear detection are thousands or millions of electron volts, keV and MeV, respectively. The electromagnetic spectrum ranges from radio waves (some of which have photon energies of 10 -9 eV), through visible light (a few eV), to higher-energy x-rays (10 keV and up) and gamma rays (mostly 100 keV and up). An x-ray photon and a gamma-ray photon of the same energy are identical. Gamma rays originate in processes in an atom's nucleus. Each chemical element has two or more isotopes. Isotopes of an element have the same number of electrons, and thus in most cases similar chemical properties, but different numbers of neutrons in their nuclei, and thus different nuclear properties. Each radioactive isotope emits gamma rays in a unique spectrum, a plot of energy levels (horizontal axis) and number of gamma rays detected at each energy level (vertical axis). These spectra are a series of spikes at particular energy levels. Figure 1 and Figure 2 show the spectra of uranium-235 and plutonium-239, respectively. Such spectra are the only way to identify an isotope outside a well-equipped laboratory. A detector with a form of "identify" or "spectrum" in its name, such as Advanced Spectroscopic Portal or radioactive isotope identification device, identifies isotopes by their gamma-ray spectra. X-rays originate in interactions with an atom's electrons. Many detection systems use x-ray beams, which can have higher energies than gamma rays and thus are more penetrating. X-ray beams are often generated through the bremsstrahlung process, German for "braking radiation," which works as follows. An accelerator creates a magnetic field that accelerates charged particles, such as electrons, which slam into a target of heavy metal. When they slow or change direction as a result of interactions with atoms, they release energy as x-rays whose energy levels are distributed from near zero to the energy of the electron beam. They do not exhibit spectral peaks like gamma rays. This difference is important for detection. Radioactive atoms are unstable. They decay by emitting radiation, principally alpha particles (a helium nucleus consisting of two neutrons and two protons, thus having a double positive charge), beta particles (electrons or positrons, the latter being electrons with a positive charge), and gamma rays (high-energy photons). These forms of radiation are of differing relevance for detection. Alpha particles, being massive (on a subatomic scale) and electrically charged, are easily stopped, such as by a sheet of paper or an inch or two of air. Beta particles, while much lighter and faster, are also electrically charged and are stopped by a thin layer of material. Gamma rays have no charge and can penetrate much more material than can alpha or beta particles. Depending on their energy, they may travel through several hundred feet of air. When an atom decays by emitting an alpha particle or beta particle, it transforms itself into a different element; it does not do so when it emits a gamma ray. Gamma-ray emission typically follows alpha or beta decay. As discussed in more detail below, each radioactive isotope that emits gamma rays does so in a spectrum of energies unique to that isotope. For example, the spectrum of U-235 has a prominent peak at 186 keV. In addition to these typical means of radioactive decay, atoms of some heavy elements fission, or split into two smaller atoms. Of the naturally occurring isotopes, only U-238 spontaneously fissions with an appreciable rate (about 7 fissions per second per kg). One by-product of fission is the emission of neutrons (typically 2-3 neutrons per fission). Neutrons have no electrical charge and can penetrate dense materials, as well as many tens of meters of air. Some isotopes of heavy elements fission spontaneously or when struck by neutrons or high-energy photons, emitting neutrons and gamma rays in the process. U-235 and Pu-239 are unique in that neutrons of any energy can cause them to fission; they are called "fissile." Neutrons of much higher energies are required to cause other isotopes to fission. This characteristic of U-235 and Pu-239 allows them to support a nuclear chain reaction. Fissile material is essential for nuclear weapons; U-235 and Pu-239 are the standard fissile materials used in modern nuclear weapons. The Atomic Energy Act of 1954 designates them as "special nuclear material" (SNM). Plutonium is not found in nature. It is produced from uranium fuel rods in a nuclear reactor and is separated from uranium and other elements using chemical processes. Weapons-grade plutonium (WGPu) is at least 93% Pu-239. In contrast, uranium in nature consists of 99.3% U-238 and 0.7% U-235, with very small amounts of other isotopes. Enriching it in the isotope 235 for use as nuclear reactor fuel or in nuclear weapons cannot be done through chemical means because isotopes of an element are nearly chemically identical, so other means must be used. For example, uranium may be converted to the gas uranium hexafluoride and placed in centrifuges specially designed to separate U-235 from U-238 based on the very slight differences in the weight of individual molecules. Uranium enriched to 20% in the isotope 235 is termed highly enriched uranium, or HEU; for use in nuclear weapons, uranium is typically enriched to 90% or so, though lower enrichments could be used. For purposes of this report, "HEU" is used to refer to uranium of 90% enrichment. HEU may also be produced from material that has been in a nuclear reactor. HEU produced in this manner contains small amounts of another isotope, U-232, which, as we shall see, is easier to detect than is U-235. Nuclear detection uses neutrons and high-energy photons in various ways. Because they can penetrate different materials, they are the main forms of radiation by which most radioactive material can be detected passively, by "listening" for signals coming out of a container without sending signals in. Because of their penetrating properties, they can be used in an active mode to probe a container for dense material. X-rays or gamma rays are used for radiography, that is, creating an opacity map like a medical x-ray. Neutrons of any energy level, and photons above 6 million electron volts (MeV), can be shot into a container to induce fission in SNM. Fission results in the emission of neutrons and gamma rays, which can be detected. Gamma rays can also be used to identify a radioactive source. Neutrons, in contrast, do not have a characteristic energy spectrum by which an isotope can be identified, and it is difficult to measure their energy, though the presence of neutrons in certain situations, as discussed below, can indicate that SNM is present. Another characteristic of radioactive materials important for detection is the rate at which a material decays. The half-life of an isotope, or the time it takes for half the atoms in a sample to decay, is an indicator of the rate of decay, with shorter half-lives indicating faster decay. The half-lives of cobalt-60, plutonium-239, and uranium-235 are 5.3 years, 24,000 years, and 700 million years, respectively. Even if a source emits high-energy gamma rays, it will be difficult to detect if it emits only a few of them. Thus type, energy level, and quantity of radiation are important for detection. Different materials attenuate neutrons and gamma rays in different ways. Heavy, dense materials like lead, tungsten, uranium, and plutonium have a high atomic number (the number of protons in the nucleus), or "Z." High-Z materials attenuate gamma rays efficiently. In contrast, neutrons are stopped most efficiently by collisions with the nuclei of light atoms, with hydrogen being the most effective because it has about the same weight as neutrons. The element with the nucleus closest in weight to a neutron is hydrogen, which in its most common isotope consists of one proton and one electron. Thus hydrogen-containing material like water, wood, plastic, or food are particularly efficient at stopping neutrons; other low-Z material is less efficient at stopping neutrons, but nonetheless more effective than high-Z material. Conversely, gamma rays are less attenuated by low-Z material and neutrons are less attenuated by high-Z material. Different amounts of material are needed to attenuate gamma rays depending on their energy level. Gamma rays from WGPu are sufficiently energetic and plentiful that it is more difficult to shield WGPu than HEU. In contrast, as explained in the footnote, an inch of lead would render gamma rays from U-235 essentially undetectable, though as discussed later other uranium isotopes that may be present in HEU are more readily detectable. Indeed, 186-keV gamma rays from U-235 have so little energy that many are absorbed by the uranium itself, a process known as self-shielding, so that the number of gamma rays emitted by a piece of U-235 depends on surface area, not mass. Unclassified demonstrations performed at Los Alamos National Laboratory for the author in June 2006 indicate how shielding and self-shielding impair the detection of low-energy gamma rays from HEU. The demonstrations used a top-of-the-line detector that had an excellent ability to identify materials by their gamma-ray spectra. In the first demonstration, the detector picked up gamma rays from a thin sheet of HEU foil at perhaps 30 feet away and quickly identified them as coming from HEU. The foil had a large surface area and little thickness, so there was little self-shielding. In the second, the detector gradually picked up gamma rays from a marble of HEU as it was brought closer to the detector. Because the marble had much more thickness and much less surface area than the HEU foil, there was considerable self-shielding, greatly reducing the gamma-ray output. In the third, the marble of HEU was placed in a capsule of a high-Z material, lead, perhaps 1 cm thick, and the detector picked up nothing even when the capsule was touching the window of the detector. Sources of radiation other than SNM complicate detection. Background radiation from naturally occurring radioactive material, such as thorium, uranium, and their decay products such as radon, is present everywhere, albeit often in trace amounts. Cosmic rays generate low levels of neutrons. Some legitimate commercial goods contain radioactive material, such as ceramics (which may contain uranium), kitty litter (which may contain thorium and uranium), and gas mantles made of thorium oxide. Other radioactive isotopes are widely used in medicine and industry. Finally, a terrorist group might conceivably place radioactive material in a shipment containing a weapon or SNM chosen so as to mask the unique gamma-ray spectrum of SNM by presenting a spectrum of several known innocuous materials with peaks to interfere with those of SNM or that have an intensity much higher than SNM. For purposes of this report, a signature is a property by which a substance (in particular, SNM) may be detected or identified. A nuclear weapon or its fissile material may be detected by various signatures, some of which are discussed next. Atomic number, abbreviated "Z," is the number of protons in an atom's nucleus. For example, the Z's of beryllium, iron, and uranium are 4, 26, and 92, respectively. Z is a property of individual atoms. In contrast, density is a bulk property, and is expressed as mass per unit volume, e.g., grams per cubic centimeter. The densities of beryllium, iron, and uranium are 1.848, 7.874, and 19.050 g/cc, respectively. At its most basic, density measures how many neutrons and protons (which constitute almost all of an atom's mass) of a substance are packed into a volume. In general, the densest materials are those of high Z. These properties may be used to detect uranium and plutonium. Uranium is the densest and highest-Z element found in nature (other than in trace quantities); plutonium has a slightly higher Z (94), and its density varies from slightly more to slightly less than uranium, depending on its crystal structure. Some detection methods discussed in Chapter 2, such as effective Z, make use of Z; and some, such as radiography and muon tomography, make use of Z and density combined. An object's opacity to a photon beam depends on its Z and density, the amount of material in the path of the beam, and the energy of the photons. Gamma rays and x-rays can penetrate more matter than can lower-energy photons, but dense, high-Z material absorbs or scatters them. Thus a way to detect an object, such as a bomb, in a container is to beam in x-rays or gamma rays to create a radiograph (an opacity map) like a medical x-ray. Background gamma radiation is ubiquitous. Since many materials, including SNM, emit gamma radiation, elevated levels of gamma radiation may or may not indicate the presence of SNM. Cosmic rays and naturally occurring uranium generate a very low background flux of neutrons. Most materials do not emit neutrons spontaneously, but HEU and plutonium do. The spontaneous emission rates for 1 kg of plutonium and 1 kg of of HEU are 60,000 neutrons per second and 3 neutrons per second, respectively. As a result, neutrons above the cosmic ray background coming from a cargo container would be suspicious. For HEU, however, the rate is not too different from the background and thus is not a strong signature. Each isotope has a unique gamma ray spectrum. For example, uranium-235 produces gamma ray peaks at several dozen discrete energy levels. This spectrum of energies is well characterized for each isotope, and is the only way to identify a particular isotope outside a well-equipped laboratory. As a result, any detector with a variant of "spectrum" or "identify" in its name, such as Advanced Spectroscopic Portal or radioactive isotope identification device, relies on identifying isotopes by their gamma-ray spectra. HEU presents other gamma ray signatures as well. HEU contains some U-238, which produces a gamma-ray peak at an energy of 1.001 MeV. While these gamma rays are energetic, they would be hard to detect unless the detector is very close to the uranium because they are emitted at a very low rate, and could easily be missed because trace amounts of naturally occurring uranium, such as in clay and soil, also generate 1.001 MeV gamma rays. HEU derived from spent nuclear reactor fuel rods also contains small amounts of uranium-232, which is formed when uranium is bombarded with neutrons in a nuclear reactor. Uranium-232 decays through a long decay chain of short-lived isotopes to thallium-208, which has a gamma ray of 2.614 MeV, one of the highest-energy gamma rays produced by radioactive decay, so it is distinctive as well as highly penetrating; it takes 2.041 cm of lead to attenuate half the gamma rays of that energy. Thallium-208 is also a decay product of naturally occurring thorium-232. U-232 decays very much faster than U-235 or U-238 (half-lives of 69 years, 700 million years, and 4.5 billion years, respectively), and thallium-208 decays even faster (half-life of 3 minutes), so even a very small amount of U-232 produces many gamma rays. Similarly, WGPu presents various gamma ray signatures because it is a mix of several isotopes of plutonium and their decay products. SNM is unique in that it can fission when struck by low-energy ("thermal") neutrons. Like some other materials, it also fissions when struck by high-energy gamma rays. In a sufficiently large mass of SNM, the neutrons (usually two or three) released by the fission of one atom cause other atoms to fission, releasing more neutrons in a chain reaction. SNM also fissions spontaneously, and neutrons released by these fissions have a non-negligible probability of causing other SNM atoms to fission. Characteristic products of fission offer indications that SNM is present. These products include neutrons that may be emitted over periods ranging from nanoseconds to many seconds, whether as a result of spontaneous fission or of fission induced by gamma rays or neutrons, and gamma rays emitted within nanoseconds of induced fission. When U-235 and Pu-239 fission, they release a nearly instantaneous burst of 2 or 3 neutrons and 6 to 10 gamma rays. These prompt neutrons are emitted in a continuum of energies, with an average of about 1 to 2 MeV, and are termed fast or high-energy neutrons. The prompt gamma rays are also emitted in a spectrum of many narrow lines. Only SNM will fission when struck by low-energy neutrons, so a beam of low-energy neutrons that results in a burst of neutrons and gamma rays indicates the presence of SNM. A beam of high-energy gamma rays (with energy greater than 6 MeV) will also cause SNM to fission. However, that beam will also cause other materials to fission, including natural uranium, so emission of a burst of neutrons and gamma rays resulting from interrogation by a high-energy gamma ray beam is a possible, but not a definitive, indicator by itself of the presence of SNM. When U-235 or Pu-239 atoms fission, they split into two smaller fission fragments in any of approximately 40 ways for each isotope, resulting in "[s]omething like 80 different fission fragments" for U-235 or Pu-239. These fission fragments are unstable and decay radioactively into isotopes of various elements. Fission is a statistical process, so that fissioning of a great many U-235 or Pu-239 atoms produces a complex mixture of some 300 isotopes of 36 elements. These isotopes have a great range of half-lives, from a small fraction of a second to millions of years, but the isotopes with a half-life greater than approximately 30 years emit only very low levels of radiation. This process produces thousands of times more gamma rays than neutrons. Since much cargo consists of low-Z material and since gamma rays penetrate low-Z cargo much more readily than do neutrons, many more gamma rays than neutrons resulting from fission of SNM escape containers holding such cargo. Higher-Z cargo will attenuate the gamma rays more than the neutrons. Some of the gamma rays have energies exceeding those of thallium-208, 2.614 MeV, the highest energy typically observed in natural backgrounds. "Their high energy makes this gamma radiation a characteristic of fission, very distinct from normal radioactive background that typically produces no gamma radiation exceeding an energy of 2.6 MeV." Note that some other isotopes, such as U-238 and Pu-240, are "fissionable," that is, they can undergo fission only when struck by high-energy (fast) neutrons. The high-energy gamma rays resulting from fission are a strong indicator of the presence of SNM. The intensity of the neutron and gamma-ray flux over a short period, caused by rapid decay of many of the fission products, and the prompt response to a probe, are distinctive signatures as well. There is another time-delay signature. A neutron beam makes atoms of some other elements radioactive, in particular transforming some atoms of stable oxygen-16 to radioactive nitrogen-16. Researchers at Lawrence Livermore National Laboratory conducted experiments in which they bombarded a target of natural uranium (99.3% U-238, 0.7% U-235) inside a cargo container with a neutron beam, and recorded the gamma ray spectrum resulting from radioactive decay. After they turned off the neutron beam, they found that the high-energy portion of the spectrum was dominated by gamma rays from the decay of nitrogen-16 for the first 15 seconds, and after that the dominant signal was from the decay of radioactive fission products, with an average half-life of about 55 seconds. This time difference is an indicator of the presence of SNM. Interrogation of SNM with a beam of neutrons or high-energy photons to induce fission produces another unique signature. While the beam may cause neutrons to be emitted immediately through various nuclear reactions (e.g., fission), materials other than SNM will not support a nuclear chain reaction. In contrast, even a subcritical mass of SNM can sustain a chain reaction for a short time. As a result, fission in a multi-kilogram block of SNM will continue to produce neutrons for a short time after the beam has been turned off, with the intensity and duration of the neutron flux depending on the amount of SNM and the cargo loading. This delayed neutron time signature is called differential die-away, is measured on the order of a thousandth of a second after the beam is turned off, and is specific to U-235 and Pu-239 (and, rarely, other fissile isotopes). This technique depends on the detection of the prompt fission signal, but hydrogenous materials such as those found in cargo tend to attenuate this signal, and there may be background neutrons, so that some difficult scans may require more time, possibly two minutes, and some may not be feasible. A subcritical mass of SNM is too small to support a supercritical chain reaction because too many neutrons escape the SNM for the number of neutrons to increase exponentially. Nonetheless, chain reactions do occur in SNM, triggered by a neutron from spontaneous fission or a background neutron. These chain reactions may last several to dozens of generations, producing a burst of neutrons and gamma rays over some billionths of a second. No other material produces this signature. In contrast, most background neutrons and gamma rays arrive at a detector in a random pattern. The one exception is that neutrons generated as cosmic rays strike matter also tend to be generated in bursts; work is under way to try to differentiate between bursts of neutrons induced by cosmic rays and those generated by fission chains. Detection of this signature is therefore a strong sign of the presence of SNM. Unlike differential die-away or delayed neutrons and gamma rays, this signature can be detected with passive means provided the SNM is not well shielded. This technique places great demands on detector technology but can be done with state-of-the-art electronics. Chapter 2 discusses in detail two other signatures—deflection of muons and nuclear resonance fluorescence and absorption—and their detection. Detection involves using detector elements to gain data, converting data to usable information through algorithms, and acting on that information through concept of operations, or CONOPS. Detectors, algorithms, and CONOPS are the eyes and ears, brains, and hands of nuclear detection: effective detection requires all three. Since photons or neutrons have no electrical charge, their energy is converted to electrical pulses that can be measured. This is the task of detectors, discussed next. The pulses are fed to algorithms. An algorithm, such as a computer program, is a finite set of logical steps for solving a problem. For nuclear detection, an algorithm must process data into usable information fast enough to be of use to an operator. It receives data from a detector's hardware, such as pulses representing the time and energy of each photon arriving at the detector. It converts the pulses to a format that a user can understand, such as displaying a gamma ray spectrum, identifying the material creating the spectrum, or flashing "alarm." Every detector uses one or more algorithms. Improvements to algorithms can contribute as much as hardware improvements to detector capability. Algorithms may be improved in many ways, such as by a better understanding of the physics of a problem, or by improving the computers in detection equipment so they can process more elaborate algorithms. CONOPS may be divided into two parts. One specifies how a detection unit is to be operated to gain data. How many containers must the unit scan per hour? How close would a detector be to a container? Shall the unit screen cargo in a single pass, or shall it be used for primary screening, with suspicious cargo sent for a more detailed secondary screening? A second part details how the data are to be used. What happens if the equipment detects a possible threat? Which alarms are to be resolved on-site and which are to be referred to off-site experts? Under what circumstances would a port or border crossing be closed? More generally, how is the flow of data managed, in both directions? What types of intelligence information do CBP agents receive, and how do data from detection systems flow to federal, state, and local officials for analysis or action? While this report does not focus on CONOPS because is not a technology, it is an essential part of nuclear detection. A discussion of how detectors work is essential to understanding the capabilities and limits of current detectors and how detectors may be improved. Detecting each signature of a nuclear weapon or SNM requires a detector that is appropriate for that signature. Further, there is a hierarchy of gamma ray detectors. The simplest can only detect the presence of gamma radiation. The next step up, detectors with low energy resolution, have a modest capability to identify an isotope by its gamma ray spectrum. Next, detectors with high energy resolution have very accurate isotope identification capabilities. More sophisticated detector systems can also identify the presence of SNM by the time pattern of gamma rays released when such material fissions. The most sophisticated detector systems can produce an image showing where each gamma ray came from. Detectors require a signal-to-noise ratio sufficient to permit detection. That is, they must be able to extract the true signal (such as a gamma-ray spectrum) from noise (spurious signals caused, for example, by background radioactive material or by imperfect detectors or data-processing algorithms). Two concepts are central to gamma-ray detector sensitivity: detection efficiency and spectral resolution. The former refers to the amount of signal a detector records. One aspect of detection efficiency is the fraction of the total emitted radiation that the detector receives. Radiation diminishes according to an inverse square law; that is, the intensity of radiation (e.g., number of photons per unit of area) from a source is inversely proportional to the square of the distance from the source. Since a lump of SNM emits radiation in all directions, moving a detector closer to SNM, or increasing its size, increases efficiency. Reducing the cost of the active material in a detector may increase efficiency by making a larger sensor area affordable. Another aspect is the fraction of the radiation striking the detector that creates a detectable signal. For example, a detector that can absorb 90% of the energy of photons striking it is more efficient than one that can absorb 10%. A more efficient detector will collect information faster, reducing the time it takes to screen a cargo container. Spectral resolution refers to the sharpness with which a detector presents energy peaks in a radiation spectrum. A graph of the gamma-ray spectrum of a radioactive isotope plots energy levels along the horizontal axis of the graph and the number of counts per unit time at each energy level along the vertical axis. A perfect device would record the energy levels of a gamma-ray spectrum as a graph with vertical "needles" of zero width because each radioactive isotope releases gamma rays only at specific energy levels. In practice, however, detectors are not perfect, and 186-keV gamma rays will be recorded as a bell curve centered on 186 keV. The narrower the spread of the bell curve, the more useful the information is. Polyvinyl toluene (PVT), a plastic that is widely used in radiation detectors because it can be fielded in large sheets at low cost, is sensitive but has poor resolution, i.e., extremely wide bell curves for each gamma-ray energy level. As a result, while PVT can detect radiation, the peaks from gamma rays of different energy levels blur together, making it impossible to identify an isotope. Figure 3 makes this point; it shows the spectra of 90% U-235 and background radiation as recorded by a PVT detector. At the other extreme, high-purity germanium (HPGe) produces very sharp peaks, permitting clear identification of specific isotopes. These detectors are expensive, heavy, have a small detector area, and must be cooled to extremely low temperatures with liquid nitrogen or a mechanical system, making them less than ideal for use in the field. However, mechanically cooled HPGe detectors weighing some 2.5 kg are being developed for field use. Figure 4 shows the spectrum of Pu-239 as recorded by various types of detectors with better resolution than PVT. Various means can improve detector sensitivity. One type of semiconductor detector crystal is cadmium-zinc-telluride, or CZT. The peak on the far right of each spectrum in Figure 5 shows improvement in the resolution of the gamma-ray spectrum for cesium-137 (a radioactive isotope) taken with different CZT detectors that, for the years indicated, were at the high end of sensitivity. The top line shows a spectrum taken with a CAPture device developed by eV Products (1995-1998); the middle line shows a spectrum taken with a coplanar-grid device developed by Lawrence Berkeley National Laboratory (2000-2003); and the bottom line shows a spectrum taken with a 3-D device developed by the University of Michigan (2008). Better CZT crystals and better ways to overcome limitations of these crystals have both improved sensitivity in various ways: Researchers have been able to grow larger crystals. CZT crystal volume for the three devices was 1.00 cc in 1995-1998, 2.25 cc in 2000-2003, and 6.00 cc at present. Larger crystals are more efficient, i.e., they can capture more photons, and more of the energy of individual photons, permitting more counts per unit time (i.e., more data). Crystal quality has improved. A more uniform crystal structure and fewer impurities allow for better transport of the photon-induced electrical charge through the crystal and thus more accurate determination of the energy of each photon. University of Michigan researchers have constructed three-dimensional arrays of CZT crystals, permitting their detector to determine the 3-D coordinates of each individual gamma ray photon as it interacts with the CZT crystal, in turn permitting location as well as identification of gamma-ray sources. Electronics have improved. Researchers have made significant progress in reducing the noise inherent in electronic circuits (application-specific integrated circuits) that translate signals from the interaction of photons with CZT into a form in which algorithms can process them. Reducing the noise in these circuits permits more accurate measurement of gamma-ray energy. For example, a circuit developed in 2007 by Brookhaven National Laboratory has improved energy resolution substantially, and other advances in detector electronics in the last few years enable electronic components to compensate for defects in the crystals (analogous to adaptive optics in astronomy). Algorithms to reconstruct the signal from gamma rays have improved, also permitting more accurate measurement of gamma ray energy. Another factor that affects the ability to detect SNM is the time available for a detector to scan a container or other object, often called "integration time." Detectors build up radiography or tomography images, or gamma-ray spectra, over time. More time enables a detector to have more photons per pixel (in the case of radiography) or per bin (in the case of gamma-ray spectra), or more muons per voxel. More time also enables a neutron detector to detect more neutrons and measure their times of arrival, as discussed below, helping to determine if the neutrons are generated by SNM or by background materials. More time thus provides better data, which provides for better separation of signal from noise, better separation of different sources of radiation, fewer false alarms, and a better chance of detecting and identifying shielded threat material. Figure 16 illustrates how one system builds up an image over time. From a physics perspective, then, increasing integration time improves the accuracy of the result, but from a port operator's perspective, longer integration time impedes the flow of commerce, which costs money, so a balance must be struck between these two opposed goals. This balance may be stated formally in a concept of operations (discussed in more detail below), which specifies how, among other things, a detection system will be operated; detection equipment must be designed to operate within the time required, and port operations must allow that amount of time for scans. Still another means of improving the ability to detect SNM is to increase the spatial resolution of a detector. According to DTRA, This is easily demonstrated in the example of a shielded versus unshielded radiation detector. Unshielded detectors are sensitive to radiation impinging on it in all directions, which is characteristic of the nature of naturally-occurring background radiation. By adding shielding, a detector's field-of-view can be controlled, and background radiation levels reduced, increasing the signal-to-noise ratio for the detector in the direction the detector is aimed. Gamma rays do not have an electrical charge, but an electrical signal is needed to measure them. There are two main ways by which a gamma ray can be turned into electrical energy. One is with a scintillator material, such as PVT or sodium iodide. When a single higher energy photon, such as a gamma ray, strikes the scintillator and interacts with it, the scintillator emits a large number of photons of lower energy, usually visible light ("optical photons"). A photomultiplier tube (PMT) converts the optical photons to electrons, then multiplies the electrons to generate a measurable pulse of electricity whose voltage is proportional to the number of optical photons, which is in turn proportional to the energy deposited by the gamma ray. An electronic device called a multi-channel analyzer sorts the pulse into a "bin" depending on its energy and increases the number of counts in that bin by one. A software package then draws a histogram with energy level on the horizontal axis and number of counts on the vertical axis. The histogram is the gamma ray spectrum for that isotope. In contrast, a semiconductor material, such as HPGe, turns gamma rays directly into an electrical signal proportional to the gamma-ray energy deposited. A voltage is applied across the semiconductor material, with one side of the material being the positive electrode and the other being the negative electrode. When a gamma ray strikes the material, it knocks some electrons loose from the semiconductor's crystal lattice. The voltage sweeps these electrons to the positive electrode. Their motion produces an electric current whose voltage is proportional to the energy of each gamma ray. Each pulse of current is then sorted into a bin depending on its voltage and the spectrum is computed as described above. This approach, with either type of detector, is used to detect the various gamma-ray signatures described earlier. However, the requirements for detecting time signatures varies somewhat. Because prompt gamma rays are emitted so quickly, identifying them requires the ability to record time of arrival to several billionths of a second. Delayed gamma rays of interest are generated over a period of tens of seconds, so the ability to record precise time of arrival is less important. Detecting fission chain time signature requires a high-efficiency detector because long fission chains are relatively rare. Thus to detect SNM rapidly, the detector must have a high efficiency for detecting every fission chain. While the delayed emissions from fission chains are too weak to detect passively, fission chain time signature focuses on detecting the prompt emissions from fission, which are stronger. High efficiency is also important for neutron and gamma-ray interrogation, but the emphasis is less stringent because far more fissions are induced (i.e., the signal is stronger). Detecting nuclear resonance fluorescence requires high-resolution detectors in order to differentiate between the various materials being analyzed. Neutrons, like photons, do not have an electrical charge, but the two interact with matter differently. Photons interact chiefly with electrons, while neutrons interact with atomic nuclei. As a result, neutrons are counted by a different process. A common neutron detector is a tube of helium-3 gas connected to a high-voltage power supply, with positively and negatively charged plates or wires in the tube. In its rest state, current cannot pass through the helium because it acts as an insulator. When a low-energy neutron passes through the tube, it is absorbed by a helium-3 atom, producing a triton (1 proton and 2 neutrons) and a proton. These particles are highly energetic and lose their energy by knocking electrons off other helium-3 atoms. Positively charged ions of helium-3 move to the negative plate, while electrons move to the positive plate. Since electric current is the movement of charged particles, these particles generate a tiny electric current that is measured and counted. Neutrons are emitted as a continuum of energies. While the mean energy of each neutron spectrum varies somewhat from one isotope to the next, neutron energy spectra do not have lines representing discrete energies as with gamma rays. Moreover, neutrons lose energy as they collide with low-Z material, further blurring their spectra. Thus neutron spectra are of little value for identifying isotopes. Instead, the total neutron count is an important means of identifying SNM because only SNM gives off neutrons spontaneously in significant numbers, though some neutron background is generated mainly when cosmic rays knock neutrons off atoms. Several other methods of detecting SNM by neutron emission, discussed above, rely on the time pattern in which a group of neutrons arrives. Several systems detect neutrons with tubes filled with helium-3 (He-3), a standard method. DOE obtains He-3 as a byproduct from the decay of tritium used in nuclear warheads. With the decades-long decline in numbers of warheads and a hiatus in tritium production for many years, there is little new supply of He-3. DOE plans to supply customers with 10,000 liters of He-3 a year, with a starting bid price expected to be around $72 per liter, and states, "This appears short of what customers are requesting." (Russia sells He-3 to U.S. companies, but quantities are proprietary and not available.) Deploying He-3 neutron detection systems in large numbers would require a considerable amount of He-3. Customs and Border Protection (CBP) states that "based on our RPM [radiation portal monitor] deployments CBP would need approximately 2500 [detector] units to cover sea and land borders." (Data for number of units needed for air cargo are not available.) Given the shortage and cost of He-3, deployment of neutron detectors using large amounts of He-3, or large numbers of units requiring small amounts of He-3, does not appear feasible. Alternative neutron detection systems are possible. They include tubes coated with boron-10 or lithium-6, tubes filled with boron-10 trifluoride (a toxic gas), nanocomposite scintillators, and "neutron straws," thin tubes being developed commercially under sponsorship of the Defense Threat Reduction Agency. Substituting any of these technologies for He-3 in a system would necessitate re-engineering the system's neutron detectors, revising algorithms, conducting tests, perhaps modifying the resulting system for operational conditions, and so on. Those changes have the potential to add delay and affect system performance (for better or worse), though given the high cost of He-3 (about $2.7 million for 38,000 liters) they might well reduce cost. Photons of sufficiently high energy can penetrate solid objects. Denser, higher-Z material within a solid object absorbs photons of lower energy and scatters photons of higher energy. For cargo scanning, a fan-shaped planar beam of photons is sent through a cargo container as the container passes through the beam, and a detector array on the other side consisting of semiconductor or scintillator material records the opacity of each pixel to the photons. An algorithm then creates a two-dimensional opacity map of the contents of the container and displays it as an image on a computer screen. Increasing the energy of photons allows them to penetrate more material. Radiography is used to search cargo containers for terrorist nuclear weapons, among other things. A radiograph would reveal clearly a large dense object, such as a nuclear weapon encased in lead shielding. Two limitations of radiography are noteworthy. First, radiographs do not detect radiation and thus do not specifically detect SNM, just high-density, high-Z material. Second, if a terrorist bomb is placed in a shipment of dense or mixed objects, the image of the bomb might be hidden or a radiographic equipment operator might not notice it. It would be much harder to detect a small piece of SNM using radiography than to detect a bomb. In order to understand the capabilities of detection systems, it is important to know their weaknesses as well as their strengths. However, detailed discussions of means of evasion tend to become classified. Some references are made throughout this report, but some are withheld to keep the report unclassified. In general, an enemy could use various means in an effort to defeat these technologies. For example, high-Z material absorbs and deflects gamma rays, low-Z material deflects neutrons, radiography might miss a small piece of SNM (especially if mixed in with other dense material), and reducing the apparent density and Z of SNM by mixing it with a low-Z substance reduces the deflection of muons. Further, enemy attempts to defeat one type of detection system may complicate plans or make a plot more vulnerable to detection by other means, as several examples illustrate. (1) The use of multiple detection systems that detect different phenomena are harder to defeat than those detecting one phenomenon only. Placing a lead shield around a bomb in order to attenuate gamma rays from plutonium would create a large, opaque image that would be quite obvious on a radiograph. It is for this reason that Congress mandated, "A container that was loaded on a vessel in a foreign port shall not enter the United States (either directly or via a foreign port) unless the container was scanned by nonintrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel." This restriction is to apply by July 1, 2012. (2) An enemy could attempt salvage fuzing, which would detonate a weapon if the weapon sensed attempts to detect it, such as with photon beams, or if it was tampered with. However, salvage fuzing has various shortcomings. It could result in a weapon detonating by accident or if it is scanned overseas. It could detonate a weapon in a U.S. port, where it would do much less damage than in a city center. (3) Enemy attempts to smuggle HEU into the United States in order to avoid detection of a complete bomb would require fabricating the weapon inside this nation, which in turn could require such activities as smuggling other weapon components and purchase of specialized equipment, and could run the risk of accidents (such as with explosives), any of which could provide clues to law enforcement personnel. For these reasons, it is important to view technology development not only as advances in capabilities per se but also in the context of an offense-defense competition.

Detection of nuclear weapons and special nuclear material (SNM, plutonium, and certain types of uranium) is crucial to thwarting nuclear proliferation and terrorism and to securing weapons and materials worldwide. Congress has funded a portfolio of detection R&D and acquisition programs, and has mandated inspection at foreign ports of all U.S.-bound cargo containers using two types of detection equipment. Nuclear weapons contain SNM, which produces suspect signatures that can be detected. It emits radiation, notably gamma rays (high-energy photons) and neutrons. SNM is dense, so it produces a bright image on a radiograph (a picture like a medical x-ray) when x-rays or gamma rays are beamed through a container in which it is hidden. Using lead or other shielding to attenuate gamma rays would make that image larger. Nuclear weapons produce detectable signatures, such as radiation or a noticeable image on a radiograph. Other detection techniques are also available. Nine technologies illustrate the detection portfolio: (1) A new scintillator material to improve detector performance and lower cost. This project was terminated in January 2010. (2) GADRAS, an application using multiple algorithms to determine the materials in a container by analyzing gamma-ray spectra. If materials are the "eyes and ears" of detectors, algorithms are the "brains." (3) A project to simulate large numbers of experiments to improve detection system performance. (4, 5) Two Cargo Advanced Automated Radiography Systems (CAARS) to detect high-density material based on the principle that it becomes less transparent to photons of higher energy, unlike other material. (6) A third CAARS to detect material with high atomic number (Z, number of protons in an atom's nucleus) based on the principle that Z affects how material scatters photons. This project was terminated in March 2009. (7) A system to generate a 3-D image of the contents of a container based on the principle that Z and density strongly affect the degree to which muons (a subatomic particle) scatter. (8) Nuclear resonance fluorescence imaging to identify materials based on the spectrum of gamma rays a nucleus emits when struck by photons of a specific energy. (9) The Photonuclear Inspection and Threat Assessment System to detect SNM up to 1 km away, unlike other systems that operate at very close range. It would beam high-energy photons at distant targets to stimulate fission in SNM, producing characteristic signatures that may be detected. These technologies are selected not because they are necessarily the "best" in their categories, but rather to show a variety of approaches, in differing stages of maturity, performed by different types of organizations, relying on different physical principles, and covering building blocks (materials, algorithms, models) as well as systems, so as to convey many points on the spectrum of detection technology development. This analysis leads to several observations for Congress. It is difficult to predict the schedule or capabilities of new detection technologies. It is easier and less costly to accelerate a program in R&D than in production. "Concept of operations" is crucial to detection system effectiveness. Congress may wish to address gaps and synergisms in the technology portfolio. Congress need not depend solely on procedures developed by executive agencies to test detection technologies, but may specify tests an agency is to conduct. Ongoing improvement in detection capabilities produces uncertainties for terrorists that will increase over time, adding deterrence beyond that of the capabilities themselves. This report will be updated occasionally.

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The 21st Century Cures Act ( P.L. 114-255 ) was signed into law on December 13, 2016, by President Barack Obama. On November 30, 2016, the House passed the House amendment to the Senate amendment to H.R. 34 , the 21st Century Cures Act, on a vote of 392 to 26. The bill was then sent to the Senate where it was considered and passed, with only minor technical modification, on December 7, 2016, on a vote of 94 to 5. The law consists of three divisions: Division A—21st Century Cures Act; Division B—Helping Families in Mental Health Crisis; and Division C—Increasing Choice, Access, and Quality in Health Care for Americans. CRS has published a series of reports on this law, one on each Division. This is the report for Division A of the law. Division A of the law provides funding for biomedical research—including the Precision Medicine Initiative (PMI) and the Cancer Moonshot Initiative—and for the opioid crisis response; modifies Food and Drug Administration (FDA) pathways for the approval of regulated medical products; and makes a number of reforms to the National Institutes of Health (NIH). Division A of the law also includes and builds on provisions from both the previously passed House bill, H.R. 6 (The 21 st Century Cures Act, passed in July 2015), and a package of Senate medical innovation bills that were considered in the early part of 2016. As noted, both the House and the Senate considered previous legislation to support medical innovation, primarily through reforms to the NIH and changes to the drug, biologic and device approval pathways at the FDA. On February 3, 2015, Senators Lamar Alexander and Patty Murray, chairman and ranking Member of the Committee on Health, Education, Labor and Pensions, announced the start of a bipartisan initiative to "examine the process for getting safe treatments, devices and cures to patients and the roles of the [FDA] and the [NIH] in that process." 1 This initiative culminated in a package of 19 bipartisan bills that were reported out of the Senate Health, Labor, Education, and Pensions (HELP) Committee in a series of three executive sessions held on February 9, 2016; March 9, 2016; and April 6, 2016. One of these 19 bills, The Adding Zika Virus to the FDA Priority Review Voucher Program Act ( S. 2512 ), subsequently was passed by both chambers and signed into law on April 19, 2016 ( P.L. 114-146 ). The Senate's medical innovation package was that chamber's companion effort to the House's 21 st Century Cures initiative, which resulted in the House passage of H.R. 6 , the initial version of the 21 st Century Cures Act, on July 10, 2015, on a vote of 344 to 77. H.R. 6 was the result of a series of hearings and roundtable meetings hosted by the House Energy and Commerce Committee dating back to spring 2014. The hearings and roundtables focused on a broad range of topics, including modernizing clinical trials, incorporating patient perspectives into medical research and regulatory processes, precision/personalized medicine, digital health care, and more. While it consisted of many different provisions, H.R. 6 was primarily focused on efforts to increase strategic investments in medical research at NIH and change some aspects of how the FDA executes its regulatory oversight mission with regard to the review and approval of new drugs, biologics, and medical devices. This report provides a brief summary of each provision of the 21 st Century Cures Act (Division A of P.L. 114-255 ), by title, subtitle, and section. The Division includes five titles, as follows: (1) Innovation projects and state responses to opioid abuse; (2) Discovery; (3) Development; (4) Delivery; and (5) Savings. Most provision summaries include a brief background of current law in addition to a description of the new provision of law. Throughout the report, clarity takes priority over consistency. For example, some summaries are more detailed than others where such detail is necessary to highlight important changes. A list of acronyms used throughout this report can be found in Appendix of this report. The National Institutes of Health (NIH) is the lead federal agency charged with performing and supporting biomedical and behavioral research. It also has major roles in training biomedical researchers and disseminating health information. Congress doubled the NIH budget from $13.65 billion to $27.1 billion in the five-year period from FY1998 to FY2003; during that period, annual increases in the 14%-15% range were the norm. Since then, increases from regular appropriations have been between 1.0% and 3.2% each year. The growth rate of the NIH budget has been at or below the rate of inflation, which for biomedical research in FY2015 is estimated to be 2.2%. NIH funding in FY2015 was 22% lower than the FY2003 level, the peak of the doubling period in constant 2012 dollars. A recent analysis of U.S. expenditures on biomedical research found that "U.S. government research funding declined from 57% (2004) to 50% (2012) of the global total, as did that of U.S. companies (50% to 41%), with the total U.S. (public plus private) share of global research funding declining from 57% to 44%. Asia, particularly China, tripled investment from $2.6 billion (2004) to $9.7 billion (2012) preferentially for education and personnel." The United States continues to be the top supporter of both public and industry medical research. However, some Members of Congress and many in the biomedical research community have expressed concern over the rapidly increasing investments being made by other countries in this area of research. Many of those who are concerned about the U.S. global position in biomedical research investment have made frequent calls for increased support for research at NIH. However, another recent analysis of U.S. biomedical research funding cautioned that the past pattern of rapid doubling of the NIH budget followed by slowdowns in federal funding "created an unsustainable hypercompetitive system that is discouraging even the most outstanding prospective students from entering our profession—and making it difficult for seasoned investigators to produce their best work." Rather than short-term infusions of cash that disappear, the authors recommend that greater emphasis be placed on the predictable and stable growth of federal funds for the research enterprise. In responding to questions raised by Senator Elizabeth Warren during a May 5, 2015, Senate hearing, NIH Director Francis Collins agreed that continued NIH budget increases—ranging from 3.7% annually to inflation plus 4% or 5%—would be preferred to a temporary larger investment that disappears. The Advisory Committee to the Director of NIH, authorized under PHSA Section 222, provides "advice on matters pertinent to NIH mission responsibilities in the conduct and support of biomedical research." Section 1001 establishes the "NIH Innovation Account" in the Treasury, to which specified amounts are transferred for each of FY2017 through FY2026. Such amounts from the account are authorized to be appropriated to the NIH Director for the purpose of carrying out the NIH Innovation Projects. Amounts appropriated from this account are available until expended. Specifically, the provision authorizes appropriations to support the Precision Medicine Initiative, specified amounts for FY2017 through FY2026, total not to exceed $1.455 billion; the Brain Research through Advancing Innovative Neurotechnologies Initiative (BRAIN Initiative), specified amounts for FY2017 through FY2026, total not to exceed $1.511 billion; cancer research, specified amounts for FY2017 through FY2023, total not to exceed $1.8 billion; and regenerative medicine using adult stem cells, specified amounts for FY2017 through FY2020 that total $30 million; no funds are to be appropriated for this activity after FY2020. This research is to be undertaken in coordination with the FDA. Within six months of enactment, the NIH Director must submit to the specified congressional committees a work plan including the proposed allocation of funds authorized to be appropriated for each year, FY2017 through FY2026, for the NIH Innovation Projects. Prior to submitting the work plan, the NIH Director must seek recommendations on the allocations of funds and the contents of the proposed work plan from the Advisory Committee to the Director of NIH. The work plan must include recommendations from this Advisory Committee, the amount of money to be obligated or expended in each fiscal year for each NIH Innovation Project, a description and justification of each such project, and a description of how each such project supports the strategic research priorities identified in the NIH Strategic Plan. Not later than October 1 of each year, FY2018 through FY2027, the Director of NIH must submit to the specified congressional committees a report including the amount of money obligated or expended in the prior fiscal year for each NIH Innovation Project, a description of any such project using funds provided by this section, and whether such projects are advancing the strategic research priorities identified in the NIH Strategic Plan. The specified House and Senate committees may request an update on the allocation of funding under this section or the description of the NIH Innovation Projects, which the NIH Director must provide in the form of additional reports or testimony. Section 1001 specifies that these funds may be used only for NIH Innovation fund projects (notwithstanding any transfer authority in any appropriations act). The section also specifies that amounts in the account are not available until appropriated in subsequent appropriations acts. Notably, the amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 through FY2026, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 through FY2026. Section 1001 sunsets on September 30, 2026. The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. FDA's budget (i.e., its total program level) has two funding streams: annual appropriations (i.e., discretionary budget authority, or BA) and industry user fees. In FDA's annual appropriations, Congress sets both the total amount of appropriated funds and the total amount of user fees that the agency is authorized to collect and obligate for that fiscal year. Appropriated funds are largely for the Salaries and Expenses account, with a much smaller amount for the Buildings and Facilities account. The different user fees contribute only to the Salaries and Expenses account. Between FY2012 and FY2016, FDA's total program level increased from $3.832 billion to $4.745 billion. Although congressionally appropriated funding increased by 9% over that time period, user fee revenue increased more than 50%. In FY2016, user fees accounted for 42% of FDA's total program level. The Science Board to the FDA is an advisory committee that provides "advice to the Commissioner and other appropriate officials on specific complex scientific and technical issues important to FDA and its mission, including emerging issues within the scientific community." Among other things, the Science Board is also tasked with providing, where requested, "expert review of Agency sponsored intramural and extramural scientific research programs." Section 1002 establishes the "FDA Innovation Account," to which a total of $500 million is authorized to be transferred over a nine-year period (FY2017-FY2025). It specifies that amounts in the account are not available until appropriated in subsequent appropriations acts and that once made available, these amounts are available until expended. The amounts from the account are authorized to be appropriated to the FDA Commissioner for the purpose of carrying out the FDA Innovation Projects specified as activities under subtitles A through F of Title III (e.g., Subtitle A—Patient Focused Drug Development, Subtitle B—Advancing New Drug Therapies, Subtitle F—Medical Device Innovations), as well as Section 3073 of this Act establishing FDA Intercenter Institutes; these activities are described later in this report. The amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 through FY2025, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 through FY2025. Within six months of enactment, the FDA Commissioner is required to submit to the specified congressional committees a work plan including the proposed allocation of funds authorized to be appropriated for each fiscal year (FY2017 through FY2025) for the FDA Innovation Projects. Prior to submitting the work plan, the FDA Commissioner must seek recommendations on the allocations of funds and the contents of the proposed work plan from the Science Board. The work plan must include recommendations from the Science Board, the amount of money to be obligated or expended in each fiscal year for each FDA Innovation Project, and a description and justification of each such project. Section 1002 requires the FDA Commissioner, not later than October 1 of each fiscal year 2018 through 2026, to submit to the specified congressional committees a report including the amount of money to be obligated or expended in each fiscal year for each FDA Innovation Project, a description of any such project using funds provided by this section, and how the activities are advancing public health. The specified House and Senate committees may request an update on the allocation of funding under this section or the description of the FDA Innovation Projects, which the FDA Commissioner must provide in the form of additional reports or testimony. Section 1002 specifies that these funds may be used only for FDA Innovation fund projects (notwithstanding any transfer authority in any appropriations act). Section 1002 sunsets on September 30, 2025. The Substance Abuse and Mental Health Services Administration (SAMHSA) administers block grants authorized by PHSA Title XIX and numerous other grants authorized by PHSA Title V, as well as other activities. Each state that receives a block grant from SAMHSA is required to submit to the HHS Secretary a report about block grant funds received in the preceding fiscal year—including the purposes for which funds were expended, the state's activities under the block grant, and the recipients of block grant funds. Section 1003 establishes the "Account for the State Response to the Opioid Abuse Crisis" in the Treasury, to which $500 million is transferred for each of FY2017 and FY2018. Such amounts from the account are authorized to be appropriated to the HHS Secretary for use as grants to support state responses to opioid abuse. Specifically, the provision authorizes appropriations to support two categories of grants to states: (1) grants "for the purpose of addressing the opioid abuse crisis" and (2) grants for activities that supplement opioid-related activities undertaken by the state agency that administers the substance abuse block grant. Section 1003 requires that such funds (1) shall not be used for any other purpose (notwithstanding any transfer authority in any appropriations act) and (2) shall be subject to the same requirements as SAMHSA's substance abuse prevention and treatment programs under PHSA Titles V and XIX. It further requires a state receiving such a grant to include specified information about the use of the grant in the report already required in connection with the block grants. The amounts in the account are not available until appropriated in subsequent appropriations acts. Notably, the amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 and FY2018, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 and FY2018. NIH derives its statutory authority from the Public Health Service Act of 1944 (PHSA), as amended. PHSA Section 301 grants the HHS Secretary broad permanent authority to conduct and sponsor research. In addition, PHSA Title IV, "National Research Institutes," authorizes in greater detail various activities, functions, and responsibilities of the NIH Director and the institutes and centers. The last major NIH reauthorization was the NIH Reform Act of 2006 ( P.L. 109-482 ). The NIH Reform Act, in PHSA Section 402A, authorized total funding levels for NIH appropriations for FY2007 ($30,331,309,000), FY2008 ($32,831,309,000), and such sums as necessary for FY2009. Overall NIH authorization expired at the end of FY2009 and has not been extended by Congress. Annual appropriations, together with Section 301 of the PHSA, have provided authority for NIH programs to continue from FY2009 to the present. Section 2001 amends PHSA Section 402A, to authorize appropriations for NIH in FY2018 ($34,851,000,000), FY2019 ($35,585,871,000), and FY2020 ($36,472,442,775). Section 105 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) provides federal agencies with broad authority to carry out programs designed to stimulate innovation through prize competitions. Before passage of P.L. 111-358 , only certain federal agencies had the authority to initiate prize competitions. The White House Office of Science and Technology Policy (OSTP) publishes annual reports on the implementation of Section 105 as required by P.L. 111-358 . Currently a number of federal government agencies, including NIH, sponsor challenges or prize competitions in science and medical research. A current list of such challenges is available on the Challenge.gov website. A search of the website on December 8, 2016, resulted in 15 competitions conducted by NIH or one of the NIH ICs. Examples of research topics covered in the various challenges include breast cancer genetics, antimicrobial resistance, and drug abuse and addiction research. Section 2002 requires the NIH Director, under authorities in 15 U.S.C. §3719, to support prize competitions for one or both of the following goals: (1) identifying and funding areas of biomedical science that could realize significant advancements through a prize competition and (2) improving health outcomes, particularly with respect to human diseases and conditions such as those that are serious and represent a significant disease burden in the United States. With regard to the second goal, the prize competition may also target human diseases and conditions where public and private investment in research is disproportionately small relative to federal government expenditures for prevention and treatment activities and those diseases and conditions with potential for a significant return on investment. The section requires the NIH Director to collect information on the effect of prize competition innovations on advancing biomedical science or improving health outcomes and the effect of the innovations on federal expenditures. This information must be included in the NIH triennial report, required in PHSA Section 403. Precision medicine is a relatively new term for what has traditionally been called personalized medicine, the idea of providing health care to individuals based on specific patient characteristics. On February 25, 2016, the White House hosted a Precision Medicine Initiative (PMI) Summit to mark the one-year anniversary of the initiative's launch, first announced in the 2015 State of the Union address. In the first year, the PMI's three key entities—National Institutes of Health (NIH), Food and Drug Administration (FDA), and the Office of the National Coordinator for Health Information Technology (ONC)—began work in this area. The FY2017 President's budget requests a total of $309 million for the PMI: $4 million to FDA, $5 million to ONC, and the remaining $300 million to NIH. Precision medicine research efforts rely on the collection of large amounts of health and other data; therefore, access to this data may be a concern in the context of this type of research. The sharing of genetic and genomic data among private individuals, researchers, and the federal government has, at times, prompted concerns that the information, if collected or retained by a federal executive branch agency, could be subject to public release pursuant to the Freedom of Information Act (FOIA). FOIA, however, specifies nine categories of information that may be exempted from the rule of disclosure, allowing agencies to withhold applicable records. Exemption 3 allows agencies to withhold applicable records if the data are specifically exempted from disclosure by a statute other than FOIA, if that statute meets criteria laid out in FOIA. These types of Exemption 3 statutes are often referred to as b(3) exemptions because they are authorized in 5 U.S.C. §552(b)(3). As a mechanism for addressing compelled disclosure of research data, NIH currently issues Certificates of Confidentiality pursuant to PHSA Section 301(d) (42 U.S.C. §241(d)) at the request of an investigator. A Certificate of Confidentiality protects investigators from being compelled to disclose information that would identify research subjects in any civil, criminal, administrative, legislative, or other proceeding. In this way, having a Certificate of Confidentiality can help promote participation in research by adding an additional layer of privacy protection. At the other end of the spectrum, the sharing of research data—specifically, genomic data generated by NIH-funded research—has also received attention in the context of precision medicine. NIH has established a comprehensive policy for the sharing of genomic data that "applies to all NIH-funded research that generates large-scale human or non-human genomic data as well as the use of these data for subsequent research." This policy requires investigators to outline their data-sharing plans as part of their funding applications; if investigators fail to submit the required data, NIH may withhold funding. Title II, Subtitle B, has four sections (Sections 2011-2014) that together aim to support precision medicine by (1) codifying the PMI; (2) requiring issuance of Certificates of Confidentiality to investigators of federally funded research; (3) protecting identifiable, sensitive information from release under FOIA; and (4) requiring the sharing of NIH-supported research data in certain circumstances. Section 2011 codifies the President's Precision Medicine Initiative (PMI) in a new PHSA Section 498E, by encouraging the HHS Secretary to establish and carry out the PMI, and by allowing specified components and authorities in the carrying out of the PMI as well as identifying requirements of the initiative, including, for example, complying with existing law and regulation regarding human research subjects protections. It also requires, not later than one year after enactment, the HHS Secretary to submit a report to Congress on relevant data access policies and procedures, and consultation with experts in the development of those policies. Section 2012 amends PHSA Section 301(d) to require the HHS Secretary to issue a Certificate of Confidentiality to research investigators of research funded wholly or in part by the federal government in which sensitive, identifiable information is collected to protect the privacy of research participants. The section prohibits the individual with the certificate from disclosing sensitive information about the research participants, with certain exceptions, as specified, and would make this type of information immune from the legal process. In addition, the section requires that these protections exist in perpetuity and that the HHS Secretary must minimize the burden to researchers of compliance with this section, and must coordinate across involved HHS entities. The requirements of this section become effective 180 days after the date of enactment of the act. Section 2013 amends PHSA Section 301 to allow the HHS Secretary to exempt from disclosure under FOIA exemption (b)(3) specified biomedical information that identifies an individual or that has an associated risk that the information may be reidentified. The HHS Secretary is required to make each such exemption available in writing and to the public, upon request. However, this does not limit individual research participants access to their own data. Section 2014 amends PHSA Section 402(b) to allow the HHS Secretary to require recipients of NIH grants or agreements to share data generated from such NIH grants or agreements in a manner consistent with all applicable federal law regarding human subject protections, propriety interests, confidential commercial information, and intellectual property. Congress has had a long-standing interest in developing the future biomedical research workforce. Recent concerns have focused on ways to reduce the time between when young investigators complete their training and when they receive their first independent NIH research grant (i.e., achieve research independence). NIH has created a number of initiatives to shorten this time, in part to better retain young investigators in biomedical research. The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2016 ( P.L. 114-113 , Division H), instructed the NIH Director to enter into a contract with the National Academy of Sciences (NAS) to conduct a comprehensive study of the policies affecting the next generation of researchers in the United States. Section 2021 amends Part A of Title IV of the PHSA by adding a new Section 404M, which establishes the Next Generation of Researchers Initiative (the Initiative) within the office of the NIH Director. The Initiative requires the NIH Director to coordinate all NIH policies and programs focused on promoting and providing opportunities for new researchers and for promoting earlier research independence. Among other things, the NIH Director would have to coordinate with relevant agencies, professional associations, and academic institutions to improve and update information on the biomedical workforce to inform training, recruitment, and retention programs of biomedical researchers. In establishing the Initiative, the NIH Director is required to consider recommendations made by NAS in its study on the next generation of researchers. Not later than two years after completion of the NAS study, the NIH Director would be required to submit a report to specified congressional committees regarding any actions taken by NIH with respect to the NAS recommendations. NIH funds seven loan repayment programs for researchers. Three of these are intramural programs that provide educational loan repayment benefits to researchers in exchange for undertaking research while employed by NIH. Intramural loan repayment programs support researchers from disadvantaged backgrounds, those who are investigating AIDS, and those undertaking general research (including general research by physicians during their fellowship training). Four of these programs help extramural researchers repay their educational loans. These funds are awarded competitively to researchers who are employed by a qualifying educational institution. Specific programs are available to extramural researchers investigating health disparities, undertaking contraception and infertility research, engaging in clinical research, and examining pediatric-related topics. Researchers may receive up to $35,000 per year in loan repayment benefits under each of these programs. Under current law, appropriations for loan repayments remain available until the end of the second fiscal year after they are appropriated. Section 2022 renames PHSA Section 487A "Intramural Loan Repayment Program" and consolidates existing NIH intramural loan repayment programs. Specifically, it (1) transfers the authority to administer these program from the HHS Secretary to the NIH Director; (2) increases annual loan repayment amounts from a maximum of $35,000 to a maximum of $50,000; and (3) provides loan repayment benefits for individuals who conduct research in areas of emerging scientific or workforce needs, in addition to individuals who conduct research on AIDS, and clinical researchers from disadvantaged backgrounds. In addition, Section 2022 authorizes the NIH Director to amend the categories eligible for intramural loan repayment as scientific and workforce priorities change. Finally, the section prohibits the NIH Director from entering into a loan repayment contract with individuals unless they have substantial amounts of educational loans relative to income as determined by the NIH Director and permits amounts appropriated for new loan repayment contracts to remain available until the end of the second fiscal year after they are appropriated. Section 2022 similarly amends the NIH's extramural loan repayment program. Specifically, it (1) retitles PHSA 487B "Extramural Loan Repayment Program," (2) transfers authority for the program from the HHS Secretary to the NIH Director, (3) increases loan repayment amounts to a maximum of $50,000 per year, (4) prohibits the NIH Director from entering into a loan repayment contract with individuals unless they have substantial amounts of educational loans relative to income as determined by the NIH Director, and (5) permits amounts appropriated for new loan repayment contracts to remain available until the end of the second fiscal year after they are appropriated. In addition, Section 2022 retains authorization for current topics eligible for extramural loan repayment (contraception and infertility, pediatric research, minority health disparities, clinical research, and clinical research conducted by individuals from disadvantaged backgrounds). The section makes extramural researchers who are conducting research in an area of emerging scientific or workforce need eligible for loan repayment benefits, and it authorizes the NIH Director to amend the categories eligible for extramural loan repayment as scientific and workforce priorities change. Finally, Section 2022 repeals existing authorizations for NIH loan repayment programs in PHSA Sections 464z, 487C, 487E, and 487F. It requires a GAO report, not later than 18 months after enactment, that (1) reports on NIH efforts to attract, retain, and develop emerging scientists, including underrepresented individuals in the sciences; (2) reports on the research areas where individuals are receiving increased loan repayment amounts; and (3) analyzes the impact of changes included in this act on addressing workforce shortages. PHSA Section 402(b)(5) specifies that the NIH Director "shall ensure that scientifically based strategic planning is implemented in support of research priorities as determined by the agencies of the National Institutes of Health." Current law does not direct NIH Institutes and Centers (ICs) to coordinate or collaborate in the development of IC strategic plans. NIH provides access to many of its strategic plans on the agency's website. The NIH Reform Act of 2006 ( P.L. 109-482 ) enhanced the authority of the NIH Director's Office to perform strategic planning and provided for trans-NIH initiatives by enacting the Common Fund into law and requiring strategic planning for the fund. The Common Fund is part of the Office of the Director and is intended to support research in emerging areas of scientific opportunity, public health challenges, and knowledge gaps that might benefit from collaboration between two or more ICs. Section 2031 amends PHSA Section 402 by adding a new subsection (m), which describes a strategic plan for NIH. Within two years of enactment, and once every six years thereafter, the NIH Director, in consultation with the IC Directors, must develop and submit to the appropriate committees of Congress, and post on the NIH website, a six-year NIH Strategic Plan. The NIH Strategic Plan is expected to provide direction to the biomedical research investments made by NIH, facilitate IC collaboration, leverage scientific opportunity, and advance biomedicine. The NIH Strategic Plan must identify research priorities, such as advancement of treatment, cure and prevention of health conditions, emerging scientific opportunities, and rising public health challenges. The research strategy must address the disease burden in the United States, including rare diseases, and the many factors that contribute to health disparities. Other elements to be included in the NIH Strategic Plan are (1) coordination of research among the ICs; (2) priorities for funding research through the Common Fund; (3) training the biomedical workforce; and (4) collaboration with other agencies and departments. The individual IC strategic plans are required to be prepared regularly, to be informed by the NIH Strategic Plan, and to have a common template. The NIH Director must consult with the IC directors, researchers, patient advocacy groups, and industry leaders when developing the strategic plan. PHSA Title IV establishes numerous reporting requirements for the NIH Director related to the activities of the agency. Specifically, PHSA Section 403(a) requires the NIH Director to submit to Congress biennially a report on NIH activities. Among other things, the report must include an assessment of the state of biomedical and behavioral research, and details of all the research activities conducted or supported by the ICs of NIH. Section 2032 amends PHSA Section 403(a) by replacing the biennial reporting requirement of the NIH Director with a triennial requirement. The section adds new, and clarifies existing, reporting requirements, including a description of intra-NIH activities and funding made available for conducting and supporting research that involves collaboration between an IC and one or more other ICs. PHSA Section 405 specifies that the National Cancer Institute Director is appointed by the President and the Directors of the other NIH Institutes are appointed by the HHS Secretary. Each NIH Institute Director reports directly to the NIH Director. Research supported by NIH is first evaluated by a peer review system. Scientists who seek to compete for NIH research funding must submit detailed applications describing the research they plan to undertake. NIH considers the applications under a two-tiered system of peer review. First, the applications are reviewed for scientific and technical merit by committees composed of nongovernment scientists who are experts in the relevant fields of research. Each application is thoroughly discussed and given a score representing the average of the scores assigned by the reviewers. That score becomes the main determinant in whether an applicant will receive funding from an IC for the research proposal. The funding decisions are fine-tuned by a second level of peer review in the ICs, when the applications are considered for program relevance by the IC's National Advisory Councils or Boards, which are composed of scientific and lay representatives. Section 202 of the Labor/HHS/ED Appropriations Act, 1993, states at the end of the section that the payment of compensation to consultants or individual scientists appointed for limited periods of time is "not to exceed the per diem rate equivalent to the maximum rate payable for senior-level positions," which is "not less than 120% of the minimum rate of basic pay payable for GS–15 of the General Schedule; and ... not greater than the rate of basic pay payable for level III of the Executive Schedule." Section 2033 amends PHSA Section 405 with regard to the appointment and terms of the Director of the National Cancer Institute and the directors of other NIH ICs. It requires that directors of ICs be appointed by the HHS Secretary acting through the NIH Director. The Director of the National Cancer Institute continues to be appointed by the President. It specifies five-year terms for the IC Directors who are appointed by the HHS Secretary acting through the NIH Director, and authorizes the NIH Director to remove an IC Director prior to the end of a five-year term if necessary. It permits the director of an IC to be reappointed at the end of a five-year term, with no limit to the number of terms served. It requires that, if the office of a director of an IC becomes vacant before the end of a five-year term, the director appointed to fill the vacancy begin a new five-year term (as opposed to finishing the five-year term of the previous director). Each current IC Director is deemed to be appointed for a five-year term as of the date of enactment. Section 2033 specifies that the compensation limitations in Section 202 of the Labor/HHS/ED Appropriations Act, 1993, related to time-limited appointments of consultants and individual scientists, do not apply to directors appointed under this new authority. The section adds a new requirement that before a new research grant is made by an IC, the IC Director will review and approve the award, taking into consideration the mission of the IC, the scientific priorities identified in the strategic plan, "programs or projects funded by other agencies on similar research topics and advice by staff and the advisory council or board of such national research institute or national center." Section 2033 also requires the HHS Secretary to submit a report to Congress, not later than two years following enactment, "on efforts to prevent and eliminate duplicative biomedical research that is not necessary for scientific purposes." Among other things, the report must "describe how the HHS Secretary operationally distinguishes necessary and appropriate scientific replication from unnecessary duplication, and provide examples of instances where the HHS Secretary has identified unnecessarily duplicative research and the steps taken to eliminate the unnecessary duplication." The Federal Demonstration Partnership (FDP) is "a cooperative initiative among 10 federal agencies and 119 institutional recipients of federal funds, sponsored by the National Academies, with a purpose of reducing the administrative burdens associated with federal research grants and contracts." In 2005 and 2012, FDP conducted surveys of principal investigators of federally funded projects to determine the impact of federal regulations and requirements on the research process. In both surveys, researchers reported spending 57% of their time engaged in research and 43% of their time in completing pre- and post-award requirements. "The most commonly experienced administrative responsibilities included those related to federal project finances, personnel, and effort reporting. These were also among the most time-consuming responsibilities. For researchers engaged in projects that required human or animal subjects, the related Institutional Review Board (IRB) and Institutional Animal Care and Use Committee (IACUC) requirements were by far the most time-consuming. Other areas viewed as particularly time-consuming were those involving clinical trials, subcontracts, and cross-agency differences." Section 2034 includes a series of requirements that aim to address the administrative burden on researchers funded by NIH and other federal agencies. First, it directs the HHS Secretary, within two years of enactment, to lead a review by research funding agencies of all financial conflict-of-interest regulations and policies and to make revisions to harmonize the policies and reduce the administrative burden on researchers, as appropriate. It also requires the HHS Secretary to update this policy and, in doing so, take into account certain specified considerations regarding financial interest disclosures. Second, it requires the NIH Director to implement measures that aim to reduce the administrative burdens experienced by primary NIH grant awardees related to monitoring grant sub-recipients. Third, the HHS Secretary, in consultation with the NIH Director, is required to evaluate financial expenditure reporting procedures and requirements for NIH funding recipients and take appropriate action to avoid duplication of effort and minimize burden to funding recipients. Fourth, within two years of enactment, the HHS Secretary, in consultation with the NIH Director, the Secretary of Agriculture, and the FDA Commissioner, must complete a review of regulations and policies for the care and use of laboratory animals and make appropriate revisions to reduce administrative burden on investigators. Fifth, the HHS Secretary is required to clarify the applicability of OMB Uniform Guidance requirements regarding documentation of personnel expenses for entities receiving HHS grants. Finally, within one year of enactment, the OMB Director is required to establish a Research Policy Board, consisting of up to 10 federal and 9 to 12 nonfederal members, as specified, to provide the NIH Director and other members of the federal government with information on the effects of regulations related to federal research requirements. The board makes recommendations on harmonizing regulations and policies to minimize administrative burden across federal research agencies. Within two years of enactment, and once thereafter, the board must submit a report to specified offices in OMB, the heads of relevant federal departments and agencies, and specified House and Senate committees. The report must provide recommendations on scientific research policy, including regulatory benefits and burdens. The board will sunset on September 30, 2021. The section also requires that GAO, within four years of enactment, conduct an evaluation of board activities regarding its purpose and responsibilities and submit a report to Congress. The Paperwork Reduction Act (PRA, 44 U.S.C. Chapter 35), enacted in 1980 and amended in 1995, established the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB). Congress required that agencies seek OIRA permission before collecting information from the public. The first of 11 stated purposes was to "minimize the paperwork burden for individuals ... and other persons resulting from the collection of information by and for the Federal Government." The PRA requires that federal agencies receive clearance from OIRA before requesting most types of information from the public. PRA clearance is required when standardized information is collected from 10 or more respondents within a 12-month period. PRA does not apply to certain types of scientific research, including collections that are neither sponsored nor conducted by the agency and those that are subject to a clinical exception. Section 2035 amends PHSA Section 301 by adding a subsection stating that the PRA does not apply to the collection of information during the conduct of NIH research. Other transaction (OT) authority is a special vehicle used by certain federal agencies for obtaining or advancing research and development (R&D). An OT is not a contract, grant, or cooperative agreement, and there is no statutory or regulatory definition of "other transaction." Only those agencies that have been provided OT authority may engage in other transactions. Generally, OT authority is created because the government needs to obtain leading-edge R&D from commercial sources, but some companies (and other entities) are unwilling or unable to comply with the government's procurement regulations and certain procurement statutes that govern contracts. Section 2036 adds a new PHSA Section 402(n) to allow the NIH Director to approve requests by IC Directors, or program officers within the Office of the Director, to engage in transactions other than a contract, grant, or agreement with respect to projects that carry out (1) the Precision Medicine Initiative, or (2) "research that represents important areas of emerging scientific opportunities, rising public health challenges, or knowledge gaps that deserve special emphasis and would benefit from conducting or supporting additional research that involves collaboration between 2 or more [ICs], or would otherwise benefit from strategic coordination and planning." This provision also requires internal NIH reporting on the use of this authority and requires the HHS Secretary, through the NIH Director, to submit a report to Congress evaluating the activities under this new subsection by September 30, 2020. Prior to FDA approval, medical products are tested in a clinical trial using human volunteers to see how the products compare to standard treatments or to no treatment. FDA uses the data from clinical trials to determine whether to approve a manufacturer's application for marketing a medical product. Clinical trials are conducted in three phases. Phase I trials try to determine dosing, document how a drug is metabolized and excreted, and identify acute side effects. Usually, a small number of healthy volunteers (between 20 and 80) are used in Phase I trials. Phase II trials include more participants (about 100-300) who have the disease or condition that the product potentially could treat. In Phase II trials, researchers seek to gather further safety data and preliminary evidence of the drug's beneficial effects (efficacy), and they develop and refine research methods for future trials with this drug. Sometimes Phase II clinical trials are divided into Phase IIA (to assess dosing requirements) and Phase IIB (to study efficacy). If the Phase II trials indicate that the drug may be effective—and the risks are considered acceptable, given the observed efficacy and the severity of the disease—the drug moves to Phase III. In Phase III trials, the drug is studied in a larger number of participants with the disease (approximately 1,000-3,000). This phase further tests the product's effectiveness, monitors side effects and, in some cases, compares the product's effects to a standard treatment, if one is already available. As more and more participants are tested over longer periods of time, the less common side effects are more likely to be revealed. Under current law in PHSA Section 479, NIH's National Center for Advancing Translational Sciences (NCATS) may develop and provide infrastructure and resources for all phases of clinical trials research; however, it may support clinical trial activities only through the end of Phase IIA, with specific exceptions. NCATS may support clinical trial activities through the end of Phase IIB for treatment of a rare disease or condition if (1) it gives public notice for a period of at least 120 days of NCATS's intention to support the clinical trial activities in Phase IIB; (2) no public or private organization provides credible written intent to NCATS that the organization has timely plans to further the clinical trial activities or conduct clinical trials of a similar nature beyond Phase IIA; and (3) NCATS ensures that support of the clinical trial activities in Phase IIB will not increase the federal government's liability beyond the award value of the center's support. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. Section 2037 amends PHSA Section 479 to extend NCATS's authority to support clinical trial activities through the end of Phase IIB (instead of Phase IIA) and extends the exception for treatment of a rare disease or condition through the end of Phase III (instead of Phase IIB). It adds material to the NCATS annual/biennial report regarding methods and tools developed since the previous report and whether such methods and tools are being used by the FDA to support medical product reviews. Under the Cures Act, the next NCATS report, following enactment, will include a complete list of all such methods and tools developed by research supported by NCATS. Racial and ethnic minorities traditionally have been underrepresented in clinical trials. For example, according to a 2011 report from an FDA-sponsored conference, "African Americans represent 12% of the U.S. population but only 5% of clinical trial participants and Hispanics make up 16% of the population but only 1% of clinical trial participants." Biological differences (e.g., genetic differences) may affect how people process or respond to medical products. This variation could make a treatment less effective or perhaps more toxic for individuals with specific genotypes. Therefore, it is important to study in clinical trials the safety and effectiveness of medical products in a broadly representative sample of people who will likely use the products following FDA approval. PHSA Section 492B requires the NIH Director to include women and minorities in NIH-funded clinical research and to conduct or support outreach to recruit minorities and women into clinical research. Section 492B(d) requires the NIH Director, in consultation with the directors of the NIH's Office of Research on Women's Health and the Office of Research on Minority Health, to develop guidelines regarding the requirements under Section 492B. Section 2038 amends PHSA Section 402(b), requiring the NIH Director, in assessing research priorities, to assemble accurate data on study populations in clinical research that specifies the inclusion of women, members of minority groups, relevant age categories (including pediatric subgroups), and other demographic variables. The data must be disaggregated by research area, condition, and disease categories and made publically available on the NIH website. The NIH Director is required to foster collaboration between the ICs that conduct research on human subjects, allow for an increase in the number of subjects studied, and utilize a diverse study population with special consideration of the determinants that contribute to health disparities. Section 2038 amends PHSA Section 492B to make the biennial report a triennial report and requires that the report contain specified data on the number of women and members of minority groups included in clinical research projects conducted during the reporting period. Section 2038 amends PHSA Section 486 to specify that the coordinating committee for the Office of Research on Women's Health will include NIH IC Directors or their senior staff-level designees. Section 2038 adds a new PHSA Section 404N, Population Focused Research, which requires the NIH Director to encourage efforts to improve research related to the health of sexual and gender minority populations through the increased participation of such groups in clinical research. The HHS Secretary, in collaboration with the NIH Director and taking into account the recommendations of the National Academy of Medicine, is required to continue to support research for the development of appropriate measures related to reporting health information of sexual and gender minority populations. Within two years of enactment, the HHS Secretary is required to disseminate and make public such measures. Section 2038 also amends PHSA Section 464z-3, adding that the National Institute on Minority Health and Health Disparities Director may foster partnerships between the ICs and may encourage the funding of collaborative research to achieve the goals of NIH related to minority health and health disparities. Section 2038 requires the NIH Director, within two years of enactment and taking into consideration the findings of the working group established under Section 2039, to develop policies for basic research to assess relevant biological variables, including sex, and how differences between male and female cells, tissues, or animals may be studied and permits the NIH Director to amend these policies as appropriate. It also requires the NIH Director to (1) consult with the Office of Research on Women's Health, the Office of Laboratory Animal Welfare, and appropriate members of the scientific and academic communities; and (2) conduct outreach in developing (and updating) policies on the influence of sex as a variable in basic research, among other requirements. With respect to clinical research involving women and minorities, the NIH Director must, within one year of enactment, update the guidelines established under PHSA Section 492B(d) to reflect the science regarding sex differences and improve adherence to the requirements of Section 492B of the PHSA, among other things. Section 2038 requires the NIH Director, within six months of enactment, to convene a workshop of experts on pediatrics and older populations to provide input on appropriate age groups to be included in research studies. Within six months of the workshop, the NIH Director must determine if it is necessary to update NIH policies "on the inclusion of relevant age groups in clinical studies." The Director is required to make available to the public the findings and conclusions of the workshop and the updates to policies. The Director must ensure that age-related data reported in the triennial report are made publicly available on the NIH website. Research supported by NIH is evaluated by a peer review system. Scientists competing for NIH funding submit detailed applications describing their research plan. NIH considers the applications under a two-tiered system of peer review. First, the applications are reviewed for scientific and technical merit by committees composed of nongovernment scientists who are experts in the relevant fields of research. Each application is thoroughly discussed and given a score, which becomes the main determinant in whether an applicant will receive IC funding. A second level of review occurs in the ICs when the applications are considered for program relevance by the IC's National Advisory Councils or Boards, composed of scientific and lay representatives. The peer review system does not necessarily evaluate the applications for reproducibility. Section 2039 requires the HHS Secretary, acting through the NIH Director, to convene a working group to make recommendations for a formal policy to enhance the rigor and reproducibility of NIH-funded scientific research. The working group must consider various specified factors, including, for example, preclinical and clinical experiment design and methods of statistical analysis. It also requires the NIH Director, not later than 18 months after enactment, to consider the recommendations and develop or update policies as appropriate. Finally, the NIH Director must issue a report to the HHS Secretary and Congress, within two years of enactment, regarding the recommendations and any subsequent policy changes. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. PHSA Section 452 established in 1990 the National Center for Medical Rehabilitation Research (the Center) within the Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD) at NIH to conduct and support research, and disseminate information, on the rehabilitation of individuals with physical disabilities. It also required the NIH Director to create a Medical Rehabilitation Coordinating Committee and a National Advisory Board on Medical Rehabilitation Research. The section also requires NICHD Director—in collaboration with the Director of the Center, the Coordinating Committee, and the Advisory Board—as created by this section—to develop, and periodically revise and update, a comprehensive plan for medical rehabilitation research. Section 2040 amends PHSA Section 452 instructing the Director of the Center—in collaboration with the Director of the Institute, the coordinating committee, and the advisory board—to develop and, not less than every five years, revise and update a comprehensive plan for medical rehabilitation research. The research plan must include goals and objectives for such research. Prior to revising and updating the research plan, the Director of the Center must report to the coordinating committee and the advisory board on the progress made toward achieving the research goals and objectives, and provide recommendations for revising and updating the plan. Within 30 days of revising and updating the plan, the Director of the Center is required to transmit the plan to the President, and to specified congressional committees. In addition, Section 2040 requires the HHS Secretary, along with the other federal agencies, to review their medical rehabilitation research programs and take action to avoid duplication among those programs through actions such as entering into interagency agreements. Finally, Section 2040 defines medical rehabilitation research as "the science of mechanisms and interventions that prevent, improve, restore, or replace lost, underdeveloped, or deteriorating function." Within 90 days of enactment, Section 2041 requires the HHS Secretary to establish a Task Force on Research Specific to Pregnant and Lactating Women. The section specifies the duties, membership, meeting schedule, and reporting requirements of the task force, which would be terminated two years after its establishment, with an option for a two-year extension. It requires the HHS Secretary, not later than two years after enactment, to update regulations and guidance, as appropriate, regarding the inclusion of pregnant women and lactating women in research. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. PHSA Title IV establishes numerous reporting requirements for the NIH Director related to the activities of the agency. Specifically, PHSA Section 403(a) requires the NIH Director to submit to Congress biennially a report on NIH activities. Among other things, the report must include an assessment of the state of biomedical and behavioral research, and details of all the research activities conducted or supported by the ICs of NIH. Section 2042 modifies or eliminates a number of different NIH reporting requirements. Within two years of enactment, the heads of each IC must submit to the NIH Director a report on the amount of funding made available for conducting or supporting research that involves collaboration between a given IC and at least one other IC. This information will be included in the triennial report required by Section 403(a), as amended by Section 2032. It also (1) eliminates an annual reporting requirement regarding the number of experts and consultants whose services are used by NIH; (2) makes a minor modification to the doctoral degree reporting requirement; (3) makes a technical correction to a vaccine reporting requirement; (4) changes the NCATS annual report to a biennial report; (5) eliminates the report on Centers of Excellence; (6) eliminates the periodic reports on rapid HIV testing; and (7) eliminates the National Institute on Nursing Research biennial report. PHSA Section 301(a) establishes the general research authorities of the Public Health Service through the HHS Secretary. Specifically, it requires the HHS Secretary to "conduct in the Service, and encourage, cooperate with, and render assistance to other appropriate public authorities, scientific institutions, and scientists in the conduct of, and promote the coordination of, research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of physical and mental diseases and impairments of man." As part of these authorities, the HHS Secretary is authorized to make available substances and living organisms for biomedical and behavioral research. Section 2043 amends PHSA Section 301(a) allowing the HHS Secretary, where research substances and living organisms are made available to researchers through contractors, to direct the contractors to collect payments for the costs incurred while making these substances and organisms available. These amounts would be credited to the appropriations accounts that incurred such costs and would be available until expended. PHSA Section 492B requires that the NIH Director ensure that clinical research conducted or supported by NIH include members of minority groups as subjects. Each IC advisory council must prepare biennial reports describing the manner in which the IC has complied with this requirement. The report is submitted to the IC Director and is included in the biennial report under PHSA Section 403. Section 2044 states that it is the sense of Congress that the National Institute on Minority Health and Health Disparities should include within its strategic plan ways to increase representation of underrepresented populations in clinical trials. Sponsors of clinical trials for drugs, biologics, and devices regulated by the FDA are required to submit registration and summary results information to ClinicalTrials.gov, the clinical trial registry and results data bank operated by NIH's National Library of Medicine (NLM) pursuant to PHSA Section 402 subsections(i)-(j). Subparagraph 402(j)(2)(B) requires the NIH Director to ensure that the public may, in addition to keyword searching, search the entries in the data bank by various specified criteria, including the disease or condition being studied, the name of the drug or device under investigation, and the location of the clinical trial. The NIH Director is instructed to add search categories as deemed necessary and to ensure that the data bank is easy to use, and that its entries are easily compared. Under PHSA Section 402(j), those responsible for specified clinical trials of FDA-regulated products have been required to submit registration information to ClinicalTrials.gov since December 2007, submit summary results information for clinical trials of approved products since September 2008, and submit adverse events information since September 2009. The section also required the HHS Secretary, by rulemaking, to expand the requirements for submission of summary results information, and authorized the HHS Secretary to use rulemaking to make other changes in the requirements for submission of registration and results information. In November 2014, HHS published a proposed rule to clarify and expand requirements for the submission of clinical trial registration and results information to ClinicalTrials.gov. The comment period was extended until March 23, 2015; about 900 comments were received. The final rule was published on September 21, 2016, and is expected take effect on January 18, 2017. Section 2051 amends PHSA Section 402(j)(2)(D), regarding posting of data, by adding new language requiring the NIH Director to inform responsible parties of the option to request that information for a medical device clinical trial be publically posted prior to the date of clearance or approval. Section 2051 adds language that defines "combination product" for purposes of this database. PHSA Section 402(i)-(j) delineates the requirements for the clinical trials database but currently does not require the submission of a report to Congress. Section 2052 requires the HHS Secretary, acting through the NIH Director and in collaboration with the FDA Commissioner, to submit to Congress, not later than two years after enactment, a report that "describes education and outreach, guidance, enforcement, and other activities undertaken to encourage compliance with Section 402(j) of the PHSA" (i.e., with submission to the clinical trials database). This section also requires the HHS Secretary, acting through the NIH Director and in collaboration with the FDA Commissioner, to submit to Congress a report on registered clinical trials, as specified, including activities undertaken by the HHS Secretary to educate responsible persons about compliance with the requirements in Section 402(j). The HHS Secretary must submit an initial report not later than two years after the compliance date of the final rule implementing Section 402(j) of the PHSA. Two follow-up reports are required, which include information on actions taken to enforce compliance with the ClinicalTrials.gov reporting requirements. PHSA Section 492B requires the NIH Director to include women and minorities in NIH-funded clinical research and to conduct or support outreach to recruit minorities and women into clinical research. Section 492B(c) requires the NIH Director to "ensure that the trial is designed and carried out in a manner sufficient to provide for a valid analysis of whether the variables being studied in the trial affect women or members of minority groups, as the case may be, differently than other subjects in the trial." Section 2053 amends PHSA Section 492B(c), adding that the NIH Director must consider whether grant award recipients conducting research related to the inclusion of women and minority populations in clinical research have complied with the reporting requirements of ClinicalTrials.gov. The NIH Director must also take such compliance into consideration when awarding any future grants to such an entity. The Director of NIH must encourage the reporting of results to ClinicalTrial.gov "through any additional means determined appropriate by the Director." PHSA Section 402(i)-(j) requires that the HHS Secretary consult with FDA, NIH, and the Centers for Disease Control and Prevention (CDC) prior to establishing the "data bank of information on clinical trials for drugs for serious or life-threatening diseases and conditions." In addition, it requires that the HHS Secretary consult with experts in risk communication to ensure that posted information regarding the database is not misleading to patients or the lay public. The HHS Secretary must also consult with other federal agencies to ensure that clinical trial information is submitted to the database. Section 2054 requires, within 90 days of enactment, the HHS Secretary to consult with relevant federal agencies, including FDA, the Office of the National Coordinator for Health Information Technology, and NIH, as well as other stakeholders (including patients, researchers, physicians, industry representatives, and developers of health information technology), to receive recommendations to improve ClinicalTrials.gov, including improvements in usability, functionality, and search capability. The PHSA does not explicitly authorize or require surveillance of neurological diseases in general, although the HHS Secretary may conduct such activities under general authorities in PHSA Title III. Surveillance is explicitly authorized for certain specified neurological disorders (e.g., amyotrophic lateral sclerosis and autism spectrum disorder). Section 2061 adds a new PHSA Section 399S-1, which requires the HHS Secretary, through the CDC Director and in consultation with specified parties, to establish a National Neurological Conditions Surveillance System by enhancing and expanding relevant surveillance infrastructure and activities. The system may include a registry. In establishing the system, the HHS Secretary is required to collect and manage information in order to facilitate research and, as is practicable, to include information on incidence and prevalence, demographics, risk factors, and diagnostic and progression markers. Additional data elements may include the natural history, prevention, detection, management, and treatment approaches for the diseases, and the development of outcome measures. The HHS Secretary initially may address a limited number of neurological diseases. The section also authorizes the HHS Secretary to award grants, contracts, or cooperative agreements with public or private nonprofit entities to implement this provision. The HHS Secretary must make information and analysis obtained from the system available to other federal health agencies and state and local agencies, and, as appropriate and subject to federal privacy laws, to researchers and the public. Within one year of the establishment of a system under this section and biennially thereafter, the HHS Secretary must provide to Congress and the public an interim report on such system. A report on implementation of this section is due to Congress four years after enactment. The section authorizes to be appropriated $5 million for each of fiscal years 2018 through 2022 to carry out activities under this section. The HHS Secretary is given broad authority to conduct research related to disease under Title III of the PHSA. Specifically, the HHS Secretary is required to conduct research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of disease. The act does not explicitly address tick-borne diseases, but HHS agencies do carry out research and public health activities on tick-borne diseases under the Secretary's general authority. Section 2062 requires the HHS Secretary to continue to conduct or support epidemiological, basic, translational, and clinical research related to vector-borne diseases, including tick-borne diseases. It also requires the HHS Secretary to ensure that the triennial report of the NIH Director to Congress includes information on NIH activities with respect to tick-borne diseases. The section also requires the HHS Secretary to establish a working group to review the status of research on tick-borne diseases and relevant federal activities, and to report on such activities and any recommended changes every two years. The section provides requirements related to the working group's membership, responsibilities, meeting frequency, and reporting. The working group is subject to the Federal Advisory Committee Act (FACA), and will terminate six years after enactment. The Health Information Portability and Accountability Act (HIPAA) privacy rule describes the circumstances under which HIPAA-covered entities such as health plans and health care providers are permitted to use or disclose individually identifiable health information (i.e., protected health information, or PHI) without an individual's written authorization. In general, covered entities may use or disclose PHI for the purposes of treatment, payment, and other routine health care operations with few restrictions. The disclosure of PHI to researchers generally requires an individual's authorization unless an Institutional Review Board (or equivalent Privacy Board) waives the authorization. A covered entity may, however, allow researchers access to PHI to prepare a research protocol, provided the PHI is not removed from the covered entity. The privacy rule traditionally has required authorizations to be study-specific; authorizations for future research were prohibited. In a January 2013 final rule, HHS permitted authorizations for future research if a sufficiently clear description of the future research is provided. Section 2063 instructs the HHS Secretary, within one year of enactment, to issue guidance clarifying some of the privacy rule's restrictions on researchers' access to PHI. First, the HHS Secretary is required to clarify that the rule's provision prohibiting researchers from removing PHI during preparation of a research protocol permits remote access to PHI by researchers, provided appropriate security and privacy safeguards are in place and the PHI is not copied or retained by the researchers. Second, the Secretary is required to clarify the circumstances under which a HIPAA authorization to use or disclose PHI for future research contains sufficient information; for example, the authorization (1) sufficiently describes the purposes such that it would be reasonable for an individual to expect that the PHI could be used or disclosed for future research; (2) states that the authorization will either expire at a specified time or will remain valid unless revoked by the individual; and (3) provides revocation instructions to the individual. Finally, Section 2063 requires the HHS Secretary, within one year of enactment, to convene a working group to study the uses and disclosures of PHI for research purposes. The working group must include various specified federal and nonfederal members, and must report to the HHS Secretary within one year of its establishment with recommendations on whether the uses and disclosures for research purposes should be modified, as specified. The HHS Secretary must submit the report to Congress and make it publicly available, at which time the working group shall terminate. In 2013, PHSA Section 409D(d) established the NIH Pediatric Research Network "in order to more effectively support pediatric research and optimize the use of Federal resources." Section 2071 amends PHSA Section 409(D)(d) to (1) eliminate language telling the NIH Director to consult with the Director of the Eunice Kennedy Shriver National Institute of Child Health and Human Development but (2) retains language telling the NIH Director to collaborate with the ICs that carry out pediatric research, (3) amends language to require the NIH Director (it had previously been permitted) to award funding to support the pediatric research consortia, and (4) require that support for the pediatric research consortia not exceed five years. Section 2072 expresses the sense of Congress that (1) NIH should encourage a global pediatric clinical study network through funding to support new and early stage investigators; (2) the HHS Secretary should engage with clinical investigators and international authorities, including those in the European Union, during the formation of the network to encourage their participation; and (3) the HHS Secretary should continue to encourage and facilitate the network after it is established. The Food and Drug Administration Safety and Innovation Act (FDASIA; P.L. 112-144 ) expanded FDA's authorities and strengthened the agency's ability to safeguard and advance public health. FDASIA added a new FFDCA Section 569C "Patient Participation in Medical Product Discussion," facilitating increased involvement of patients earlier in the regulatory process for medical product review. Section 569C directs the HHS Secretary to develop and implement strategies to solicit the views of patients during the medical product development process and consider the perspectives of patients during regulatory discussions by (1) fostering participation of a patient representative who may serve as a special government employee in appropriate agency meetings with medical product sponsors and investigators; and (2) exploring means to provide for identification of patient representatives who do not have any, or have minimal, financial interests in the medical products industry. Section 3001 amends FFDCA Section 569C by adding a new subsection (b), "Statement of Patient Experience," requiring the HHS Secretary, upon approval of a new drug application (NDA), to make public any patient experience data and related information submitted and reviewed as part of the application. "Data and information" refers to patient experience data, information on patient-focused drug development tools, and other relevant information, as determined by the HHS Secretary. "Patient experience data" is defined as (1) data that are collected by any persons (including patients, family members and caregivers of patients, patient advocacy organizations, disease research foundations, researchers, and drug manufacturers); and (2) are intended to provide information about patients' experiences with a disease or condition, including—(A) the impact of such disease or condition, or a related therapy, on patients' lives; and (B) patient preferences with respect to treatment of such disease or condition. Section 3002 requires the HHS Secretary, acting through the FDA Commissioner, to develop a plan to issue draft and final guidance, over a period of five years, regarding the collection of patient experience data and the use of such data in drug development. This section specifies the contents of the guidance documents (e.g., methods that could be used to collect and submit patient experience data, and methodologies, standards, and technologies that could be used to collect and analyze clinical data for regulatory decisionmaking). Section 3003 exempts FDA from the Paperwork Reduction Act clearance process when requesting patient experience data under sections 3001 and 3002 of the 21 st Century Cures Act. Section 3004 requires the HHS Secretary, acting through the FDA Commissioner, to publish on the FDA website, no later than June 1 of 2021, 2026, and 2031, a report "assessing the use of patient experience data in regulatory decision-making, in particular with respect to the review of patient experience data and information on patient-focused drug development tools...." Lengthy clinical trials have been found to contribute to the high cost of drug development. In clinical settings where the disease course is long and an extended period of time would be required to measure the intended clinical benefit of a drug, surrogate endpoints—based on the measurement of biomarkers—may be used to determine the clinical benefit of a product, rather than clinical endpoints. Surrogate endpoints "enable smaller, faster, and thus cheaper clinical trials. In addition, pharmaceutical companies argue that using surrogates means that fewer patients are exposed during testing, and beneficial new medications reach the market faster. The main disadvantage of these endpoints is that favorable effects on surrogates do not automatically translate into benefits to health." A number of drugs have been approved on the basis of surrogate endpoint data and, after adoption into medical practice, have been shown to be harmful through clinical trials or other subsequent analysis. The FDA uses surrogate endpoints in about half of new drug approvals. The Institute of Medicine defines a clinical endpoint as "a characteristic or variable that reflects how a patient [or consumer] feels, functions, or survives. Death is one example of a clinical endpoint." IOM defines "surrogate endpoint" in the following way: a biomarker that is intended to substitute for a clinical endpoint. A surrogate endpoint is expected to predict clinical benefit (or harm or lack of benefit or harm) based on epidemiologic, therapeutic, pathophysiologic, or other scientific evidence. For example, blood pressure has served as a surrogate endpoint for morbidity and mortality due to cardiovascular disease in trials of several classes of antihypertensive drugs. A surrogate endpoint represents a special use of a biomarker, in which the biomarker substitutes for a clinical endpoint. FDASIA ( P.L. 112-144 ) amended FFDCA Section 506 (on fast track products) by adding the following: "The HHS Secretary shall ... establish a program to encourage the development of surrogate and clinical endpoints, including biomarkers, and other scientific methods and tools that can assist the HHS Secretary in determining whether the evidence submitted in an application is reasonably likely to predict clinical benefit for serious or life-threatening conditions for which significant unmet medical needs exist." Section 3011 adds a new FFDCA Section 507, "Qualification of Drug Development Tools," which requires the HHS Secretary to establish a process for the qualification of drug development tools. A drug development tool is defined to include (1) a biomarker; (2) a clinical outcome assessment; and (3) any other method, material, or measure that the HHS Secretary determines aids drug development and regulatory review. Under new FFDCA Section 507, the HHS Secretary is allowed to accept a qualification submission based on factors that include its scientific merit, and the HHS Secretary is allowed to prioritize review of a qualification submission based on factors including, for example, the severity, rarity, or prevalence of the disease being targeted or the availability or lack of an alternative treatment. The HHS Secretary is allowed, through grants or other specified mechanisms, to consult with biomedical research consortia and may consider their recommendations in review of the qualification submission. "Biomedical research consortia" is defined as collaborative groups that may take the form of public-private partnerships and may include, among others, government agencies, institutions of higher education, patient advocacy groups, industry representatives, clinical and scientific experts, and other relevant individuals. The HHS Secretary is required to carry out a full review of the qualification package and to determine if the drug development tool at issue is qualified for its proposed context of use. A qualified drug development tool is allowed to be used to obtain approval or licensure of a drug or biologic or to support a product's investigational use. The HHS Secretary is allowed to rescind or modify the granted qualification if he or she determines the drug development tool is not appropriate for the proposed context; if the HHS Secretary does this, the requestor would be granted a meeting, upon request, with the HHS Secretary to discuss the basis of the decision. New FFDCA Section 507 requires the HHS Secretary to make public on the FDA website, and update at least biannually, information about the qualification submissions, the HHS Secretary's determinations in response to the submissions, and any subsequent modifications to the HHS Secretary's determinations, among others. It also specifies that nothing in this section is to be construed to allow the HHS Secretary to release any information contained in an application for approval or licensure of a drug or biologic that is confidential commercial or trade secret information; in addition, nothing in the section is allowed to be construed as altering the standards of evidence for approval or licensure of a drug or biologic or to limit the Secretary's authority to approve or license such products. The section also requires the HHS Secretary, not later than three years after enactment, to publish draft guidance to implement new FFDCA Section 507, in consultation with the biomedical research consortia and other interested parties through a collaborative public process. The guidance is required to, for example, provide "a conceptual framework describing appropriate standards and scientific approaches to support the development of biomarkers." The HHS Secretary is required to issue final guidance not later than six months after the comment period for the draft guidance closes. To inform the guidance, the HHS Secretary is required, in consultation with the biomedical research consortia, to develop a taxonomy for the classification of biomarkers for use in drug development. The HHS Secretary is required to make this publicly available not later than two years after enactment and to finalize the taxonomy not later than one year after the public comment period closes. The section requires the HHS Secretary, not later than two years after enactment, to convene a public meeting regarding the qualification process under new FFDCA Section 507. The HHS Secretary is also required to publish a report on FDA's website, not later than five years after enactment, to include specified information. Precision medicine is a relatively new term for what has traditionally been called personalized medicine (or targeted medicine), the idea of providing health care to individuals based on specific patient characteristics. This approach relies on companion diagnostics to target drugs and biological products to specific subsets of patients. Rare diseases often have genetic origins, and advances in medicine have resulted in the development of new treatments that work by targeting the genetic mutations that cause these diseases. It is inherently difficult to develop drugs for rare diseases because of the small patient population available to conduct clinical trials, so targeted therapies are generally first developed for patients with the most frequent disease-causing mutations. However, to provide therapies for the full spectrum of certain genetic rare diseases, additional targeted therapies would need to be developed. Targeted therapies, because they may be treating small subsets of patients, sometimes qualify as "orphan drugs." Such drugs are called orphan drugs because firms may lack the financial incentives to sponsor products to treat small patient populations. Orphan drugs receive their designation pursuant to FFDCA Section 526(a), a designation that was created by the Orphan Drug Act ( P.L. 97-414 ) to encourage firms to develop pharmaceuticals to treat rare diseases and conditions by providing an extended period of market exclusivity. FFDCA Section 526(a) defines "rare disease or condition" as any disease or condition that affects fewer than 200,000 persons in the United States, or affects more than 200,000 persons in the United States and for which there is no reasonable expectation that the cost of developing and making the drug available in the United States will be recovered from U.S. sales. Section 3012 adds a new FFDCA Section 529A "Targeted Drugs for Rare Diseases," with the purpose of facilitating the "development, review, and approval of genetically targeted drugs and variant protein targeted drugs to address an unmet medical need in one or more patient subgroups, including subgroups of patients with different mutations of a gene, with respect to rare diseases or conditions that are serious or life-threatening; and maximize the use of scientific tools or methods, including surrogate endpoints and other biomarkers, for such purposes." Section 3012 allows the HHS Secretary to permit the sponsor of a new drug application for a genetically targeted drug or a variant protein-targeted drug to rely on data and information that has been previously developed and submitted, either by the same or a different sponsor (with permission), as part of an approved application that incorporates or uses the same or similar genetically targeted technology or for a variant protein-targeted drug. It defines genetically targeted drugs, genetically targeted technology, and variant protein targeted drugs. New FFDCA Section 529A is not to be construed to limit the HHS Secretary's product approval authorities, or to entitle sponsors to obtain information in another sponsor's application without permission of the other sponsor. FDASIA ( P.L. 112-144 ) added a new FFDCA Section 529, creating the pediatric priority review voucher program. This voucher program, funded by user fees, provides a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product for a rare pediatric disease to be used for the priority review of another application. The term "rare pediatric disease" refers to a disease that affects (1) individuals aged from birth to 18 years, and (2) fewer than 200,000 persons in the United States, or affects more than 200,000 persons in the United States and for which there is no reasonable expectation that the cost of developing and making the drug available in the United States will be recovered from U.S. sales. For example, in 2014, BioMarin was awarded a rare pediatric disease priority review voucher for the drug Vimizim (elosulfase alfa) —a treatment for a rare congenital enzyme disorder. BioMarin sold the voucher to Sanofi and Regeneron for $67.5 million, and it was then used to speed the approval of Praluent (alirocumab) injection, a cholesterol-lowering treatment. FDASIA terminated the authority to award such vouchers one year after the HHS Secretary awards the third-priority voucher and required the GAO, beginning on the date of the third voucher award, to study and then report on the effectiveness of the voucher program in the development of products that prevent or treat rare pediatric diseases. FDA awarded the third voucher in March 2015, triggering the March 2016 sunset of this authority. This authority was extended until September 30, 2016, by the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ). The Advancing Hope Act of 2016 ( P.L. 114-229 ), reported as part of the package of Senate medical innovation bills, was signed into law on September 30, 2016. The law temporarily extended the program's authority through December 31, 2016. It also amended the definition of "rare pediatric disease" in FFDCA Section 529(a) by adding the following words in italics: "The disease is a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents . " It also added the requirement that the sponsor of a rare pediatric disease product application that intends to request a voucher for a rare pediatric disease product notify the HHS Secretary of such intent upon submission of the rare pediatric disease product application. In addition, the law required that GAO study the voucher program and report to Congress, by January 31, 2022, on the program's effectiveness as an incentive for developing drugs that treat or prevent rare pediatric diseases and that would not otherwise have been developed. Section 3013 extends the authority to award such priority review vouchers until September 30, 2020. A new drug application or a biologics license application submitted to FDA after the enactment of the 21 st Century Cures Act for a product designated as a rare pediatric disease drug before September 30, 2020, remains eligible to receive a priority review voucher, provided it is approved by September 30, 2022. This provision also removes the requirement that GAO study the pediatric priority review program under FFDCA Section 529. Under the Prescription Drug User Fee Act (PDUFA) of 1992, FDA agreed to specific goals for improving the drug review time and created a two-tiered system of review times: Standard Review and Priority Review. Compared with the amount of time standard review generally takes (approximately 10 months), a priority review designation means FDA's goal is to take action on an application within 6 months. An application for a drug may receive priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. An application may also receive priority review if it is the subject of a priority review voucher. Currently, FDA has two authorized priority review voucher programs (the rare pediatric disease priority review program, and the tropical disease priority review program), funded by user fees, which provide a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product to be used for the priority review of another application. The purpose of the priority review drug voucher programs is to incentivize development of new treatment for diseases that may otherwise not attract development interest from companies due to either cost or lack of market opportunities. Section 3086 of this bill creates a third priority review voucher program to encourage the development of drugs and vaccines for agents that present a threat to national security. Section 3014 requires the Comptroller General to conduct a study addressing the effectiveness and impact of three FDA priority review voucher programs: (1) the neglected tropical disease priority review voucher program, (2) the rare pediatric disease priority review voucher program, and (3) the priority review voucher program for drugs and vaccines to treat agents that present a national security threat. It requires the Comptroller General to submit a report to Congress with specified contents (including drug indications, value of the voucher, resources used for drug review under these programs, and consideration of program improvements) by January 31, 2020. The Comptroller is directed to conduct the study and issue the specified reports in a way that does not compromise national security. The Orphan Drug Act of 1983 ( P.L. 97-414 ) was signed into law to incentivize development of drugs to treat rare diseases, each of which affects fewer than 200,000 individuals in the United States. Since the law's passage, FDA has approved over 400 new orphan drugs and biological products. Incentives for sponsors of orphan drugs include seven years of market exclusivity, tax credits for clinical trial expenses, user fee waivers, and eligibility for federal grants to cover costs of qualified clinical testing expenses. The FFDCA contains provisions to grant market exclusivity for statutorily defined time periods (in months or years) to the holder of an approved drug application for a product that is, for example, a drug used in the treatment of a rare disease or condition, the first generic version of a drug to come to market, certain pediatric uses of approved drugs, and new qualified infectious disease products. During the period of exclusivity, FDA does not grant marketing approval to another manufacturer's product. Section 5 of the Orphan Drug Act (21 U.S.C. 360ee) allows the HHS Secretary to make grants and enter into contracts with certain entities to assist in "defraying the costs of qualified clinical testing expenses incurred in connection with the development of drugs for rare diseases and conditions." Section 5 defines "qualified testing" as human clinical testing (i) which is carried out under an exemption for a drug for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or regulations issued under such section); (ii) which occurs after the date such drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act; and (B) preclinical testing involving a drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act. Section 3015 amends Section 5 of the Orphan Drug Act (21 U.S.C. 360ee) to broaden the use of grants made by the HHS Secretary to assist in "defraying the costs of developing drugs for rare diseases or conditions" to include "prospectively planned and designed observational studies and other analyses conducted to assist in the understanding of the natural history of a rare disease or condition and in the development of a therapy." In March 2015 congressional testimony, the then FDA Commissioner spoke of new manufacturing technologies that could eventually "lower costs, limit drug shortages, and reduce supply chain vulnerabilities." Continuous manufacturing, for example, could produce a drug in a "continuous stream" rather than in a "series of sequential and discrete" operations. She noted the need for "academic research in this area and expanding opportunities for collaboration, possibly through public-private partnerships or consortia." Section 3016 allows the HHS Secretary to "award grants to institutions of higher education and nonprofit organizations for the purpose of studying and recommending improvements to the process of continuous manufacturing of drugs and biological products and similar innovative monitoring and control techniques." The traditional approach to clinical trials for drugs has focused on a design planned in advance that includes specific treatments and doses and durations, specified decision rules for patient/subject assignment to treatment groups, and prespecified statistical analysis to test a prespecified qualitative and quantitative hypothesis. Because the analytic plan is set in advance, it does not lend itself to unintentional (or intentional) bias as data are reviewed. A researcher may feel strongly about a hypothesis and hope that the results will confirm an idea, but he or she must carry out the analysis so the results can be understood and replicated by others. A drawback to trials with this kind of static design is that they tend to take a long time and cannot adapt to new information learned during the trial. In recent years, some clinical and methodological researchers have looked to adaptive trial designs and statistical analyses using techniques (such as Bayesian statistics) that can provide mid-course feedback. Because a mistaken finding of effectiveness or safety could put a dangerous drug on the market or delay the approval of a useful drug, FDA has acted cautiously in accepting alternative trial designs. In 2010, FDA published draft guidance on the use of adaptive trial design. Section 3021 requires the HHS Secretary to conduct a public meeting and issue guidance to assist sponsors in "incorporating complex adaptive and other novel trial designs into proposed clinical protocols and applications for new drugs" under FFDCA Section 505 and biological products under PHSA Section 351. Such guidance must address, for example, the use of complex adaptive and other novel trial designs, including how such trials "help to satisfy the substantial evidence standard" under FFDCA Section 505(d), and the types of quantitative and qualitative information that should be submitted for review. Prior to updating or issuing guidance, the HHS Secretary is required to consult with stakeholders through a public meeting. Not later than 18 months after the date of the public meeting, the HHS Secretary, acting through the FDA Commissioner, must update or issue draft guidance, and final guidance not later than one year after the close of the public comment period on the draft. To approve a new drug for marketing in the United States, FDA reviews the sponsor's new drug application (NDA) to assess, among other things, whether the drug is safe and effective for its intended purpose. FFDCA Section 505(d) refers to "substantial evidence," which it defines as evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof. If the Secretary determines, based on relevant science, that data from one adequate and well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to establish effectiveness, the Secretary may consider such data and evidence to constitute substantial evidence for purposes of the preceding sentence. The Secretary shall implement a structured risk-benefit assessment framework in the new drug approval process to facilitate the balanced consideration of benefits and risks, a consistent and systematic approach to the discussion and regulatory decisionmaking, and the communication of the benefits and risks of new drugs. Nothing in the preceding sentence shall alter the criteria for evaluating an application for premarket approval of a drug. The associated rule (21 C.F.R. 314.126) describes characteristics of "adequate and well-controlled studies," which include a statement of objectives, an analytic plan, a control group, quantification of treatment duration and timing, and method of sample size determination. The study design would lead to the identification of appropriate research subjects and include methods to minimize bias in the assignment of subjects to treatment groups as well as in data analysis. These characteristics basically describe a controlled (often randomized) clinical trial. The rule, however, places these characteristics in the context of having "been developed over a period of years and are recognized by the scientific community as the essentials of an adequate and well-controlled clinical investigation." The rule states that FDA should "consider" these characteristics in its determination of effectiveness claims. Section 3022 adds a new FFDCA Section 505F, "Utilizing Real World Evidence," requiring the HHS Secretary to "establish a program to evaluate the potential use of real world evidence to help to support the approval of a new indication for a drug approved under Section 505(c) and to help support or satisfy postapproval study requirements." The provision defines "real world evidence" as "data regarding the usage, or the potential benefits or risks, of a drug derived from sources other than randomized clinical trials." Section 3022 requires the HHS Secretary to establish a draft framework for implementing the program to include specified content (e.g., sources of real world evidence such as ongoing safety surveillance, observational studies, claims, and patient-centered outcomes research activities). It also requires the HHS Secretary, in developing the framework, to consult with interested parties, which could be done via a public-private partnership or a contract, grant, or other appropriate arrangement. The HHS Secretary is required to use the new "program to evaluate the potential use of real world evidence" to inform the development of guidance for industry. This section is not to be construed to alter the standards of evidence for approval of drugs or biologics, including the substantial evidence standard, or to alter "the Secretary's authority to require postapproval studies or clinical trials, or the standards of evidence under which studies or trials are evaluated." The HHS Human Subject Regulations are a core set of federal standards for protecting human subjects in HHS-sponsored research. These regulations are commonly referred to as the "Common Rule" because the same requirements have been adopted by many non-HHS federal departments and agencies, who apply the regulations to the research they fund. Under the Common Rule, research protocols must be approved by an Institutional Review Board (IRB) to ensure that the rights and welfare of the research subjects are protected. The rule lists several criteria for IRB approval, including the requirement that researchers obtain the informed consent of their research subjects. In addition, it sets out the types of information that must be provided to prospective research subjects during the informed consent process, including an explanation of the purpose of the research, a description of the research procedures, and a description of the risks and benefits of the research. An IRB may decide to waive the informed consent requirement if it determines that (1) the research poses no more than minimal risk to the subjects, (2) the waiver will not adversely affect the rights and welfare of the subjects, and (3) the research is not practicable without a waiver. HHS has promulgated additional protections for certain vulnerable populations involved in research. Those groups include pregnant women, human fetuses, and neonates; prisoners; and children. FDA has issued its own set of Human Subject Regulations, which are similar, but not identical, to the Common Rule. FDA applies these regulations to all the research it regulates, including clinical trials of new drugs and medical devices, regardless of the source of funding for the research. Humanitarian use devices, which are currently approved by FDA for diagnosing or treating diseases or conditions that affect fewer than 4,000 individuals in the United States each year, may be used in a facility only after a local IRB has approved their use in that facility, except in certain emergency situations. In July 2011, HHS published an advance notice of proposed rulemaking (ANPRM) requesting public comment on a broad range of amendments to the Common Rule, with the goal of "enhancing the effectiveness of the research oversight system by improving the protections for human subjects while also reducing burdens, delays, and ambiguity for investigators and human subjects." HHS sought comments on such changes as refining the current risk-based regulatory framework, coordinating IRB review of multisite studies, and harmonizing the regulations and guidance of different agencies. Last fall, HHS and 15 other federal departments and agencies jointly released a proposed rule to amend the Common Rule. A final rule has not yet been published. Section 3023 requires the HHS Secretary, to the extent possible, to harmonize differences between the HHS Human Subject Regulations and the FDA Human Subject Regulations. The HHS Secretary is required to modify the HHS and FDA regulations and associated rules for vulnerable populations to reduce regulatory duplications and unnecessary delays; accommodate multisite and cooperative research projects; incorporate local consideration, community values, and mechanisms to protect vulnerable populations; and to ensure that human research that is subject to the HHS regulations or to the FDA regulations may use joint or shared IRB review, an independent IRB, or some other IRB arrangement to avoid duplication of effort. Within three years of enactment, the HHS Secretary, in consultation with specified stakeholders, is required to issue regulations or guidance as necessary to implement the harmonization required under this section. The HHS Secretary is further required to submit, within two years of enactment, a report to Congress on the progress made toward completing such harmonization. Section 3024 amends FFDCA Section 520(g) ("Exemption for Devices for Investigational Use") to allow the HHS Secretary, subject to such conditions as he may prescribe, to waive the informed consent requirement for individuals participating in the clinical trial of a medical device if the trial poses no more than minimal risk to the participants and includes appropriate safeguards to protect their rights, safety, and welfare. Section 3024 also amends FFDCA Section 505(i) (regarding the investigational use of drugs) to modify the existing requirement for informed consent as a condition of the HHS Secretary granting an exemption to allow manufacturers, or sponsors of investigations, to not require certification of informed consent for individuals participating in the clinical trial of a drug if it is not feasible, if it is contrary to the best interest of human beings, or if the trial poses no more than minimal risk to the participants and includes appropriate safeguards to protect their rights, safety, and welfare (new language in italics). FFDCA Section 505 and accompanying regulations provide the framework for FDA's approval of a sponsor's new drug application (NDA). For a drug whose active ingredient has never been FDA-approved, the law requires the sponsor to submit an NDA that includes data to provide evidence of the drug's safety and effectiveness for its intended use, information about the manufacturing process, and the drug labeling. Once a product has an approved NDA, FDA requires that the manufacturer submit a supplemental NDA each time the manufacturer wants to change the labeling, the manufacturing process, or the dosing, or when it wants to add a new indication (a new intended use) of the drug. Regulations at 21 C.F.R. Sections 314.50 and 314.54 describe the required contents of those applications. Regarding clinical data, the regulations direct the applicant to submit, in addition to descriptions and analysis of controlled and uncontrolled clinical studies, (iv) A description and analysis of any other data or information relevant to an evaluation of the safety and effectiveness of the drug product obtained or otherwise received by the applicant from any source, foreign or domestic, including information derived from clinical investigations, including controlled and uncontrolled studies of uses of the drug other than those proposed in the application, commercial marketing experience, reports in the scientific literature, and unpublished scientific papers. (21 C.F.R. 314.50(d)(5)(iv)) The clinical data submission must also include an "integrated summary of the data demonstrating substantial evidence of effectiveness for the claimed indications." Section 3031 amends FFDCA Section 505(c) and PHSA Section 351(a)(2) to permit the HHS Secretary to rely upon "qualified data summaries" to support the approval of a supplemental NDA submitted by the sponsor of an approved drug seeking to add a new "qualified" indication to the approval. A "qualified indication" is one "for a drug that the HHS Secretary determines to be appropriate for summary level review." This provision adds that such supplemental application is eligible only if data demonstrating the safety of the drug are available and acceptable to the HHS Secretary, and all data used to develop the qualified data summaries are submitted as part of the supplemental NDA. It requires the HHS Secretary to post on the FDA website, and update annually, the number of applications reviewed solely based on a qualified data summary, and the average time for completion of reviews using and not using the review flexibility, among other specified information. This section defines qualified data summary as a "summary of clinical data that demonstrates the safety and effectiveness of a drug with respect to a qualified indication." FDA regulates the U.S. sale of drugs and biological products, basing approval or licensure on evidence of the safety and effectiveness for a product's intended uses. Without that approval or licensure, a manufacturer may not distribute the product except for use in the clinical trials that will provide evidence to determine that product's safety and effectiveness. Under certain circumstances, however, FDA may permit the sponsor to provide an unapproved or unlicensed product to patients outside that standard regulatory framework. One such mechanism is expanded access to investigational drugs, commonly referred to as "compassionate use." If excluded from a clinical trial because of enrollment limitations, a person, acting through a physician, may request access to an investigational new drug outside of the trial. FDA may grant expanded access to a patient with a serious disease or condition for which there is no comparable or satisfactory alternative therapy, if, among other requirements, probable risk to the patient from the drug is less than the probable risk from the disease; if there is sufficient evidence of safety and effectiveness to support the drug's use for this person; and if providing access "will not interfere with the ... clinical investigations to support marketing approval." The widespread use of expanded access is limited by an important factor: whether the manufacturer agrees to provide the drug, which—because it is not FDA-approved—cannot be obtained otherwise. FDA does not have the authority to compel a manufacturer to participate. Manufacturers may consider several factors in deciding whether to provide an investigational drug, such as available supply, perceived liability risk, limited staff and facility resources, and need for data to assess safety and effectiveness. Although FDA reports the number of investigational drug requests it receives, manufacturers do not. Section 3032 adds a new FFDCA Section 561A, "Expanded Access Policy Required for Investigational Drugs," to require a manufacturer or distributor of an investigational drug to be used for a serious disease or condition to make its policies on evaluating and responding to compassionate use requests publicly available. Required elements of the policy include contact information for the manufacturer or distributor of the drug, request procedures, "the general criteria the manufacturer or distributor will use to evaluate such requests for individual patients, and for responses to such requests," anticipated time to acknowledge request receipts, and a hyperlink or other reference to the clinical trial record containing information about expanded access to the drug. The new section states that posting of policy would not guarantee patients access to an investigational drug. The provision also allows a manufacturer or distributor to revise its policy at any time. Section 3032 becomes effective on the later of the date that is 60 days after the enactment of the 21 st Century Cures Act or "the first initiation of a phase 2 or phase 3 study ... with respect to such investigational drug." Regenerative medicine is defined by NIH as "the process of creating living, functional tissues to repair or replace tissue or organ function lost due to age, disease, damage, or congenital defects." The regulation of cells or tissues intended for implantation or infusion into a human patient is the responsibility of the FDA Center for Biologics Evaluation and Research (CBER). FDA refers to such cells as HCT/Ps, which stands for human cells, tissues, and cellular and tissue-based products. Stem cells are one example of HCT/P. CBER held a public workshop on standards development for cellular therapies and regenerative medicine products in March 2014. Section 3033 adds a paragraph (g) to FFDCA Section 506 to require the HHS Secretary, at the request of the sponsor of a drug, to facilitate an "efficient development program for, and expedite review of" a drug that qualifies as a regenerative advanced therapy. To be eligible for such designation, the drug must (1) be a regenerative medicine therapy, (2) be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and (3) have preliminary clinical evidence indicating that the drug has the potential to address unmet medical needs for such a disease or condition. This designation may be requested with or after submission of an investigational new drug (IND) application. An application regarding a regenerative medicine therapy is eligible for priority review and for accelerated approval in addition to "early interactions [with FDA] to discuss any potential surrogate or intermediate endpoint." The term "regenerative medicine therapy" includes cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated under PHSA Section 361 and 21 C.F.R. 1271. This section specifies the procedure through which the sponsor of a drug could request such designation, how the HHS Secretary would respond to the request, and postapproval requirements. This section is not to be construed to alter the authority of the HHS Secretary to approve drugs and license biologics pursuant to the FFDCA and PHSA Section 351, respectively, including standards of evidence, or to alter the requirement of postapproval studies. Section 3034 requires the HHS Secretary, acting through the FDA Commissioner, to issue draft guidance within one year of enactment of the 21 st Century Cures Act, and final guidance not later than 12 months after the close of the public comment period on the draft guidance, "clarifying how, in the context of regenerative advanced therapies, the HHS Secretary will evaluate devices used in the recovery, isolation, or delivery of regenerative advanced therapies," as specified. Section 3035 requires that before March 1 of each calendar year, with respect to the previous calendar year, the HHS Secretary submit a report to Congress on (1) the number and type of applications for regenerative advanced therapies filed, approved or licensed, withdrawn, or denied, and (2) the number of such applications or therapies that were granted accelerated approval or priority review. Section 3036 amends the FFDCA by adding a new Section 506G, "Standards for Regenerative Medicine and Regenerative Advanced Therapies." This section requires the HHS Secretary, in consultation with the National Institute of Standards and Technology (NIST) and specified stakeholders, to facilitate an effort toward the development of standards for regenerative medicine and advanced therapies through a transparent public process to support, such as "through regulatory predictability, the development, evaluation, and review of" such therapies. It also requires the HHS Secretary to review and update relevant regulations and guidance, as appropriate. This section further requires the Office of Combination Products (OCP) to help coordinate timely review of combination products across relevant agency centers and to ensure that persons are designated in each primary agency center as points of contact for the sponsors of combination products. It specifies additional duties for OCP related to communication, and facilitating meetings between the agency and the sponsors. It requires the HHS Secretary, not later than four years after enactment and after a public comment period, to issue final guidance on the combination product review process, as specified, and adds reporting requirements to the annual report to Congress on the activities of OCP, as specified. It amends FFDCA Section 520(h)(4) to prohibit the use of information contained in an application for premarket approval of a class III device from being used in an application for premarket approval of a combination product that contains an approved drug constituent, unless the applicant provides a patent certification and notifies the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. It also requires the HHS Secretary to identify, not later than 18 months after enactment, types of combination products and manufacturing processes that the HHS Secretary proposes may adopt different good manufacturing processes or streamlined mechanisms. This list is to be published in the Federal Register , finalized after public comment, and updated as needed. Under FFDCA Section 502, a drug or device is deemed to be misbranded if, among other things, its labeling is false or misleading. Section 502(a) specifies that health care economic information provided in the course of selecting drugs for managed care or other similar organizations, by a formulary committee or similar entity, is not to be considered false or misleading if the information "directly relates" to a use of the drug as approved under FFDCA Section 505 or licensed under PHSA Section 351(a); the information must also be based on competent and reliable scientific evidence. Information that helps substantiate the health care economic information presented in accordance with this section must be made available to the HHS Secretary upon request. Health care economic information is defined to mean "any analysis that identifies, measures, or compares the economic consequences, including the costs of the represented health outcomes, of the use of a drug to the use of another drug, to another health care intervention, or to no intervention." Health care providers generally may prescribe a drug for an unapproved use when they judge that it is medically appropriate for their patient (often called "off-label" use). Drug companies, however, are not allowed to promote or distribute information about unapproved uses that have not been determined by FDA to be safe and effective. Drug and device companies have argued that current regulations prevent them from distributing important information to physicians about off-label uses of their products. In November 2016, FDA held a two-day public meeting to obtain input from various groups regarding off-label uses of approved or cleared medical products. Section 3037 amends FFDCA Section 502(a) by allowing drug and device companies to promote health care economic information to payors (e.g., insurance companies), in addition to formulary committees and other similar entities "with knowledge and expertise in the area of health care economic analysis." This section allows for health care economic information to be "related" to an FDA-approved indication rather than "directly-related" as required by current law. This section maintains the "competent and reliable scientific evidence" standard and adds that, where applicable, the health care economic information must be accompanied by "a conspicuous and prominent statement describing any material differences" between the health care economic information and a product's approved labeling. It also amends the definition of health care economic information by (1) expanding the scope of the term "any analysis" to include "clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or comprising the analysis"; (2) specifying that analyses comprising health care economic information could be based on the economic consequences of the use of a drug, which may in turn be based on the separate or aggregated clinical consequences of the represented health outcomes; and (3) adding that health care economic information does not include analyses that relate only to a non-FDA-approved indication. FDA regulatory authority over medical product safety and effectiveness covers drugs, biological products, and medical devices. The agency generally divides responsibilities for the review of marketing applications in its product-centered offices. The Center for Drug Evaluation and Research (CDER) reviews new drug applications for approval, the Center for Biologics Evaluation and Research (CBER) reviews biologics license applications for licensure, and the Center for Devices and Radiological Health (CDRH) reviews premarket approval applications for approval and 510(k) notifications for clearance. In 2002, Congress directed FDA to establish an Office of Combination Products (OCP) to facilitate the timely review and regulation of drug-device, drug-biologic, and device-biologic combination products, pursuant to the requirements in FFDCA Section 503. Both drugs and devices are defined in the FFDCA as products intended to diagnose, prevent, or treat disease, or otherwise affect the structure or any function of the body. Unlike a drug, however, a device "does not achieve its primary intended purposes through chemical action within or on the body ... and is not dependent upon being metabolized for the achievement of its primary intended purposes." OCP is required to determine the primary mode of action of a combination product and regulate it based on that determination. Generally, OCP treats a drug-device combination product as a drug unless the manufacturer can prove that it satisfies the device exclusionary clause (i.e., the product does not rely on chemical action to achieve its primary intended purpose). A manufacturer whose product is assigned to CDER will have a higher standard of evidence, a potentially higher requirement for supporting data, a higher user fee, and probably a longer premarket review time period than a manufacturer whose product is assigned to CDRH. Section 3038 amends FFDCA Section 503(g) to require the HHS Secretary to assign a primary center for the regulation of combination products and to conduct premarket review of these products under a single application whenever appropriate, among other things. It requires the HHS Secretary to determine the primary mode of action for a combination product—defined as the single mode of action expected to make the greatest contribution to the overall intended therapeutic effects of the product—in order to determine how best to review the product. The HHS Secretary is not permitted to determine that the primary mode of action is that of a drug or biologic solely because the combination product has any chemical action within or on the body. If the sponsor of a combination product disagrees with the HHS Secretary's determination and requests an explanation, the HHS Secretary must provide a substantive scientific rationale for the determination. In addition, the sponsor may propose and, subject to an agreement with the HHS Secretary, conduct additional studies to establish the relevance of any chemical action in the product's primary mode of action. The sponsor may also request a meeting on such combination product, as specified, "to establish clarity and certainty." This paragraph also specifies other procedures for communication between the agency and the sponsor. For premarket review of a combination product that includes an approved constituent component (e.g., a drug or device), the HHS Secretary is allowed to require that a sponsor submit only that information that is necessary to determine the safety of the combination product, including any incremental risks or benefits posed by the product, taking into account any prior findings for the approved constituent parts. For a combination product submitted through a device pathway (515, 510(k), or 513(f)(2)) that contains an approved drug constituent, the applicant must certify any patents that claim the approved drug or its use for which the applicant has not obtained a right of reference, and give notice to the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. A combination product containing an approved drug constituent that is submitted through a device pathway is eligible for certain regulatory exclusivity periods: new chemical entity exclusivity (five years), new clinical investigation exclusivity three years), pediatric exclusivity (six months), qualified infectious disease product exclusivity (five years), and orphan drug exclusivity (seven years). Notwithstanding any other provision of this subsection, an application for a combination product submitted through a device pathway that contains an approved drug constituent would be considered a 505(b)(2) application for specified purposes. It does not prohibit a sponsor from submitting separate applications for the constituent parts of a combination product, unless the HHS Secretary determines that a single application is necessary. This section further requires OCP to help coordinate timely review of combination products across relevant agency centers and to ensure that persons are designated in each primary agency center as points of contact for the sponsors of combination products. It specifies additional duties for OCP related to communication and facilitating meetings between the agency and the sponsors. It requires the HHS Secretary, not later than four years after enactment and after a public comment period, to issue final guidance on the combination product review process, as specified, and adds reporting requirements to the annual report to Congress on the activities of OCP as specified. It amends FFDCA Section 520(h)(4) to prohibit the use of information contained in an application for premarket approval of a class III device from being used in an application for premarket approval of a combination product that contains an approved drug constituent, unless the applicant provides a patent certification and notifies the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. It also requires the HHS Secretary to identify, not later than 18 months after enactment, types of combination products and manufacturing processes that the HHS Secretary proposes may adopt different good manufacturing processes or streamlined mechanisms. This list is to be published in the Federal Register , finalized after public comment, and updated as needed. According to the CDC, each year in the United States, at least 2 million people become infected with bacteria that are resistant to antibiotics, and at least 23,000 of them die from these infections. The U.S. National Strategy for Combating Antibiotic-Resistant Bacteria (CARB) identifies five interrelated goals to control antibiotic resistance (AR): Antibiotic Stewardship: the judicious use of antibiotics in health care and agricultural settings; One Health Surveillance: integration of public health and animal disease, food, and environmental surveillance for resistant bacteria; Diagnostic Innovations: new technologies such as "point-of-care" antibiotic susceptibility tests and tests to identify viral infections; Treatment, Prevention, and Control Research and Development: efforts to boost basic research, facilitate clinical trials of new antibiotics, attract private investment, and increase the number of antibiotic drug candidates in the drug development pipeline; and International Collaboration: engagement in global AR activities through multiple venues. Section 3041, "Antibacterial Resistance Monitoring," defines the term "antimicrobial" to include any antibacterial or antifungal drugs, and may include drugs that eliminate or inhibit the growth of other microorganisms, as appropriate. The section amends PHSA Section 319E to require the HHS Secretary to carry out the following activities, as specified: (1) encourage and assist in reporting of antimicrobial drug use, drug resistance, and antimicrobial stewardship programs in health care facilities of the Indian Health Service (IHS), Department of Veterans Affairs (VA), and Department of Defense (DOD); (2) report annually on antimicrobial drug resistance trends, stewardship programs, and other matters; (3) provide guidance and other informational materials about antimicrobial stewardship for residential and ambulatory health care facilities; (4) assist states with their antimicrobial resistance prevention activities; and (5) establish a mechanism for facilities to report antimicrobial stewardship activities and evaluate drug resistance data, including for drugs approved under the Limited Population Pathway established in Section 3042 of this Act. The HHS Secretary is required, consistent with laws prohibiting disclosure of trade secret and confidential information, to make data collected pursuant to this section publicly available. Antimicrobial drugs are intended for short-term use, making the development of new ones potentially less attractive to drug developers. Addressing barriers to antimicrobial drug approval may help counter this problem. The so-called limited population drug approval pathway for new antimicrobial drugs is one such approach, involving smaller clinical trials in a limited population of patients that have serious or life-threatening infections and unmet medical needs due to the lack of an effective approved antimicrobial drug. Section 3042 creates a new product review pathway in FFDCA Section 506(h), "Limited Population Pathway for Antibacterial and Antifungal Drugs." This pathway allows the HHS Secretary to approve an antibacterial or antifungal drug as a limited population drug if (1) the drug is intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs; (2) the standards for new drug approval or biologics licensure are met; and (3) the HHS Secretary receives a written request from the sponsor to approve the drug as a limited population drug. This review pathway includes the following elements, among others: The HHS Secretary's determination of the safety and efficacy of a limited population drug reflects the benefit-risk profile of the drug in the intended limited population, considering the availability or lack of alternative treatments for this population. Products approved using this pathway must carry prominent labeling noting, among other things, the intended use for a limited and specific population of patients. Sponsors must submit promotional materials to FDA for review 30 days prior to dissemination. Sponsors may pursue this pathway concurrently with other expedited development or approval pathways, as applicable. Section 3042 also requires the HHS Secretary to issue, within 18 months of enactment, draft guidance describing criteria, processes, and other considerations for demonstrating the safety and effectiveness of limited population drugs, and final guidance within 18 months of the close of the public comment period on the draft guidance. It requires the HHS Secretary to provide prompt advice to the sponsor regarding the approval of a limited population drug. If such drug obtains approval for a broader indication, this legislation allows the HHS Secretary to remove any post-marketing conditions, such as labeling and promotional review requirements, regarding limited population use. The HHS Secretary must report to Congress at least every two years on the number of requests for approval and the number of approvals of limited population drugs. The Comptroller General must report by December 2021 on activities under this section, the extent to which the limited population drug pathway facilitated approval of treatments for limited populations, and the effects of such pathway, if any, on antimicrobial and antifungal drug resistance. This section shall not be construed to alter the HHS Secretary's authority to approve drugs pursuant to the FFDCA or PHSA. In general, the FFDCA regulates the actions of product sponsors in marketing, labeling, and promotion of medical products, but does not regulate the actions of health care providers engaged in the practice of medicine. Consequently, providers are generally allowed to prescribe drugs for uses or at doses other than those uses or doses approved by FDA. This is referred to as "off-label" use. Section 3043 states that provisions in Subtitle E and any amendments to them shall not be construed to restrict the prescribing authority of health care professionals (such as off-label prescribing) or limit the practice of health care. Laboratory tests can help clinicians determine whether a drug is likely to work against a specific infection by showing whether the infectious organism is susceptible (vs. resistant) to that drug. The criteria that distinguish susceptibility from resistance are called "breakpoints." Under current law and regulation, breakpoint information must be provided on antimicrobial drug labels, and labels for Antimicrobial Susceptibility Testing (AST) devices must reflect the relevant drug label(s). Generally, sponsors must apply to FDA to make changes to information contained in these drug and device labels, and FDA must pre-approve label changes for these drugs and devices. However, the susceptibility of infectious organisms may change over time, sometimes rapidly, rendering label information inaccurate for clinical decision-making purposes. FDA, clinicians, and others have sought to streamline FDA's process to ensure that antimicrobial drug and AST device labels reflect current information. Section 3044 establishes a new FFDCA Section 511A, "Susceptibility Test Interpretive Criteria for Microorganisms." The stated purpose is to clarify the HHS Secretary's authority to efficiently update susceptibility test interpretive criteria to address the development of drug resistance; to provide for public notice of the availability of recognized interpretive criteria and interpretive criteria standards; and to clear (under FFDCA Section 510(k)), classify (under FFDCA Section 513(f)(2)), or approve (under FFDCA Section 515) AST devices using updated, recognized susceptibility test interpretive criteria. The section requires the HHS Secretary to identify appropriate susceptibility test interpretive criteria, as specified, and to, within one year of enactment, establish and maintain a public "Interpretive Criteria Website," listing (1) any criteria standards established by a nationally or internationally recognized standard development organization, where such organization meets specified requirements for transparency and management of potential conflicts of interest, among other things; and (2) criteria that, although determined by the HHS Secretary to be appropriate with respect to approved or licensed antimicrobial drugs, lack a recognized standard, for one of several stated reasons. The website must include several specific disclaimers regarding the uses and limitations of the information presented. The HHS Secretary is required to publish in the Federal Register a notice of establishment of the website not later than the date on which it is established. The provision clarifies that reference to the website in the labeling of an antimicrobial drug does not constitute misbranding, and states that FFDCA Section 511A shall not be construed to allow the HHS Secretary to disclose protected trade secret or confidential information. The HHS Secretary is required to review any new or updated criteria standards from a recognized standard development organization, and other changes to interpretive criteria, revise the website accordingly, and publish a notice of any such revisions on the FDA agency website, at least every six months. The website must also be revised upon the approval of any antimicrobial drug when such approval is based on criteria other than those already listed. All such notices must be compiled and published in the Federal Register at least annually, with a request for public comments. The HHS Secretary shall consider public comments, among other things, in revising website content. Both criteria standards and non-standard criteria listed on the website are considered to be recognized standards for the purpose of premarket review and other legal requirements for devices, pursuant to FFDCA Section 514(c)(1). However, sponsors may use standards other than those listed by FDA under this section in seeking approval or clearance of a drug or device. Antimicrobial drugs approved after the Interpretive Criteria Website is established must carry a reference to the website on the label. Sponsors of antimicrobial drugs approved before the website is established must submit, within one year of establishment of the website, supplemental applications to similarly change the label. Section 3044 allows the HHS Secretary, so long as other requirements for clearance are met, to authorize the marketing of an AST device for which the label references information from the website in lieu of information from clinical trials, and directs practitioners to information on the labels of antimicrobial drugs for which susceptibility is measured using such device. Finally, the section explicitly recognizes interpretive criteria standards posted on the Interpretive Criteria Website as device standards. It also (1) requires the HHS Secretary to report to Congress regarding progress in implementing this section; and (2) exempts FDA from requirements under the Paperwork Reduction Act when updating the list of susceptibility test interpretive criteria standards. This section shall not be construed to alter the HHS Secretary's authority to clear devices pursuant to the FFDCA or PHSA. FDA requires all medical device product manufacturers to register their facilities, list their devices with the agency, and follow general controls requirements. FDA classifies devices according to the risk they pose to the patient. Medical devices that present only minimal risk can be legally marketed upon registration alone. These low-risk devices are deemed exempt from premarket review, and manufacturers need not submit an application to FDA prior to marketing. About two-thirds of medical devices listed with FDA are exempt from premarket review; therefore, these devices would not have a need for "priority review." Most moderate- and high-risk devices must go through premarket review to obtain the agency's permission prior to marketing. FDA grants this permission when a manufacturer meets regulatory premarket requirements and agrees to any necessary postmarket requirements, which vary according to the risk that a device presents. In general, for moderate-risk and high-risk medical devices, manufacturers can use two pathways to bring such devices to market with FDA's permission: (1) the premarket approval (PMA) pathway ( approval ) and (2) the 510(k) pathway ( clearance ). There is a fundamental difference between the PMA and 510(k) pathways. In a PMA review, FDA determines whether the device is reasonably safe and effective for its intended use. In a 510(k) review, FDA determines whether the device is substantially equivalent to another device whose safety and effectiveness may never have been assessed. The time it takes to review a medical device—total review time—is composed of the time FDA handles the application—FDA time—plus the amount of time the device sponsor or submitter takes to respond to requests by FDA for additional information about the device. Under FFDCA Section 515(d)(5), in order to provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human diseases or conditions, the HHS Secretary is required to provide review priority for devices that represent breakthrough technologies for which no approved alternatives exist, that offer significant advantages over existing approved alternatives, or whose availability is in the best interest of the patients. To implement this requirement, the FDA, on April 23, 2014, issued the following draft guidance: Expedited Access for Premarket Approval Medical Devices Intended for Unmet Medical Need for Life Threatening or Irreversibly Debilitating Diseases or Conditions - Draft Guidance for Industry and Food and Drug Administration Staff . As indicated in the title, the FDA draft guidance covered only premarket approval (PMA) medical devices; FDA issued final guidance on April 13, 2015, that addressed de novo 510(k) devices, which it concluded are not eligible for the full scope of the priority review program. The guidance focuses on balancing risks versus benefits for patients, drafting a Data Development Plan by the medical device sponsor, and collecting postmarket data on medical devices that have received a priority review designation. As described in the FDA guidance, for a medical device that has received a priority review designation, the expedited review process involves lower requirements in the premarket review process, such as less information in the PMA application, in exchange for increased collection of postmarket data and reliance on the use of surrogate endpoints. According to FDA, the Expedited Access PMA (EAP) program features "earlier and more interactive engagement with FDA staff—including the involvement of senior management and a collaboratively developed plan for collecting the scientific and clinical data to support approval—features that, taken together, should provide these patients with earlier access to safe and effective medical devices." FDA intends to withdraw approval for a device if the sponsor fails to adhere to the postmarket requirements, such as data collection, or if the postmarket data prove the device is not safe and effective. Comments on the April 2014 FDA draft guidance questioned FDA's ability to enforce postmarket study requirements and urged the agency and Congress "to evaluate whether FDA has sufficient authorities to promptly withdraw product approval if the necessary data are not promptly collected or suggest that the product benefits do not outweigh risks." One media source stated that, regarding the EAP program, FDA "estimates that, at least in the early stages, on average, about six devices a year may qualify for the program, and the [agency] believes it has the resources available to handle that volume." The estimated six devices would represent about 15% of FDA's total PMA applications in one year. Other comments on the FDA draft guidance questioned whether FDA has sufficient resources to dedicate to the EAP program. Section 3051 adds a new Section 515C, "Breakthrough Devices," to Chapter V of the FFDCA. The new section requires the HHS Secretary to establish a program to provide priority review for devices that (1) provide more effective diagnosis or treatment of a life-threatening or irreversibly debilitating condition, and (2) represent breakthrough technologies for which no approved alternatives exist, offer significant advantages over existing alternatives, or are, once available, in the best interest of patients. The section allows requests from device sponsors for designation of priority review of not only PMA medical devices, but also 510(k) devices and one other type of regulatory decision involving a medical device. The section requires the HHS Secretary in 60 days to determine whether the request for priority review would be granted. Such requests are to be evaluated by a team of experienced FDA staff and senior managers. If the HHS Secretary approves a priority review designation for a device, the HHS Secretary may not withdraw the designation because another "breakthrough" device was subsequently cleared or approved, thereby resulting in the specified criteria (i.e., no approved alternatives exist, offer significant advantages over existing approved or cleared alternatives, or the availability of which is in the best interest of patients) no longer being met. Each priority review device is assigned a team of staff, "including a team leader with appropriate subject matter expertise and experience." Senior FDA personnel oversee each team to facilitate the efficient development and review of the device. Among other things, the HHS Secretary is required to "provide for interactive communication with the device sponsor during the review process," and expedite "the Secretary's review of manufacturing and quality systems compliance." The HHS Secretary is required to "disclose to the sponsor, not less than 5 business days in advance the topics of any consultation concerning the sponsor's device that the HHS Secretary intends to undertake with external experts or an advisory committee and provide the sponsor an opportunity to recommend such external experts." The HHS Secretary may, as appropriate, "coordinate with the sponsor regarding early agreement on a data development plan." The HHS Secretary may ensure that clinical trial design is as efficient as practicable and may facilitate "expedited and efficient development and review of the device through utilization of timely postmarket data collection" with regard to PMA applications. Agreements on clinical protocols are binding, but they may be subject to change under certain circumstances. The provision specifies that both the agreement and subsequent changes to the clinical protocol must be agreed to in writing. The HHS Secretary is required to issue, not later than one year after enactment, guidance on the implementation of the new Section 515C of the FFDCA. In addition, the HHS Secretary is required to issue a report, on January 1, 2019, to the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee describing the program added under new FFDCA Section 515C, including recommendations to strengthen the program and better meet patient needs in a timely manner. The Humanitarian Device Exemption (HDE) was intended to encourage the development of devices that help treat and diagnose diseases or conditions that affect fewer than 4,000 individuals in the United States per year. An HDE application is similar to a PMA but is exempt from the effectiveness requirements to encourage manufacturers to develop devices for these small markets. Section 3052 amends FFDCA Section 520(m) and allows an HDE to be granted to treat and diagnose diseases or conditions that affect not more than 8,000 individuals in the United States. Within 18 months of enactment, the HHS Secretary, acting through the Commissioner of the FDA, is required to publish draft guidance that "defines the criteria for establishing 'probable benefit'" when evaluating whether the health benefit of an HDE device outweighs the risk of injury or illness from using such a device. Under the Medical Device Amendments of 1976 (MDA, P.L. 94-295 ), FDA was required to classify all medical devices into one of three classes. Congress provided definitions for the three classes—Class I, Class II, Class III—based on the risk (low-, moderate-, and high-risk, respectively) posed by the device to patients. Device classification determines the type of regulatory requirements that a manufacturer must follow. General controls are the minimum regulations that apply to all FDA-regulated medical devices. Class II devices are those under current law that "cannot be classified as Class I because the general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness of the device." Although Class II includes devices that pose a moderate risk to patients, currently only some have information—or special controls—available to reduce or mitigate risk. Special controls include special labeling requirements, premarket data requirements, postmarket surveillance, patient registries, guidelines, and performance standards. According to a 2011 report by the Institute of Medicine, about "15% of all device types classified in Class II are subject to special controls." This is because "FDA has not promulgated performance standards or special controls for the vast majority of types of Class II devices." Although "FDA has procedures for developing, adopting, and implementing guidance and standards," it has been "persistently hindered in fully developing those materials by a lack of or limitations on human, fiscal, and technologic resources and capabilities." According to a 1988 Government Accountability Office (GAO) report, FDA estimated that "40 staff- years (not staff-hours) would be required to develop a single performance standard." In response to agency problems with developing performance standards, the Safe Medical Devices Act of 1990 ( P.L. 101-629 ) simplified the process of establishing performance standards for Class II devices and authorized the use of alternative restrictions, called special controls, at the agency's discretion. The Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) allowed FDA to recognize an appropriate performance standard developed by a U.S. or international organization involved in standard development. Section 3053 amends FFDCA Section 514(c) by adding two new subparagraphs and two new paragraphs. Under the section, any person may submit to FDA a request for the agency to recognize "all or part of an appropriate standard established by a nationally or internationally recognized standard organization." The HHS Secretary is required to make a determination to recognize all, part, or none of the standard within 60 days, with a written response indicating the rationale for such a determination, "including the scientific, technical, regulatory, or other basis for such determination." The response and rationale for recognition must be made publically available. Under the section, the HHS Secretary is required to provide to all FDA employees who review premarket submissions for devices "periodic training on the concept and use of recognized standards for purposes of meeting a premarket submission requirement or other applicable requirement." The HHS Secretary must publish guidance identifying the principles for recognizing standards. Under the Medical Device Amendments of 1976 (MDA), the manufacturer of a new product would submit a notice to the FDA 90 days prior to marketing. This type of premarket review is known as a 510(k) notification, after the section of the MDA requiring that FDA be notified of the new product before it is marketed. The Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) eliminated the requirement of a 510(k) submission for most Class I devices and a small proportion of Class II device types. A 2009 GAO study found that 67% of device types were exempt from premarket review; Class I devices made up 95% and Class II devices made up 5% of these exempt devices. On July 1, 2015, FDA released guidance that exempts 120 medical devices from premarket notification requirements; draft guidance was issued on August 1, 2014. The 120 devices are primarily Class II but include a few Class I devices and some pre-amendment (pre-MDA) unclassified devices. The guidance states that until "publication of a final rule or order exempting these devices from 510(k), FDA does not intend to enforce compliance with 510(k) requirements for these devices. FDA does not expect manufacturers to submit 510(k)s for these devices during this time period." Section 3054 amends FFDCA Section 510(l) and requires the HHS Secretary, within 120 days of enactment and at least once every five years thereafter, as the HHS Secretary determines appropriate, to identify and publish in the Federal Register "any type of class I device that the Secretary determines no longer requires a report under subsection (k) to provide reasonable assurance of safety and effectiveness." Upon publication, each type of Class I device so identified is exempt from the 510(k) requirement and the "classification regulation applicable to each such type of device" is deemed amended to incorporate the exemption. Similarly, the section amends FFDCA Section 510(m) and requires the HHS Secretary, within 90 days of enactment, to publish in the Federal Register "a list of each type of class II device that the Secretary determines no longer requires a report under subsection (k) to provide reasonable assurance of safety and effectiveness." The HHS Secretary must provide a 60-day public comment period after publication of such a list. Not later than 210 days after enactment, the HHS Secretary is required to publish in the Federal Register a list representing the final determination on the types of Class II devices that no longer require a 510(k) notice prior to marketing. Upon publication of the final list, each type of Class II device so listed is exempt from the 510(k) requirement and the "classification regulation applicable to each such type of device" is deemed amended to incorporate the exemption. FDA advisory committees "provide independent expert advice to the agency on a range of complex scientific, technical, and policy issues. An advisory committee meeting also provides a forum for a public hearing on important matters. Although advisory committees provide recommendations to FDA, FDA makes the final decisions." In April 2015, FDA issued draft guidance entitled "Procedures for Meetings of the Medical Devices Advisory Committee." Once final, the draft guidance will replace two earlier FDA guidance documents. The draft guidance provides information on the processes associated with Medical Devices Advisory Committee panel meetings, such as types of panel meetings, information exchange for panel meetings, and conduct of panel meetings. The Medical Devices Advisory Committee includes 17 different advisory panels, which address topics in various specialty areas. FDA may refer a matter to a particular device panel for advice on a premarket submission if the submission is, for example, of significant public interest or is highly controversial. The agency may also ask a panel to provide advice on regulatory actions, such as device classification, or general scientific matters "that are related to a device type or a general topic that is relevant to medical device safety and effectiveness." Under current law, the advisory panels are composed of persons who are qualified by training and experience to evaluate the safety and effectiveness of the devices to be referred to the panel and who, to the extent feasible, possess skill in the use of, or experience in the development, manufacture, or utilization of, such devices. The HHS Secretary shall make appointments to each panel so that each panel shall consist of members with adequately diversified expertise in such fields as clinical and administrative medicine, engineering, biological and physical sciences, and other related professions. In addition, each panel shall include as nonvoting members a representative of consumer interests and a representative of interests of the device manufacturing industry. Scientific, trade, and consumer organizations shall be afforded an opportunity to nominate individuals for appointment to the panels. Section 3055 amends FFDCA Section 513(b)(5) by adding two new subparagraphs that require the HHS Secretary to ensure that there is "adequate expertise" on a device classification panel, including by giving the device manufacturer the opportunity to provide advice "on the expertise needed among the voting members of the panel," among other things. The HHS Secretary is required to ensure this expertise when "a device is specifically the subject of review by a classification panel." The provision defines "adequate expertise" to mean that the classification panel reviewing a premarket submission includes "two or more voting members, with a specialty or other expertise clinically relevant to the device under review, and at least one voting member who is knowledgeable about the technology of the device." Each year the HHS Secretary must provide an "opportunity for patients, representatives of patients, and sponsors of medical device submissions to provide recommendations for individuals with appropriate expertise to fill voting member positions on classification panels." The section amends FFDCA Section 513(b)(6) regarding the panel review process and participation in the panel meeting, adding that the device manufacturer, or its representative, must be allowed time during a panel meeting to correct misstatements of fact or provide clarifying information, subject to the discretion of the panel chairperson. The section strikes subparagraph (B) in FFDCA Section 513(b)(6) and replaces it with a similar subparagraph, delineating that adequate time for presentations is required to be provided to the device manufacturer and the HHS Secretary, and adds that the panel may pose questions to the representative of the manufacturer and consider the responses in the panel's review of the device. The HHS Human Subject Regulations are a core set of federal standards for protecting human subjects in HHS-sponsored research. These regulations are commonly referred to as the Common Rule because the same requirements have been adopted by many other federal departments and agencies, which apply the regulations to the research they fund. Under the Common Rule, research protocols must be approved by an Institutional Review Board (IRB) to ensure that the rights and welfare of research subjects are protected. FDA has issued its own set of Human Subject Regulations, which are similar, but not identical, to the Common Rule. FDA applies these regulations to all the research it regulates, including clinical trials of new drugs and medical devices, regardless of the source of funding for the research. All clinical evaluations of investigational devices (unless exempt) must have an investigational device exemption (IDE) before the clinical study is initiated. An IDE allows an unapproved device (most commonly an invasive or life-sustaining device) to be used in a clinical study to collect the data required to support a PMA submission. The IDE permits a device to be shipped lawfully for investigation of the device without requiring that the manufacturer comply with other requirements of the FFDCA, such as registration and listing. Devices approved by FDA via the HDE are for diagnosing or treating diseases or conditions that affect fewer than 4,000 individuals in the United States each year. An HDE application is similar to a PMA, but it is exempt from the effectiveness requirements. Such devices may be used in a facility only after a local IRB has approved their use in that facility, except in certain emergency situations. Section 3056 amends FFDCA Section 520(g), regarding IDEs, and FFDCA Section 520(m), regarding HDEs, by removing the word "local" in all references to local IRBs, including in the stipulation that an approved humanitarian use device may be used in a facility only after a local IRB has approved such use, except in certain emergency situations. The Clinical Laboratory Improvement Amendments (CLIA) of 1988 (CLIA, P.L. 100-578 ) provide the Centers for Medicare & Medicaid Services (CMS) with authority to regulate clinical laboratories to ensure the accuracy of test results, given that these results affect clinical decisionmaking. CLIA requires laboratories to receive certification before they are allowed to carry out clinical laboratory testing on a human sample. CLIA certification is based on the level of complexity of testing that a laboratory is performing, graded as low, moderate, or high. FDA is responsible for categorizing clinical laboratory tests according to their level of complexity. Laboratories that perform only low-complexity tests (called waived tests ) receive a certificate of waiver (COW) from CMS. Conversely, only laboratories certified to do so may perform moderate- and high-complexity tests. FDA determines whether a test is waived (i.e., low-complexity) or not based on information submitted by the test's manufacturer, and FDA has issued guidance to support the manufacturer's submission of this information. Under current law, waived tests are those "that have been approved by FDA for home use or that, as determined by the HHS Secretary, are simple laboratory examinations and procedures that have an insignificant risk of an erroneous result." The guidance recommends ways to demonstrate that a test is both "simple" and has "an insignificant risk of an erroneous result." Demonstrating the latter includes showing that a test's accuracy is comparable to a method whose accuracy has already been established and documented. (Section V of the guidance document addresses approaches to demonstrating accuracy.) Section 3057 requires the HHS Secretary, acting through the FDA Commissioner, to, not later than one year after enactment, publish draft guidance that revises Section V of the current guidance, including providing clarification on the appropriate use of comparable performance between a waived and moderately complex laboratory user to demonstrate accuracy. It also requires the HHS Secretary, not later than one year after the comment period for the draft guidance closes, to publish final revised guidance. Section 205 of the Food and Drug Administration Modernization Act of 1997 (FDAMA, P.L. 105-115 ) amended FFDCA Section 513, adding two provisions commonly referred to as the "Least Burdensome Provisions." (FFDCA Section 513(a)(3)(D)(ii) and Section 513(i)(1)(D)). The two provisions stipulate that FDA consider the "least burdensome" data or information "necessary" to demonstrate a reasonable assurance of device effectiveness in a PMA application or substantial equivalence to predicate devices with differing technological characteristics in certain 510(k) notifications. The two provisions are as follows: FDA published final guidance on the least burdensome provisions on October 4, 2002. Under the guidance, FDA may allow the use of non-clinical data—such as laboratory and/or animal testing—in place of clinical data for the approval of PMA devices in certain circumstances, such as "devices or modifications of approved devices for which scientifically valid information is available in the public domain." When clinical data are needed, FDA allows manufacturers to consider study designs to shorten the length of the study. Such study designs include the use of "surrogate endpoints and statistical methods, such as Bayesian analyses," and study designs other than the gold standard—the randomized controlled trial. Although FDA allows for substitution of laboratory data in certain circumstances, the absence of problems in laboratory testing may not always predict what happens to a device over time in the human body, where forces that cannot be replicated in laboratory testing act upon the device. The 2002 FDA guidance states, "[r]eliance on postmarket controls (e.g., ... postmarket surveillance, and the Medical Device Reporting requirements) should be considered as a mechanism to reduce the premarket burden for 510(k)s and PMAs, while still ensuring the safety and effectiveness of the device." However, the FDA's authority to require postmarket studies of medical devices is limited. A September 2015 GAO study found that of the 392 postmarket surveillance studies ordered by FDA between May 1, 2008, and February 24, 2015, 88% were inactive, 10% were ongoing, and 2% were complete. Activities related to implementing the least burdensome provision, including training for staff and advisory panels, are posted on FDA's website. Section 3058 amends FFDCA Section 513 by adding a new subsection (j), "Training and Oversight of Least Burdensome Requirements." The HHS Secretary must ensure that each FDA employee involved in the review of premarket submissions, including supervisors, receives training on the "meaning and implementation of the least burdensome requirements" and must periodically assess the implementation of such requirements, including employee training. The FDA ombudsman responsible for device premarket review is required to conduct an audit of the least burdensome training, including the effectiveness of the training, 18 months after enactment. The audit must include "interviews of persons who are representatives of the industry regarding their experience in the device premarket review process" and a list of the measurement tools used to assess the implementation of the least burdensome requirement. A summary of the audit findings must be submitted to the Senate HELP Committee and the House Energy and Commerce Committee and posted on the FDA website within 30 days of completion of the audit. Regarding PMA applications, the section amends FFDCA Section 515(c), adding a new paragraph that requires the HHS Secretary to "consider the least burdensome appropriate means necessary to demonstrate device safety and effectiveness." It defines the term necessary to mean "the minimum required information that would support a determination by the HHS Secretary that an application provides a reasonable assurance of the safety and effectiveness of the device" and states that the role of postmarket information must be considered in determining the least burdensome means of demonstrating a reasonable assurance of device safety and effectiveness. In addition, the provision amends FFDCA Section 517A(a), adding that each substantive summary of the scientific and regulatory rationale for any decision made by FDA's Center for Devices and Radiological Health (CDRH) regarding the submission or review of a PMA, a 510(k), or an IDE must include a brief statement on how the least burdensome requirements were considered and applied. FFDCA Section 510(k) requires medical device manufacturers to register with the HHS Secretary and, at least 90 days prior to introducing a device intended for human use into interstate commerce, to report to the HHS Secretary (1) the class in which the device is classified and (2) actions taken to comply with applicable device regulatory requirements under FFDCA Sections 514 and 515. This notification requirement is part of the 510(k) premarket approval pathway, a process that is unique to medical devices and, if successful, results in FDA clearance . Under the 510(k) pathway, the manufacturer must demonstrate that a new device is substantially equivalent to a device already on the market (a predicate device). Substantial equivalence is determined by comparing the performance characteristics of a new device with those of a predicate device; clinical data demonstrating safety and effectiveness are usually not required. Reusable medical devices are those devices that may be reprocessed and used on multiple patients. In March of 2015, FDA released final guidance on the reprocessing of reusable medical devices: Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling . This guidance states that, among other things, "[m]anufacturers seeking to bring to market certain reusable devices, such as duodenoscopes, bronchoscopes and endoscopes, should submit to the FDA for review their data validating the effectiveness of their reprocessing methods and instructions." Under Section 604 of the Food and Drug Administration Safety and Innovation Act (FDASIA), the HHS Secretary was required to withdraw draft guidance, issued by FDA in July 2011, entitled " Guidance for Industry and FDA Staff—510(k) Device Modifications: Deciding When to Submit a 510(k) for a Change to an Existing Device ," and leave the prior guidance issued in 1997 in effect. Although patient and consumer groups have generally supported a more rigorous 510(k) notification system, industry had voiced concerns that the 2011 guidance would slow the device regulatory process. Section 604 of FDASIA also required a report to House and Senate committees on when a 510(k) notification should be submitted for a modification or change to a legally marketed device. Any new draft guidance (or proposed regulation) on 510(k) device modification could not be issued before the committees received the report. Final guidance (or regulation) could not be issued until one year after the committees had received the report. This report was completed by FDA in January 2014. Section 3059 amends FFDCA Section 510 by adding a new subsection (q), "Reusable Medical Devices," which requires the HHS Secretary, not later than 180 days after enactment, to identify and publish a list of reusable device types for which reports under Section 510(k) must include (1) instructions for use and (2) validation data regarding cleaning, disinfection, and sterilization. Reports issued after the publication of this list are required to include instructions for use and validation data, as specified by the HHS Secretary. The section also requires the HHS Secretary, acting through the FDA Commissioner and not later than one year after the date on which the comment period closes for the draft guidance, to issue final guidance regarding when a notification under 510(k) would have to be submitted for a modification or change to a legally marketed device. Increasingly, health care facilities are using computer systems for routine administrative and financial transactions (e.g., patient scheduling, claims processing) and for capturing and exchanging clinical information (e.g., electronic health records). One area that is undergoing especially rapid growth and innovation is mobile health. This term refers to the use of portable devices, such as smartphones and tablets, for medical purposes. Users interface with mobile devices through the use of software applications ("apps"). Some apps simply access stored medical information, while others capture and input patient data into an electronic health record (EHR). Many apps now provide clinical decision support (CDS) using algorithms that use clinical information to generate customized (i.e., patient-specific) diagnosis and treatment recommendations. Regulators are particularly interested in mobile apps that could pose a risk to patients if they malfunction. These include apps used to display and transfer data from a patient monitor; apps that control an existing device; and apps that transform a mobile platform into a medical device (e.g., an app that allows patients to use their smartphone to record electrocardiograms using a lead that connects to the phone). Under the FFDCA, the FDA has regulatory authority over software that meets the statutory definition of a medical device and is "intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease." FDA released a nonbinding guidance document on mobile medical apps in September 2013, in which it stated its intention to focus on the functionality of the mobile health product, not the mobile platform itself. Thus, the agency did not intend to regulate smartphone or tablet manufacturers. FDA further stated its intention to adopt a risk-based approach by applying its regulatory oversight to "only those mobile apps that are medical devices and whose functionality could pose a risk to patient safety if the mobile app were to not function as intended." In February 2015, FDA released updated guidance on its risk-based approach to regulating mobile medical apps. The agency provided examples of mobile apps that do not meet the statutory definition of a medical device and so are not subject to its regulatory authority, including apps used to automate general office operations in health care settings. The agency then gave examples of mobile apps that may meet the definition of a medical device but for which the agency intends to exercise enforcement discretion—meaning that it does not intend to apply regulatory oversight—because the apps pose minimal risk to the public. This category includes mobile apps that help asthmatics track inhaler usage and asthma episodes; apps that give patients a portal into their own EHR; and apps intended for individuals to log, track, or make decisions related to general wellness (e.g., Fitbit products). Finally, FDA provided examples of mobile apps that are the focus of the agency's regulatory oversight. These apps meet the definition of a medical device, and they pose a significant risk to patient safety if they do not function as intended. Examples include apps that connect to an existing device for the purpose of controlling its operation, function, or energy source; apps that are used in active patient monitoring or analyzing patient-specific medical device data from a connected device; and apps that transform a mobile platform into a regulated medical device. The updated guidance did not address regulation of CDS software. Section 3060 amends FFDCA Section 520 to exclude certain types of health software from the FFDCA definition of medical device, including products that provide a variety of administrative and health management functions; electronic health record technology that creates, stores, transfers, and displays patient information; and software that interprets and analyzes patient data to help make clinical diagnosis or treatment decisions (including CDS tools). In general, this would preclude FDA from regulating these products as medical devices. However, Section 3060 creates an exception allowing FDA to exercise regulatory authority if the agency determines that the use of the software "would be reasonably likely to have serious adverse health consequences" based on specified criteria. One of the criteria is the likelihood and severity of patient harm if the software were not to perform as intended. The exception would apply to EHR systems (and other software that simply creates, stores, transfers, and displays data), as well as CDS and other analytic tools. Section 3060 requires the HHS Secretary to report, within two years of enactment and biennially thereafter, on the health risks and benefits associated with software determined to be excluded from the medical device definition, and a summary of the impact of such software on patient safety. Finally, Section 3060 amends FFDCA Section 513(b) to require the HHS Secretary to classify a health software accessory based on its intended use, "notwithstanding the classification of any other device with which such accessory is intended to be used." The Silvio O. Conte Senior Biomedical Research Service (SBRS), established in PHSA Section 228, is a special hiring mechanism used by the HHS Secretary to attract and retain accomplished scientists to work in Public Health Service (PHS) agencies. It is not subject to civil service requirements under Title 5 of the U.S. Code , and it is distinct from other PHS hiring mechanisms, such as the PHS Commissioned Corps. SBRS requirements are as prescribed in law and regulation (42 C.F.R. Part 24). Currently, SBRS is limited to 500 members, who are accomplished doctoral-level scientists in biomedical research or clinical research evaluation. The rate of pay may not exceed that for Level I of the Executive Schedule (currently about $206,000 per year) unless approved by the President. The HHS Secretary may contribute up to 10% of a Servicemember's pay to that person's already established retirement system at the institution of higher education at which the member had been employed. Section 3071 renames the SBRS as the Silvio O. Conte Senior Biomedical Research and Biomedical Product Assessment Service (the Service). It increases the number of authorized members to 2,000 and adds "biomedical product assessment" as a desired field of expertise. It clarifies that the HHS Secretary is not required to reduce the number of employees serving in other HHS employment systems to offset the number of new employees in the Service. The provision requires the HHS Secretary to appoint experts to agencies within HHS, "taking into account the need for the expertise of such expert." It also authorizes the appointment of persons who hold "a master's level degree in engineering, bioinformatics, or a related or emerging field," broadening the current requirement for doctoral-level members. It increases the upper pay rate limit to that of the President (currently $400,000 per year) but eliminates the authority to contribute to a member's preexisting retirement system. Finally, the provision requires GAO, within four years of enactment, to study and report to Congress on the changes to the Service and their effects on HHS departments and agencies. Title 5 of the U.S. Code provides the broad framework of requirements under which many federal employees are hired; however, some subsets of employees are hired under alternative government-wide or agency-specific authorities. Numerous hiring authorities target scientists and other technical workers, for whom federal agencies such as FDA compete with the private sector and nonfederal public employers. For example, FFDCA Section 714 authorizes the HHS Secretary to appoint employees to positions in FDA to perform, administer, or support activities related to review of medical device applications and human generic drugs "without regard to the provisions of title 5, United States Code, governing appointments in the competitive service." Section 3072 adds a new FFDCA Section 714A, "Hiring Authority for Scientific, Technical, and Professional Personnel," which authorizes the HHS Secretary to "appoint outstanding and qualified candidates to scientific, technical, or professional positions that support the development, review, and regulation of medical products" within the competitive service "without regard to the provisions of title 5, United States Code, governing appointments in the competitive service." The FDA Commissioner is allowed to determine pay (not to exceed the annual rate of pay of the President) for the purposes of retaining qualified employees, notwithstanding certain General Schedule pay rate requirements. It specifies that this information will be publicly available and that this new provision does not affect the FDA's streamlined hiring authority in FFDCA 714. The provision also requires the HHS Secretary, not later than 18 months after the enactment of the 21 st Century Cures Act, to submit a report to Congress on workforce planning and certain specified elements with regard to the FDA workforce. This provision also requires the Comptroller General to conduct a study of FDA's ability "to hire, train, and retain qualified scientific, technical, and professional staff ... necessary to fulfill the mission of the [FDA] to protect and promote public health," among other specified contents with regard to the FDA workforce. FDA regulatory authority over medical product safety and effectiveness covers drugs, biological products, and medical devices. The agency generally divides responsibilities for the review of marketing applications in its product-centered offices. CDER reviews new drug applications for approval, CBER reviews biologics license applications for licensure, and CDRH reviews premarket approval applications for approval and 510(k) notifications for clearance. As part of the Vice President's Cancer Moonshot Initiative, the Obama Administration has proposed an Oncology Center of Excellence to streamline collaboration across FDA's Human Drugs, Biologics, and Devices and Radiological Health programs. According to the FDA's FY2017 Congressional Justification, "With the continued development of companion diagnostic tests and the use of combinations of drugs and biologics to treat cancer using methods developed through the science of precision medicine, to most benefit those affected, FDA needs to take an integrated approach in its evaluation of products for the prevention, screening, diagnosis, and treatment of cancer." Although the Administration's proposed center of excellence is specific to cancer, there has arguably been an increase in the number and complexity of diagnostics and therapeutics for other diseases as well, and some groups have suggested that such pilots could be done in other areas (e.g., cardiology, neurology, and infectious disease). Section 3073 adds a new FFDCA Section 1014, "Food and Drug Administration Intercenter Institutes," requiring the HHS Secretary to establish one or more "Intercenter Institutes" for a major disease area(s). Such institutes will be responsible for coordinating activities applicable to specific disease area(s) between CDER, CBER, and CDRH; for example, coordinating staff from the three centers with diverse product expertise relevant to a major disease area, and streamlining the review of medical products related to that major disease area. This provision requires the HHS Secretary to establish at least one institute within one year of enactment, and to provide a public comment period while each institute is being implemented. In addition, this provision allows the HHS Secretary to terminate any such institute if the HHS Secretary determines that it is no longer benefitting the public health. Following allegations of misspent funds during a 2010 General Services Administration meeting held in Las Vegas, the Office of Management and Budget (OMB) imposed restrictions on conference travel for federal employees in memorandum M-12-12. The memorandum directed agencies, beginning in FY2013, to spend at least 30% less than what was spent in FY2010 on travel expenses, and stated that agencies "must maintain this reduced level of spending each year through FY 2016." Senior-level agency approval is required for all conferences sponsored by an agency where the conference expenses to the agency exceed $100,000. Agencies are prohibited from spending more than $500,000 on a single conference. However, this restriction may be waived if the agency head "determines that exceptional circumstances exist whereby spending in excess of $500,000 on a single conference is the most cost-effective option to achieve a compelling purpose." Under Section 3074, if attendance at a scientific meeting is directly related to the professional duties of scientific or medical professionals of HHS, then the meetings would not be considered to be conferences for the purposes of (1) federal reporting requirements in annual appropriations acts, and (2) a restriction in OMB memorandum M-12-12 or any other regulation restricting such travel, but would not exempt these meeting from federal travel regulations. The provision also requires that each HHS operating division, not later than 90 days after the end of the fiscal year, post on its website an annual report on scientific meeting attendance and related travel spending for each fiscal year, including details as specified. The Food and Drug Administration Amendments Act of 2007 (FDAAA, P.L. 110-85 ) required FDA to take several actions regarding how it informs the public, expert committees, and others about agency actions and plans and information the agency has developed or gathered about drug safety and effectiveness. Among other things, the law required biweekly screening of the FDA Adverse Event Reporting System (FAERS) database and quarterly reporting on the FAERS website regarding new safety information or potential signals of a serious risk. The FDAAA also required the development and maintenance of a website with extensive drug safety information, and required the HHS Secretary to "prepare, by 18 months after approval of a drug or after use of the drug by 10,000 individuals, whichever is later, a summary analysis of the adverse drug reaction reports received for the drug, including identification of any new risks not previously identified, potential new risks, or known risks reported in an unusual number." The FDAAA also named the risk-management process "risk evaluation and mitigation strategies" (REMS) and expanded the risk-management authority of FDA. A REMS may include "an elements to assure safe use" (ETASU), which is a restriction on distribution or use that is intended to (1) allow access to those who could benefit from the drug while minimizing their risk of adverse events and (2) block access to those for whom the potential harm would outweigh potential benefit. Section 3075 amends FFDCA Section 505(k)(5) to require the HHS Secretary to conduct regular screenings of the FAERS database instead of the bi-weekly screenings required by current law. This provision requires the HHS Secretary to post guidelines on the FDA website, with input from experts, that detail best practices for drug safety surveillance using FAERS and criteria for public posting of adverse event signals. This provision also amends FFDCA Section 505(r)(2)(D) to remove the requirement that the HHS Secretary prepare a summary analysis of the adverse drug reaction reports received for a drug "by 18 months after approval" and instead requires that the HHS Secretary make publicly available on the FDA website "best practices for drug safety surveillance activities for drugs newly approved under this section or section 351 of the [PHSA]." This provision also amends FFDCA Section 505-1(f)(5)(A), expanding the authority to evaluate the ETASU for a drug to include "or other advisory committee," compared with current law, which designates this responsibility to the HHS Secretary "through the Drug Safety and Risk Management Advisory Committee (or successor committee)" of the FDA. This provision also amends FFDCA Section 505-1(f)(5)(B) to change the requirement that the committee evaluate the ETASU for one or more drugs from "annually" to "periodically." FFDCA Section 770, as added by FDAAA ( P.L. 110-85 ), created the Reagan-Udall Foundation for the Food and Drug Administration, a nonprofit organization "to advance the mission" of FDA. Its duties cover activities such as identifying and then prioritizing unmet needs; awarding grants or entering into other agreements with scientists, academic consortia, public-private partnerships, nonprofit organizations, and industry; holding meetings and publishing information and data for use by FDA and others; and taking action to obtain patents and licensing of inventions, among others. It is led by a Board of Directors, four of whom are ex officio members, as well as 14 members who are appointed to the Board by the ex officio members, including nine from candidates provided by the National Academy of Sciences, and five from candidates provided by "patient and consumer advocacy groups, professional scientific and medical societies, and trade organizations." Section 770 specifies that of the 14 appointed members, four must be representatives of the "general pharmaceutical, device, food, cosmetic, and biotechnology industries;" three must be representatives of academic research organizations; two must be representatives of patient or consumer advocacy organizations; one must be a representative of health care providers; and four must be "at-large members with expertise or experience relevant to the purpose of the Foundation." Section 3077 amends FFDCA Section 770 to change the membership of the Board of Directors to allow the voting members of the board to increase the size of the board and appoint new members by majority vote, without regard to the balance of expertise and affiliation required by current law. It limits to 30% of the membership "representatives of the general pharmaceutical, device, food, cosmetic, and biotechnology industries." The obligation to ensure specific expertise among the members is broadened to rest with all members of the board, not only ex officio appointees. As with the current law, each board member's term of office would last for four years, and initially appointed board members' terms would expire on a staggered basis, as determined by the ex officio members. This provision adds that for the additional board members appointed pursuant to the 21 st Century Cures Act, the terms of office for the initially appointed persons may expire on a staggered basis, as determined by the members of the board. The provision removes the salary cap of the foundation's Executive Director, which is now set at the compensation of the Commissioner. It also amends the language regarding separation of funds. The current requirement is that funds received from the Treasury be held in separate accounts from funds received from other sources, including private entities. The provision changes the requirement, so that funds received from the Treasury are "managed as individual programmatic funds, according to best accounting practices." Following the terrorist attacks of 2001, the federal government determined that it needed additional medical countermeasures (such as diagnostic tests, drugs, vaccines, and other treatments) to respond to an attack using chemical, biological, radiological, or nuclear (CBRN) agents. The Project BioShield Act ( P.L. 108-276 ), the Pandemic and All-Hazards Preparedness Act (PAHPA, P.L. 109-417 ), and the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (PAHPRA, P.L. 113-5 ) established new authorities and programs in the Department of Health and Human Services (HHS) to support the development and procurement of new CBRN medical countermeasures. The Health and Human Services Assistant Secretary for Preparedness and Response (ASPR) coordinates the government-wide effort to develop and procure medical countermeasures. The ASPR is required to provide Congress an annual coordinated 5-year budget plan that includes countermeasure activities outside the ASPR's office such as basic research at National Institutes of Health and stockpiling in the Strategic National Stockpile at the Centers for Disease Control and Prevention. As part of the ASPR Office, the Biomedical Advanced Research and Development Authority (BARDA) supports advanced research and development of CBRN countermeasures through contracts and public-private partnerships. The BARDA also implements Project BioShield, a special process and funding mechanism that allows for the use of specifically appropriated funds to procure countermeasures that still need up to 10 more years of development. The Cures Act places additional requirements on and provides additional authorities for ASPR and BARDA. It also modifies the process for Project BioShield procurements. Section 3081 requires the HHS Secretary to provide "timely and accurate recommended utilization" guidelines for medical countermeasures in the Strategic National Stockpile. Additionally, it amends the requirement for the HHS Secretary to report to Congress when the amount available for Project BioShield procurements falls below $1.5 billion. This section specifies the recipients of the report as the Senate Committee on Health, Education, Labor, and Pensions, the Senate Committee on Appropriations, the House Committee on Energy and Commerce, and the House Committee on Appropriations. This report is now required by "March 1 of each year in which" the amount available drops below $1.5 billion rather than the previously required deadline of within 30 days of its occurrence. Section 3082 moves contracting authority for Project BioShield and BARDA advanced research and development from the ASPR to the BARDA Director. This move was recommended by the Blue Ribbon Panel on Biodefense to "reduce unnecessary bureaucratic delays, improve efficiency and decision making, and enhance BARDA program effectiveness and accountability." Section 3083 requires ASPR to provide additional information in its annual "coordinated 5-year budget plan" and requires that it be made publicly available in "a manner that does not compromise national security." This section also adds the requirement that the budget plan also consider the development of countermeasures and products for emerging infectious diseases that may present "a threat to the nation." Section 3084 allows the HHS Secretary to partner with "an independent, non-profit entity" to "foster and accelerate the development of medical countermeasures; ... promote the development of new and promising [countermeasure] technologies; ... [and] address unmet public health needs ... such as novel antimicrobials for multidrug resistant organisms and multiuse platform technologies for diagnostics, prophylaxis, vaccines, and therapeutics." This partner may provide business advice and use venture capital practices to invest in companies developing medical countermeasures. The U.S. intelligence community has successfully used a similar strategic investor model to address its unmet technology needs through In-Q-Tel. This section establishes certain criteria for the partner, including prior experience in technology innovation and successful partnering with the federal government. The HHS Secretary acting through the BARDA Director is to provide the entity with the government needs and requirements and a description of the work to be done under the agreement. The entity is required to provide regular reports on the spending of funds provided by HHS and on progress meeting the identified needs. The Comptroller General is to evaluate this partnership no later than four years after enactment. This authority sunsets on September 30, 2022. Section 3085 removes the requirement that the President approve each specific use of Project BioShield appropriations. The Blue Ribbon Study Panel on Biodefense recommended this change to streamline the Project BioShield contracting process. This section also specifies the congressional committees that HHS must notify following a decision to use Project BioShield funds as the Senate Committee on Health, Education, Labor, and Pensions, the House Committee on Energy and Commerce, and the Appropriation Committee in each chamber. Under the Prescription Drug User Fee Act of 1992 (PDUFA), FDA agreed to specific goals for improving the drug review time and created a two-tiered system of review times: Standard Review and Priority Review. Compared with the amount of time standard review generally takes (approximately 10 months), a Priority Review designation means FDA's goal is to take action on an application within 6 months. An application for a drug may receive priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness, or if it is the subject of a priority review voucher. Currently, FDA has two authorized priority review voucher programs (the rare pediatric disease priority review program and the tropical disease priority review program), funded by user fees, which provide a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product to be used for the priority review of another application. The purpose of the priority review drug voucher programs is to incentivize development of new treatment for diseases that may otherwise not attract development interest from companies due to either cost or lack of market opportunities. Section 3086 adds new FFDCA Section 565A, "Priority Review to Encourage Treatments for Agents that Present National Security Threats," establishing a new priority review voucher program, funded by user fees, to provide a transferable voucher, under specified conditions, to a sponsor of an approved new human drug product application for a material threat medical countermeasure to be used for the priority review of another application. This section defines a "material threat medical countermeasure application" as, among other things, a human drug application "to prevent, or treat harm from a biological, chemical, radiological, or nuclear agent identified as a material threat" under the Public Health Service Act, or "to mitigate, prevent, or treat harm from a condition that may result in adverse health consequences or death and may be caused by administering a drug, or biological product against such agent." The HHS Secretary's authority to award such voucher is set to sunset on October 1, 2023. PHSA Section 319 authorizes the HHS Secretary to determine the existence of a public health emergency, which in turn authorizes certain further actions to enhance response flexibility, such as waivers of requirements for grant-making and hiring. The Paperwork Reduction Act (PRA) ensures that federal agencies do not overburden the public with federally sponsored data collections. Among other things, the PRA requires review and preclearance of federal data collection proposals by OMB. Such preclearance and other requirements could slow the collection of information needed to prepare for and respond to public health emergencies. Section 3087 would add a provision to PHSA Section 319 to waive requirements for voluntary data collection under the Paperwork Reduction Act (PRA) if the HHS Secretary determines (1) that the conditions of a public health emergency under PHSA Section 319 are met or there is a significant likelihood that such conditions will arise, and (2) that applicable preparedness and response activities would necessitate a waiver of PRA requirements. A waiver becomes effective when the HHS Secretary posts a notice of such waiver on the HHS website. Its termination must be similarly posted. The duration of a waiver is a matter of Secretarial discretion in order to facilitate reasonable preparedness, response, and post-response activities. Under normal circumstances, drugs, devices, and biologics may be introduced into interstate commerce only if they have been approved, cleared, or licensed, respectively, by the FDA. But if the Secretary of HHS declares, pursuant to FFDCA Section 564, that an emergency exists due to a specified biological, chemical, radiological, or nuclear agent (which may include a naturally occurring disease outbreak), the HHS Secretary may temporarily authorize the use of unapproved products, or unapproved uses of approved products, for response to the emergency. This authorization is referred to as an Emergency Use Authorization (EUA). This authority did not previously extend to drugs approved for use in animals. Section 3088 provides a set of amendments that make EUA provisions applicable to animal drugs by referencing FFDCA Sections 504 (regarding animal drugs used in feeds), 512 (regarding requirements for approval of new animal drugs), and 517 (regarding animal drugs for minor animal species or minor uses). A vaccine may be both a commercial product and a public good, and Congress has established several federal payment mechanisms, health insurance coverage requirements, and other incentives to support the production and use of vaccines in the United States. Some of these incentives are tied to recommendations of CDC and/or its Advisory Committee on Immunization Practices (ACIP). The ACIP is a group of medical and public health experts that develop recommendations on use of vaccines in the civilian U.S. population. In contrast to FDA, which licenses vaccines when they are shown to be safe and effective for individuals, ACIP and CDC also consider epidemiology and vaccine availability, and may recommend routine use of a vaccine for only a subset of the population for whom FDA has licensed its use. Vaccine manufacturers have an interest in understanding the factors considered by ACIP and CDC, as well as FDA, in making vaccine use and licensing decisions. The ACIP is not explicitly authorized in the PHSA or elsewhere in federal law. Its authority is based in general authority of the HHS Secretary to establish advisory committees. However, the ACIP has been given explicit statutory roles under the PHSA and the Social Security Act (SSA). The ACIP's actions pursuant to these roles affect reimbursement for immunizations, and thereby affect the market for vaccine products. These roles are as follows: PHSA Section 2713 requires most private health insurance plans, unless grandfathered, to cover, without cost-sharing, immunizations recommended by the ACIP. Pursuant to regulations, this requirement is effective for a vaccine if and when an ACIP recommendation for use of that vaccine has been adopted by CDC and published on CDC's Immunization Schedules. SSA Section 1928 establishes the Vaccines for Children (VFC) program, which provides federally purchased vaccines free of charge to eligible children. VFC vaccines are those for which the ACIP has issued a recommendation for use in children. In 1986, in order to stabilize the pediatric vaccine market, Congress waived the liability of manufacturers (in most cases) and established the National Vaccine Injury Compensation Program (VICP) to compensate persons injured by certain vaccines. Initially the list of covered vaccine types and associated compensable injuries and time frames (called the "Injury Table") was provided in law. Prior to the enactment of the Cures Act, the HHS Secretary could, through rulemaking, create or modify compensable injuries and time frames for vaccines on the Injury Table, but could not add additional vaccine types. An exception existed for new vaccines that were recommended by CDC for routine use in children, which were automatically included in the Injury Table. In 2013, the Advisory Commission on Childhood Vaccines (ACCV), which advises on the VICP, informed the HHS Secretary that the VICP authority could discourage the growing use of vaccines for pregnant women, as the law did not allow for addition of such vaccines to the Injury Table unless they were also recommended for routine use in children, and did not clearly cover injury to an infant born to a woman who was vaccinated during pregnancy. Section 3091 requires the ACIP to consider the use of any vaccine newly licensed or licensed for a new indication by FDA at the committee's next regularly scheduled meeting. If ACIP does not issue recommendations regarding such vaccine at such meeting, it must provide an update on the status of its review. The section also requires the ACIP to make recommendation in a timely manner regarding (1) a vaccine designated by FDA as a breakthrough therapy to treat a serious or life-threatening disease or condition (pursuant to FFDCA Section 506), or (2) a vaccine that could be used in a public health emergency. Section 3092 requires the CDC Director to review, as specified, ACIP processes and consistency in issuing recommendations, and to publish a report on such review not later than 18 months after enactment, including recommendations to improve the consistency of ACIP's processes. Section 3093 requires the CDC Director to ensure that the agency's infectious disease centers and divisions coordinate their immunization program and policy efforts, including through consultation with stakeholders. The section also requires the HHS Secretary, within one year of enactment, to publish and provide to Congress a report on ways to promote innovation in the development of vaccines against infectious diseases, including the processes to determine priority needs, and on obstacles (and proposed remedies) to vaccine innovation. The HHS Secretary may consult with specified stakeholders, including vaccine developers, in producing this report. Section 3093 also amends PHSA Sections 2111 and 2114 (which authorize the VICP petition process and vaccine injury table) to require the HHS Secretary to incorporate into the table of covered vaccines any vaccine recommended by CDC for routine use in pregnant women. It clarifies that both the woman and a child or children in utero when the vaccine was administered are eligible for compensation. Sections 4001 through 4008 of Title IV address the federal policies to promote the adoption and use of EHR technology. They are based on the provisions in S. 2511 , the Improving Health Information Technology Act, which was reported by the Senate HELP Committee on April 5, 2016. These eight sections are discussed below. The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 authorized Medicare and Medicaid incentive payments to acute-care hospitals and physicians who attest to being meaningful users of certified electronic health record (EHR) technology. The law instructed the HHS Secretary to make the measures of "meaningful use" more stringent over time, which CMS has done in stages. Stage 1 of meaningful use requires eligible hospitals and physicians to use EHR technology to meet a series of meaningful use objectives that generally involve capturing and storing structured patient data (e.g., vital signs, medications, lab test results). Providers must use EHR technology that has been tested and certified as having the capability to perform these functions. Testing and certification entities are authorized by the HHS Office of the National Coordinator for Health Information Technology (ONC). Stage 2 of meaningful use requires eligible hospitals and physicians to use their EHR technology to perform more advanced functions, such as giving patients access to their electronic health information and exchanging patient data during transitions of care (e.g., a hospital discharge to a rehabilitation facility, or a physician referral). Beginning in 2015, hospitals and physicians that are not meaningful EHR users are subject to a Medicare payment adjustment (i.e., penalty) unless they qualify for a hardship exception. CMS published a final rule in October 2015 modifying the meaningful use Stage 2 objectives and establishing the objectives for Stage 3, which hospitals and physicians must meet by 2018. The agency made significant changes to the meaningful use program in response to the concerns of health care providers about the challenges and burdens they face in making EHR technology work. For example, CMS eliminated several clinical documentation objectives, and instead focused on a few objectives that capture more advanced uses of the technology (e.g., CDS, health information exchange). CMS also published an accompanying final rule (the 2015 Edition final rule) that expands the certification program. In addition to certifying the next generation of EHR technology that hospitals and physicians need to achieve meaningful use Stage 3, the program will be able to certify health information technology (HIT) products with a different combination of capabilities and functionalities that meet the needs of other types of health care providers and settings that are not eligible to participate in the EHR incentive program. The 2015 Edition final rule for the certification program established new transparency requirements for HIT developers. It also seeks to improve interoperability, for example, by requiring certified HIT products to adopt new and updated vocabulary and content standards for structured health information, including a common clinical data set composed of standardized data elements, and by improving the testing of the ability of HIT systems to transmit, receive, and use standardized clinical documents. ONC released a national interoperability roadmap in October 2015—developed over an 18-month period with input from numerous stakeholders—to coordinate efforts around achieving HIT interoperability. The roadmap establishes interoperability goals for the next 10 years, with 2017 set as the deadline for individuals and health care providers along the care continuum to be able to send, receive, find, and use core clinical data. ONC expects the roadmap to evolve in partnership with the public and private sectors as technology and policy dictate. The roadmap discusses the payment and regulatory drivers for promoting interoperability, as well as the central policy and technical components of a fully interoperable nationwide health information infrastructure. A key challenge is overcoming legal and governance barriers to trusted information exchange by getting stakeholders to agree to and follow a common set of standards, services, policies, and practices that facilitate exchange and use of electronic health information without limiting competition. Medicare Access and CHIP Reauthorization Act of 2015 (MACR A) MACRA declared it a national objective to achieve widespread interoperability of certified EHR technology by the end of 2018. The law defines interoperability as the ability of health information systems to not only exchange clinical information but to also use the information based on common standards in order to improve care and patient outcomes. In addition, MACRA instructed the HHS Secretary, within one year of enactment, to submit a report to Congress on ways to help health care providers compare and select certified EHR technology, such as through surveying EHR users and vendors and making such information publicly available. Finally, MACRA required the HHS Secretary, in consultation with stakeholders, to establish interoperability metrics to measure progress toward achieving the national objective of widespread interoperability of certified EHR technology by July 1, 2016. If that objective is not met by December 31, 2018, the HHS Secretary will have until December 31, 2019, to submit a report to Congress identifying the barriers to widespread interoperability and providing recommendations for achieving it. Information Blocking ONC released a report to Congress on health information blocking in April 2015. The report defined information blocking as knowingly and unreasonably interfering with the exchange or use of electronic health information, and examined the nature and extent of the practice based on available evidence. It also detailed the actions that ONC is taking, in coordination with other federal agencies, to address information blocking. Finally, the report identified gaps in authority that limit the ability of ONC and other federal agencies to effectively target, deter, and remedy such conduct. MACRA requires eligible hospitals and physicians, beginning April 2016, to indicate through meaningful use attestation (or some other process specified by the HHS Secretary) that they have not knowingly and willfully taken any action to limit or restrict the interoperability of their certified EHR technology. Patient Access The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule gives individuals the right of access to inspect, obtain a copy of, and transmit to a third party a copy of their health information. One of the meaningful use objectives that must be met by hospitals and physicians using certified EHR technology is to provide individuals with the ability to view, download, and transmit (VDT) their electronic health information. As part of meeting that objective, the 2015 Edition final rule for the certification program requires EHR developers to publish application programming interfaces (APIs); that is, programming instructions to enable other software application developers to produce apps giving individuals access to their clinical data. Patient Matching ONC released a report on patient identification and matching (i.e., linking patient records with the correct individual) in February 2014. It recommended standardizing patient attributes for the purpose of information exchange, coordinating activities among organizations, and introducing EHR certification criteria for capturing patient identification standards. Patient matching was addressed in the 2015 Edition final rule for the HIT certification program. Certified EHR systems must be able to create a summary-of-care document that includes the following standardized patient data: first name; last name; previous name; middle name (including middle initial); suffix; date of birth (year, month, and day are required fields; hours and minutes are optional); address; phone numbers (home, business, cell); and sex. Section 4001 ("Assisting Doctors and Hospitals in Improving Quality of Care for Patients") requires the HHS Secretary to develop, within one year of enactment, a strategy and recommendations for reducing the regulatory and administrative burdens of using EHR technology. In addition, it eases EHR documentation requirements by allowing physicians, as consistent with state law, to delegate electronic medical record documentation to non-physicians, provided certain criteria are met. It requires ONC to encourage the voluntary certification of HIT for use in medical specialties and sites of service, and to adopt certification criteria for HIT used by pediatricians. It also requires the HHS Secretary to submit to the HIT Advisory Committee of the ONC, within six months of enactment, a report on meaningful use statistics, as specified. Section 4002 ("Transparent Reporting on Usability, Security, and Functionality") amends PHSA Section 3001(c)(5) to require the HHS Secretary, within one year of enactment, to issue a rule that requires HIT developers, as a condition of certification, (1) to provide assurances that they will not engage in information blocking; (2) not to prohibit or restrict communication regarding the usability, security, or functionality of their HIT product; and (3) publish application programming interfaces, among other things. Section 4002 also establishes Medicare EHR payment adjustment hardship exceptions for hospitals and physicians whose EHR technology has been decertified, and for physicians eligible for merit-based incentive payments (MIPS). Finally, this section adds a new PHSA Section 3009A, which establishes an EHR reporting program to help providers choose EHR products. It instructs the HHS Secretary to convene stakeholders to develop reporting criteria that reflect EHR product usability, interoperability, and security, and requires EHR developers—as a condition of maintaining certification—to submit reports based on those criteria for each of their certified products. This section authorizes to be appropriated $15 million in total for the purposes of carrying out the information blocking and Medicare EHR payment provisions. Section 4003 ("Interoperability") amends PHSA Section 3000(c) to require ONC, in collaboration with other federal entities, to convene stakeholders to develop and publish on its website a trusted exchange framework and a common agreement among existing health information networks to exchange electronic health information, as steps in achieving an interoperable nationwide health information network. It also requires the HHS Secretary to establish a digital contact directory for health care professionals, practices, and facilities. Finally, Section 4003 eliminates the existing HIT Policy Committee and HIT Standards Committee and adds a new PHSA Section 3002 to replace them with a single new committee—the HIT Advisory Committee—which assumes their responsibilities and duties, and is required to produce annual progress reports on advancing interoperability nationwide, as specified. Section 4004 ("Information Blocking") defines the practice of information blocking; directs the HHS Secretary to identify via rulemaking reasonable and necessary activities that do not constitute information blocking; and authorizes the HHS Office of Inspector General (OIG) to investigate and penalize information-blocking practices by HIT developers, health information exchanges and networks, and health care providers. It establishes civil monetary penalties for developers, exchanges, and networks that engage in information blocking, and requires the OIG to refer to the appropriate agency health care providers who engage in information blocking to be subject to appropriate disincentives under federal law. OIG is authorized to refer instances of information blocking to the HHS Office for Civil Rights (OCR) if a HIPAA privacy consultation would resolve the matter. Section 4004 also requires ONC, in consultation with OCR, to issue guidance on common legal, governance, and security barriers that prevent the trusted exchange of electronic health information. It authorizes ONC to share information about information blocking investigations with the Federal Trade Commission. Finally, it requires ONC to implement a process for the public to report instances of information blocking or problems with interoperability. Section 4005 ("Leveraging Electronic Health Records to Improve Patient Care") requires certified HIT to be able to transmit data to and receive data from clinical data registries, as defined. It also extends federal privilege and confidentiality protections to HIT developers who report and analyze patient safety information related to HIT use. Section 4006 ("Empowering Patients and Improving Patient Access to Their Electronic Health Records") amends PHSA Section 3009 to facilitate patient access to their electronic health information by requiring the HHS Secretary to encourage partnerships between health information networks, health care providers, and other stakeholders to offer access through secure, user-friendly software. This section also requires the HHS Secretary, in coordination with OCR, to educate providers on using exchanges to provide patient access, and to issue guidance to exchanges on best practices for providing patient access. It requires ONC and OCR to develop policies that support dynamic technology solutions for promoting patient access, and to help educate individuals and providers on patients' rights under HIPAA. Finally, ONC may require that HIT standards and certification support patients' access to their electronic health information. Section 4007 ("GAO Study on Patient Matching") requires that GAO conduct a study, within one year of enactment, to review the policies and activities of ONC and other relevant stakeholders, and to make recommendations regarding patient matching, the effectiveness of such efforts, and performance related to additional factors, such as privacy and security of patient information. GAO must report its findings to Congress within two years of enactment. Section 4008 ("GAO Study on Patient Access to Health Information") requires GAO to study patients' access to their own health information, including barriers to access (such as fees and formats), complications that health care providers experience when providing access, and methods patients may use for requesting their personal health information. GAO must report its findings to Congress within 18 months of enactment. CMS administers the Medicare program through contracts with private entities, such as Medicare Administrative Contractors (MACs). MACs assist CMS in administering Medicare's day-to-day operations, such as paying fee-for-service (FFS) claims, enrolling providers, coordinating provider customer service, and other activities. MACs also conduct program integrity activities, including prepayment and post-payment claims review, provider audits, and overpayment recoupment. In addition, MACs develop and implement local coverage determinations (LCD) for their jurisdictions. Medicare covers a broad range of medical treatments, services, and equipment needed by beneficiaries, but there are limitations to Medicare's coverage. To be covered by Medicare, items or services must be considered reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the functioning of a body part. Medicare law defines categories of services and items that Medicare routinely covers, but the law does not specify which services or under what conditions these items and services are covered. Under the reasonable and necessary provision, the HHS Secretary has discretion to determine what specific items and services will be covered and under what conditions. The HHS Secretary has authority to make Medicare coverage policy decisions both nationally and locally. LCDs are MAC decisions on whether, and under what circumstances, to cover a particular item or service on a contractor-wide basis. National coverage decisions (NCDs) are made by CMS to describe the circumstances under which Medicare will cover an item or service on a nationwide basis. The vast majority of coverage policy is determined on a local level by MACs. MACs initiate LCDs and may develop them in the absence of relevant NCDs or as a supplement to an NCD, as long as the LCD policy does not conflict with national Medicare policy. CMS's Medicare Program Integrity Manual (Chapter 13, Local Coverage Determinations) instructs MACs on LCD development. The process includes several mechanisms for local stakeholder input, including notice and comment periods for new LCDs and state-based physician advisory committees, referred to as Carrier Advisory Committees (CACs), to provide formal LCD input. In developing LCDs, MACs use medical literature, the advice of local medical societies and medical consultants, public comments, and comments from the provider community in the MAC's jurisdiction. MACs are responsible for ensuring that LCDs are consistent with all statutes, rulings, regulations, and national coverage decisions. Section 4009 requires the HHS Secretary to require MACs to display on their websites and on the Medicare website, at least 45 days prior to the effective date, the following information for each LCD developed by a MAC for its jurisdiction: the entire proposed LCD; where and when the proposed LCD was first made public; hyperlinks to the proposed LCD and responses to comments submitted to the MAC on the proposed LCD; a summary of evidence considered by the contractor during the LCD development, as well as a list of sources of evidence; and an explanation of the rationale in support of the proposed LCD. Section 4009 is effective for LCDs proposed or revised 180 days after the enactment date. Prior to the passage of the Cures Act, the HHS Secretary was not required to offer ombudsman services to entities that manufacture pharmaceutical, biotechnology, medical device, or diagnostic products for which these entities are seeking Medicare coverage. Medicare law requires the HHS Secretary to conduct a satisfaction survey at least every five years of beneficiaries, as well as providers and suppliers who submitted appeals (SSA Section 1869(e)) and to submit a report to Congress on the results of the survey. In addition, SSA Section 1808(c) requires the HHS Secretary to appoint a Medicare Beneficiary Ombudsman. The Medicare Beneficiary Ombudsman was created to identify and address systemic issues that affect Medicare beneficiaries, but the Medicare Beneficiary Ombudsman did not help pharmaceutical, biotechnology, medical device, or diagnostic product manufacturers resolve complaints, grievances, or requests about Medicare coverage. The Medicare Beneficiary Ombudsman is prohibited from serving "as an advocate for any increases in payments or new coverage of services," but may "identify issues and problems in payment or coverage policies." Section 4010 requires the HHS Secretary to provide within 12 months of enactment a pharmacy and technology ombudsman within CMS. The pharmacy and technology ombudsman is required to receive and respond to complaints, grievances, and requests (regarding coverage, coding, or payment) from pharmaceutical, biotechnology, medical device, or diagnostic product manufacturers whose products are covered by Medicare or for which coverage was sought. The pharmaceutical and technology ombudsman is subject to the same prohibition on advocacy and authority to identify issues as the Medicare Beneficiary Ombudsman. Some Medicare-covered items and services can be provided either in a physician's office, in a hospital outpatient department, or in a freestanding or hospital-operated ambulatory surgical center (ASC); the payments would be determined by the Medicare physician fee schedule (MPFS), the Medicare hospital outpatient prospective payment system (OPPS) fee schedule, or the Medicare ASC payment system, respectively. The Medicare Payment Advisory Commission (MedPAC) has recommended (including its March and June 2013 reports to Congress) that Medicare implement "site-neutral" policies, for instance, those that would equalize outpatient payment rates at hospitals with those of free-standing physician offices. Section 4011 would establish new requirements "to facilitate price transparency with respect to items and services for which payment may be made either to a hospital outpatient department or to an ambulatory surgery center." Beginning in 2018 and in each year thereafter, the HHS Secretary will make information available to the public via a searchable website on (1) the estimated Medicare payment amounts for the items and services provided under both the hospital OPPS fee schedule and the ASC payment system, and (2) the estimated amount of beneficiary liability for each item or service. The estimated amount of beneficiary liability would be calculated based on the amount for which an individual who does not have any Medicare supplemental coverage is responsible. The HHS Secretary would include notice of the availability of such information in the annual explanation of Medicare benefits sent to all beneficiaries. The HHS Secretary could also use existing mechanisms, such as the CMS Physician Compare website, to make this information available to beneficiaries. To implement this subsection, the HHS Secretary would transfer $6 million from the Supplemental Medical Insurance Trust Fund to the CMS Program Management Account for FY2017; these funds would remain available until expended. Telehealth is the use of electronic information and telecommunications technologies to support remote clinical health care, patient and professional health-related education, and other health care delivery functions. Medicare Part A does not cover services furnished through telehealth. Medicare Part B does cover "telehealth services," which are defined under Social Security Act Section 1834(m)(4)(F) as a set of service codes corresponding to various primary care and psychiatric visits furnished by physicians and other practitioners. With some exceptions, Part B telehealth services must be provided through live videoconferencing. Under Medicare Part B telehealth, the facility where the beneficiary is located is referred to as the "originating site," and the site where the practitioner is located is referred to as the "distant site." CMS makes a payment to the physician or other practitioner at the distant site for rendering the telehealth service, and it pays a separate facility fee to the originating site. Under Social Security Act Section 1834(m)(4)(C), only certain categories of providers and suppliers may serve as telehealth originating sites. Further, within those categories, only providers or suppliers that are located in a documented health professional shortage area or in a county that is not included in a Metropolitan Statistical Area, or are participating in federal telemedicine demonstration projects, are eligible to be originating sites. Section 4012 requires CMS and the Medicare Payment Advisory Commission (MedPAC) to conduct evaluations and submit information to Congress concerning telehealth. CMS is required, no later than one year after the date of enactment of the provision, to provide information on (1) subpopulations of Medicare beneficiaries whose care would be most improved by the expansion of telehealth services; (2) activities by the CMS Center for Medicare and Medicaid Innovation (CMMI) that examine the use of telehealth; (3) the types of high-volume Medicare services that might be suitable for telehealth reimbursement; and (4) barriers that might prevent the expansion of telehealth services under Part B. MedPAC is required, no later than March 15, 2018, to provide information identifying (1) the telehealth services that are reimbursable under Medicare Parts A and B under current law; (2) telehealth services that currently are reimbursable by private health insurance plans; and (3) potential ways to incorporate into Medicare Parts A and B telehealth services that are not paid for under those programs but are paid for by private health insurance plans. Section 4012 also expresses the sense of Congress that eligible telehealth "originating sites" should be expanded. Section 4012 provides that any expansion of telehealth services in Medicare should recognize that telemedicine is the delivery of safe, effective, quality health care services by a health care provider, using technology as the mode of care delivery; should meet or exceed the applicable conditions for Medicare coverage and payment if the same service were provided in person; and should involve clinically appropriate means for delivering services. The Medicare Improvements for Patient and Providers Act ( P.L. 110-275 ) established Social Security Act Section 1898, which makes funds available to the HHS Secretary "to make improvements under the original Medicare fee-for-service program under parts A and B … including adjustments to payments for items and services furnished by providers of services and suppliers under such original Medicare fee-for-service program." Many subsequent laws have modified the amount in the fund, but to date none of the monies have been expended. Most recently, the Comprehensive Addiction and Recovery Act of 2016 ( P.L. 114-198 ) modified Section 1898 to make $140 million available "during and after 2021." Section 5001 would change the amount available in the fund from $140 million to $270 million. States generally are free to set payment rates for items and services provided under Medicaid as they see fit, subject to certain exceptions and a general requirement that payment policies are consistent with efficiency, economy, and quality of care and are sufficient to provide access equivalent to the general population's access. However, there are federal upper payment limits on fee-for-service reimbursement of certain Medicaid providers. Federal upper payment limit regulations specify that states cannot pay more in the aggregate for certain types of services than the amount that would be paid for the services under the Medicare principles of reimbursement; the Medicare principles of reimbursement are based on methodologies that apply to regions and certain metropolitan areas, and may result in different payment amounts in different states. The Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) applies an upper payment limit to durable medical equipment (DME) under Medicaid for items and services furnished on or after January 1, 2019. Section 5002 requires the federal upper payment limit on DME be implemented one year earlier – for items and services furnished on or after January 1, 2018. Social Security Act Title XI identifies Medicare- and Medicaid-related anti-fraud provisions, which include penalties and exclusions on individuals and other entities that engage in certain types of federal health program misconduct (federal health programs include Medicare and Medicaid, as well as other programs that provide health benefits or insurance funded by the federal government). Under Social Security Act Section 1128A, the HHS OIG is authorized to impose civil monetary penalties (CMPs) and assessments on individuals, organizations, agencies, or other entities, that engage in improper conduct related to federal health care programs, including penalties for knowingly presenting or causing to be presented to a federal or state employee or agent false or fraudulent claims (beneficiaries are not subject to civil penalties under Social Security Act Section 1128A). For example, penalties may apply to services that were not provided as claimed, or claims that were part of a pattern of providing items or services that a person knows or should know are not medically necessary. In addition, certain payments made to physicians to reduce or limit services are also prohibited. Social Security Act Section 1128A provides for monetary penalties of up to $10,000 for each item or service claimed, up to $50,000 under certain additional circumstances, as well as treble damages. Social Security Act 1128, exclusion from federal health programs is mandatory under certain circumstances, and permissive in others. Exclusions are mandatory for those convicted of certain offenses, including (1) a criminal offense related to the delivery of an item or service under Medicare, Medicaid, or a state health care program; (2) a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service; and (3) a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The HHS OIG has permissive authority to exclude entities or individuals from federal health programs under a number of circumstances such as: convictions for certain fraud misdemeanors, theft, embezzlement, breach of fiduciary duty, or other financial misconduct; convictions for interference or obstruction of criminal investigations; and revocation or suspension of a health care practitioner's license for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity. Section 5003 amends Section 1128A of the Social Security Act by adding new subsections (o), (p), (q), (r), and (s). Under Section 5003 any person (including organizations, agencies, or other entities, but excluding beneficiaries) who commits improper conduct related to grants, contracts, or other agreements funded by HHS is subject to CMPs as follows: Knowingly presents or causes to be presented a specified claim that the individual knows or should know was false is subject, in addition to other penalties prescribed by law, to CMPs of up to $10,000 for each specified claim. In addition, individuals determined to have presented these specified claims is subject to assessments of up to three times the amount of the specified claim in lieu of damages sustained by the United States or a specified state agency. Knowingly makes, uses or causes to be made or used a false statement, omission, or misrepresentation of a material fact in an application, proposal, bid, progress report, or other document required to receive or retain funding for HHS-funded grants, contracts, or other agreements is subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false statement, omission, or misrepresentation of material fact. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are also subject to assessments of up to three times the total amount of the funds or property obligated to the HHS Secretary in lieu of damages sustained by the United States or a specified state agency; Knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent specified claim under an HHS-funded grant, contract, or other agreement is subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false record or statement. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are subject to assessments of up to three times the amount of the specified claim in lieu of damages sustained by the United States or a specified state agency. Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit funds or property to the HHS Secretary or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit funds or property related to an HHS-funded grant, contract, or other agreement are subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false record or statement or $10,000 for each day that the individual knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are subject to assessments of up to three times the total amount of the funds or property obligated to the HHS Secretary in lieu of damages sustained by the United States or a specified state agency). Fails to grant timely access, upon reasonable request (as defined in regulations issued by the HHS Secretary), to the HHS OIG for conducting audits, investigations, evaluations, or other statutory functions related to grants, contracts, and other agreements with HHS is subject, in addition to other penalties prescribed by law, to CMPs of up to $15,000 for each day of the failure to grant timely access. In addition to CMPs, Section 5003 authorizes the HHS Secretary to exclude individuals who knowingly commit improper conduct related to HHS-funded grants, contracts, and other agreements from participation in federal health care programs and to direct appropriate state agencies also to exclude these individuals from participation in any state health programs. The Social Security Act Sections 1128A(c), (d), (g) and (h) apply to Section 5003 CMPs or assessments as they do to penalties, assessments or proceedings under Social Security Act Section 1128A(a). Section 5003 also specifies that in applying the Social Security Act Section 1128A(d), references to claims under Social Security Act Section 1128A(d) are treated as a reference to claims as defined in Section 5003. Section 5003 defines the following terms applicable to Social Security Act Section 1128A(o) and (p): Department means the Department of Health and Human Services (HHS). Material means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property. Other agreement includes a cooperative agreement, scholarship, fellowship, loan, subsidy, payment for a specified use, donation agreement, award, or sub-award (regardless of whether one or more of the persons entering into the agreement was a contractor or subcontractor). Program beneficiary means, in the case of grant, contract, or other agreement designed to accomplish the objective of awarding or otherwise furnishing benefits or assistance to individuals and for which the HHS Secretary provides funding, an individual who applies for, or who receives, such benefits or assistance from a grant, contract, or agreement. Program beneficiary does not include, with respect to a grant, contract, or other agreement, an officer, employee, or agent of an individual or entity that receives an HHS-funded grant or enters into a contract or other agreement. Recipient includes a sub-recipient or subcontractor. Specified state agency means an agency of state government established or designated to administer or supervise the administration of a grant, contract, or other agreement funded in whole or in part by the HHS Secretary. Under Section 5003, a specified claim under Social Security Act Section 1128A means any application, request, or demand under a grant, contract, or other agreement for money or property, whether or not the United States or a specified state agency has title to the money or property, that is not a claim [Social Security Act Section 1128A(i)(2), defines a claim as an application for payments for items and services under a federal health care program] and that: (1) is presented or caused to be presented to an officer, employee, or agent of HHS or any agency thereof or any specified state agency; or (2) is made to a contractor, grantee, or any other recipient if the money or property is to be spent or used on HHS's behalf or to advance an HHS program or interest, and if HHS: (A) provides or has provided any portion of the money or property requested or demanded; or (B) will reimburse the contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded. In addition, the term obligation as used in Social Security Act Section 1128A(o) means an established duty, whether fixed or not fixed, arising from an express or implied contractual, grantor-grantee, or licensure-licensee relationship, for a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment. Section 5003 also requires the following conforming amendments be made: by adding "specified claims" to "claims" in Social Security Act Section 1128A(e); and (A) in Social Security Act Section 1128A(f) in the matter before paragraph (1), inserting "or specified claim (as defined in subsection (r)) after "district where the claim"; and inserting "or, with respect to a person described in subsection (o), the person)" after "claimant"; and (B) in the matter following paragraph (4) inserting "(or, in the case of a penalty or assessment under subsection (o), by a specified State agency (as defined in subsection (q)(6))," after "or a State agency". Although most outpatient prescription drugs are covered under Medicare Part D, Medicare covers certain drugs and biologicals under Part B. Biological products are derived from living organisms rather than inorganic chemical compounds. Part B drugs and biologicals include drugs furnished incident to physician services, immunosuppressive drugs following a Medicare-covered organ transplant, erythropoietin for treating individuals with anemia who have end-stage renal disease, certain oral anti-cancer drugs, and drugs administered through DME. Medicare providers and suppliers purchase Part B drugs, and then are paid by Medicare after administering the drugs to beneficiaries. Generally, Medicare reimburses physicians and other providers, such as hospital outpatient clinics, for Part B drugs and biologicals at 106% of the volume weighted average of each drug's average sales price (ASP) billed under the same billing code. Health care providers also are paid separately for the administration of Part B drugs and biologicals to patients. Some Part B drugs and biologicals however, such as blood products, vaccines, and drugs administered through DME are reimbursed differently. Drugs administered through DME, such as infusion pumps, are reimbursed at 95% of the drug's average wholesale price (AWP) in effect on October 1, 2003. A drug or biological's AWP is a commercially published reference price, but not an average paid by purchasers or charged by wholesalers. AWP is considered a manufacturer's suggested wholesale price to retailers and is published in drug pricing compendia. AWP is not defined in statute or regulation. Section 303(b) of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA; P.L. 108-173 ) required the HHS Secretary to establish a competitive acquisition program for certain DME products in specified areas. Under the DME competitive acquisition program as described in the Social Security Act Section 1847, payment for DME items in competitive bidding areas is based on supplier bids, rather than on a Medicare DME fee schedule. Medicare Part B drugs administered through DME are included in DME competitive bidding. The DME competitive acquisition program started in nine metropolitan areas in January 2011 and has since expanded to 100 metropolitan areas. Several HHS OIG reports, such as the February 2013 report, Part B Payments for Drugs Infused through Durable Medical Equipment (OEI-12-12-00310), have shown that under the Medicare Part B drug reimbursement methodology based on AWP the amount Medicare paid DME suppliers for some drugs furnished through DME was substantially greater than what it cost DME suppliers to purchase those drugs. Based on an April 2015 OIG study, Implementing OIG Recommendations Could Have Reduced Payments for DME Infusion Drugs by Hundreds of Millions of Dollars (OEI-12-15-00110), other Part B drugs furnished through DME, such as insulin (administered through an infusion pump), the amount it cost DME suppliers to purchase some drugs was considerably less than what Medicare paid for those drugs drug acquisition costs generally exceeded the Medicare payment rate. Beginning on January 1, 2017, Section 5004 requires Medicare to reimburse DME suppliers for Medicare Part B infusion drugs and biologicals furnished through DME in the same manner as other Medicare Part B drugs; on the basis of 106% of the volume weighted average of the ASPs of drugs included in the same Medicare billing code. Section 5004 excludes Medicare Part B drugs and biologicals furnished through DME from the DME competitive acquisition program. Prior to passage of the Cures Act, state Medicaid programs were required to promptly notify the HHS Secretary (and for physicians, also the state licensing board) when they terminated, suspended, otherwise sanctioned, or prohibited providers (or other individuals) from participating under the state Medicaid plan. In addition, prior to passage of the Cures Act, states were required to terminate individuals or entities from their state Medicaid program when the HHS Secretary or another state Medicaid program terminated participating providers for cause -- fraud, integrity, or quality issues. States also may terminate providers for reasons other than cause such as inactivity, death, and failure to renew their license or revalidate enrollment, but states are not obligated to report non-cause terminations to the HHS Secretary. States also were required to deny claims for items or services provided by terminated individuals or entities for the duration of the termination and the HHS Secretary is required to recover the federal share of claims paid by states (or Medicaid managed care entities) to terminated providers. The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) Section 6401(b)(2) required the CMS Administrator to establish a process to notify all state Medicaid and CHIP programs within 30 days of the effective date of a provider termination by Medicare or any state Medicaid or CHIP program. To address the notification requirement, CMS established an Internet web-based portal which was replaced in 2014 by the "Termination Notification Database." Both the web-based portal and the Termination Notification Database enable states to voluntarily report provider and other entity terminations and also to identify individuals and entities that other state programs terminated. In March 2014 and August 2015 reports, the HHS OIG identified shortcomings with the voluntary termination reporting such as that the state provider termination data included providers terminated for reasons other than cause and the reported data were often insufficient for other states to confidently use to identify terminated providers. Prior to passage of the Cures Act, states were not required to enroll providers employed by Medicaid managed care entities and, potentially, terminate those providers for cause, although states were obligated to inform managed care plans of the requirement to screen all employees and contractors for federal health program exclusions. Managed care entities under contract to state Medicaid programs were required to identify providers in the plan's network, who were terminated or otherwise sanctioned by a state Medicaid agency or Medicare. In addition, state Medicaid programs were required to identify and report to the CMS administrator or the HHS Secretary terminations for cause and other sanctions on Medicaid managed care providers. Beginning on July 1, 2018, Section 5005 requires states to submit information within 30 days of the effective date on participating providers of services or any other person under a Medicaid state plan or a waiver who was terminated. Following the notice to the HHS Secretary that a provider was terminated, states are required to submit to the HHS Secretary the following information, as appropriate, on terminated providers: (1) the terminated provider's name; (2) the type of provider; (3) the provider's practice specialty; (4) the provider's date of birth, Social Security number, national provider identification number, and state license or certification number; (5) the termination reason; (6) a copy of the termination notice; (7) the effective date of the termination; and (8) any other information the HHS Secretary requires. The termination notice effective date is defined as the later of (a) the date on which the termination is effective, as specified on the termination notice, or (b) the date on which all applicable appeal rights have been exhausted or the timeline for appeal has expired. Section 5005 requires the HHS Secretary within 30 days of notification of a provider termination to review the provider termination and, if appropriate, include the termination in Termination Notification Database or similar system that was developed under ACA Section 6401(b)(2). Under Section 5005, by July 1, 2018 states are required to include a provision in Medicaid and CHIP managed care contracts that managed care entities will terminate from their networks any providers of services or individuals terminated from Medicare or any state Medicaid or CHIP program. Beginning on July 1, 2018, Section 5005 requires the HHS Secretary to prohibit payment to states for Medicaid expenditures for terminated fee-for-service (FFS) providers under a Medicaid state plan or waiver. The effective date for the prohibition is 60 days after the date on which terminated providers are added to the termination database or similar system required by ACA Section 6401(b)(2). Beginning on July 1, 2018, Section 5005 requires the HHS Secretary to prohibit payments to states for managed care expenditures incurred by the state for Medicaid state plan services (or waivers) provided by terminated providers. Beginning on July 1, 2018, the HHS Secretary is prohibited from reimbursing states for the federal share of services provided by managed care entities unless the state has a contract with the managed care entity that complies with the Section 5005 requirement for Medicaid managed care contracts to include a provision requiring managed care entities terminate providers from the managed care entity network who were terminated from Medicare or other state Medicaid or CHIP programs. By July 1, 2017, in consultation with state Medicaid directors, the HHS Secretary is required by Section 5005 to issue regulations establishing uniform terminology for describing the reasons providers are terminated from Medicaid or CHIP. By January 1, 2017, Section 5005 requires states to require that Medicaid FFS and managed care entity (by January 1, 2018) providers to enroll with the state by submitting the following identifying information the providers: (1) name, (2) specialty, (3) date of birth, (4) Social Security number, (5) national provider identification number (if applicable), (6) federal taxpayer identification number, and (7) state license or certification number (if applicable). Participating FFS and managed care entity providers include entities that furnish items and services, order, prescribe, refer, or certify Medicaid eligibility for services under a Medicaid state plan or waiver. Section 5005 specifies that certain Medicaid requirements must apply to states under CHIP in the same manner as they apply to state Medicaid programs. More specifically, Section 5005 requires state CHIPs to terminate providers if the providers were terminated by Medicare or other state Medicaid or CHIP programs. By January 1, 2017, Section 5005 requires state CHIPs to require participating FFS providers to enroll by submitting identifying information. In addition, Section 5005 requires the Secretary to limit federal matching payments to states if states have not implemented the requirement that managed care contracts include a provision agreeing to terminate providers who were terminated by Medicare or other state Medicaid or CHIP programs. Before March 31, 2020, the HHS OIG is required to submit a report to Congress on the implementation of Section 5005. The report is required to include the following: (1) an assessment of the extent to which providers who are included in the termination notification database as required by Section 5005 are terminated from participation in state Medicaid plans or waivers; (2) information on federal financial participation paid to states in violation of Section 5005 prohibition on payments to states for terminated providers and payments to Medicaid managed care entities that were required to terminate providers who were terminated under Medicare or other state Medicaid plans or waivers; (3) an assessment of the extent to which state contracts with Medicaid managed care entities comply with the new Section 5005 requirement that state managed care contracts include a provision barring terminated providers from participation in Medicaid and CHIP provider networks; and (4) an assessment of the extent to which states are enrolling FFS and managed care providers participating in Medicaid or under a waiver as required by Section 5005. Provider directories—lists of the health care providers contracted to furnish care under a health care program—are useful in ensuring that eligible individuals have access to covered services. States have considerable discretion in how they communicate sources of available care under their fee-for-service (FFS) Medicaid programs to beneficiaries. Federal law currently does not require state Medicaid programs to publish FFS provider directories. For Medicaid services furnished through managed care, by contrast, provider directories are federally required. Under new Medicaid managed care regulations that will take effect for contract years beginning on or after July 1, 2017, the directories must cover a wider range of providers, include more information, and be available on the managed care entity's website. Section 5006 requires state Medicaid programs to publish annually and make available on their websites a FFS provider directory. The directory must identify participating physicians and may at state option include other participating provider types, listing at minimum the provider's contact information and specialty. For providers that participate in a primary care case management (PCCM) system, the directory must indicate whether the physician or other provider is accepting new Medicaid patients and the provider's cultural and linguistic capabilities. The requirements of Section 5006 do not apply to any state where all Medicaid beneficiaries receiving services under the Medicaid state plan or waiver, except Indians or Alaska Natives, are enrolled in a comprehensive risk-based managed care organization (MCO) or similar prepaid health plan. Section 5006 will bring the administration of Medicaid FFS and managed care programs into closer alignment. The state FFS provider directories must be published no later than January 1, 2017. If the Secretary of Health and Human Services determines that state legislation would be required for any particular state to have the authority to amend its Medicaid state plan to require the publication of a FFS provider directory, then the state will be considered compliant with the timing requirement of Section 5006 so long as it publishes its provider directory before the first day of the first calendar quarter after the close of the first regular legislative session beginning after the date of enactment of the Cures Act. Under federal Medicaid law, most trusts are counted as an asset in determining Medicaid eligibility for aged and disabled individuals and are subject to asset transfer rules. However, there are certain exceptions in current law to the general rule of counting trusts as an asset. Specifically, Medicaid does not count certain special-needs trusts and pooled trusts as assets and does not apply asset transfer rules to these trust types. This exception is commonly referred to as the "special needs trust exception." In order for a trust to meet this exception under Medicaid, a trust must contain the assets of an individual under age 65 (i.e., non-elderly individual) who meets the statutory definition of disability under SSA Section 1614(a)(3). SSA Section 1917(d)(4)(A) permits only parents, grandparents, legal guardians, or a court to establish a special needs trust on behalf of a non-elderly disabled individual. Such trusts must contain assets of the disabled individual and the trust must be used to provide funding for certain expenditures that supplement Medicaid benefits, subject to certain limitations. Special needs trusts allow non-elderly individuals with disabilities to maintain their eligibility for Medicaid. When the beneficiary dies, the state receives the remaining proceeds of the trust equal to any amounts paid for medical assistance provided under the state Medicaid program. Section 5007 makes a technical correction to the language regarding special needs and pooled trusts under Medicaid, which are exempt from asset counting and transfer rules, to allow non-elderly individuals with disabilities to establish a special needs trust on their own behalf. This provision is effective on or after the date of enactment. Outpatient prescription drugs are an optional Medicaid benefit, but all states cover prescription drugs for most beneficiary groups. Medicaid law requires prescription drug manufacturers who wish to sell their products to Medicaid agencies to enter into rebate agreements with the HHS Secretary on behalf of states. Under these voluntary rebate agreements, drug manufacturers pay a rebate to state Medicaid agencies for drugs purchased for Medicaid beneficiaries. Most drug manufacturers participate in the Medicaid drug rebate program. The Medicaid rebate program requires states to cover all of a participating manufacturer's drugs, but states have the option to not cover or restrict use of certain drugs, drug classes, or drug uses which are identified in the Social Security Act, Section 1927(d)(2). This list of Medicaid excluded drugs includes drugs used for cosmetic purposes or hair growth. When states elect to cover the statutorily excluded drugs, drug classes or drug uses, they receive federal financial participation (FFP), the federal share of state Medicaid expenditures. States are prohibited from receiving FFP when they cover certain statutorily excluded drugs, such as sexual or erectile dysfunction drugs, except when those drugs are medically necessary for other purposes. Beginning with the enactment date of the Cures Act, Section 5008 prohibits states from receiving FFP for drugs used for cosmetic purposes and hair growth, except when those drugs are medically necessary. Section 4002 of the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) established the Prevention and Public Health Fund (PPHF), to be administered by the HHS Secretary, and provided it with a permanent annual appropriation. Prior to enactment of the Cures Act, appropriations to the PPHF were as follows: for FY2010, $500 million; for each of fiscal years 2012 through 2017, $1 billion; for each of fiscal years 2018 and 2019, $1.25 billion; for each of fiscal years 2020 and 2021, $1.5 billion; and for FY2022, and each fiscal year thereafter, $2 billion. Section 5009 amends the PPHF appropriation as follows: for each of fiscal years 2018 and 2019, $900 million; for each of fiscal years 2020 and 2021, $1 billion; for FY2022, $1.5 billion; for FY2023, $1 billion; for FY2024, $1.7 billion; and for FY2025 and each fiscal year thereafter, $2 billion. This amendment decreases the total PPHF appropriation for FY2018 through FY2024 by $3.5 billion. The Strategic Petroleum Reserve (SPR) was authorized by Congress as part of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6241) (EPCA). Congress authorized the SPR as a response to rising oil prices and petroleum product shortages related to the oil embargo established against the United States, the Netherlands, and Canada by the Organization of the Arab Petroleum Exporting Countries (OAPEC). The SPR is authorized to hold up to 1 billion barrels of oil, although it currently holds 695 million barrels. The OAPEC embargo also fostered the creation of the International Energy Agency (IEA). The IEA was established to enable oil-importing nations to develop plans and measures for emergency responses to energy crises. IEA member countries, including the United States, are committed to maintaining oil stocks (inventories) equivalent to 90 days of their prior year's net imports, developing programs for demand restraint in the event of emergencies, and agreeing to participate in an oil sharing program in times of emergency shortage. The current SPR oil inventory represents 149 days of net import coverage. The President may authorize an SPR drawdown upon determining that a severe oil supply interruption exists nationally, or internationally, or is imminent. The Secretary of Energy also has limited authority to release oil from the SPR for a test drawdown. Section 5010 directs the Secretary of Energy to drawdown and sell crude oil from the SPR in the amount of 10 million barrels during FY2017, 9 million barrels in FY2018, and 6 million barrels in FY2019, for a total of 25 million barrels. The resultant oil sales revenue is to be deposited in the general fund of the Treasury during the fiscal year corresponding to the year of sale. Section 5010 amends SPR drawdown limitations as specified in subparagraphs (c) and (d) of EPCA Section 161 (h)(2). The amendment sets the minimum holding levels of the SPR at 450 million barrels, instead of the current minimum holding level of 500 million barrels. ACA Section 1323 provides that each U.S. territory can choose whether to establish a health insurance exchange by October 1, 2013. If a territory elects to establish an exchange, it could receive a portion of a $1 billion appropriation to provide financial assistance to individuals who obtain coverage through the exchange. If a territory does not elect to establish an exchange, it could receive an increase in Medicaid funds. No territory elected to establish an exchange. Section 5011 rescinds $464 million from unobligated amounts of the $1 billion appropriation for U.S. territories that elect to establish an exchange. Medicare Part B covers a variety of durable medical equipment (DME) when it is medically necessary and prescribed by a physician. Durable medical equipment (DME) is equipment that (1) can withstand repeated use, (2) has an expected life of at least three years (effective for items classified as DME after January 1, 2012), (3) is used to serve a medical purpose, (4) generally is not useful in the absence of an illness or injury, and (5) is appropriate for use in the home. Infusion pumps are DME, and the drugs infused are covered supplies necessary for the functioning of the DME. Infusion pumps are covered by Medicare if, in part, the administration of the drug in the home is reasonable and necessary, an infusion pump is necessary to safely administer a drug, and either (a) the drug is administered by a prolonged infusion of at least 8 hours because of proven improved clinical efficacy, or (b) the drug is administered by intermittent infusion (each episode of infusion lasting less than 8 hours) that does not require the beneficiary to return to a physician's office prior to the beginning of each infusion and toxicity or adverse side effects of the drug are unavoidable without infusing it at a strictly controlled rate. The DME benefit does not include coverage of personnel to assist with the infusion (as the requirement that the administration of the drug in the home is reasonable is a condition of coverage). Under a separate provision of law (not DME), Social Security Act, Section 1861(s)(2)(Z), Medicare Part B is required to cover intravenous immune globulin (IVIG) for the treatment of primary immune deficiency diseases in the home. However, the statutes do not cover the items and services necessary for the in-home administration of IVIG. The specific items and services are the supplies and in-home nursing services necessary to inject the IVIG intravenously. The Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (Medicare IVIG Access Act, P.L. 112-242 ) requires the HHS Secretary to establish a demonstration project to evaluate the benefit of providing payment for items and services needed for the in-home administration of IVIG. The IVIG demonstration began August 2014 and will end September 30, 2017. The Medicare IVIG Access Act also required the HHS Secretary to establish a per visit payment amount for items and services (including nursing services) needed for the in-home administration of IVIG based on national per visit low-utilization payment amount under the prospective payment system for home health services covered under Medicare. In order to receive payments under Medicare Part B and retain a Medicare billing number, DME suppliers that furnish items of equipment or provide services under Medicare Part B must comply with quality and other Medicare conditions of participation requirements. Medicare conditions of participation for DME suppliers include being licensed in the state where suppliers are located and being accredited by an independent accreditation organization approved by CMS. Section 5012 creates a new Medicare home infusion therapy benefit, effective January 1, 2021. Home infusion therapy is defined as a specific set of items and services furnished by a qualified home infusion therapy supplier , which are furnished in the home to an individual who is under the care of an applicable provider and who has a plan prescribed by a physician that specifies the type, amount, and duration of infusion therapy to be provided. The physician must also periodically review the plan. Specifically, the items and services included in home infusion therapy consist of professional services, including nursing services, training and education (not included as part of the training and education associated with durable medical equipment), remote monitoring and monitoring services, and home infusion therapy drugs. A qualified home infusion supplier means a pharmacy, physician, or other provider or supplier licensed by the State in which she practices and who furnishes infusion therapy to individuals with acute or chronic conditions requiring administration of home infusion drugs, ensures safe and effective administration, is accredited, and meets other requirements determined by the Secretary; a home infusion therapy supplier may meet these qualification requirements by subcontracting with another pharmacy, physician, provider of services, or supplier who meets the requirements. An applicable provider (whom cares for the individual) is defined as a physician, nurse practitioner, and a physician assistant. Home has the same definition under the home infusion therapy benefit as under the durable medical equipment benefit. Home infusion drug is defined as a drug or biologic administered intravenously or subcutaneously for an administration period of 15 minutes or more, in the home of an individual through a DME pump, and does not include insulin pump systems or self-administered drugs or biologicals on a self-administered drug exclusion list. Prior to furnishing home infusion therapy, the physician who establishes the plan is required to notify the beneficiary of the options available for infusion therapy (home, physician's office, hospital outpatient department.) Section 5012 requires the Secretary to implement a payment system for the new benefit described above. The payment is to be determined on a per-day basis, and is to vary by type of therapy and nursing utilization, and is to be adjusted by a geographic wage index, patient acuity, and complexity of drug administration. The payments will be updated yearly by the percent increase in the Consumer Price Index for all urban consumers for the 12-month period ending in June of the preceding year, adjusted for a measure of nationwide economic productivity. The per-day payment amounts determined in this way are prohibited from exceeding the cost of infusion therapy services provided in a physician's office. In addition, the Secretary has discretion to make adjustments to reflect outliers (or excessively costly patients) in a budget-neutral manner. In developing the payment system, the Secretary may consider the costs of providing infusion therapy, consult with suppliers, and consider payments for similar services under Medicare Part A or Medicare Advantage, and private insurance. Section 5012 allows the Secretary to consider prior authorization requirements for home infusion therapy services. Section 5012 requires the Secretary to designate organizations for accrediting home infusion therapy suppliers by not later than January 1, 2021. The Secretary is to consider the following factors in designating the accreditation organizations: (a) the ability of the organization to conduct timely reviews, (b) the ability of the organization to take into account the capacities of suppliers located in rural areas, (c) whether the organization has established reasonable fees for their accreditation services, and (d) such other factors as the Secretary determines appropriate. The Secretary is required to review the list of designated accreditation organizations, taking into account those factors specified above, and may, by regulation , modify the list of accreditation organizations. If the Secretary removes an organization from the list of accreditation organizations, any supplier that is accredited by the organization will be considered to have been accredited for the remainder of the effective period of accreditation, even after the organization is removed from the list of accrediting organizations. If an accrediting organization is designated by the Secretary before January 1, 2019, and a supplier is accredited by the organization before January 1, 2021, then that supplier will be considered to have been accredited as of January 1, 2023 and for the remainder of the effective period of accreditation; this provision would allow suppliers that received accreditation early to avoid having to be re-accredited for an extended period. ACA: Patient Protection and Affordable Care Act ( P.L. 110-148 , as amended) ACCV: Advisory Commission on Childhood Vaccines ACIP: Advisory Committee on Immunization Practices ASC: ambulatory surgical center ASPR: Health and Human Services Assistant Secretary for Preparedness and Response AST: Antimicrobial Susceptibility Testing BARDA: Biomedical Advanced Research and Development Authority BRAIN Initiative: Brain Research through Advancing Innovative Neurotechnologies Initiative CACs: Carrier Advisory Committees CARB: National Strategy for Combating Antibiotic-Resistant Bacteria CBER: FDA Center for Biologics Evaluation and Research CBRN: chemical, biological, radiological, or nuclear CDC: Centers for Disease Control CDER: Center for Drug Evaluation and Research CDRH: Center for Devices and Radiological Health CDS: clinical decision support The Center: National Center for Medical Rehabilitation Research CLIA: Clinical Laboratory Improvement Amendments of 1988 CMPs: civil monetary penalties CMS: Centers for Medicare & Medicaid Services CMMI: Center for Medicare and Medicaid Innovation COW: certificate of waiver DME: durable medical equipment DOD: Department of Defense EHR: electronic health record EPCA: Energy Policy and Conservation Act of 1975 (42 U.S.C. 6241) ETASU: elements to assure safe use EUA: Emergency Use Authorization FACA: Federal Advisory Committee Act FAERS: FDA Adverse Event Reporting System database FDP: Federal Demonstration Partnership FDA: Food and Drug Administration FDAAA: Food and Drug Administration Amendments Act of 2007 ( P.L. 110-85 ) FDAMA: Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) FDASIA: Food and Drug Administration Safety and Innovation Act ( P.L. 112-144 ) FFDCA: Federal Food, Drug, and Cosmetic Act FFS: fee-for-service FOIA : Freedom of Information Act FY: Fiscal Year GAO: Government Accountability Office GS : General Schedule HHS: Department of Health and Human Services HELP: Senate Health, Labor, Education, and Pensions Committee HIPAA: Health Insurance Portability and Accountability Act of 1986 HCT/Ps : human cells, tissues, and cellular and tissue-based products HDE: Humanitarian Device Exemption HIT: health information technology HITECH: Health Information Technology for Economic and Clinical Health Act of 2009 IHS: Indian Health Service IRB: Institutional Review Board IACUC: Institutional Animal Care and Use Committee IC: NIH Institutes and Centers IDE: investigational device exemption IEA: International Energy Agency IOM: Institute of Medicine LCD: local coverage determinations MACRA: Medicare Access and CHIP Reauthorization Act of 2015 MACs: Medicare Administrative Contractors MCO: managed care organization MDA: Medical Device Amendments of 1976 ( P.L. 94-295 ) MedPAC: Medicare Payment Advisory Commission MPFS: Medicare physician fee schedule NAS: National Academy of Sciences NCATS: NIH's National Center for Advancing Translational Sciences NCDs: National coverage decisions NDA: new drug application NIH: National Institutes of Health (NIH) NICHD: Eunice Kennedy Shriver National Institute of Child Health and Human Development NLM: National Library of Medicine OAPEC: Organization of the Arab Petroleum Exporting Countries OCP: Office of Combination Products OCR: HHS Office for Civil Rights OIG: HHS Office of Inspector General OIRA: Office of Information and Regulatory Affairs OMB: Office of Management and Budget ONC: Office of the National Coordinator for Health Information Technology OSTP: White House Office of Science and Technology Policy OT: Other transaction OPPS: Medicare hospital outpatient prospective payment system fee schedule PAHPRA: Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 ( P.L. 113-5 ) PCCM: primary care case management system PDUFA: Prescription Drug User Fee Act of 1992 PHI: protected health information PHS: Public Health Service agencies PHSA: Public Health Service Act of 1944 PMA: premarket approval pathway PMI: Precision Medicine Initiative PPHF: Prevention and Public Health Fund PRA: Paperwork Reduction Act (44 U.S.C. Chapter 35) R&D: research and development REMS: risk evaluation and mitigation strategies SAMHSA: Substance Abuse and Mental Health Services Administration SBRS : Silvio O. Conte Senior Biomedical Research Service SSA: Social Security Act SPR: Strategic Petroleum Reserve VA: Department of Veterans Affairs VDT: view, download, and transmit VFC: Vaccines for Children program VICP: National Vaccine Injury Compensation Program

The 21st Century Cures Act (P.L. 114-255) was signed into law on December 13, 2016, by President Barack Obama. On November 30, 2016, the House passed the House amendment to the Senate amendment to H.R. 34, the 21st Century Cures Act, on a vote of 392 to 26. The bill was then sent to the Senate where it was considered and passed, with only minor technical modification, on December 7, 2016, on a vote of 94 to 5. The law consists of three divisions: Division A—21st Century Cures Act; Division B—Helping Families in Mental Health Crisis; and Division C—Increasing Choice, Access, and Quality in Health Care for Americans. CRS has published a series of reports on this law, one on each Division. This is the report for Division A of the law. This report provides a brief summary of each provision of the 21st Century Cures Act (Division A of P.L. 114-255), by title, subtitle, and section. The Division includes five titles, as follows: (1) Innovation projects and state responses to opioid abuse; (2) Discovery; (3) Development; (4) Delivery; and (5) Savings. Title I provides funding for biomedical research, including the Precision Medicine Initiative (PMI) and the Cancer Moonshot Initiative, for the opioid crisis response, and for the Food and Drug Administration (FDA) to support certain new activities authorized by the law. Title II, consisting of seven subtitles, requires or authorizes a number of activities to support biomedical research, including the reauthorization of the National Institutes of Health (NIH) and the reform of that agency through numerous administrative, reporting, and data access provisions. The Title includes provisions that support young investigators funded by NIH; pediatric research; collaborative research such as research on neurological disease; and precision medicine efforts, and specifically the PMI. Title III, consisting of ten subtitles, focuses on modifying the drug and device approval pathways at the FDA to support innovation, and specifically includes provisions that support patient-focused drug development and streamlined and clarified pathways to approval for drugs, combination products, antimicrobials, Orphan drugs, drugs for rare disease, and regenerative therapies. This Title also contains provisions making modifications to the medical device approval pathway and reforms to the FDA's hiring process. Finally, it addresses FDA's regulation of medical countermeasure and vaccine development. Title IV focuses on health care delivery, and includes provisions that together address the federal policies to promote the adoption and use of electronic health record (EHR) technology, as well as a handful of Medicare delivery provisions addressing telehealth services in Medicare, site-of-service price transparency for certain Medicare services, Local Coverage Determinations (LCDs) under Medicare, and a technology and pharmaceutical ombudsman for Medicare. Title V provides savings for the Division, and includes Medicare and Medicaid savings; Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) savings, including Prevention and Public Health Fund (PPHF) and territory funding; and savings from the Strategic Petroleum Reserve (SPR) drawdown.

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The Congressional Research Service receives numerous requests for lists of recipients of the Medal of Honor (MOH), the nation's highest award for military bravery. Since its first presentation in 1863, there have been nearly 3,500 recipients of the Medals of Honor. In 1973 and 1979, the Senate Veterans' Affairs Committee issued Committee Print 8, Vietnam Era Medal of Honor Recipients: 1964-1972 , and Committee Print 3, Medal of Honor Recipients: 1863-1978 . Each print lists recipients and provides the full text of the citations describing the actions that resulted in the awarding of the MOH. Since the release of the committee prints, there have been several additions and changes to the list of recipients of this award. This report covers additions and changes to the list of recipients of the medal since the release of the above-mentioned committee prints. An asterisk (*) indicates those individuals who were awarded their medals posthumously. The citations are written in draft form by the time the recommendation packet leaves the hands of the individual's CO (commanding officer). Thus the originator of the citation is whomever the CO has detailed to compile the evidence and eyewitness statements. It's called the "proposed citation" and is a whole section of the form. As the citation is processed through the chain of command, it is edited. The final citation that is read at the presentation ceremony is a composite work completed by everyone in the chain of command. Further detailed information about the recommendation process may be found at http://www.army.mil/medalofhonor/process.html . Most citations are published in a Department of the Army general order by the U.S. Army Human Resources Command, Awards and Decorations Branch at http://www.apd.army.mil/AdminPubs/DAGO_by_Year.asp . However, the Congressional Medal of Honor Society may occasionally publish citations before the Awards and Decorations Branch publishes them. The citations are also published by the Department of the Army Center of Military History . Links to additional agencies and Internet sites concerned with awards for valor are provided at the end of this report. The Congressional Medal of Honor Society (CMOHS) was congressionally chartered and signed into law by President Dwight D. Eisenhower on August 5, 1958, for the purpose of encouraging patriotism and honoring all recipients of the MOH. It contains all MOH citations along with historical information, statistics, and information pertinent to the award. It may be accessed at http://www.cmohs.org . In some instances, Congress approved legislation to remove statutory time limits in order for the MOH to be awarded. Where this has occurred, the legislation is cited. Date of issue information, if not provided by CMOHS or the military branches, was located on the website of Military Times/ Home of Heroes at http://www.homeofheroes.com/a_homepage/community.html or through news reports. The FY1996 National Defense Authorization Act ( P.L. 104-106 , Title V, Subtitle C, Section 524) provided for the review of records relating to Asian Americans and Native American Pacific Islanders who received Distinguished Service Crosses or Navy Crosses for service during World War II. This legislation also waived the time limit to allow the President to award the MOH; consequently, 22 Asian Americans received the MOH. The FY1997 National Defense Authorization Act ( P.L. 104-201 , Title V, Subtitle G, Sections 561 and 562 September 23, 1996) waived the time limit to allow the President to award the MOH to seven African American soldiers for their heroic acts during World War II. (Some military personnel records were destroyed for these individuals in a 1973 fire at the National Personnel Records Center. Records were reconstructed from auxiliary sources; therefore, the place indicated after the date of birth is the home of record at the time the individual entered the military, and not necessarily the place of birth. Data on the place where the individual entered service is often not available.) In 2002, through the National Defense Authorization Act for Fiscal Year 2002, Congress requested that the Department of Defense (DOD) review records of veterans of Jewish or Hispanic heritage from World War II to later periods. Earlier measures provided in the National Defense Authorization Act for Fiscal Year 1997 authorized review of the records of African Americans who may have also been eligible for the award. DOD's review resulted in 19 veterans approved to be recipients of the MOH. An additional five were named after a review of recipients of the Distinguished Service Cross. President Obama presented the MOH posthumously to 21 veterans and three living recipients on March 18, 2014. Most recently, on November 6, 2014, President Obama awarded the MOH to representatives of First Lieutenant Alonzo H. Cushing for his actions at the Battle of Gettysburg, July 3, 1863. For historical information and a more detailed account of congressional and other efforts to award the MOH, see CRS Report 95-519, Medal of Honor: History and Issues , by [author name scrubbed]. See also the Congressional Medal of Honor Society at http://www.cmohs.org and the Department of Defense Military Awards for Valor site at http://valor.defense.gov/ . An asterisk (*) indicates those individuals who were awarded their medals posthumously. In the FY2014 National Defense Authorization Act, Congress waived the time limitations for awarding the Medal of Honor to Lt. Cushing. Rank and organization : First Lieutenant, U.S. Army, Battery A, 4 th United States Artillery Brigade, 2 d Corps, Army of the Potomac. Place and date : near Cemetery Ridge, Gettysburg, Pennsylvania, July 3, 1863 . Entered service at : Fredonia, New York. Born: 1841, Delafield, Wisconsin. Date of issue: November 6, 2014. First Lieutenant Alonzo H. Cushing distinguished himself by acts of bravery above and beyond the call of duty while serving as an artillery commander in Battery A, 4 th U.S. Artillery, Army of the Potomac at Gettysburg, Pennsylvania on July 3, 1863, during the American Civil War. That morning, Confederate forces led by General Robert E. Lee began cannonading First Lieutenant Cushing's position on Cemetery Ridge. Using field glasses, First Lieutenant Cushing directed fire for his own artillery battery. He refused to leave the battlefield after being struck in the shoulder by a shell fragment. As he continued to direct fire, he was struck again—this time suffering grievous damage to his abdomen. Still refusing to abandon his command, he boldly stood tall in the face of Major General George E. Pickett's charge and continued to direct devastating fire into oncoming forces. As the Confederate forces closed in, First Lieutenant Cushing was struck in the mouth by an enemy bullet and fell dead beside his gun. His gallant stand and fearless leadership inflicted severe casualties upon Confederate forces and opened wide gaps in their lines, directly impacting the Union force's ability to repel Pickett's charge. First Lieutenant Cushing's extraordinary heroism and selflessness above and beyond the call of duty at the cost of his own life are in keeping with the highest traditions of military service and reflect great credit upon himself, Battery A, 4 th U.S. Artillery, Army of the Potomac, and the United States Army. Congress approved "a bill to authorize the award of the Medal of Honor" to Corporal Smith and others on June 20, 2000, removing the statutory time limit on the award. Rank and organization : Corporal, U.S. Army, 55 th Massachusetts Voluntary Infantry. Place and date : Near Boyd's Landing, SC, November 30, 1864 . Entered service at : unknown. Born : September 3, 1842. Date of issue : January 31, 2001. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Corporal Andrew Jackson Smith, of Clinton, Illinois, a member of the 55 th Massachusetts Voluntary Infantry, distinguished himself on November 30, 1864, by saving his regimental colors, after the color bearer was killed during a bloody charge called the Battle of Honey Hill, South Carolina. In the late afternoon, as the 55 th Regiment pursued enemy skirmishers and conducted a running fight, they ran into a swampy area backed by a rise where the Confederate Army awaited. The surrounding woods and thick underbrush impeded infantry movement and artillery support. The 55 th and 34 th regiments formed columns to advance on the enemy position in a flanking movement. As the Confederates repelled other units, the 55 th and 54 th regiments continued to move into flanking positions. Forced into a narrow gorge crossing a swamp in the face of the enemy position, the 55 th 's Color-Sergeant was killed by an exploding shell, and Corporal Smith took the Regimental Colors from his hand and carried them through heavy grape and canister fire. Although half of the officers and a third of the enlisted men engaged in the fight were killed or wounded, Corporal Smith continued to expose himself to enemy fire by carrying the colors throughout the battle. Through his actions, the Regimental Colors of the 55 th Infantry Regiment were not lost to the enemy. Corporal Andrew Jackson Smith's extraordinary valor in the face of deadly enemy fire is in keeping with the highest traditions of military service and reflect great credit upon him, the 55 th Regiment, and the United States Army. Congress approved P.L. 105-371 on November 12, 1998, to authorize and request that the President award the Medal of Honor posthumously to Theodore Roosevelt for action in the attack of San Juan Heights, July 1, 1898. President Clinton initiated an Army review. An Army panel approved the award in June 2000. Rank and organization : Lieutenant Colonel, U.S. Army, First Cavalry Regiment. Place and date : San Juan Heights, Republic of Cuba, July 1, 1898. Entered service : Resigned position as Assistant Secretary of the Navy to join Army, May 6, 1898. Born : October 27, 1858, New York, NY. Date of issue: January 16, 2001. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Lieutenant Colonel Theodore Roosevelt distinguished himself by acts of bravery on 1 July 1898, near Santiago de Cuba, Republic of Cuba, while leading a daring charge up San Juan Hill. Lieutenant Colonel Roosevelt, in total disregard for his personal safety, and accompanied by only four or five men, led a desperate and gallant charge up San Juan Hill, encouraging his troops to continue the assault through withering enemy fire over open countryside. Facing the enemy's heavy fire, he displayed extraordinary bravery throughout the charge and was the first to reach the enemy trenches, where he quickly killed one of the enemies with his pistol, allowing his men to continue the assault. His leadership and valor turned the tide in the Battle for San Juan Hill. Lieutenant Colonel Roosevelt's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Corporal Stowers' recommendation was delayed due to administrative error. The law provides that in such cases time limitations may be waived. Rank and organization : Corporal, U.S. Army, Company C, 371 st Infantry Regiment, 93 rd Infantry Division. Place and date : Champagne Marne Sector, France, September 28, 1918. Entered service at : unknown. Born: 1897, Anderson County, SC. Date of issue: April 24, 1991. Citation : Corporal Stowers distinguished himself by exceptional heroism on September 28, 1918, while serving as a squad leader in Company C, 371 st Infantry Regiment, 93 rd Infantry Division. His company was the lead company during the attack on Hill 188, Champagne Marne Sector, France, during World War I. A few minutes after the attack began, the enemy ceased firing and began climbing up onto the parapets of the trenches, holding up their arms as if wishing to surrender. The enemy's actions caused the American forces to cease fire and to come out into the open. As the company started forward and when within about 100 meters of the trench line, the enemy jumped back into their trenches and greeted Corporal Stowers's company with interlocking bands of machine gun fire and mortar fire causing well over 50% casualties. Faced with incredible enemy resistance, Corporal Stowers took charge, setting such a courageous example of personal bravery and leadership that he inspired his men to follow him in the attack. With extraordinary heroism and complete disregard of personal danger under devastating fire, he crawled forward leading his squad toward an enemy machine gun nest, which was causing heavy casualties to his company. After fierce fighting, the machine gun position was destroyed and the enemy soldiers were killed. Displaying great courage and intrepidity, Corporal Stowers continued to press the attack against a determined enemy. While crawling forward and urging his men to continue the attack on a second trench line, he was gravely wounded by machine gun fire. Although Corporal Stowers was mortally wounded, he pressed forward, urging on the members of his squad until he died. Inspired by the heroism and display of bravery of Corporal Stowers, his company continued the attack against incredible odds, contributing to the capture of Hill 188 and causing heavy enemy casualties. Corporal Stowers' conspicuous gallantry, extraordinary heroism, and supreme devotion to his men were well above and beyond the call of duty, follow the finest traditions of military service, and reflect the utmost credit on him and the United States Army. Lieutenant Baker was among the seven African Americans who were awarded the MOH for their heroic acts during World War II following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : First Lieutenant, U.S. Army, Company C, 370 th Infantry Regiment. Place and date : Near Viareggio, Italy, April 5 and 6, 1945. Entered service : June 26, 1941. Born : December 17, 1919, Cheyenne, WY. Date of issue: January 13, 1997. Citation : For extraordinary heroism in action on April 5 and 6, 1945, near Viareggio, Italy. Then-Second Lieutenant Baker demonstrated outstanding courage and leadership in destroying enemy installations, personnel, and equipment during his company's attack against a strongly entrenched enemy in mountainous terrain. When his company was stopped by the concentration of fire from several machine gun emplacements, he crawled to one position and destroyed it, killing three Germans. Continuing forward, he attacked and enemy observation post and killed two occupants. With the aid of one of his men, Lieutenant Baker attacked two more machine gun nests, killing or wounding the four enemy soldiers occupying these positions. He then covered the evacuation of the wounded personnel of his company by occupying an exposed position and drawing the enemy's fire. On the following night Lieutenant Baker voluntarily led a battalion advance through enemy mine fields and heavy fire toward the division objective. Second Lieutenant Baker's fighting spirit and daring leadership were an inspiration to his men and exemplify the highest traditions of the Armed Forces. Private Cano's military records military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private, 4 th Infantry Division, U.S. Army. Place and date: Schevenhütte, Germany, December 2-3, 1944. Entered service at : Texas. Born : June 19, 1920, La Morita, Mexico. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Pedro Cano distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving with Company C, 8 th Infantry Regiment, 4 th Infantry Division during combat operations against an armed enemy in Schevenhütte, Germany on December 2 and 3, 1944. On the afternoon of the 2 nd , American infantrymen launched an attack against German emplacements but were repulsed by enemy machinegun fire. Armed with a rocket launcher, Private Cano crawled through a densely mined area under heavy enemy fire and successfully reached a point within 10 yards of the nearest emplacement. He quickly fired a rocket into the position, killing the two gunners and five supporting riflemen. Without hesitating, he fired into a second position, killing two more gunners, and proceeded to assault the position with hand grenades, killing several others and dispersing the rest. Then, when an adjacent company encountered heavy fire, Private Cano crossed his company front, crept to within 15 yards of the nearest enemy emplacement, and killed the two machine gunners with a rocket. With another round he killed two more gunners and destroyed a second gun. On the following day, his company renewed the attack and again encountered heavy machinegun fire. Private Cano, armed with his rocket launcher, again moved across fire-swept terrain and destroyed three enemy machineguns in succession, killing the six gunners. Private Cano's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Carter was among the seven African Americans who were awarded the MOH for their heroic acts during World War II following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and Organization : Staff Sergeant, Seventh Army Infantry Company Number 1 (Provisional), U.S. Army. Place and date : Near Speyer, Germany, 23 March 1945. Entered service : September 26, 1941. Born: May 26, 1916, Los Angeles, CA. Date of issue: January 13, 1997. Citation : Staff Sergeant Edward A. Carter, Jr. distinguished himself by extraordinary heroism in action on March 23, 1945. For extraordinary heroism in action on March 23, 1945, near Speyer, Germany. When the tank on which he was riding received heavy bazooka and small arms fire, Sergeant Carter voluntarily attempted to lead a three-man group across an open field. Within a short time, two of his men were killed and the third seriously wounded. Continuing on alone, he was wounded five times and finally forced to take cover. As eight enemy riflemen attempted to capture him, Sergeant Carter killed six of them and captured the remaining two. He then crossed the field using as a shield his two prisoners from which he obtained valuable information concerning the disposition of enemy troops. Staff Sergeant Carter's extraordinary heroism was an inspiration to the officers and men of the Seventh Army Infantry Company Number 1 (Provisional) and exemplify the highest traditions of the Armed Forces. Congress approved P.L. 95-163 on November 2, 1977, removing the statutory time limit on the award for Corporal Casamento. Rank and organization : Corporal, Company "D," First Battalion, Fifth Marines, First Marine Division, U.S. Marine Corps. Place and date : Guadalcanal, November 1, 1942. Entered service at : Brooklyn, NY, August 19, 1940. Born : November 16, 1920, Brooklyn, NY. Date of issue: September 12, 1980. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving with Company "D," First Battalion, Fifth Marines, First Marine Division on Guadalcanal, British Solomon Islands, in action against the enemy Japanese forces on November 1,1942. Serving as a leader of a machine gun section, Corporal Casamento directed his unit to advance along a ridge near the Mantanikau River where they engaged the enemy. He positioned his section to provide covering fire for two flanking units and to provide direct support for the main force of his company, which was behind him. During the course of this engagement, all members of his section were either killed or severely wounded and he himself suffered multiple, grievous wounds. Nonetheless, Corporal Casamento continued to provide critical supporting fire for the attack and in defense of his position. Following the loss of all effective personnel, he set up, loaded, and manned his unit's machine gun, tenaciously holding the enemy forces at bay. Corporal Casamento single-handedly engaged and destroyed one machine gun emplacement to his front and took under fire the other emplacement on the flank. Despite the heat and ferocity of the engagement, he continued to man his weapon and repeatedly repulsed multiple assaults by the enemy forces, thereby protecting the flanks of the adjoining companies and holding his position until the arrival of his main attacking force. Corporal Casamento's courageous fighting spirit, heroic conduct, and unwavering dedication to duty reflected great credit upon himself and were in keeping with the highest traditions of the Marine Corps and the United States Naval Service. Staff Sergeant Davila's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Staff Sergeant, Company H, 7 th Infantry, U.S. Army. Place and date : Near Artena, Italy, March 28, 1944. Entered service : March 6, 1941 Born : April 27, 1916, El Paso, Texas . Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Staff Sergeant Rudolph B. Davila distinguished himself by extraordinary heroism in action, on May 28, 1944, near Artena, Italy. During the offensive which broke through the German mountain strongholds surrounding the Anzio beachhead, Staff Sergeant Davila risked death to provide heavy weapons support for a beleaguered rifle company. Caught on an exposed hillside by heavy, grazing fire from a well-entrenched German force, his machine gunners were reluctant to risk putting their guns into action. Crawling fifty yard to the nearest machine gun, Staff Sergeant Davila set it up alone and opened fire on the enemy. In order to observe the effect of his fire, Sergeant Davila fired from the kneeling position, ignoring the enemy fire that struck the tripod and passed between his legs. Ordering a gunner to take over, he crawled forward to a vantage point and directed the fire fight with hand and arm signals until both hostile machine guns were silenced. Bringing his three remaining machine guns into action, he drove the enemy to a reserve position two hundred yards to the rear. When he received a painful wound in the leg, he dashed to a burned tank and, despite the crash of bullets on the hull, engaged a second enemy force from the tank's turret. Dismounting, he advanced 130 yards in short rushes, crawled 20 yards and charged into an enemy-held house to eliminate the defending force of five with a hand grenade and rifle fire. Climbing to the attic, he straddled a large shell hole in the wall and opened fire on the enemy. Although the walls of the house were crumbling, he continued to fire until he had destroyed two more machine guns. His intrepid actions brought desperately needed heavy weapons support to a hard-pressed rifle company and silenced four machine gunners, which forced the enemy to abandon their prepared positions. Staff Sergeant Davila's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Corporal Day's recommendation was delayed due to administrative error. The law provides that in such cases time limitations may be waived. Rank and organization : Corporal, Company "G" Second Battalion, 22 nd Marines, Sixth Marine Division. Place and date : Okinawa, Ryukyu Islands, May 14-17, 1945. Entered service : St. Louis, MO, 1943. Born : October 5, 1925, East St. Louis, IL. Date of issue: January 20, 1998. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty as a squad leader serving with the Second Battalion, 22 nd Marines, Sixth Marine Division in sustained combat operations against Japanese Forces on Okinawa, Ryukyu Islands, from May 14-17, 1945. On the first day, Corporal Day rallied his squad and the remnants of another unit and led them to a critical position forward of the front lines of Sugar Loaf Hill. Soon thereafter, they came under an intense mortar and artillery barrage that was quickly followed by a ferocious ground attack by some 40 Japanese soldiers. Despite the loss of one-half of his men, Corporal Day remained at the forefront, shouting encouragement, hurling hand grenades, and directing deadly fire, thereby repelling the determined enemy. Reinforced by six men, he led his squad in repelling three fierce night attacks, but suffered five additional Marines killed and one wounded, whom he assisted to safety. Upon hearing nearby calls for corpsmen assistance, Corporal Day braved heavy enemy fire to escort four seriously wounded Marines, one at a time, to safety. Corporal Day then manned a light machine gun, assisted by a wounded Marine, and halted another night attack. In this ferocious action, his machine gun was destroyed, and he suffered multiple white phosphorous and fragmentation wounds. He reorganized his defensive position in time to halt a fifth enemy attack with devastating small arms fire. On three separate occasions, Japanese soldiers closed to within a few feet of his foxhole, but they were killed by Corporal Day. During the second day, the enemy conducted numerous unsuccessful swarming attacks against his exposed position. When the attacks momentarily subsided, over 70 enemy dead were counted around his position. On the third day, a wounded and exhausted Corporal Day repulsed the enemy's final attack, killing a dozen enemy soldiers at close range. Having yielded no ground and with more than 100 enemy dead around his position, Corporal Day preserved the lives of his fellow Marines and made a significant contribution to the success of the Okinawa campaign. By his extraordinary heroism, repeated acts of valor and quintessential battle field leadership, Corporal Day inspired the efforts of his outnumbered Marines to defeat a much larger enemy force, reflecting great credit upon himself in upholding the highest standards and traditions of the Marine Corps and United States Naval Service. Lieutenant Fox was among the seven African Americans who were awarded the MOH for their heroic acts during World War II, following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : First Lieutenant, U.S. Army, Cannon Company, 366 th Infantry, 92 nd Infantry Division, 598 th Field Artillery Battalion. Place and date : Near Sommocolonia, Italy. Entered service : February 28, 1941. Born : May 18, 1915, Cincinnati, OH. Date of issue : January 13, 1997. Citation : First Lieutenant John R. Fox distinguished himself by extraordinary heroism at the risk of his own life on 26 December 1944 in the Serchio River Valley Sector, in the vicinity of Sommocolonia, Italy. Lieutenant Fox was a member of Cannon Company, 366 th Infantry, 92 nd Infantry Division, acting as a forward observer, while attached to the 598 th Field Artillery Battalion. Christmas Day in the Serchio Valley was spent in positions which had been occupied for some weeks. During Christmas night, there was a gradual influx of enemy soldiers in civilian clothes, and by early morning the town was largely in enemy hands. An organized attack by uniformed German formations was launched around 0400 hours, 26 December 1944. Reports were received that the area was being heavily shelled by everything the Germans had, and although most of the U.S. infantry forces withdrew from the town, Lieutenant Fox and members of his observer party remained behind on the second floor of a house, directing defensive fires. Lieutenant Fox reported at 0800 hours that the Germans were in the streets and attacking in strength. He called for artillery fire increasingly close to his own position. He told his battalion commander, "That was just where I wanted it. Bring it in 60 yards!" His commander protested that there was a heavy barrage in the area and the bombardment would be too close. Lieutenant Fox gave his adjustment, requesting that the barrage be fired. The distance was cut in half. The Germans continued to press forward in large numbers, surrounding the position. Lieutenant Fox again called for artillery fire with the commander protesting again stating, "Fox, that will be on you!" The last communication from Lieutenant Fox was "Fire It! There's more of them than there are of us. Give them hell!" The bodies of Lieutenant Fox and his party were found in the vicinity of his position when his position was retaken. This action by Lieutenant Fox, at the cost of his own life, inflicted heavy casualties, causing the deaths of approximately 100 German soldiers, thereby delaying the advance of the enemy until infantry and artillery units could be reorganized to meet the attack. Lieutenant Fox's extraordinarily valorous actions exemplify the highest traditions of the military service. Private Gandara's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private, Company D, 2 d Battalion, 507 th Parachute Infantry Regiment, 17 th Airborne Division, U.S. Army. Place and date: Amfreville, France, June 9, 1944. Entered service at: Los Angeles, CA. Born: April 25, 1924, Santa Monica, CA. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Joe Gandara distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving with Company D, 2 nd Battalion, 507 th Parachute Infantry Regiment, 17 th Airborne Division during combat operations against an armed enemy in Amfreville, France, on June 9, 1944. On that day, Private Gandara's detachment came under devastating enemy fire from a strong German force, pinning the men to the ground for a period of four hours. Private Gandara voluntarily advanced alone toward the enemy position. Firing his machinegun from his hip as he moved forward, he destroyed three hostile machineguns before he was fatally wounded. Private Gandara's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private Hajiro's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company I, 442 nd Regimental Combat Team. Place and date : Near Bruyeres and Biffontaine, France, October 19, 22, 29, 1944. Entered service at : Honolulu, HI, 1 February 1942. Born : unknown. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private Barney F. Hajiro distinguished himself by extraordinary heroism in action on October 19, 22, and 29, 1944, in the vicinity of Bruyeres and Biffontaine, eastern France. Private Hajiro, while acting as a sentry on top of an embankment on October 19, 1944 in the vicinity of Bruyeres, France, rendered assistance to allied troops attacking a house 2000 yards away, exposing himself to enemy fire and directing fire at an enemy strong point. He assisted the unit on his right by firing his automatic rifle and killing or wounding two enemy snipers. On October 22, 1944, he and one comrade took up an outpost security position about 50 yards to the right front of their platoon, concealed themselves, and ambushed an 18-man, heavily armed enemy patrol, killing two, wounding one, and taking the remainder as prisoners. On October 29, 1944, in a wooded area in the vicinity of Biffontaine, France, Private Hajiro initiated an attack up the slope of a hill referred to as "Suicide Hill" by running forward approximately 100 yards under fire. He then advanced ahead of these comrades about 10 yards, drawing fire and spotting camouflaged machine gun nests. He fearlessly met fire with fire and single-handedly destroyed two machine gun nests and killed two enemy snipers. As a result of Private Hajiro's heroic actions, the attack was successful. Private Hajiro's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit upon him, his unit, and the United States Army. Private Hasemoto's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company B, 100 th Infantry Battalion, 34 th Infantry Division. Place and date : Near Cerasuolo, Italy, 29 November 1943. Entered service at : Schofield Barracks, HI, 30 June 1941. Born : 16 July 1916, Honolulu, HI. Date of issue : June 21, 2000. Citation . For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Mikio Hasemoto distinguished himself by extraordinary heroism in action on 29 November 1943, in the vicinity of Cerasuolo, Italy. A force of approximately 40 enemy soldiers, armed with machine guns, machine pistols, rifles, and grenades, attacked the left flank of the platoon. Two enemy soldiers with machine guns advanced forward, firing their weapons. Private Hasemoto, an automatic rifleman, challenged these two machine gunners. After firing four magazines at the approaching enemy, his weapon was shot and damaged. Unhesitatingly, he ran 10 yards to the rear, secured another automatic rifle and continued to fire until his weapon jammed. At this point, Private Hasemoto and his squad leader had killed approximately 20 enemy soldiers. Again, Private Hasemoto ran through a barrage of enemy machine gun fire to pick up an M-1 rifle. Continuing their fire, Private Hasemoto and his squad leader killed 10 more enemy soldiers. With only three enemy soldiers left, he and his squad leader charged courageously forward, killing one, wounding one, and capturing another. The following day, Private Hasemoto continued to repel enemy attacks until he was killed by enemy fire. Private Hasemoto's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Hayashi's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company K, 442 nd Regimental Combat Team. Place and date : Near Tendola, Italy, 20 and 22 April 1945. Entered service : unknown. Born : circa 1919. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Joe Hayashi distinguished himself by extraordinary heroism in action on 20 and 22 April 1945, near Tendola, Italy. On 20 April 1945, ordered to attack a strongly defended hill that commanded all approaches to the village of Tendola, Private Hayashi skillfully led his men to a point within 75 yards of enemy positions before they were detected and fired upon. After dragging his wounded comrades to safety, he returned alone and exposed himself to small arms fire in order to direct and adjust mortar fire against hostile emplacements. Boldly attacking the hill with the remaining men of his squad, he attained his objective and discovered that the mortars had neutralized three machine guns, killed 27 men, and wounded many others. On 22 April 1945, attacking the village of Tendola, Private Hayashi maneuvered his squad up a steep, terraced hill to within 100 yards of the enemy. Crawling under intense fire to a hostile machine gun position, he threw a grenade, killing one enemy soldier and forcing the other members of the gun crew to surrender. Seeing four enemy machine guns delivering deadly fire upon other elements of his platoon, he threw another grenade, destroying a machine gun nest. He then crawled to the right flank of another machine gun position where he killed four enemy soldiers and forced the others to flee. Attempting to pursue the enemy, he was mortally wounded by a burst of machine pistol fire. The dauntless courage and exemplary leadership of Private Hayashi enabled his company to attain its objective. Private Hayashi's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit and the United States Army. Private Hayashi's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company A, 100 th Battalion (Separate), 34 th Infantry Division. Place and date : Near Cerasuolo, Italy, 29 November 1943. Entered service : Schofield Barracks, HI, 24 March 1941. Born: 28 November 1917, Waialua (Oahu), HI . Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private Shizuya Hayashi distinguished himself by extraordinary heroism in action on 29 November 1943, near Cerasuolo, Italy. During a flank assault on high ground held by the enemy, Private Hayashi rose alone in the face of grenade, rifle, and machine gun fire. Firing his automatic rifle from the hip, he charged and overtook an enemy machine gun position, killing seven men in the nest and two more as they fled. After his platoon advanced 200 yards from this point, an enemy antiaircraft gun opened fire on the men. Private Hayashi returned fire at the hostile position, killing nine of the enemy, taking four prisoners, and forcing the remainder of the force to withdraw from the hill. Private Hayashi's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Mr. Inouye's military records military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Second Lieutenant, U.S. Army, Company E, 442 nd Infantry Regiment. Place and date : Near San Terenzo, Italy, 21 April 1945. Entered service at : Honolulu, HI, 5 November 1944. Born: 7 September 1924, Honolulu, HI. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Second Lieutenant Daniel K. Inouye distinguished himself by extraordinary heroism in action on 21 April 1945, in the vicinity of San Terenzo, Italy. While attacking a defended ridge guarding an important road junction, Second Lieutenant Inouye skillfully directed his platoon through a hail of automatic weapon and small arms fire, in a swift enveloping movement that resulted in the capture of an artillery and mortar post and brought his men to within 40 yards of the hostile force. Emplaced in bunkers and rock formations, the enemy halted the advance with crossfire from three machine guns. With complete disregard for his personal safety, Second Lieutenant Inouye crawled up the treacherous slope to within five yards of the nearest machine gun and hurled two grenades, destroying the emplacement. Before the enemy could retaliate, he stood up and neutralized a second machine gun nest. Although wounded by a sniper's bullet, he continued to engage other hostile positions at close range until an exploding grenade shattered his right arm. Despite the intense pain, he refused evacuation and continued to direct his platoon until enemy resistance was broken and his men were again deployed in defensive positions. In the attack, 25 enemy soldiers were killed and eight others captured. By his gallant, aggressive tactics and by his indomitable leadership, Second Lieutenant Inouye enabled his platoon to advance through formidable resistance and was instrumental in the capture of the ridge. Second Lieutenant Inouye's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private James was among the seven African Americans who were awarded the MOH for their heroic acts during World War II, following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : Private First Class, U.S. Army, Company G, 413 th Infantry. Place and date : Near Lippoldsberg, Germany, April 7, 1945. Entered service : September 11, 1942. Born : March 18, 1920, Kansas City, MO. Date of issue: January 13, 1997. Citation: Private First Class Willy F. James, Jr. distinguished himself by extraordinary heroism at the risk of his own life on 7 April 1945 in the Weser River Valley, in the vicinity of Lippoldsberg, Germany. On April 7, 1945, Company G, 413 th Infantry, fought its way across the Weser River in order to establish a crucial bridgehead. The company then launched a fierce attack against the town of Lippoldsberg, possession of which was vital to securing and expanding the important bridgehead. Private First Class James was first scout of the lead squad in the assault platoon. The mission of the unit was to seize and secure a group of houses on the edge of town, a foothold from which the unit could launch an attack on the rest of the town. Far out in the front, Private First Class James was the first to draw enemy fire. His platoon leader came forward to investigate, but poor visibility made it difficult for Private First Class James to point out enemy positions with any accuracy. Private First Class James volunteered to go forward to fully reconnoiter the enemy situation. Furious crossfire from enemy snipers and machine guns finally pinned down Private First Class James after he had made his way forward approximately 200 yards across open terrain. Lying in an exposed position for more than an hour, Private First Class James intrepidly observed the enemy's positions, which were given away by the fire he was daringly drawing upon himself. Then, with utter indifference to his personal safety, in a storm of enemy small arms fire, Private First Class James made his way back more than 300 yards across open terrain under enemy observation to his platoon positions, and gave a full detailed report on the enemy disposition. The unit worked out a new plan of maneuver based on Private First Class James's information. The gallant soldier volunteered to lead a squad in an assault on the key house in the group that formed the platoon objective. He made his way forward, leading his squad in an assault on the strongly held enemy positions in the building and designating targets accurately and continuously as he moved along. While doing so, Private First Class James saw his platoon leader shot down by enemy snipers. Hastily designating and coolly orienting a leader in his place, Private First Class James instantly went to the aid of his platoon leader, exposing himself recklessly to the incessant enemy fire. As he was making his way across open ground, Private First Class James was killed by a burst from an enemy machine gun. Private First Class James's extraordinarily heroic action in the face of withering enemy fire provided the disposition of enemy troops to his platoon. Inspired to the utmost by Private First Class James's self-sacrifice, the platoon sustained the momentum of the assault and successfully accomplished its mission with a minimum of casualties. Private First Class James contributed very definitely to the success of his battalion in the vitally important combat operation of establishing and expanding a bridgehead over the Weser River. His fearless, self-assigned actions far above and beyond the normal call of duty exemplify the finest traditions of the American combat soldier and reflect the highest credit upon Private First Class James and the Armed Forces of the United States. Sergeant Kobashigawa's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Technical Sergeant, U.S. Army, Company B, 100 th Infantry Battalion (Separate), 34 th Infantry Division. Place and date : Near Lanuvio Italy, 2 June 1944. Entered service at : Honolulu, HI, 14 November 1941. Born : 28 September 1917, Hilo, HI. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Technical Sergeant Yeiki Kobashigawa distinguished himself by extraordinary heroism in action on 2 June 1944, in the vicinity of Lanuvio Italy. During an attack, Technical Sergeant Kobashigawa's platoon encountered strong enemy resistance from a series of machine guns providing supporting fire. Observing a machine gun nest 50 yards from his position, Technical Sergeant Kobashigawa crawled forward with one of his men, threw a grenade and then charged the enemy with his submachine gun while a fellow soldier provided covering fire. He killed one enemy soldier and captured two prisoners. Meanwhile, Technical Sergeant Kobashigawa and his comrade were fired upon by another machine gun 50 yards ahead. Directing a squad to advance to his first position, the Technical Sergeant Kobashigawa again moved forward with a fellow soldier to subdue the second machine gun nest. After throwing grenades into the position, Technical Sergeant Kobashigawa provided close supporting fire while a fellow soldier charged, capturing four prisoners. On the alert for other machine gun nests, Technical Sergeant Kobashigawa discovered four more, and skillfully led a squad in neutralizing two of them. Technical Sergeant Kobashigawa's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Sergeant Kuroda's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the Medal of Honor. Rank and organization : Staff Sergeant, U.S. Army, Company H, 442 nd Regimental Combat Team. Place and date : Near Bruyeres, France, 20 October 1944. Entered service : March 23, 1943. Born : November 8, 1922. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Staff Sergeant Robert T. Kuroda distinguished himself by extraordinary heroism in action, on 20 October 1944, near Bruyeres, France. Leading his men in an advance to destroy snipers and machine gun nests, Staff Sergeant Kuroda encountered heavy fire from enemy soldiers occupying a heavily wooded slope. Unable to pinpoint the hostile machine gun, he boldly made his way through heavy fire to the crest of the ridge. Once he located the machine gun, Staff Sergeant Kuroda advanced to a point within 10 yards of the nest and killed three enemy gunners with grenades. He then fired clip after clip of rifle ammunition, killing or wounding at least three of the enemy. As he expended the last of his ammunition, he observed that an American officer had been struck by a burst of fire from a hostile machine gun located on an adjacent hill. Rushing to the officer's assistance, he found that the officer had been killed. Picking up the officer's submachine gun, Staff Sergeant Kuroda advanced through continuous fire toward a second machine gun emplacement and destroyed the position. As he turned to fire upon additional enemy soldiers, he was killed by a sniper. Staff Sergeant Kuroda's courageous actions and indomitable fighting spirit ensured the destruction of enemy resistance in the sector. Staff Sergeant Kuroda's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Lara's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private First Class, Company L, 180 th Infantry, 45 th Infantry Division, U.S. Army. Place and date: Aprilia, Italy, May 27-28, 1944. Entered service at : Riverside, CA. Born : 1920. Date of issue : March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private First Class Salvador J. Lara distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as the squad leader of a rifle squad with 2 nd Platoon, Company L, 180 th Infantry, 45 th Infantry Division during combat operations against an armed enemy in Aprilia, Italy, on May 27 and 28, 1944. On the afternoon of the 27 th , Private First Class Lara aggressively led his rifle squad in neutralizing multiple enemy strongpoints and in inflicting large numbers of casualties on the enemy. Having taken his initial objective, Private First Class Lara noticed that the unit to his right was meeting stiff resistance from a large, well-entrenched enemy force in a deep ditch. Private First Class Lara quickly gathered three men and attacked a wide section of the enemy position, killing four, forcing 15 others to surrender, and causing two enemy mortar crews to abandon their weapons. His fearless and efficient performance enabled both his own unit and the unit to his right to continue to their objective. The next morning, as his company resumed the attack, Private First Class Lara sustained a severe leg wound, but did not stop to receive first aid. His company suffered heavy casualties as a result of withering machinegun fire coming from an enemy strongpoint on the right flank. After requesting permission to destroy the enemy machineguns armed only with a Browning automatic rifle, Private First Class Lara crawled alone toward the nearest machinegun. Despite his painful wound and the extreme danger of the task, he rose and fearlessly charged the nest, killing the crew members. Another machinegun opened fire on him, but he quickly neutralized this weapon with accurate fire from his Browning, killing three more of the enemy. His aggressive attack forced two other machinegun crews to flee their weapons. After rejoining his company, Private First Class Lara continued his exemplary performance until he captured his objective. Private First Class Lara's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private Leonard's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private First Class, Company C, 30 th Infantry Regiment, U.S. Army. Place and date: St. Die, France, November 7, 1944. Entered service at : Lockport, NJ. Born : August 9, 1913, Lockport, NJ. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private First Class William F. Leonard distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a squad leader in Company C, 30 th Infantry Regiment, 3 rd Infantry Division during combat operations against an armed enemy near St. Die, France, on November 7, 1944. Private First Class Leonard's platoon was reduced to eight men as a result of blistering artillery, mortar, machinegun, and rifle fire. Private First Class Leonard led the survivors in an assault over a hill covered by trees and shrubs that the enemy continuously swept with automatic weapons fire. Ignoring bullets that pierced his pack, Private First Class Leonard killed two snipers at ranges of 50 and 75 yards and engaged and destroyed a machinegun nest with grenades, killing its two-man crew. Though momentarily stunned by an exploding bazooka shell, Private First Class Leonard relentlessly advanced, ultimately knocking out a second machinegun nest and capturing the roadblock objective. Private First Class Leonard's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Staff Sergeant Mendoza's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Staff Sergeant, Company B, 250 th Infantry, 88 th Infantry Division, U.S. Army. Place and date: Mount Battaglia, Italy, October 4, 1944. Entered service at : Phoenix, AZ. Born : June 15, 1922, Miami, AZ. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Staff Sergeant Manuel V. Mendoza distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a platoon sergeant with Company B, 350 th Infantry, 88 th Infantry Division during combat operations against an armed enemy on Mount Battaglia, Italy, on October 4, 1944. That afternoon, the enemy launched a violent counterattack preceded by a heavy mortar barrage. Staff Sergeant Mendoza, already wounded in the arm and leg, grabbed a Thompson sub-machinegun and ran to the crest of the hill where he saw approximately 200 enemy troops charging up the slopes employing flame-throwers, machine pistols, rifles, and hand grenades. Staff Sergeant Mendoza immediately began to engage the enemy, firing five clips and killing 10 enemy soldiers. After exhausting his ammunition, he picked up a carbine and emptied its magazine at the enemy. By this time, an enemy soldier with a flame-thrower had almost reached the crest, but was quickly eliminated as Staff Sergeant Mendoza drew his pistol and fired. Seeing that the enemy force continued to advance, Staff Sergeant Mendoza jumped into a machinegun emplacement that had just been abandoned and opened fire. Unable to engage the entire enemy force from his location, he picked up the machinegun and moved forward, firing from his hip and spraying a withering hail of bullets into the oncoming enemy, causing them to break into confusion. He then set the machinegun on the ground and continued to fire until the gun jammed. Without hesitating, Staff Sergeant Mendoza began throwing hand grenades at the enemy, causing them to flee. After the enemy had withdrawn, he advanced down the forward slope of the hill, retrieved numerous enemy weapons scattered about the area, captured a wounded enemy soldier, and returned to consolidate friendly positions with all available men. Staff Sergeant Mendoza's gallant stand resulted in 30 German soldiers killed and the successful defense of the hill. Staff Sergeant Mendoza's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private Moto's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private First Class, U.S. Army, Company C, 100 th Infantry Battalion (Separate), 34 th Infantry Division. Place and date : Near Castelina, Italy, July 7, 1944. Entered service at : Honolulu, HI, July 7, 1944. Born: unknown. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private First Class Kaoru Moto distinguished himself by extraordinary heroism in action on July 7, 1944, near Castellina, Italy. While serving as first scout, Private First Class Moto observed a machine gun nest that was hindering his platoon's progress. On his own initiative, he made his way to a point 10 paces from the hostile position and killed the enemy machinegunner. Immediately, the enemy assistant gunner opened fire in the direction of Private First Class Moto. Crawling to the rear of the position, Private First Class Moto surprised the enemy soldier, who quickly surrendered. Taking his prisoner with him, Private First Class Moto took a position a few yards from a house to prevent the enemy from using the building as an observation post. While guarding the house and his prisoner, he observed an enemy machine gun team moving into position. He engaged them and with deadly fire forced the enemy to withdraw. An enemy sniper located in another house fired at Private First Class Moto, severely wounding him. Applying first aid to his wound, he changed position to elude the sniper fire and to advance. Finally relieved of his position, he made his way to the rear for treatment. Crossing a road, he spotted an enemy machine gun nest. Opening fire, he wounded two of the three soldiers occupying the position. Not satisfied with this accomplishment, he then crawled forward to a better position and ordered the enemy soldier to surrender. Receiving no answer, Private First Class Moto fired at the position, and the soldiers surrendered. Private First Class Moto's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Muranaga's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private First Class, U.S. Army, Company F, 442 nd Infantry Regiment, 34 th Infantry Division. Place and date : Near Suvereto, Italy, June 26, 1944. Entered service : May 29, 1943. Born: February 16, 1922. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private First Class Kiyoshi K. Muranaga distinguished himself by extraordinary heroism in action on June 26,1944, near Suvereto, Italy. Private First Class Muranaga's company encountered a strong enemy force in commanding positions and with superior firepower. An enemy 88mm self-propelled gun opened direct fire on the company, causing the men to disperse and seek cover. Private First Class Muranaga's mortar squad was ordered to action, but the terrain made it impossible to set up their weapons. The squad leader, realizing the vulnerability of the mortar position, moved his men away from the gun to positions of relative safety. Because of the heavy casualties being inflicted on his company, Private First Class Muranaga, who served as a gunner, attempted to neutralize the 88mm weapon alone. Voluntarily remaining at his gun position, Private First Class Muranaga manned the mortar himself and opened fire on the enemy gun at a range of approximately 400 yards. With his third round, he was able to correct his fire so that the shell landed directly in front of the enemy gun. Meanwhile, the enemy crew, immediately aware of the source of mortar fire, turned their 88mm weapon directly on Private First Class Muranaga's position. Before Private First Class Muranaga could fire a fourth round, an 88mm shell scored a direct hit on his position, killing him instantly. Because of the accuracy of Private First Class Muranaga's previous fire, the enemy soldiers decided not to risk further exposure and immediately abandoned their position. Private First Class Muranaga's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Nakae's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company A, 100 th Battalion, 442 nd Infantry Regiment. Place and date : Near Pisa, Italy, August 19, 1944. Entered service at : Honolulu, HI, February 8, 1942. Born : unknown. Date of issue : June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Masato Nakae distinguished himself by extraordinary heroism in action on 19 August 1944, near Pisa, Italy. When his submachine gun was damaged by a shell fragment during a fierce attack by a superior enemy force, Private Nakae quickly picked up his wounded comrade's M-1 rifle and fired rifle grenades at the steadily advancing enemy. As the hostile force continued to close in on his position, Private Nakae threw six grenades and forced them to withdraw. During a concentrated enemy mortar barrage that preceded the next assault by the enemy force, a mortar shell fragment seriously wounded Private Nakae. Despite his injury, he refused to surrender his position and continued firing at the advancing enemy. By inflicting heavy casualties on the enemy force, he finally succeeded in breaking up the attack and caused the enemy to withdraw. Private Nakae's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Nakamine's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company B, 100 th Infantry Battalion (Separate), 34 th Infantry Division. Place and date : Near La Torreto, Italy, June 2, 1944. Entered service at : Honolulu, HI, November 14, 1941. Born: February 26, 1920. Date of issue : June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private Shinyei Nakamine distinguished himself by extraordinary heroism in action on 2 June 1944, near La Torreto, Italy. During an attack, Private Nakamine's platoon became pinned down by intense machine gun crossfire from a small knoll 200 yards to the front. On his own initiative, Private Nakamine crawled toward one of the hostile weapons. Reaching a point 25 yards from the enemy, he charged the machine gun nest, firing his submachine gun, and killed three enemy soldiers and captured two. Later that afternoon, Private Nakamine discovered an enemy soldier on the right flank of his platoon's position. Crawling 25 yards from his position, Private Nakamine opened fire and killed the soldier. Then, seeing a machine gun nest to his front approximately 75 yards away, he returned to his platoon and led an automatic rifle team toward the enemy. Under covering fire from his team, Private Nakamine crawled to a point 25 yards from the nest and threw hand grenades at the enemy soldiers, wounding one and capturing four. Spotting another machine gun nest 100 yards to his right flank, he led the automatic rifle team toward the hostile position but was killed by a burst of machine gun fire. Private Nakamine's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Nakamura's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private First Class, U.S. Army, Company G, 442 nd Regiment, 34 th Infantry Division. Place and date : Near Castellina, Italy, July 4, 1944. Entered service : July 27, 1943. Born : January 21, 1922. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private First Class William K. Nakamura distinguished himself by extraordinary heroism in action on 4 July 1944, near Castellina, Italy. During a fierce firefight, Private First Class Nakamura's platoon became pinned down by enemy machine gun fire from a concealed position. On his own initiative, Private First Class Nakamura crawled 20 yards toward the hostile nest, with fire from the enemy machine gun barely missing him. Reaching a point 15 yards from the position, he quickly raised himself to a kneeling position and threw four hand grenades, killing or wounding at least three of the enemy soldiers. The enemy weapon silenced, Private First Class Nakamura crawled back to his platoon, which was able to continue its advance as a result of his courageous action. Later, his company was ordered to withdraw from the crest of a hill so that a mortar barrage could be placed on the ridge. On his own initiative, Private First Class Nakamura remained in position to cover his comrades' withdrawal. While moving toward the safety of a wooded draw, his platoon became pinned down by deadly machine gun fire. Crawling to a point from which he could fire on the enemy position, Private First Class Nakamura quickly and accurately fired his weapon to pin down the enemy machine gunners. His platoon was then able to withdraw to safety without further casualties. Private First Class Nakamura was killed during this heroic stand. Private First Class Nakamura's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Rank and organization: Sergeant, Company H, 16 th Infantry Regiment, 1 st Infantry Division, U.S. Army. Place and date: Heistern, Germany, November 18, 1944. Entered service at : Jamaica, NY. Born : April 27, 1921, Queens, NY. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant Alfred B. Nietzel distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a section leader for Company H, 16 th Infantry Regiment, 1 st Infantry Division during combat operations against an armed enemy in Heistern, Germany, on November 18, 1944. That afternoon, Sergeant Nietzel fought tenaciously to repel a vicious enemy attack against his unit. Sergeant Nietzel employed accurate, intense fire from his machinegun and successfully slowed the hostile advance. However, the overwhelming enemy force continued to press forward. Realizing he desperately needed reinforcements, Sergeant Nietzel ordered the three remaining members of his squad to return to the company command post and secure aid. He immediately turned his attention to covering their movement with his fire. After expending all his machinegun ammunition, Sergeant Nietzel began firing his rifle into the attacking ranks until he was killed by the explosion of an enemy grenade. Sergeant Nietzel's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private Nishimoto's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, First Class, U.S. Army, Company G, 442 nd Regimental Combat Team (Attached to the Third Battalion). Place and date : Vicinity of La Houssiere, France, November 7, 1944. Entered service : unknown. Born : circa 1920. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private First Class Joe M. Nishimoto distinguished himself by extraordinary heroism in action on 7 November 1944, near La Houssiere, France. After three days of unsuccessful attempts by his company to dislodge the enemy from a strongly defended ridge, Private First Class Nishimoto, as acting squad leader, boldly crawled forward through a heavily mined and booby-trapped area. Spotting a machine gun nest, he hurled a grenade and destroyed the emplacement. Then, circling to the rear of another machine gun position, he fired his submachine gun at point-blank range, killing one gunner and wounding another. Pursuing two enemy riflemen, Private First Class Nishimoto killed one, while the other hastily retreated. Continuing his determined assault, he drove another machine gun crew from its position. The enemy, with their key strong points taken, were forced to withdraw from this sector. Private First Class Nishimoto's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Sergeant Ohata's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Staff Sergeant, U.S. Army, Company B, 100 th Infantry Battalion (Separate), 34 th Infantry Division. Place and date : Near Cerasuolo, November 29-30, 1943. Entered service at : Honolulu, HI, November 21, 1941. Born : September 13, 1918, Honolulu, HI. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Sergeant Allan M. Ohata distinguished himself by extraordinary heroism in action on November 29 and 30, 1943, near Cerasuolo, Italy. Sergeant Ohata, his squad leader, and three men were ordered to protect his platoon's left flank against an attacking enemy force of 40 men, armed with machine guns, machine pistols, and rifles. He posted one of his men, an automatic rifleman, on the extreme left, 15 yards from his own position. Taking his position, Sergeant Ohata delivered effective fire against the advancing enemy. The man to his left called for assistance when his automatic rifle was shot and damaged. With utter disregard for his personal safety, Sergeant Ohata left his position and advanced 15 yards through heavy machine gun fire. Reaching his comrade's position, he immediately fired upon the enemy, killing 10 enemy soldiers and successfully covering his comrade's withdrawal to replace his damaged weapon. Sergeant Ohata and the automatic rifleman held their position and killed 37 enemy soldiers. Both men then charged the three remaining soldiers and captured them. Later, Sergeant Ohata and the automatic rifleman stopped another attacking force of 14, killing four and wounding three while the others fled. The following day, he and the automatic rifleman held their flank with grim determination and staved off all attacks. Staff Sergeant Ohata's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Congress approved "a bill to authorize the award of the Medal of Honor" to Technician Okubo and others on June 20, 2000, removing the statutory time limit on the award. Rank and organization : Technician Fifth Grade, Medical Corps, U.S. Army, Medical Detachment, 442 nd Combat Team. Place and date : Near Biffontaine, France, October 28 and 29, 1944 and November 4, 1944. Entered service at : Alturas, CA, May 22, 1943. Born : Anacortes, WA. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Technician Fifth Grade James K. Okubo distinguished himself by extraordinary heroism in action on October 28 and 29, 1944, and November 4, 1944, in the Forêt Domaniale de Champ, near Biffontaine, eastern France. On October 28, under strong enemy fire coming from behind mine fields and roadblocks, Technician Fifth Grade Okubo, a medic, crawled 150 yards to within 40 yards of the enemy lines. Two grenades were thrown at him while he left his last covered position to carry back wounded comrades. Under constant barrages of enemy small arms and machine gun fire, he treated 17 men on October 28, and 8 more men on October 29. On November 4, Technician Fifth Grade Okubo ran 75 yards under grazing machine gun fire and, while exposed to hostile fire directed at him, evacuated and treated a seriously wounded crewman from a burning tank, who otherwise would have died. Technician Fifth Grade James K. Okubo's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Sergeant Okutsu's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Technical Sergeant, U.S. Army, Company F, 442 nd Regimental Combat Team. Place and date : On Mount Belvedere near Massa, Italy, April 7, 1945 . Entered service at : Hanapepe, HI, March 12, 1943. Born : November 3, 1921, Koloa, HI . Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Technical Sergeant Yukio Okutsu distinguished himself by extraordinary heroism in action on April 7, 1945, on Mount Belvedere, Italy. While his platoon was halted by the crossfire of three machine guns, Technical Sergeant Okutsu boldly crawled to within 30 yards of the nearest enemy emplacement through heavy fire. He destroyed the position with two accurately placed hand grenades, killing three machine gunners. Crawling and dashing from cover to cover, he threw another grenade, silencing a second machine gun, wounding two enemy soldiers, and forcing two others to surrender. Seeing a third machine gun, which obstructed his platoon's advance, he moved forward through heavy small arms fire and was stunned momentarily by rifle fire, which glanced off his helmet. Recovering, he bravely charged several enemy riflemen with his submachine gun, forcing them to withdraw from their positions. Then, rushing the machine gun nest, he captured the weapon and its entire crew of four. By these single-handed actions he enabled his platoon to resume its assault on a vital objective. The courageous performance of Technical Sergeant Okutsu against formidable odds was an inspiration to all. Technical Sergeant Okutsu's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Ono's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the Medal of Honor. Rank and organization : Private, U.S. Army, Company G, 442 nd Regimental Combat Team. Place and date : Near Castellina, Italy. Entered service at : Knox, Indiana, September 2, 1943. Born : June 6, 1923. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private First Class Frank H. Ono distinguished himself by extraordinary heroism in action on July 4, 1944, near Castellina, Italy. In attacking a heavily defended hill, Private First Class Ono's squad was caught in a hail of formidable fire from the well-entrenched enemy. Private First Class Ono opened fire with his automatic rifle and silenced one machine gun 300 hundred yards to the right front. Advancing through incessant fire, he killed a sniper with another burst of fire, and while his squad leader reorganized the rest of the platoon in the rear, he alone defended the critical position. His weapon was then wrenched from his grasp by a burst of enemy machine pistol fire as enemy troops attempted to close in on him. Hurling hand grenades, Private First Class Ono forced the enemy to abandon the attempt, resolutely defending the newly won ground until the rest of the platoon moved forward. Taking a wounded comrade's rifle, Private First Class Ono again joined in the assault. After killing two more enemy soldiers, he boldly ran through withering automatic, small arms, and mortar fire to render first aid to his platoon leader and a seriously wounded rifleman. In danger of being encircled, the platoon was ordered to withdraw. Volunteering to cover the platoon, Private First Class Ono occupied virtually unprotected positions near the crest of the hill, engaging an enemy machine gun emplaced on an adjoining ridge and exchanging fire with snipers armed with machine pistols. Completely disregarding his own safety, he made himself the constant target of concentrated enemy fire until the platoon reached the comparative safety of a draw. He then descended the hill in stages, firing his rifle, until he rejoined the platoon. Private First Class Ono's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Sergeant Otani's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the Medal of Honor. Rank and organization : Staff Sergeant, U.S. Army, Company G, 442 nd Infantry Regiment, 34 th Infantry Division. Place and date : Near Pieve di S. Luce, Italy, July 15, 1944. Entered service at : Indianapolis, IN, February 16, 1942. Born : June 2, 1918. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Staff Sergeant Kazuo Otani distinguished himself by extraordinary heroism in action on July 15, 1944, near Pieve Di S. Luce, Italy. Advancing to attack a hill objective, Staff Sergeant Otani's platoon became pinned down in a wheat field by concentrated fire from enemy machine gun and sniper positions. Realizing the danger confronting his platoon, Staff Sergeant Otani left his cover and shot and killed a sniper who was firing with deadly effect upon the platoon. Followed by a steady stream of machine gun bullets, Staff Sergeant Otani then dashed across the open wheat field toward the foot of a cliff, and directed his men to crawl to the cover of the cliff. When the movement of the platoon drew heavy enemy fire, he dashed along the cliff toward the left flank, exposing himself to enemy fire. By attracting the attention of the enemy, he enabled the men closest to the cliff to reach cover. Organizing these men to guard against possible enemy counterattack, Staff Sergeant Otani again made his way across the open field, shouting instructions to the stranded men while continuing to draw enemy fire. Reaching the rear of the platoon position, he took partial cover in a shallow ditch and directed covering fire for the men who had begun to move forward. At this point, one of his men became seriously wounded. Ordering his men to remain under cover, Staff Sergeant Otani crawled to the wounded soldier, who was lying on open ground in full view of the enemy. Dragging the wounded soldier to a shallow ditch, Staff Sergeant Otani proceeded to render first aid treatment, but was mortally wounded by machine gun fire. Staff Sergeant Otani's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Sergeant Rivers was among the seven African Americans who were awarded the MOH for their heroic acts during World War II following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : Staff Sergeant, U.S. Army, Company A, 761 st Tank Battalion. Place and date : Near Guebling, France, November 16-19, 1944. Entered service : January 15, 1942. Born : October 30, 1918, Oklahoma City, OK. Date of issue: January 13, 1997. Citation : Staff Sergeant Ruben Rivers distinguished himself by extraordinary heroism in action during November 15-19, 1944, while serving with Company A, 761 st Tank Battalion. On November 16, 1944, while advancing toward the town of Guebling, France, Staff Sergeant Rivers' tank hit a mine at a railroad crossing. Although severely wounded, his leg slashed to the bone, Staff Sergeant Rivers declined an injection of morphine, refused to be evacuated, took command of another tank, and advanced with his company into Guebling the next day. Repeatedly refusing evacuation, Staff Sergeant Rivers continued to direct his tank's fire at enemy positions beyond the town through the morning of November 19, 1944. At dawn that day, Company A's tanks advanced toward Bourgaltroff, their next objective, but were stopped by enemy fire. Captain David J. Williams, the company commander, ordered his tanks to withdraw and take cover. Staff Sergeant Rivers, however radioed that he had spotted the German antitank positions: "I see 'em. We'll fight 'em!" Staff Sergeant Rivers, joined by another Company A tank, opened fire on enemy tanks, covering Company A as they withdrew. While doing so, Staff Sergeant Rivers's tank was hit, killing him and wounding the rest of the crew. Staff Sergeant Rivers's fighting spirit and daring leadership were an inspiration to his unit and exemplify the highest traditions of military service. Private Sakato's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Private, U.S. Army, Company E, 442 nd Regimental Combat Team. Place and date : Near Biffontaine, France, October 29,1944 . Entered service at : Fort Douglas, UT, March 1, 1944. Born: February 19, 1921, Colton, CA . Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private George T. Sakato distinguished himself by extraordinary heroism in action on 29 October 1944, on hill 617 in the vicinity of Biffontaine, France. After his platoon had virtually destroyed two enemy defense lines, during which he personally killed five enemy soldiers and captured four, his unit was pinned down by heavy enemy fire. Disregarding the enemy fire, Private Sakato made a one-man rush that encouraged his platoon to charge and destroy the enemy strongpoint. While his platoon was reorganizing, he proved to be the inspiration of his squad in halting a counter-attack on the left flank during which his squad leader was killed. Taking charge of the squad, he continued his relentless tactics, using an enemy rifle and P-38 pistol to stop an organized enemy attack. During this entire action, he killed 12 and wounded two, personally captured four, and assisted his platoon in taking 34 prisoners. By continuously ignoring enemy fire, and by his gallant courage and fighting spirit, he turned impending defeat into victory and helped his platoon complete its mission. Private Sakato's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Congress approved the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 551, on December 28, 2001, removing the statutory time limit on the award for Captain Salomon. Rank and organization : Captain, U.S. Army 2 nd Battalion, 105 th Infantry Regiment, 27 th Infantry Division. Place and date: Saipan, Marianas Islands, July 7, 1944. Entered service : Denver, CO. Born: September 1, 1914, Milwaukee, WI. Date of issue: May 1, 2002. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Captain Ben L. Salomon was serving at Saipan, in the Marianas Islands on July 7, 1944, as the Surgeon for the 2d Battalion, 105 th Infantry Regiment, 27 th Infantry Division. The Regiment's 1 st and 2d Battalions were attacked by an overwhelming force estimated between 3,000 and 5,000 Japanese soldiers. It was one of the largest attacks attempted in the Pacific Theater during World War II. Although both units fought furiously, the enemy soon penetrated the Battalions' combined perimeter and inflicted overwhelming casualties. In the first minutes of the attack, approximately 30 wounded soldiers walked, crawled, or were carried into Captain Salomon's aid station, and the small tent soon filled with wounded men. As the perimeter began to be overrun, it became increasingly difficult for Captain Salomon to work on the wounded. He then saw a Japanese soldier bayoneting one of the wounded soldiers lying near the tent. Firing from a squatting position, Captain Salomon quickly killed the enemy soldier. Then, as he turned his attention back to the wounded, two more Japanese soldiers appeared in the front entrance of the tent. As these enemy soldiers were killed, four more crawled under the tent walls. Rushing them, Captain Salomon kicked the knife out of the hand of one, shot another, and bayoneted a third. Captain Salomon butted the fourth enemy soldier in the stomach and a wounded comrade then shot and killed the enemy soldier. Realizing the gravity of the situation, Captain Salomon ordered the wounded to make their way as best they could back to the regimental aid station, while he attempted to hold off the enemy until they were clear. Captain Salomon then grabbed a rifle from one of the wounded and rushed out of the tent. After four men were killed while manning a machine gun, Captain Salomon took control of it. When his body was later found, 98 dead enemy soldiers were piled in front of his position. Captain Salomon's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Congress approved the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552, on December 28, 2001, requesting that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: First Lieutenant, Company E, 15 th Infantry Regiment, 3 d Infantry Division, U.S. Army. Place and date: Lure, France, September 17, 1944. Born : December 6, 1918, Hooper, NE. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: First Lieutenant Donald K. Schwab distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as the commander of Company E, 15 th Infantry Regiment, 3 rd Infantry Division, during combat operations against an armed enemy near Lure, France, on September 17, 1944. That afternoon, as First Lieutenant Schwab led his company across four hundred yards of exposed ground, an intense, grazing burst of machinegun and machine-pistol fire sprung forth without warning from a fringe of woods directly in front of the American force. First Lieutenant Schwab quickly extricated his men from the attempted ambush and led them back to a defiladed position. Soon after, he was ordered to overwhelm the enemy line. He rapidly organized his men into a skirmish line and, with indomitable courage, again led them forward into the lethal enemy fire. When halted a second time, First Lieutenant Schwab moved from man to man to supervise collection of the wounded and organize his company's withdrawal. From defilade, he rallied his decimated force for a third charge on the hostile strong point and successfully worked his way to within fifty yards of the Germans before ordering his men to hit the dirt. While automatic weapons fire blazed around him, he rushed forward alone, firing his carbine at the German foxholes, aiming for the vital enemy machine-pistol nest that had sparked the German resistance and caused heavy casualties among his men. Silhouetted through the mist and rain by enemy flares, he charged to the German emplacement, ripped the half-cover off the hostile firing pit, struck the German gunner on the head with his carbine butt, and dragged the German back through a hail of fire to friendly lines. First Lieutenant Schwab's action so disorganized hostile infantry resistance that the enemy forces withdrew, abandoning their formidable defensive line. First Lieutenant Schwab's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Tanouye's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Technical Sergeant, U.S. Army, Company K, 442 nd Infantry Regiment, 34 th Infantry Division . Place and date : Near Molino A Ventoabbto, Italy, July 7, 1944 . Entered service : February 21, 1942. Born : November 14, 1919. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Technical Sergeant Ted T. Tanouye distinguished himself by extraordinary heroism in action on 7 July 1944, near Molino A Ventoabbto, Italy. Technical Sergeant Tanouye led his platoon in an attack to capture the crest of a strategically important hill that afforded little cover. Observing an enemy machine gun crew placing its gun in position to his left front, Technical Sergeant Tanouye crept forward a few yards and opened fire on the position, killing or wounding three and causing two others to disperse. Immediately, an enemy machine pistol opened fire on him. He returned the fire and killed or wounded three more enemy soldiers. While advancing forward, Technical Sergeant Tanouye was subjected to grenade bursts, which severely wounded his left arm. Sighting an enemy-held trench, he raked the position with fire from his submachine gun and wounded several of the enemy. Running out of ammunition, he crawled 20 yards to obtain several clips from a comrade on his left flank. Next, sighting an enemy machine pistol that had pinned down his men, Technical Sergeant Tanouye crawled forward a few yards and threw a hand grenade into the position, silencing the pistol. He then located another enemy machine gun firing down the slope of the hill, opened fire on it, and silenced that position. Drawing fire from a machine pistol nest located above him, he opened fire on it and wounded three of its occupants. Finally taking his objective, Technical Sergeant Tanouye organized a defensive position on the reverse slope of the hill before accepting first aid treatment and evacuation. Technical Sergeant Tanouye's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Lieutenant Thomas was among the seven African Americans who were awarded the MOH for their heroic acts during World War II following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : Lieutenant, Company C, 614 th Tank Destroyer Battalion, U.S. Army. Place and date : Near Climbach, France, December 14, 1944. Entered service : January 20, 1942. Born : April 17,1920, Birmingham, AL. Date of issue: January 13, 1997. Citation : Then Lieutenant Charles L. Thomas distinguished himself by extraordinary heroism in action on December 14, 1944. One platoon of Company C, 614 th Tank Destroyer Battalion, was designated as the leading element in a task force formed to storm and capture the village of Climbach, France. Lieutenant Thomas, the commanding officer of Company C, realized, with the obscurity of information regarding the enemy and a complete lack of reconnaissance, the mission would be an extremely dangerous one. Fully cognizant of the danger, Lieutenant Thomas volunteered to command the selected platoon of his company and ride in the column's leading vehicle—a highly maneuverable, but equally vulnerable, M-20 scout car. Lieutenant Thomas knew that if there was a concentration of enemy armor in the village, as was believed, he would absorb the initial shock of the first enemy resistance. The task force left Preuschdorf, France, at 1023 hours, and proceeded to advance in column toward Climbach. Lieutenant Thomas in his scout car stayed well in form of the column. At 1400 hours, upon reaching the high ground southeast of the village, Lieutenant Thomas experienced initial contact with the enemy. As his scout car advanced to an exposed position on the heights, he received intense direct fire from enemy artillery, self-propelled guns, and small arms at a range of 700 yards. The first burst of hostile fire disabled the scout car and severely wounded Lieutenant Thomas. He immediately signaled the column to halt. Before leaving the wrecked vehicle, Lieutenant Thomas and the crew found themselves subjected to a veritable hail of enemy fire. Lieutenant Thomas received multiple gunshot wounds in his chest, legs, and left arm. In spite of the intense pain caused by his wounds, Lieutenant Thomas ordered and directed the dispersion and emplacement of his first two antitank guns. In a few minutes these guns were effectively returning the enemy fire. Realizing that it would be impossible for him to remain in command of the platoon because of his injuries, Lieutenant Thomas then signaled for the platoon commander to join him. Lieutenant Thomas then thoroughly oriented him as to the enemy gun positions, his ammunition status, and the general situation. Although fully cognizant of the probable drastic consequences of not receiving prompt medical attention, Lieutenant Thomas refused evacuation until he felt certain that his junior officer was in full control of the situation. Only then did Lieutenant Thomas allow his evacuation to the rear. Throughout the action, Lieutenant Thomas displayed magnificent personal courage and a complete disregard for his own safety. His extraordinary heroism spurred the soldiers of the platoon to a fierce determination to triumph, and resulted in a mass display of heroism by them. Lieutenant Thomas's intrepid actions throughout the operation reflect the highest traditions of military service. Lieutenant Urban's recommendation was delayed due to administrative error. The law provides that in such cases time limitations may be waived. Rank and organization : Lieutenant Colonel, Second Battalion, 60 th Infantry Regiment, Ninth Infantry Division, U.S. Army. Place and date : Renouf, St. Lo, France, the Meuse River near Heer, Belgium, June 14,1944, to September 3, 1944. Entered service at : Fort Bragg, NC, July 2, 1941. Born : August 25, 1919, Buffalo, NY. Date of issue: July 19, 1980. Citation: For conspicuous gallantry and intrepidity in action at the risk of life above and beyond the call of duty: During the period, June 14, 1944, to September 3, 1944, Lieutenant Colonel (then Captain) Matt Urban distinguished himself by a series of bold, heroic actions, exemplified by singularly outstanding combat leadership, personal bravery, and tenacious devotion to duty, while assigned to the Second Battalion, 60 th Infantry Regiment, Ninth Infantry Division. On 14 June, Captain Urban's company, attacking at Renouf, France, encountered heavy enemy small arms and tank fire. The enemy tanks were unmercifully raking his unit's positions and inflicting heavy casualties. Captain Urban, realizing that his company was in imminent danger of being decimated, armed himself with a bazooka. He worked his way with an ammo carrier through hedgerows, under a continuing barrage of fire, to a point near the tanks. He brazenly exposed himself to the enemy fire and, firing the bazooka, destroyed both tanks. Responding to Captain Urban's action, his company moved forward and routed the enemy. Later that same day, still in the attack near Orglandes, Captain Urban was wounded in the leg by direct fire from a 37mm tank-gun. He refused evacuation and continued to lead his company until they moved into defensive positions for the night. At 0500 hours the next day, still in the attack near Orglandes, Captain Urban, though badly wounded, directed his company in another attack. One hour later he was again wounded. Suffering from two wounds, one serious, he was evacuated to England. In mid-July, while recovering from his wounds, he learned of his unit's severe losses in the hedgerows of Normandy. Realizing his unit's need for battle-tested leaders, he voluntarily left the hospital and hitchhiked his way back to his unit near St. Lo, France. Arriving at the Second Battalion Command Post at 1130 hours, 25 July, he found that his unit had jumped-off at 1100 hours in the first attack of "Operation Cobra." Still limping from his leg wound, Captain Urban made his way forward to retake command of his company. He found his company held up by strong enemy opposition. Two supporting tanks had been destroyed and another, intact but with no tank commander or gunner, was not moving. He located a lieutenant in charge of the support tanks and directed a plan of attack to eliminate the enemy strong-point. The lieutenant and a sergeant were immediately killed by the heavy enemy fire when they tried to mount the tank. Captain Urban, though physically hampered by his leg wound and knowing quick action had to be taken, dashed through the scathing fire and mounted the tank. With enemy bullets ricocheting from the tank, Captain Urban ordered the tank forward and, completely exposed to the enemy fire, manned the machine gun and placed devastating fire on the enemy. His action, in the face of enemy fire, galvanized the battalion into action, and they attacked and destroyed the enemy position. On 2 August, Captain Urban was wounded in the chest by shell fragments and, disregarding the recommendation of the Battalion Surgeon, again refused evacuation. On 6 August, Captain Urban became the commander of the Second Battalion. On 15 August, he was again wounded but remained with his unit. On 3 September, the Second Battalion was given the mission of establishing a crossing-point on the Meuse River near Heer, Belgium. The enemy planned to stop the advance of the allied Army by concentrating heavy forces at the Meuse. The Second Battalion, attacking toward the crossing-point, encountered fierce enemy artillery, small arms, and mortar fire, which stopped the attack. Captain Urban quickly moved from his command post to the lead position of the battalion. Reorganizing the attacking elements, he personally led a charge toward the enemy's strong-point. As the charge moved across the open terrain, Captain Urban was seriously wounded in the neck. Although unable to talk above a whisper from the paralyzing neck wound, and in danger of losing his life, he refused to be evacuated until the enemy was routed and his battalion had secured the crossing-point on the Meuse River. Captain Urban's personal leadership, limitless bravery, and repeated extraordinary exposure to enemy fire served as an inspiration to his entire battalion. His valorous and intrepid actions reflect the utmost credit on him and uphold the noble traditions of the United States Army. Captain Wai's military records were among those reviewed under the FY1996 National Defense Authorization Act ( P.L. 104-106 , Section 524). Following review, he was awarded the MOH. Rank and organization : Captain, U.S. Infantry Headquarters, 34 th Infantry Regiment, U.S. Army. Place and date : Near Leyte, Philippine Islands, October 20, 1944. Entered service : unknown. Born : unknown. Date of issue: June 21, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Captain Francis B. Wai distinguished himself by extraordinary heroism in action, on October 20, 1944, in Leyte, Philippine Islands. Captain Wai landed at Red Beach, Leyte, in the face of accurate, concentrated enemy fire from gun positions advantageously located in a palm grove bounded by submerged rice paddies. Finding the first four waves of American soldiers leaderless, disorganized, and pinned down on the open beach, he immediately assumed command. Issuing clear and concise orders, and disregarding heavy enemy machine gun and rifle fire, he began to move inland through the rice paddies without cover. The men, inspired by his cool demeanor and heroic example, rose from their positions and followed him. During the advance, Captain Wai repeatedly determined the locations of enemy strong points by deliberately exposing himself to draw their fire. In leading an assault upon the last remaining Japanese pillbox in the area, he was killed by its occupants. Captain Wai's courageous, aggressive leadership inspired the men, even after his death, to advance and destroy the enemy. His intrepid and determined efforts were largely responsible for the rapidity with which the initial beachhead was secured. Captain Wai's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army. Private Watson was among the seven African Americans who were awarded the MOH for their heroic acts during World War II following Congress's approval of P.L. 104-201 , which waived the time limit to allow the President to award the MOH. Rank and organization : Private, Second Battalion, 29 th Quartermaster Regiment, U.S. Army. Place and date : Near Porlock Harbor, New Guinea, 8 March 1943. Entered service : 1 September 1942. Born : 24 March 1914, Birmingham, AL. Date of issue : January 13, 1997. Citation : Private George Watson distinguished himself by extraordinary heroism on 8 March 1943, while serving in the Pacific Command with the Second Battalion, 29 th Quartermaster Regiment, near Porlock Harbor, New Guinea. Private Watson was on board a troop ship, the Dutch Steamer (United States Army Transport) Jacob , when it was attacked and hit by enemy bombers. Before it sank, the ship was abandoned. Private Watson, instead of seeking to save himself, remained in deep waters long enough to assist several soldiers who could not swim to reach the safety of a life raft. This heroic action, which subsequently cost him his life, resulted in saving the lives of several of his comrades. Weakened by continuous physical exertion and overcome by muscular fatigue, Private Watson drowned when the suction of the sinking ship dragged him beneath the surface of the swirling waters. His demonstrated bravery and unselfish act set in motion a train of compelling events that finally led to American victory in the Pacific. Private Watson's extraordinary valorous actions, his daring and inspiring leadership, and his self-sacrificing devotion to his fellow man exemplify the finest traditions of military service. Corporal Baldonado's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Corporal, Company B, 187 th Airborne Infantry Regiment, U.S. Army. Place and date: Kangdong, Korea, November 25, 1950. Entered service at : Santa Clara, CA. Born : August 28, 1930, Colorado. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Corporal Joe R. Baldonado distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an acting machinegunner in 3 rd Squad, 2 nd Platoon, Company B, 187 th Airborne Infantry Regiment during combat operations against an armed enemy in Kangdong, Korea, on November 25, 1950. On that morning, the enemy launched a strong attack in an effort to seize the hill occupied by Corporal Baldonado and his company. The platoon had expended most of its ammunition in repelling the enemy attack and the platoon leader decided to commit his 3 rd Squad, with its supply of ammunition, in the defensive action. Since there was no time to dig in because of the proximity of the enemy, who had advanced to within 25 yards of the platoon position, Corporal Baldonado emplaced his weapon in an exposed position and delivered a withering stream of fire on the advancing enemy, causing them to fall back in disorder. The enemy then concentrated all their fire on Corporal Baldonado's gun and attempted to knock it out by rushing the position in small groups and hurling hand grenades. Several times, grenades exploded extremely close to Corporal Baldonado but failed to interrupt his continuous firing. The hostile troops made repeated attempts to storm his position and were driven back each time with appalling casualties. The enemy finally withdrew after making a final assault on Corporal Baldonado's position during which a grenade landed near his gun, killing him instantly. Corporal Baldonado's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Corporal Espinoza's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Corporal, U.S. Army. Place and date: Chorwon, Korea, August 1, 1952. Entered service at : Texas. Born : July 15,1929, El Paso, TX. Date of issue: March 18, 2014. Citation : Corporal Victor H. Espinoza distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an acting rifleman in Company A, 23 rd Infantry Regiment, 2 nd Infantry Division during combat operations against an armed enemy in Chorwon, Korea, on August 1, 1952. On that day, Corporal Espinoza and his unit were responsible for securing and holding a vital enemy hill. As the friendly unit neared its objective, it was subjected to a devastating volume of enemy fire, slowing its progress. Corporal Espinoza, unhesitatingly and being fully aware of the hazards involved, left his place of comparative safety and made a deliberate one-man assault on the enemy with his rifle and grenades, destroying a machinegun and killing its crew. Corporal Espinoza continued across the fire-swept terrain to an exposed vantage point where he attacked an enemy mortar position and two bunkers with grenades and rifle fire, knocking out the enemy mortar position and destroying both bunkers and killing their occupants. Upon reaching the crest, and after running out of rifle ammunition, he called for more grenades. A comrade who was behind him threw some Chinese grenades to him. Immediately upon catching them, he pulled the pins and hurled them into the occupied trenches, killing and wounding more of the enemy with their own weapons. Continuing on through a tunnel, Corporal Espinoza made a daring charge, inflicting at least seven more casualties upon the enemy who were fast retreating into the tunnel. Corporal Espinoza was quickly in pursuit, but the hostile fire from the opening prevented him from overtaking the retreating enemy. As a result, Corporal Espinoza destroyed the tunnel with TNT, called for more grenades from his company, and hurled them at the enemy troops until they were out of reach. Corporal Espinoza's incredible display of valor secured the vital strong point and took a heavy toll on the enemy, resulting in at least 14 dead and 11 wounded. Corporal Espinoza's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Gomez's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Sergeant First Class, Company 1, 8 th Cavalry Regiment, 1 st Cavalry Division, U.S. Army. Place and date: September 3, 1950, Tabu-dong, Korea. Born : October 28, 1919, Los Angeles, CA. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant Eduardo C. Gomez distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving with Company I, 8 th Cavalry Regiment, 1 st Cavalry Division during combat operations against an armed enemy in Tabu-dong, Korea, on September 3, 1950. That afternoon, while conducting combat patrol, Sergeant Gomez's company was ruthlessly attacked by a hostile force that moved within 75 yards of the command post before it was immobilized by rocket fire. However, an enemy tank and multiple enemy machineguns continued to rake the company perimeter with devastating fire. Realizing the tank posed a serious threat to the entire perimeter, Sergeant Gomez voluntarily crawled 30 yards across an open rice field vulnerable to enemy observation and fire, boarded the tank, pried open one of the hatches on the turret, and dropped an activated grenade into the hull, killing the crew. Wounded in the left side while returning to his position, Sergeant Gomez refused evacuation. Observing that the tripod of a .30 caliber machinegun was rendered inoperable by enemy fire, he cradled the weapon in his arms, returned to the forward defensive positions, and swept the assaulting force with withering fire. Although his weapon overheated and burned his hands and his painful wound still bled, Sergeant Gomez maintained his stand and, upon orders to withdraw in the face of overwhelming enemy superiority, remained to provide protective fire. Sergeant Gomez continued to pour accurate fire into the enemy ranks, exacting a heavy toll in casualties and retarding their advance. Sergeant Gomez would not consent to leave his post for medical attention until the company established new defensive positions. Sergeant Gomez's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private First Class Kaho'ohanohano's military records were among those reviewed under the FY2010 National Defense Authorization Act ( P.L. 111-84 , Title V, Subtitle F, Section 551). Following review, he was awarded the MOH. Rank and organization : Private First Class, Company H, 17 th Infantry Regiment, 7 th Infantry Division, U.S. Army. Place and date : Chupa-ri, Korea, September 1, 1951. Entered service in Hawaii. Born : 1930. Place of birth: unknown. Date of issue: May 2, 2011. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private First Class Anthony T. Kaho'ohanohano, Company H, 17 th Infantry Regiment, 7 th Infantry Division, distinguished himself by extraordinary heroism in action against the enemy in the vicinity of Chupa-ri, Korea, on 1 September 1951. On that date, Private First Class Kaho'ohanohano was in charge of a machine-gun squad supporting the defensive positioning of Company F when a numerically superior enemy force launched a fierce attack. Because of the enemy's overwhelming numbers, friendly troops were forced to execute a limited withdrawal. As the men fell back, Private First Class Kaho'ohanohano ordered his squad to take up more defensible positions and provide covering fire for the withdrawing friendly force. Although having been wounded in the shoulder during the initial enemy assault, Private First Class Kaho'ohanohano gathered a supply of grenades and ammunition and returned to his original position to face the enemy alone. As the hostile troops concentrated their strength against his emplacement in an effort to overrun it, Private First Class Kaho'ohanohano fought fiercely and courageously, delivering deadly accurate fire into the ranks of the onrushing enemy. When his ammunition was depleted, he engaged the enemy in hand-to-hand combat until he was killed. Private First Class Kaho'ohanohano's heroic stand so inspired his comrades that they launched a counterattack that completely repulsed the enemy. Upon reaching Private First Class Kaho'ohanohano's emplacement, friendly troops discovered 11 enemy soldiers lying dead in front of the emplacement and two inside it, killed in hand-to-hand combat. Private First Class Kaho'ohanohano's extraordinary heroism and selfless devotion to duty are in keeping with the finest traditions of military service and reflect great credit upon himself, the 7 th Infantry Division, and the United States Army. Congress, in the National Defense Authorization Act for Fiscal Year 2012, ( P.L. 112-81 , Title V, Subtitle I, Section 594, authorized the President to award the MOH posthumously to Captain Emil Joseph Kapaun, upgrading his Distinguished Service Cross. Rank and organization: Captain (Chaplain), 3 rd Battalion, 8 th Cavalry Regiment, 1 st Cavalry Division, U.S. Army. Place and date: Unsan, Korea, November 1-2, 1950. Entered service at: Kansas. Born: April 20, 1916, Pilsen, KS. Date of issue: April 11, 2013. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving with the 3 rd Battalion, 8 th Cavalry Regiment, 1 st Cavalry Division during combat operations against an armed enemy at Unsan, Korea, from November 1-2, 1950. On November 1, as Chinese Communist Forces viciously attacked friendly elements, Chaplain Kapaun calmly walked through withering enemy fire in order to provide comfort and medical aid to his comrades and rescue friendly wounded from no-man's land. Though the Americans successfully repelled the assault, they found themselves surrounded by the enemy. Facing annihilation, the able-bodied men were ordered to evacuate. However, Chaplain Kapaun, fully aware of his certain capture, elected to stay behind with the wounded. After the enemy succeeded in breaking through the defense in the early morning hours of November 2, Chaplain Kapaun continually made rounds, as hand-to-hand combat ensued. As Chinese Communist Forces approached the American position, Chaplain Kapaun noticed an injured Chinese officer amongst the wounded and convinced him to negotiate the safe surrender of the American Forces. Shortly after his capture, Chaplain Kapaun, with complete disregard for his personal safety and unwavering resolve, bravely pushed aside an enemy soldier preparing to execute Sergeant First Class Herbert A. Miller. Not only did Chaplain Kapaun's gallantry save the life of Sergeant Miller, but also his unparalleled courage and leadership inspired all those present, including those who might have otherwise fled in panic, to remain and fight the enemy until captured. Chaplain Kapaun's extraordinary heroism and selflessness, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, the 3 rd Battalion, 8 th Cavalry Regiment, the 1 st Cavalry Division, and the United States Army. President Barack Obama presented the Medal of Honor to Kapaun's nephew at the White House on April 11, 2013. Congress approved Supplemental Appropriations for Defense, International Affairs, and other Security Related Needs on May 25, 2007, removing the statutory time limit on the award for Master Sergeant Keeble. Rank and organization : Master Sergeant, Company G, 2 nd Battalion, 19 th Infantry Regiment, 24 th Infantry Division, U.S. Army. Place and date : Sangsan-ni, Korea, October 20, 1951. Entered service at : Wahpeton, ND. Born : May 16, 1917, Waubay, SD. Date of issue: March 3, 2008. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Master Sergeant Woodrow W. Keeble distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty in action with an armed enemy near Sangsan-ni, Korea, on October 20, 1951. On that day, Master Sergeant Keeble was an acting platoon leader for the support platoon in Company G, 19 th Infantry, in the attack on Hill 765, a steep and rugged position that was well defended by the enemy. Leading the support platoon, Master Sergeant Keeble saw that the attacking elements had become pinned down on the slope by heavy enemy fire from three well-fortified and strategically placed enemy positions. With complete disregard for his personal safety, Master Sergeant Keeble dashed forward and joined the pinned-down platoon. Then, hugging the ground, Master Sergeant Keeble crawled forward alone until he was in close proximity to one of the hostile machine-gun emplacements. Ignoring the heavy fire that the crew trained on him, Master Sergeant Keeble activated a grenade and threw it with great accuracy, successfully destroying the position. Continuing his one-man assault, he moved to the second enemy position and destroyed it with another grenade. Despite the fact that the enemy troops were now directing their firepower against him and unleashing a shower of grenades in a frantic attempt to stop his advance, he moved forward against the third hostile emplacement, and skillfully neutralized the remaining enemy position. As his comrades moved forward to join him, Master Sergeant Keeble continued to direct accurate fire against nearby trenches, inflicting heavy casualties on the enemy. Inspired by his courage, Company G successfully moved forward and seized its important objective. The extraordinary courage, selfless service, and devotion to duty displayed that day by Master Sergeant Keeble was an inspiration to all around him and reflected great credit upon himself, his unit, and the United States Army. Private Kravitz's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 551, on December 28, 2001, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private First Class, Company M, 3 rd Battalion, 5 th Infantry Regiment, U.S. Army. Place and date: Yangpyong, Korea, March 6-7, 1951. Entered service at : New York. Born : 1931, Brooklyn, NY. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private First Class Leonard M. Kravitz distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an assistant machinegunner with Company M, 5 th Infantry Regiment, 24 th Infantry Division during combat operations against an armed enemy in Yangpyong, Korea, on March 6 and 7, 1951. After friendly elements had repulsed two probing attacks, the enemy launched a fanatical banzai charge with heavy supporting fire and, despite staggering losses, pressed the assault with ruthless determination. When the machinegunner was wounded in the initial phase of the action, Private First Class Kravitz immediately seized the weapon and poured devastating fire into the ranks of the onrushing assailants. The enemy effected and exploited a breach on the left flank, rendering the friendly positions untenable. Upon order to withdraw, Private First Class Kravitz voluntarily remained to provide protective fire for the retiring elements. Detecting enemy troops moving toward friendly positions, Private First Class Kravitz swept the hostile soldiers with deadly, accurate fire, killing the entire group. His destructive retaliation caused the enemy to concentrate vicious fire on his position and enabled the friendly elements to withdraw. Later, after friendly troops had returned, Private First Class Kravitz was found dead behind the gun he had so heroically manned, surrounded by numerous enemy dead. Private First Class Kravitz's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Negron's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Sergeant, U.S. Army. Place and date: Kalma-Eri, Korea, April 28, 1951. Born : September 26, 1929, Corozal, Puerto Rico. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant Juan E. Negron distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a member of Company L, 65 th Infantry Regiment, 3 rd Infantry Division during combat operations against an armed enemy in Kalma-Eri, Korea, on April 28, 1951. That afternoon, Sergeant Negron took up the most vulnerable position on his company's exposed right flank after an enemy force had overrun a section of the line. When notified that elements of his company were withdrawing, Sergeant Negron refused to leave his exposed position, instead delivering withering fire at hostile troops who had broken through a road block. When the hostile troops approached his position, Sergeant Negron accurately hurled hand grenades at short range, halting their attack. Sergeant Negron held the position throughout the night while friendly forces organized and launched a counterattack. The next morning, after the enemy had been repulsed, friendly forces relieved Sergeant Negron and found the bodies of 15 enemy soldiers surrounding his position. Sergeant Negron's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Pena's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Master Sergeant, Company F, 2 nd Battalion, 5 th Cavalry Regiment, 1 st Cavalry Division, U.S. Army. Place and date: Waegwan, Korea, September 4, 1950. Entered service at : El Paso, TX. Born : November 6, 1924, Newgulf, TX. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Master Sergeant Mike C. Pena distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a member of Company F, 5 th Cavalry Regiment, 1 st Cavalry Division during combat operations against an armed enemy in Waegwan, Korea, on September 4, 1950. That evening, under cover of darkness and a dreary mist, an enemy battalion moved to within a few yards of Master Sergeant Pena's platoon. Recognizing the enemy's approach, Master Sergeant Pena and his men opened fire, but the enemy's sudden emergence and accurate, point-blank fire forced the friendly troops to withdraw. Master Sergeant Pena rapidly reorganized his men and led them in a counterattack, which succeeded in regaining the positions they had just lost. He and his men quickly established a defensive perimeter and laid down devastating fire, but enemy troops continued to hurl themselves at the defenses in overwhelming numbers. Realizing that their scarce supply of ammunition would soon make their positions untenable, Master Sergeant Pena ordered his men to fall back and manned a machinegun to cover their withdrawal. He singlehandedly held back the enemy until the early hours of the following morning when his position was overrun and he was killed. Master Sergeant Pena's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Private Rivera's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private, Company G, 2 nd Battalion, 7 th Infantry Regiment, 3 rd Infantry Division, U.S. Army. Place and date: Changyongni, Korea, May 22-23, 1951. Entered service at : New York. Born : 29 April 1933, Cabo Rojo, Puerto Rico. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Demensio Rivera distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an automatic rifleman with 2 nd Platoon, Company G, 7 th Infantry Regiment, 3 rd Infantry Division during combat operations against an armed enemy in Changyong-ni, Korea, on May 23, 1951. Early that morning, a large hostile force emerged from a dense fog and viciously attacked Private Rivera and his comrades. Private Rivera immediately responded by firing with deadly accuracy until his weapon jammed. Without hesitating, he threw his rifle down and began to engage the enemy with his pistol and grenades. At one point, Private Rivera fearlessly crawled from his emplacement to engage an infiltrating enemy soldier in fierce hand-to-hand combat. With only the sound of footsteps and obscure shadows to guide his aim, Private Rivera held his position against tremendous odds, inflicting numerous casualties on the enemy until he found himself without ammunition of any kind except one grenade. Displaying a peerless fighting spirit and an utterly selfless devotion to duty, Private Rivera pulled the pin from his last grenade and calmly waited for the enemy to reach his position. As enemy troops leaped inside his bunker, Private Rivera activated the grenade with the full knowledge that it meant his almost certain death. When the debris from the explosion had cleared, friendly forces recovered a severely wounded Private Rivera and discovered the bodies of four dead or dying enemy soldiers surrounding him. Private Rivera's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Rank and organization : Corporal, U.S. Army. Place and date : Republic of Korea, July 23, 1950 to April 20, 1953. Entered service at : unknown. Born : 18 June 1929, Hungary. Date of issue : September 23, 2005. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Corporal Tibor Rubin distinguished himself by extraordinary heroism during the period from July 23, 1950, to April 20, 1953, while serving as a rifleman with Company I, 8 th Cavalry Regiment, 1 st Cavalry Division in the Republic of Korea. While his unit was retreating to the Pusan Perimeter, Corporal Rubin was assigned to stay behind to keep open the vital Taegu-Pusan Road link used by his withdrawing unit. During the ensuing battle, overwhelming numbers of North Korean troops assaulted a hill defended solely by Corporal Rubin. He inflicted a staggering number of casualties on the attacking force during his personal 24-hour battle, single-handedly slowing the enemy advance and allowing the 8 th Cavalry Regiment to complete its withdrawal successfully. Following the breakout from the Pusan Perimeter, the 8 th Cavalry Regiment proceeded northward and advanced into North Korea. During the advance, he helped capture several hundred North Korean soldiers. On October 30, 1950, Chinese forces attacked his unit at Unsan, North Korea, during a massive nighttime assault. That night and throughout the next day, he manned a .30 caliber machine gun at the south end of the unit's line after three previous gunners became casualties. He continued to man his machine gun until his ammunition was exhausted. His determined stand slowed the pace of the enemy advance in his sector, permitting the remnants of his unit to retreat southward. As the battle raged, Corporal Rubin was severely wounded and captured by the Chinese. Choosing to remain in the prison camp despite offers from the Chinese to return him to his native Hungary, Corporal Rubin disregarded his own personal safety and immediately began sneaking out of the camp at night in search of food for his comrades. Breaking into enemy food storehouses and gardens, he risked certain torture or death if caught. Corporal Rubin provided not only food to the starving Soldiers, but also desperately needed medical care and moral support for the sick and wounded of the POW camp. His brave, selfless efforts were directly attributed to saving the lives of as many as forty of his fellow prisoners. Corporal Rubin's gallant actions in close contact with the enemy and unyielding courage and bravery while a prisoner of war are in the highest traditions of military service and reflect great credit upon himself and the United States Army. Private First Class Svehla's military records were among those reviewed at the request of Congress. Following review, he was awarded the MOH, an upgrade from his Distinguished Service Cross. Rank and Organization: Private First Class, F Company, 32 nd Infantry Regiment, 7 th Infantry Division, U.S. Army. Place and date : Pyongong, Korea, 12 June, 1952. Entered service at: New Jersey. Born: 1932, New Jersey. Date of issue: May 2, 2011. Citation : Private First Class Henry Svehla distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a Rifleman with F Company, 32d Infantry Regiment, 7 th Infantry Division, in connection with combat operations against an armed enemy in Pyongong, Korea, on 12 June 1952. That afternoon while Private First Class Svehla and his platoon were patrolling a strategic hill to determine enemy strength and positions, they were subjected to intense enemy automatic weapons and small arms fire at the top of the hill. Coming under the heavy fire, the platoon's attack began to falter. Realizing the success of the mission and the safety of the remaining troops were in peril, Private First Class Svehla leapt to his feet and charged the enemy positions, firing his weapon and throwing grenades as he advanced. In the face of this courage and determination, the platoon rallied to the attack with renewed vigor. Private First Class Svehla, utterly disregarding his own safety, destroyed enemy positions and inflicted heavy casualties, when suddenly fragments from a mortar round exploding nearby seriously wounded him in the face. Despite his wounds, Private First Class Svehla refused medical treatment and continued to lead the attack. When an enemy grenade landed among a group of his comrades, Private First Class Svehla, without hesitation and undoubtedly aware of the extreme danger, threw himself upon the grenade. During this action, Private First Class Svehla was mortally wounded. Private First Class Svehla's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Private Vera's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Private, Company F, 2 nd Battalion, 38 th Infantry Regiment, 2 nd Infantry Division, U.S. Army. Place and date: Chorwon, Korea, September 21, 1952. Born : May 3, 1932, Puerto Rico. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Private Miguel A. Vera distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an automatic rifleman with Company F, 38 th Infantry 2 nd Infantry Division in Chorwon, Korea, on September 21, 1952. That morning, despite suffering from wounds inflicted in a previous battle, Private Vera voluntarily left the aid station to join his comrades in an attack against well-fortified enemy positions on a hill of great importance. When the assaulting elements had moved within 20 yards of the enemy positions, they were suddenly trapped by a heavy volume of mortar, artillery, and small-arms fire. The company prepared to make a limited withdrawal, but Private Vera volunteered to remain behind to provide covering fire. As his companions moved to safety, Private Vera remained steadfast in his position, directing accurate fire against the hostile positions despite the intense volume of fire that the enemy was concentrating upon him. Later in the morning, when the friendly force returned, they discovered Private Vera in the same position, facing the enemy. Private Vera's noble intrepidity and self-sacrifice saved many of his comrades' lives. Private Vera's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Weinstein's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Sergeant, Company G, 21 st Infantry Regiment, U.S. Army. Place and date: Kumsong, Korea, October 19, 1951. Born : October 18, 1928, Lamar, MO. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant Jack Weinstein distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while leading 1 st Platoon, Company G, 21 st Infantry Regiment, 24 th Infantry Division in Kumsong, Korea, on October 19, 1951. That afternoon, 30 enemy troops counterattacked Sergeant Weinstein's platoon. Most of the platoon's members had been wounded in the previous action and withdrew under the heavy fire. Sergeant Weinstein, however, remained in his position and continued to fight off the onrushing enemy, killing at least six with his M-1 rifle before running out of ammunition. Although under extremely heavy enemy fire, Sergeant Weinstein refused to withdraw and continued fighting by throwing enemy hand grenades found lying near his position. He again halted the enemy's progress and inflicted numerous casualties. Alone and unaided, he held the ground that his platoon had fought tenaciously to take and held out against overwhelming odds until another platoon was able to relieve him and drive back the enemy. Sergeant Weinstein's leg had been broken by an enemy grenade and old wounds suffered in previous battles had reopened, but he refused to withdraw and successfully bought time for his wounded comrades to reach friendly lines. Sergeant Weinstein's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. In H.R. 3304 , the National Defense Authorization Act for Fiscal Year 2014, P.L. 113-66 , Congress authorized the President of the United States to award the MOH to Command Sergeant Adkins, waiving time limitations found in 10 U.S.C. §3744. Rank and organization : Command Sergeant Major, Detachment A-102, 5 th Special Forces Group, 1 st Special Forces. Place and date : Camp A Shau, Republic of Vietnam, March 9-12, 1966 . Entered service at : unknown. Born: February 1, 1934, Waurika, Oklahoma. Date of issue: September 15, 2014. Sergeant First Class Adkins distinguished himself during the period March 9, 1966, to March 12, 1966, during combat operations at Camp A Shau, Republic of Vietnam. When the camp was attacked by a large Viet Cong force, Sergeant First Class Adkins rushed through intense hostile fire and manned a mortar position. Although he was wounded, he ran through exploding mortar rounds and dragged several of his comrades to safety. When the hostile fire subsided, Sergeant First Class Adkins exposed himself to sporadic sniper fire and carried his wounded comrades to the camp dispensary. During the evacuation of a seriously wounded American, Sergeant First Class Adkins maneuvered outside the camp walls to draw fire and successfully covered the rescue. During the early morning hours of March 10, 1966, a Viet Cong regiment launched its main attack. Within two hours, Sergeant First Class Adkins was the only man firing a mortar weapon. Although he was painfully wounded and most of his crew was killed or wounded, he fought off the fanatical waves of attacking Viet Cong. After withdrawing to a communications bunker where several Americans were attempting to fight off a company of Viet Cong, Sergeant First Class Adkins killed numerous insurgents with his suppressive fire. Running extremely low on ammunition, he returned to the mortar pit, gathered the vital ammunition, and ran through intense fire back to the communications bunker. After being ordered to evacuate the camp, all signal equipment and classified documents were destroyed. Sergeant First Class Adkins and a small group of men fought their way out of the camp and evaded the Viet Cong for two days until they were rescued by a helicopter. Sergeant First Class Adkins's extraordinary heroism in close combat against a numerically superior hostile force was in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Specialist Alvarado's military records were reviewed under the FY2002 National Defense Authorization Act, in which Congress requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization : Specialist Fourth Class, U.S. Army. Place and date : Phuoc Long Province, Republic of Vietnam, August 12, 1969. Entered service at : Bakersfield, CA. Born : February 13, 1947, Bakersfield, California. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Specialist Four Leonard L. Alvarado distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a rifleman with Company D, 2 nd Battalion, 12 th Cavalry, 1 st Cavalry Division (Airmobile) during combat operations against an armed enemy in Phuoc Long Province, Republic of Vietnam on August 12, 1969. On that day, as Specialist Four Alvarado and a small reaction force moved through dense jungle en route to a beleaguered friendly platoon, Specialist Four Alvarado detected enemy movement and opened fire. Despite his quick reaction, Specialist Four Alvarado and his comrades were soon pinned down by the hostile force that blocked the path to the trapped platoon. Specialist Four Alvarado quickly moved forward through the hostile machinegun fire in order to engage the enemy troops. Suddenly, an enemy grenade exploded nearby, wounding and momentarily stunning him. Retaliating immediately, he killed the grenadier just as another enemy barrage wounded him again. Specialist Four Alvarado crawled forward through the fusillade to pull several comrades back within the hastily formed perimeter. Realizing his element needed to break away from the hostile force, Specialist Four Alvarado began maneuvering forward alone. Though repeatedly thrown to the ground by exploding satchel charges, he continued advancing and firing, silencing several emplacements, including one enemy machinegun position. From his dangerous forward position, he persistently laid suppressive fire on the hostile forces, and after the enemy troops had broken contact, his comrades discovered that he had succumbed to his wounds. Specialist Four Alvarado's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Congress approved P.L. 96-81 , December 18, 1980, removing the statutory time limit on the award for Master Sergeant Benavidez. Rank and organization : Master Sergeant, Detachment B-56, Fifth Special Forces Group, Republic of Vietnam. Place and date : West of Loc Ninh on 2 May 1968. Entered service at: Houston, TX, June 1955. Born : 5 August 1935, DeWitt County, Cuero, TX. Date of issue: February 24, 1981. Citation : Master Sergeant (then Staff Sergeant) Roy P. Benavidez, United States Army, who distinguished himself by a series of daring and extremely valorous actions on 2 May 1968 while assigned to Detachment B 56, Fifth Special Forces Group (Airborne), First Special Forces, Republic of Vietnam. On the morning of 2 May 1968, a 12-man Special Forces Reconnaissance Team was inserted by helicopters in a dense jungle area west of Loc Ninh, Vietnam, to gather intelligence information about confirmed large-scale enemy activity. This area was controlled and routinely patrolled by the North Vietnamese Army. After a short period of time on the ground, the team met heavy enemy resistance, and requested emergency extraction. Three helicopters attempted extraction, but were unable to land due to intense enemy small arms and anti-aircraft fire. Sergeant Benavidez was at the Forward Operating Base in Loc Ninh monitoring the operation by radio when these helicopters returned to off-load wounded crew members and to assess aircraft damage. Sergeant Benavidez voluntarily boarded a returning aircraft to assist in another extraction attempt. Realizing that all the team members were either dead or wounded and unable to move to the pickup zone, he directed the aircraft to a nearby clearing, where he jumped from the hovering helicopter and ran approximately 75 meters under withering small arms fire to the crippled team. Prior to reaching the team's position he was wounded in his right leg, face, and head. Despite these painful injuries, he took charge, repositioning the team members and directing their fire to facilitate the landing of an extraction aircraft, and the loading of wounded and dead team members. He then threw smoke canisters to direct the aircraft to the team's position. Despite his severe wounds and under intense enemy fire, he carried and dragged half of the wounded team members to the awaiting aircraft. He then provided protective fire by running alongside the aircraft as it moved to pick up the remaining team members. As the enemy's fire intensified, he hurried to recover the body and classified documents on the dead team leader. When he reached the leader's body, Sergeant Benavidez was severely wounded by small arms fire in the abdomen and grenade fragments in his back. At nearly the same moment, the aircraft pilot was mortally wounded, and his helicopter crashed. Although in extremely critical condition due to his multiple wounds, Sergeant Benavidez secured the classified documents and made his way back to the wreckage, where he aided the wounded out of the overturned aircraft, and gathered the stunned survivors into a defensive perimeter. Under increasing enemy automatic weapons and grenade fire, he moved around the perimeter distributing water and ammunition to his weary men, re-instilling in them a will to live and fight. Facing a buildup of enemy opposition with a beleaguered team, Sergeant Benavidez mustered his strength, began calling in tactical air strikes, and directed the fire from supporting gunships to suppress the enemy's fire and so permit another extraction attempt. He was wounded again in his thigh by small arms fire while administering first aid to a wounded team member just before another extraction helicopter was able to land. His indomitable spirit kept him going as he began to ferry his comrades to the craft. On his second trip with the wounded, he was clubbed from additional wounds to his head and arms before killing his adversary. He then continued under devastating fire to carry the wounded to the helicopter. Upon reaching the aircraft, he spotted and killed two enemy soldiers who were rushing the craft from an angle that prevented the aircraft door gunner from firing upon them. With little strength remaining, he made one last trip to the perimeter to ensure that all classified material had been collected or destroyed, and to bring in the remaining wounded. Only then, in extremely serious condition from numerous wounds and loss of blood, did he allow himself to be pulled into the extraction aircraft. Sergeant Benavidez's gallant choice to join voluntarily his comrades who were in critical straits, to expose himself constantly to withering enemy fire, and his refusal to be stopped despite numerous severe wounds, saved the lives of at least eight men. His fearless personal leadership, tenacious devotion to duty, and extremely valorous actions in the face of overwhelming odds were in keeping with the highest traditions of the military service, and reflect the utmost credit on him and the United States Army. Staff Sergeant Conde-Falcon's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Staff Sergeant, Company D, 1 st Battalion, 505 th Infantry Regiment, 3 rd Brigade, 82 nd Airborne Division, U.S. Army. Place and date : Ap Tan Hoa, Republic of Vietnam, April 4, 1969. Entered service at: Chicago, IL. Born: February 24, 1938, Juncos, Puerto Rico. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Staff Sergeant Felix M. Conde-Falcon distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an acting Platoon Leader in Company D, 1 st Battalion, 505 th Infantry Regiment, 3 rd Brigade, 82 nd Airborne Division during combat operations against an armed enemy in Ap Tan Hoa, Republic of Vietnam, on April 4, 1969. While entering a heavily wooded section on the route of advance, Staff Sergeant Conde-Falcon and his company encountered an extensive enemy bunker complex, later identified as a battalion command post. Following tactical artillery and air strikes on the heavily secured enemy position, Staff Sergeant Conde-Falcon's platoon was selected to assault and clear the bunker fortifications. Moving out ahead of his platoon, Staff Sergeant Conde-Falcon charged the first bunker, heaving grenades as he went. As the hostile fire increased, he crawled to the blind side of an entrenchment position, jumped to the roof, and tossed a grenade into the bunker aperture. Without hesitating, he proceeded to two additional bunkers, both of which he destroyed in the same manner as the first. Rejoining his platoon, Staff Sergeant Conde-Falcon advanced about one hundred meters through the trees before coming under intense hostile fire. Selecting three men to accompany him, he maneuvered toward the enemy's flank position. Carrying a machinegun, he singlehandedly assaulted the nearest fortification, killing the enemy inside before running out of ammunition. After returning to the three men with his empty weapon and taking up an M-16 rifle, he concentrated on the next bunker. Within 10 meters of his goal, Staff Sergeant Conde-Falcon was shot by an unseen assailant and soon died of his wounds. Staff Sergeant Conde-Falcon's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Colonel Cook received his MOH for his heroic behavior while being held as a POW in North Vietnam. News of his deeds could not be obtained until POWs with whom he had served were repatriated. The law provides that time limitations may be waived in such cases. Rank and organization : Colonel, U.S. Marine Corps. Place and date : Binh Gia, Phovc Tuy Province, South Vietnam, December 31, 1964. Entered service at : Quantico, Virginia. Born : August 9, 1934, Brooklyn, NY. Date of issue: May 16, 1980. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while interned as Prisoner of War by the Viet Cong in the Republic of Vietnam during the period 31 December 1964 to 8 December 1967. Despite the fact that by so doing he knew he would bring about harsher treatment for himself, Colonel (then Captain) Cook established himself as the senior prisoner, even though in actuality he was not. Repeatedly assuming more than his share of the manual labor in order that the Prisoners of War could improve the state of their health, Colonel Cook willingly and unselfishly put the interests of his comrades before that of his own well-being and, eventually, his life. Giving more needy men his medicine and drug allowance while constantly nursing them, he risked infection from contagious diseases while in a rapidly deteriorating state of health. This unselfish and exemplary conduct, coupled with his refusal to stray even the slightest from the Code of Conduct, earned him the deepest respect from not only his fellow prisoners, but his captors as well. Rather than negotiate for his own release or better treatment, he steadfastly frustrated attempts by the Viet Cong to break his indomitable spirit, and passed this same resolve on to the men with whose well-being he so closely associated himself. Knowing his refusals would prevent his release prior to the end of the war, and also knowing his chances for prolonged survival would be small in the event of continued refusal, he chose nevertheless to adhere to a Code of Conduct far above that which could be expected. His personal valor and exceptional spirit of loyalty in the face of almost certain death reflected the highest credit upon Colonel Cook, the Marine Corps, and the United States Naval Service. Specialist Copas's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Specialist Fourth Class, Company C, 1 st Battalion (Mechanized), 5 th Infantry Regiment, 25 th Infantry Division, U.S. Army. Place and date : Ph Romeas Hek, Cambodia, May 12, 1970. Entered service at : Fort Pierce, FL. Born : Fort Pierce, FL, August 29, 1950. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Specialist Four Ardie R. Copas distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a Machinegunner in Company C, 1 st Battalion (Mechanized), 5 th Infantry Regiment, 25 th Infantry Division during combat operations against an armed enemy near Ph Romeas Hek, Cambodia, on May 12, 1970. That morning, Specialist Four Copas's company was suddenly attacked by a large hostile force firing recoilless rifles, rocket-propelled grenades, and automatic weapons. As Specialist Four Copas began returning fire, his armored car was struck by an enemy recoilless round, knocking him to the ground and injuring four American soldiers beside the vehicle. Ignoring his own wounds, Specialist Four Copas quickly remounted the burning vehicle and commenced firing his machinegun at the belligerents. Braving the hostile fire directed at him and the possible detonation of the mortar rounds inside the track, Specialist Four Copas maintained a heavy volume of suppressive fire on the foe while the wounded Americans were safely evacuated. Undaunted, Specialist Four Copas continued to place devastating volleys of fire upon the adversary until he was mortally wounded when another enemy round hit his vehicle. Specialist Four Copas's daring action resulted in the safe evacuation of his comrades. Specialist Four Copas's extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Congress approved the FY1996 National Defense Authorization Act, P.L. 104-106 , Section 522, on February 10, 1996, waiving the statutory time limit on any award or decoration for an act of valor performed while serving on active duty during the Vietnam era. Rank and Organization: Major, Company A, 229 th Assault Helicopter Battalion, 1 st Cavalry Division (Airmobile), U.S. Army. Place and date: Ia Drang Valley, Republic of Vietnam, November 14, 1965. Place and date of birth: Olympia, WA, 1933. Date of issue: February 26, 2007. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Major Bruce P. Crandall distinguished himself by extraordinary heroism as a Flight Commander in the Republic of Vietnam, while serving with Company A, 229 th Assault Helicopter Battalion, 1 st Cavalry Division (Airmobile). On 14 November 1965, his flight of 16 helicopters was lifting troops for a search and destroy mission from Plei Me, Vietnam, to Landing Zone X-Ray in the Ia Drang Valley. On the fourth troop lift, the airlift began to take enemy fire, and by the time the aircraft had refueled and returned for the next troop lift, the enemy had Landing Zone X-Ray targeted. As Major Crandall and the first eight helicopters landed to discharge troops on his fifth troop lift, his unarmed helicopter came under such intense enemy fire that the ground commander ordered the second flight of eight aircraft to abort their mission. As Major Crandall flew back to Plei Me, his base of operations, he determined that the ground commander of the besieged infantry battalion desperately needed more ammunition. Major Crandall then decided to adjust his base of operations to Artillery Firebase Falcon in order to shorten the flight distance to deliver ammunition and evacuate wounded soldiers. While medical evacuation was not his mission, he immediately sought volunteers and with complete disregard for his own personal safety, led the two aircraft to Landing Zone X-Ray. Despite the fact that the landing zone was still under relentless enemy fire, Major Crandall landed and proceeded to supervise the loading of seriously wounded soldiers aboard his aircraft. Major Crandall's voluntary decision to land under the most extreme fire instilled in the other pilots the will and spirit to continue to land their own aircraft, and in the ground forces the realization that they would be resupplied and that friendly wounded would be promptly evacuated. This greatly enhanced morale and the will to fight at a critical time. After his first medical evacuation, Major Crandall continued to fly into and out of the landing zone throughout the day and into the evening. That day he completed a total of 22 flights, most under intense enemy fire, retiring from the battlefield only after all possible service had been rendered to the Infantry battalion. His actions provided critical resupply of ammunition and evacuation of the wounded. Major Crandall's daring acts of bravery and courage in the face of an overwhelming and determined enemy are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Specialist Duran's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Specialist Four, Company E, 2 d Battalion, 5 th Cavalry, 1 st Cavalry Division (Airmobile), U.S. Army. Place and date: Ph Romeas Hek, Cambodia, May 12, 1970. Entered service at : California. Born : July 26, 1948, Juarez, Mexico. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Specialist Four Jesus S. Duran distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an acting M-60 machinegunner in Company E, 2 nd Battalion, 5 th Cavalry, 1 st Cavalry Division (Airmobile) during combat operations against an armed enemy in the Republic of Vietnam on April 10, 1969. That afternoon, the reconnaissance platoon was moving into an elaborate enemy bunker complex when the lead elements began taking concentrated ambush fire from every side. The command post was in imminent danger of being overrun. With an M-60 machinegun blazing from his hip, Specialist Four Duran rushed forward and assumed a defensive position near the command post. As hostile forces stormed forward, Specialist Four Duran stood tall in a cloud of dust raised by the impacting rounds and bursting grenades directed toward him and thwarted the enemy with devastating streams of machinegun fire. Learning that two seriously wounded troopers lay helplessly pinned down under harassing fire, Specialist Four Duran assaulted the suppressive enemy positions, firing deadly bursts on the run. Mounting a log, he fired directly into the enemy's foxholes, eliminating four and cutting down several others as they fled. Specialist Four Duran then continued to pour effective fire on the disorganized and fleeing enemy. Specialist Four Duran's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Rank and organization: Specialist Four, Company C, 1 st Battalion, 501 st Infantry, 101 st Airborne Division, U.S. Army. Place and date: Tam Ky, Republic of Vietnam, May 21, 1969. Entered service at: San Antonio, TX. Born: 1946, Nordheim, TX. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Specialist Four Santiago J. Erevia distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a radio telephone operator in Company C, 1 st Battalion (Airmobile), 501 st Infantry, 101 st Airborne Division (Airmobile) during search-and-clear mission near Tam Ky, Republic of Vietnam on May 21, 1969. After breaching an insurgent perimeter, Specialist Four Erevia was designated by his platoon leader to render first aid to several casualties, and the rest of the platoon moved forward. As he was doing so, he came under intense hostile fire from four bunkers to his left front. Although he could have taken cover with the rest of the element, he chose a retaliatory course of action. With heavy enemy fire directed at him, he moved in full view of the hostile gunners as he proceeded to crawl from one wounded man to another, gathering ammunition. Armed with two M-16 rifles and several hand grenades, he charged toward the enemy positions behind the suppressive fire of the two rifles. Under very intense fire, he continued to advance on the insurgents until he was near the first bunker. Disregarding the enemy fire, he pulled the pin from a hand grenade and advanced on the bunker, leveling suppressive fire until he could drop the grenade into the bunker, mortally wounding the insurgent and destroying the fortification. Without hesitation, he employed identical tactics as he proceeded to eliminate the next two enemy positions. With the destruction of the third bunker, Specialist Four Erevia had exhausted his supply of hand grenades. Still under intense fire from the fourth position, he courageously charged forward behind the fire emitted by his M-16 rifles. Arriving at the very edge of the bunker, he silenced the occupant within the fortification at point-blank range. Through his heroic actions the lives of the wounded were saved and the members of the company command post were relieved from a very precarious situation. His exemplary performance in the face of overwhelming danger was an inspiration to his entire company and contributed immeasurably to the success of the mission. Specialist Four Erevia's conspicuous gallantry, extraordinary heroism, and intrepidity at the risk of his own life, above and beyond the call of duty, were in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Rank and Organization : Chief Master Sergeant, Detachment 1, 1043 rd Radar Evaluation Squadron, U.S. Air Force. Place and date : Phou Pha Thi, Laos, March 11, 1968. Entered service at: Harrisburg, PA. Born : March 5, 1933. Place of birth : unknown. Date of issue: September 21, 2010. Citation: For conspicuous gallantry and intrepidity in action at the risk of his life above and beyond the call of duty. Chief Etchberger and his team of technicians were manning a top secret defensive position at Lima Site 85 when the base was overrun by an enemy ground force. Receiving sustained and withering heavy artillery attacks directly upon his unit's position, Chief Etchberger's entire crew lay dead or severely wounded. Despite having received little or no combat training, Chief Etchberger single-handedly held off the enemy with an M-16, while simultaneously directing air strikes into the area and calling for air rescue. Because of his fierce defense and heroic and selfless actions, he was able to deny the enemy access to his position and save the lives of his remaining crew. With the arrival of the rescue aircraft, Chief Etchberger, without hesitation, repeatedly and deliberately risked his own life, exposing himself to heavy enemy fire in order to place three surviving wounded comrades into rescue slings hanging from the hovering helicopter waiting to airlift them to safety. With his remaining crew safely aboard, Chief Etchberger finally climbed into an evacuation sling himself, only to be fatally wounded by enemy ground fire as he was being raised into the aircraft. Chief Etchberger's bravery and determination in the face of persistent enemy fire and overwhelming odds are in keeping with the highest standards of performance and traditions of military service. Chief Etchberger's gallantry, self-sacrifice, and profound concern for his fellow men at risk of his life, above and beyond the call of duty, reflect the highest credit upon himself and the United States Air Force. Congress approved a bill authorizing the award of the MOH to Corporal Smith and others on June 20, 2000, removing the statutory time limit on the award. Rank and organization : Captain, 229 th Assault Helicopter Battalion, 1 st Cavalry Division (Airmobile), U.S. Army. Place and date : Ia Drang Valley, Republic of Vietnam. Entered service at : Hattiesburg, MS, September 13, 1948. Born: November 20, 1927, Neely, MS. Date of issue: July 16, 2001. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Captain Ed W. Freeman, United States Army, distinguished himself by numerous acts of conspicuous gallantry and extraordinary intrepidity on 14 November 1965 while serving with Company A, 229 th Assault Helicopter Battalion, 1 st Cavalry Division (Airmobile). As a flight leader and second in command of a 16-helicopter lift unit, he supported a heavily engaged American infantry battalion at Landing Zone X-Ray in the Ia Drang Valley, Republic of Vietnam. The unit was almost out of ammunition after taking some of the heaviest casualties of the war, fighting off a relentless attack from a highly motivated, heavily armed enemy force. When the infantry commander closed the helicopter landing zone due to intense direct enemy fire, Captain Freeman risked his own life by flying his unarmed helicopter through a gauntlet of enemy fire time after time, delivering critically needed ammunition, water and medical supplies to the besieged battalion. His flights had a direct impact on the battle's outcome by providing the engaged units with timely supplies of ammunition critical to their survival, without which they would almost surely have gone down, with much greater loss of life. After medical evacuation helicopters refused to fly into the area due to intense enemy fire, Captain Freeman flew 14 separate rescue missions, providing life-saving evacuation of an estimated 30 seriously wounded soldiers—some of whom would not have survived had he not acted. All flights were made into a small emergency landing zone within 100 to 200 meters of the defensive perimeter where heavily committed units were perilously holding off the attacking elements. Captain Freeman's selfless acts of great valor, extraordinary perseverance and intrepidity were far above and beyond the call of duty or mission and set a superb example of leadership and courage for all of his peers. Captain Freeman's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit and the United States Army. Sergeant Garcia's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Sergeant, Company B, 1 st Battalion, 2 d Infantry, 1 st Brigade, 1 st Infantry Division, U.S. Army. Place and date : Lai Khe, Republic of Vietnam, December 8, 1968. Born : February 26, 1944, Corsicana, TX. Date of issue: March 18, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant Candelario Garcia distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an acting team leader for Company B, 1 st Battalion, 2 nd Infantry, 1 st Brigade, 1 st Infantry Division during combat operations against an armed enemy in Lai Khe, Republic of Vietnam, on December 8, 1968. On that day, while conducting reconnaissance, Sergeant Garcia and his platoon discovered communication wire and other signs of an enemy base camp leading into a densely vegetated area. As the men advanced, they came under intense fire. Several men were hit and trapped in the open. Ignoring a hail of hostile bullets, Sergeant Garcia crawled to within 10 meters of a machinegun bunker, leaped to his feet, and ran directly at the fortification, firing his rifle as he charged. Sergeant Garcia jammed two hand grenades into the gun port and then placed the muzzle of his weapon inside, killing all four occupants. Continuing to expose himself to intense enemy fire, Sergeant Garcia raced 15 meters to another bunker and killed its three defenders with hand grenades and rifle fire. After again braving the enemies' barrage in order to rescue two casualties, he joined his company in an assault that overran the remaining enemy positions. Sergeant Garcia's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Congress approved P.L. 105-103 , November 20, 1997, removing the statutory time limit on the award for Petty Officer Ingram. Rank and organization : Hospital Corpsman Third Class, U.S. Navy, serving with Company C, First Battalion, Seventh Marines, 1 st Marine Division. Place and date : Ngai Province, Republic of Vietnam, 28 March 1966. Entered service at : Jacksonville, FL, September 30, 1963. Born : January 10, 1945, Clearwater, FL. Date of issue: July 10, 1998. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as Corpsman with Company C, First Battalion, Seventh Marines, against elements of a North Vietnam Aggressor (NVA) battalion in Quang Ngai Province, Republic of Vietnam on March 28, 1966. Petty Officer Ingram accompanied the point platoon as it aggressively engaged an outpost of an NVA battalion. As the battle moved off a ridge line, down a tree-covered slope, to a small rice paddy and a village beyond, a tree line suddenly exploded with an intense hail of automatic rifle fire from approximately 100 North Vietnamese regulars. In moments, the platoon was decimated. Oblivious to the danger, Petty Officer Ingram crawled across the battlefield to reach a downed Marine. As he administered aid, a bullet went through the palm of his hand. Calls for "corpsmen" echoed across the ridge. Bleeding, he edged across the fire-swept landscape, collecting ammunition from the dead and administering aid to the wounded. Receiving two more wounds, with the third wound being a life-threatening one, he looked for a way off the face of the ridge, but again he heard the call for help and again he resolutely answered. He gathered magazines, resupplied and encouraged those capable of returning fire, and rendered aid to the more severely wounded until he finally reached the right flank of the platoon. While dressing the head wound of another corpsman, he sustained his fourth bullet wound. From 1600 hours until almost sunset, Petty Officer Ingram pushed, pulled, cajoled, and doctored his Marines. Enduring the pain from his many wounds and disregarding the probability of his own death, Petty Officer Ingram's gallant actions saved many lives. By his indomitable fighting spirit, daring initiative, and unfaltering dedication to duty, Petty Officer Ingram reflected great credit upon himself and upheld the highest traditions of the United States Naval Service. Rank and organization: Staff Sergeant Class, 3 rd Company, 5 th Special Forces Group (Airborne), 1 st Special Forces, U.S. Army. Place and date : Chi Lang, Republic of Vietnam, September 17, 1969. Entered service at: Fort Bragg, NC . Born: January 7, 1942, Okmulgee, OK. Date of issue: March 18, 2014. For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Staff Sergeant Melvin Morris distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as commander of a strike force drawn from Company D, 5 th Special Forces Group (Airborne), 1 st Special Forces, during combat operations against an armed enemy in the vicinity of Chi Lang, Republic of Vietnam, on September 17, 1969. On that afternoon, Staff Sergeant Morris's affiliated companies encountered an extensive enemy mine field and were subsequently engaged by a hostile force. Staff Sergeant Morris learned by radio that a fellow team commander had been killed near an enemy bunker and he immediately reorganized his men into an effective assault posture before advancing forward and splitting off with two men to recover the team commander's body. Observing the maneuver, the hostile force concentrated its fire on Staff Sergeant Morris's three-man element and successfully wounded both men accompanying him. After assisting the two wounded men back to his forces' lines, Staff Sergeant Morris charged forward into withering enemy fire with only his men's suppressive fire as cover. While enemy machine gun emplacements continuously directed strafing fusillades against him, Staff Sergeant Morris destroyed the positions with hand grenades and continued his assault, ultimately eliminating four bunkers. Upon reaching the bunker nearest the fallen team commander, Staff Sergeant Morris repulsed the enemy, retrieved his comrade and began the arduous trek back to friendly lines. He was wounded three times as he struggled forward, but ultimately succeeded in returning his fallen comrade to a friendly position. Staff Sergeant Morris's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Congress approved the FY2001 National Defense Authorization Act, P.L. 106-398 , Section 548, removing the statutory time limit on the award for Airman First Class Pitsenbarger. Rank and organization : Airman First Class, Pararescue Crew Member, Detachment 6, 38 th Aerospace Rescue and Recovery Squadron, U.S. Air Force. Place and date : Near Cam My, Republic of Vietnam. Entered service at : Piqua, OH, December 31, 1962. Born : July 8, 1944, Piqua, OH. Date of issue : December 8, 2000. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Airman First Class Pitsenbarger distinguished himself by extreme valor on 11 April 1966 near Cam My, Republic of Vietnam, while assigned as a Pararescue Crew Member, Detachment 6, 38 th Aerospace Rescue and Recovery Squadron. On that date, Airman Pitsenbarger was aboard a rescue helicopter responding to a call for evacuation of casualties incurred in an ongoing firefight between elements of the United States Army's 1 st Infantry Division and a sizeable enemy force approximately 35 miles east of Saigon. With complete disregard for personal safety, Airman Pitsenbarger volunteered to ride a hoist more than one hundred feet through the jungle, to the ground. On the ground, he organized and coordinated rescue efforts, cared for the wounded, prepared casualties for evacuation, and insured that the recovery operation continued in a smooth and orderly fashion. Through his personal efforts, the evacuation of the wounded was greatly expedited. As each of the nine casualties evacuated that day was recovered, Airman Pitsenbarger refused evacuation in order to get more wounded soldiers to safety. After several pick-ups, one of the two rescue helicopters involved in the evacuation was struck by heavy enemy ground fire and was forced to leave the scene for an emergency landing. Airman Pitsenbarger stayed behind on the ground to perform medical duties. Shortly thereafter, the area came under sniper and mortar fire. During a subsequent attempt to evacuate the site, American forces came under heavy assault by a large Viet Cong force. When the enemy launched the assault, the evacuation was called off and Airman Pitsenbarger took up arms with the besieged infantrymen. He courageously resisted the enemy, braving intense gunfire to gather and distribute vital ammunition to American defenders. As the battle raged on, he repeatedly exposed himself to enemy fire to care for the wounded, pull them out of the line of fire, and return fire whenever he could, during which time he was wounded three times. Despite his wounds, he valiantly fought on, simultaneously treating as many wounded as possible. In the vicious fighting that followed, the American forces suffered 80% casualties as their perimeter was breached, and Airman Pitsenbarger was fatally wounded. Airman Pitsenbarger exposed himself to almost certain death by staying on the ground, and perished while saving the lives of wounded infantrymen. His bravery and determination exemplify the highest professional standards and traditions of military service and reflect great credit upon himself, his unit, and the United States Air Force. Congress approved P.L. 106-65 on October 5, 1999, removing the statutory time limit on the award for Specialist Four Rascon. Rank and organization : Specialist Four, U.S. Army, Reconnaissance Platoon, Headquarters Company, First Battalion (Airborne), 503 rd Infantry, 173 rd Airborne Brigade (Separate). Place and date : Long Khanh Province, Republic of Vietnam, March 16, 1966. Entered service at : Fort Ord, CA, August 1963. Born : September 10, 1945, Chihuahua, Mexico. Date of issue: February 8, 2000. Citation : Specialist Four Alfred Rascon distinguished himself by a series of extraordinarily courageous acts on March 16, 1966, while assigned as a medic to the Reconnaissance Platoon, Headquarters Company First Battalion (Airborne), 503 rd Infantry, 173 rd Airborne Brigade (Separate). While moving to reinforce its sister battalion under intense enemy attack, the reconnaissance platoon came under heavy fire from a numerically superior enemy force. The intense fire from crew-served weapons and grenades severely wounded several point squad soldiers. Specialist Four Rascon, ignoring directions to stay behind shelter until cover fire could be provided, made his way forward. He repeatedly tried to reach the severely wounded point machine-gunner lying on an open enemy trail, but was driven back each time by withering fire. Finally, he jumped to his feet and, with total disregard for his personal safety, he raced through heavy enemy fire and exploding grenades to reach his wounded comrade. He then intentionally placed his body between the soldier and the enemy machine guns, sustaining numerous shrapnel injuries and a serious wound to the hip. Ignoring his own wounds, he dragged the larger soldier from the fire-raked trail. Hearing a second machine gunner yell that he was running out of ammunition, Specialist Four Rascon, still under heavy enemy fire, crawled back to the wounded machine-gunner, stripped him of his bandoleers of ammunition, and gave them to the machine gunner, who continued his suppressive fire. Later, Specialist Four Rascon, fearing the abandoned machine gun, its ammunition, and spare barrel should fall into enemy hands, made his way to retrieve them. On his way, he was wounded in the face and torso by grenade fragments, but continued to recover the abandoned machine gun, ammunition, and spare barrel items, enabling another soldier to provide added suppressive fire to the pinned-downed squad. While searching for additional wounded, he saw the point grenadier wounded by small arms fire and grenades. With complete disregard for his own life, Specialist Four Rascon covered the wounded soldier with his body, thereby absorbing the blasts from the exploding grenades and saving the soldier's life. As grenades were being thrown at the wounded point squad leader, Specialist Rascon again, in completed disregard for his own life, covered the soldier with his body, absorbing the full force of the grenade explosions. Once more, Specialist Four Rascon was critically wounded by shrapnel, but again he continued to search for and aid the wounded. Although severely wounded, he remained on the battlefield himself, and continued treating the wounded and directing their evacuation. Only after being placed on the evacuation helicopter did he allow aid to be given to himself. Specialist Four Rascon's extraordinary valor in the face of deadly enemy fire, his heroism in rescuing the wounded, and his gallantry by repeatedly risking his own life for his fellow soldiers are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Sergeant Rodela's military records were reviewed under the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 552. P.L. 107-107 requested that the DOD review service records of certain Jewish Americans or Hispanic Americans who had been awarded the Distinguished Service Cross, Navy Cross, or Air Force Cross. Rank and organization: Sergeant First Class, Operational Detachment Alpha 3312, U.S. Army. Place and date : Phuoc Long Province, Republic of Vietnam, September 1, 1969. Entered service at : Corpus Christi, TX. Born : June 15, 1937, Corpus Christi, TX. Date of issue: March 18, 2014. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Sergeant First Class Jose Rodela distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as the company commander, Detachment B-36, Company A, 5 th Special Forces Group (Airborne), 1 st Special Forces during combat operations against an armed enemy in Phuoc Long Province, Republic of Vietnam, on September 1, 1969. That afternoon, Sergeant First Class Rodela's battalion came under an intense barrage of mortar, rocket, and machinegun fire. Ignoring the withering enemy fire, Sergeant First Class Rodela immediately began placing his men into defensive positions to prevent the enemy from overrunning the entire battalion. Repeatedly exposing himself to enemy fire, Sergeant First Class Rodela moved from position to position, providing suppressing fire and assisting wounded, and was himself wounded in the back and head by a B-40 rocket while recovering a wounded comrade. Alone, Sergeant First Class Rodela assaulted and knocked out the B-40 rocket position before successfully returning to the battalion's perimeter. Sergeant First Class Rodela's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. Specialist-Four Class Sabo's original nomination for the MOH was lost in 1970. It was discovered by a researcher at the National Archives in 1999. H.R. 1585 , which became P.L. 110-181 , authorized and requested that the President award the MOH posthumously to Specialist Sabo. The law also provides that in such cases time limitations may be waived. Rank and organization: Specialist Fourth Class, Company B, 3 rd Battalion, 506 th Infantry, 101 st Airborne Division, U.S. Army. Place and date: Se San, Cambodia, May 10, 1970. Entered service at: Ellwood City, PA. Born : February 23, 1948, Austria. Date of issue: May 16, 2012. Citation : Specialist-Four Leslie H. Sabo Jr. distinguished himself by conspicuous acts of gallantry and intrepidity above and beyond the call of duty at the cost of his own life while serving as a rifleman in Company B, 3 rd Battalion, 506 th Infantry, 101 st Airborne Division in Se San, Cambodia, on May 10, 1970. On that day, Specialist-Four Sabo and his platoon were conducting a reconnaissance patrol when they were ambushed from all sides by a large enemy force. Without hesitation, Specialist-Four Sabo charged an enemy position, killing several enemy soldiers. Immediately thereafter, he assaulted an enemy flanking force, successfully drawing their fire away from friendly soldiers and ultimately forcing the enemy to retreat. In order to re-supply ammunition, he sprinted across an open field to a wounded comrade. As he began to reload, an enemy grenade landed nearby. Specialist-Four Sabo picked it up, threw it, and shielded his comrade with his own body, thus absorbing the brunt of the blast and saving his comrade's life. Seriously wounded by the blast, Specialist Four Sabo nonetheless retained the initiative and then single-handedly charged an enemy bunker that had inflicted severe damage on the platoon, receiving several serious wounds from automatic weapons fire in the process. Now mortally injured, he crawled towards the enemy emplacement and, when in position, threw a grenade into the bunker. The resulting explosion silenced the enemy fire, but also ended Specialist-Four Sabo's life. His indomitable courage and complete disregard for his own safety saved the lives of many of his platoon members. Specialist-Four Sabo's extraordinary heroism and selflessness, above and beyond the call of duty, at the cost of his life, are in keeping with the highest traditions of military service and reflect great credit upon himself, Company B, 3 rd Battalion, 506 th Infantry, 101 st Airborne Division, and the United States Army. In H.R. 3304 , the National Defense Authorization Act for Fiscal Year 2014, P.L. 113-66 , Congress authorized the President of the United States to award the MOH to Specialist Sloat, waiving time limitations found in 10 U.S.C. §3744. Rank and organization : Specialist 4, Company D, 2 nd Battalion, 1 st Infantry Regiment, 196 th Light Infantry Brigade, Americal Division, U.S. Army. Place and date : Hawk Hill Firebase, Republic of Vietnam, January 17, 1970. Entered service at : unknown. Born : unknown. Date of issue: September 15, 2014. On the morning of January 17, 1970, Sloat's squad was conducting a patrol, serving as a blocking element in support of tanks and armored personnel carriers from F Troop in the Que Son valley. As the squad moved up a small hill in file formation, the lead soldier tripped a wire attached to a hand grenade booby trap set up by enemy forces. When the grenade rolled down the hill toward Sloat, he had a choice. He could hit the ground and seek cover or pick up the grenade and throw it away from his fellow soldiers. After initially attempting to throw the grenade, Sloat realized that detonation was imminent, and that two or three men near him would be killed or seriously injured if he couldn't shield them from the blast. In an instant, Sloat chose to draw the grenade to his body, shielding his squad members from the blast, and saving their lives. Sloat's actions define the ultimate sacrifice of laying down his own life in order to save the lives of his comrades. Specialist Four Donald P. Sloat's extraordinary heroism and selflessness are in keeping with the highest traditions of military service, and reflect great credit upon himself, his unit, and the United States Army. Congress approved the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 551, on December 28, 2001, removing the statutory time limit on the award for Captain Swanson. Rank and organization : Captain, Troop B, First Squadron, Ninth Cavalry, First Cavalry Division (Airmobile), U.S. Army. Place and date : Kingdom of Cambodia, 26 February 1971. Entered service at : Denver, CO. Born : May 1, 1942, San Antonio, TX. Date of issue: May 1, 2002. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Captain Jon E. Swanson distinguished himself by acts of bravery on February 26, 1971, while flying an OH-6A aircraft in support of ARVN Task Force 333 in the Kingdom of Cambodia. With two well-equipped enemy regiments known to be in the area, Captain Swanson was tasked with pinpointing the enemy's precise positions. Captain Swanson flew at treetop level at a slow airspeed, making his aircraft a vulnerable target. The advancing ARVN unit came under heavy automatic weapons fire from enemy bunkers 100 meters to their front. Exposing his aircraft to enemy anti-aircraft fire, Captain Swanson immediately engaged the enemy bunkers with concussion grenades and machine gun fire. After destroying five bunkers and evading intense ground-to-air fire, he observed a .51 caliber machine gun position. With all his heavy ordnance expended on the bunkers, he did not have sufficient explosives to destroy the position. Consequently, he marked the position with a smoke grenade and directed a Cobra gun ship attack. After completion of the attack, Captain Swanson found the weapon still intact and an enemy soldier crawling over to man it. He immediately engaged the individual and killed him. During this time, his aircraft sustained several hits from another .51 caliber machine gun. Captain Swanson engaged the position with his aircraft's weapons, marked the target, and directed a second Cobra gun ship attack. He volunteered to continue the mission, despite the fact that he was now critically low on ammunition and his aircraft was crippled by enemy fire. As Captain Swanson attempted to fly toward another .51 caliber machine gun position, his aircraft exploded in the air and crashed to the ground, causing his death. Captain Swanson's courageous actions resulted in at least eight enemy killed and the destruction of three enemy anti-aircraft weapons. Captain Swanson's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit upon himself, his unit, and the United States Army. P.L. 98-301 authorized the President to award the Medal of Honor to the Unknown Soldier of the Vietnam War. The Medal was bestowed during interment ceremonies on Memorial Day, May 28, 1984. In June 1998, the Department of Defense announced that the results of DNA tests on the remains of the Vietnam Unknown confirmed his identity as Air Force First Lieutenant Michael J. Blassie. His remains were returned to his family and reinterred in St. Louis. Members of Blassie's family requested that he retain the Medal. The Pentagon denied this request, stating that the Vietnam Unknown Medal of Honor will be kept on permanent display at Arlington National Cemetery in symbolic tribute to all who lost their lives in the Vietnam War. Congress approved the FY2002 National Defense Authorization Act, P.L. 107-107 , Section 551, on December 28, 2001, removing the statutory time limit on the award for Captain Versace. Rank and organization : Captain, Detachment A, 5 th Special Forces Group, Special Operations Group, Military Assistance Command, U.S. Army. Place and date : Ca Mau, Republic of Vietnam. Entered service at : West Point, NY, June 3, 1959. Born : July 2, 1937, Honolulu, HI. Date of issue: July 8, 2002. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Captain Humbert R. Versace distinguished himself by extraordinary heroism during the period of 29 October 1963 to 26 September 1965, while serving as S-2 Advisor, Military Assistance Advisory Group, Detachment 52, Ca Mau, Republic of Vietnam. While accompanying a Civilian Irregular Defense Group patrol engaged in combat operations in Thoi Binh District, An Xuyen Province, Captain Versace and the patrol came under sudden and intense mortar, automatic weapons, and small arms fire from elements of a heavily armed enemy battalion. As the battle raged, Captain Versace, although severely wounded in the knee and back by hostile fire, fought valiantly and continued to engage enemy targets. Weakened by his wounds and fatigued by the fierce firefight, Captain Versace stubbornly resisted capture by the over-powering Viet Cong force with the last full measure of his strength and ammunition. Taken prisoner by the Viet Cong, he exemplified the tenets of the Code of Conduct from the time he entered into Prisoner of War status. Captain Versace assumed command of his fellow American soldiers, scorned the enemy's exhaustive interrogation and indoctrination efforts, and made three unsuccessful attempts to escape, despite his weakened condition, which was brought about by his wounds and the extreme privation and hardships he was forced to endure. During his captivity, Captain Versace was segregated in an isolated prisoner of war cage, manacled in irons for prolonged periods of time, and placed on extremely reduced ration. The enemy was unable to break his indomitable will, his faith in God, and his trust in the United States of America. Captain Versace, an American fighting man who epitomized the principles of his country and the Code of Conduct, was executed by the Viet Cong on 26 September 1965. Captain Versace's gallant actions in close contact with an enemy force and unyielding courage and bravery while a prisoner of war are in the highest traditions of the military service and reflect the utmost credit upon himself and the United States Army. Rank and organization : Master Sergeant, U.S. Army. Place and date : October 3,1993, Mogadishu, Somalia. Entered service at : unknown. Born : August 13, 1968, Lincoln, ME. Date of issue: May 23, 1994. Citation : Master Sergeant Gordon, United States Army, distinguished himself by actions above and beyond the call of duty. On 3 October 1993, while serving as Sniper Team Leader, United States Army Special Operations Command with Task Force Ranger in Mogadishu, Somalia. Master Sergeant Gordon's sniper team provided precision fire from the lead helicopter during an assault and at two helicopter crash sites, while subjected to intense automatic weapons and rocket propelled grenade fires. When Master Sergeant Gordon learned that ground forces were not immediately available to secure the second crash site, he and another sniper unhesitatingly volunteered to be inserted to protect four critically wounded personnel, despite being well aware of the growing number of enemy personnel closing in on the site. After his third request to be inserted, Master Sergeant Gordon received permission to perform his volunteer mission. When debris and enemy ground fires at the site caused them to abort the first attempt, Master Sergeant Gordon was inserted 100 meters south of the crash site. Equipped with only his sniper rifle and a pistol, Master Sergeant Gordon and his fellow sniper, while under intense small arms fire from the enemy, fought their way through a dense maze of shanties and shacks to reach the critically injured crew members. Master Sergeant Gordon immediately pulled the pilot and the other crew members from the aircraft, establishing a perimeter which placed him and his fellow sniper in the most vulnerable position. Master Sergeant Gordon used his long range rifle and side arm to kill an undetermined number of attackers until he depleted his ammunition. Master Sergeant Gordon then went back to the wreckage, recovering some of the crew's weapons and ammunition. Despite the fact that he was critically low on ammunition, he provided some of it to the dazed pilot and then radioed for help. Master Sergeant Gordon continued to travel the perimeter, protecting the downed crew. After his team member was fatally wounded and his own rifle ammunition exhausted, Master Sergeant Gordon returned to the wreckage, recovered a rifle with the last five rounds of ammunition and gave it to the pilot with the words, "good luck." Then, armed only with his pistol, Master Sergeant Gordon continued to fight until he was fatally wounded. His actions saved the pilot's life. Master Sergeant Gordon's extraordinary heroism and devotion to duty were in keeping with the highest standards of military service and reflect great credit upon him, his unit, and the United States Army. Rank and organization : Sergeant First Class, U.S. Army. Place and date : 3 October 1993, Mogadishu, Somalia. Entered service at : unknown. Born : August 30, 1960, Lincoln, NE. Date of issue: May 24, 1994. Citation : Sergeant First Class Shughart, United States Army, distinguished himself by actions above and beyond the call of duty. On October 1993, while serving as a Sniper Team Member, United States Army Special Operations Command with Task Force Ranger in Mogadishu, Somalia. Sergeant First Class Shughart provided precision sniper fire from the lead helicopter during an assault on a building and at two helicopter crash sites, while subjected to intense automatic weapons and rocket propelled grenade fire. While providing critical suppressive fire at the second crash site, Sergeant First Class Shughart and his team leader learned that ground forces were not immediately available to secure the site. Sergeant First Class Shughart and his team leader unhesitatingly volunteered to be inserted to protect the four critically wounded personnel, despite being well aware of the growing number of enemy personnel closing in on the site. After their third request to be inserted, Sergeant First Class Shughart and his team leader received permission to perform this volunteer mission. When debris and enemy ground fires at the site caused them to abort the first attempt, Sergeant First Class Shughart and his team leader were inserted 100 meters south of the crash site. Equipped with only his sniper rifle and a pistol, Sergeant First Class Shughart and his team leader, while under intense small arms fire from the enemy, fought their way through a dense maze of shanties and shacks to reach the critically injured crew members. Sergeant First Class Shughart pulled the pilot and the other crew members from the aircraft, establishing a perimeter which placed him and his fellow sniper in the most vulnerable position. Sergeant First Class Shughart used his long range rifle and side arm to kill an undetermined number of attackers while traveling the perimeter, protecting the downed crew. Sergeant First Class Shughart continued his protective fire until he depleted his ammunition and was fatally wounded. His actions saved the pilot's life. Sergeant First Class Shughart's extraordinary heroism and devotion to duty were in keeping with the highest standards of military service and reflect great credit upon him, his unit, and the United States Army. Rank and organization: Lance Corporal, Company F, 2 nd Battalion, 9 th Marines, Regimental Combat Team 1, 1 st Marine Division (Forward), 1 st Marine Expeditionary Force (Forward). Place and date: Marjah District, Helmand Province, Afghanistan, November 21, 2010. Entered service at : Columbia, SC. Born: October 17, 1989, Flowood, MS. Date of issue : June 19, 2014. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as an Automatic Rifleman with Company F, 2 nd Battalion, 9 th Marines, Regimental Combat Team 1, 1 st Marine Division (Forward), 1 Marine Expeditionary Force (Forward), in Helmand Province, Afghanistan, in support of Operation Enduring Freedom on November 21, 2010. Lance Corporal Carpenter was a member of a platoon-size coalition force, comprised of two reinforced Marine squads partnered with an Afghan National Army squad. The platoon had established Patrol Base Dakota two days earlier in a small village in the Marjah District in order to disrupt enemy activity and provide security for the local Afghan population. Lance Corporal Carpenter and a fellow Marine were manning a rooftop security position on the perimeter of Patrol Base Dakota when the enemy initiated a daylight attack with hand grenades, one of which landed inside their sandbagged position. Without hesitation, and with complete disregard for his own safety, Lance Corporal Carpenter moved toward the grenade in an attempt to shield his fellow Marine from the deadly blast. When the grenade detonated, his body absorbed the brunt of the blast, severely wounding him, but saving the life of his fellow Marine. By his undaunted courage, bold fighting spirit, and unwavering devotion to duty in the face of almost certain death, Lance Corporal Carpenter reflected great credit upon himself and upheld the highest traditions of the Marine Corps and the United States Naval Service. Rank and organization: Specialist, B Troop, 3 rd Squadron, 61 st Cavalry Regiment, U.S. Army. Place and date: Outpost Keating, Nuristan Province, Afghanistan, October 3, 2009. Entered service at: Antioch, CA. Born: January 25, 1980, Spokane, WA. Date of issue : August 26, 2013. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Specialist Ty M. Carter distinguished himself by acts of gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as a Scout with Bravo Troop, 3d Squadron, 61 st Cavalry Regiment, 4 th Brigade Combat Team, 4 th Infantry Division, during combat operations against an armed enemy in Kamdesh District, Nuristan Province, Afghanistan on October 3, 2009. On that morning, Specialist Carter and his comrades awakened to an attack of an estimated 300 enemy fighters occupying the high ground on all four sides of Combat Outpost Keating, employing concentrated fire from recoilless rifles, rocket propelled grenades, anti-aircraft machine guns, mortars and small arms fire. Specialist Carter reinforced a forward battle position, ran twice through a 100 meter gauntlet of enemy fire to resupply ammunition and voluntarily remained there to defend the isolated position. Armed with only an M4 carbine rifle, Specialist Carter placed accurate, deadly fire on the enemy, beating back the assault force and preventing the position from being overrun, over the course of several hours. With complete disregard for his own safety and in spite of his own wounds, he ran through a hail of enemy rocket propelled grenade and machine gun fire to rescue a critically wounded comrade who had been pinned down in an exposed position. Specialist Carter rendered life extending first aid and carried the Soldier to cover. On his own initiative, Specialist Carter again maneuvered through enemy fire to check on a fallen Soldier and recovered the squad's radio, which allowed them to coordinate their evacuation with fellow Soldiers. With teammates providing covering fire, Specialist Carter assisted in moving the wounded Soldier 100 meters through withering enemy fire to the aid station and before returning to the fight. Specialist Carter's heroic actions and tactical skill were critical to the defense of Combat Outpost Keating, preventing the enemy from capturing the position and saving the lives of his fellow Soldiers. Specialist Ty M. Carter's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, Bravo Troop, 3d Squadron, 61 st Cavalry Regiment, 4 th Brigade Combat Team, 4 th Infantry Division and the United States Army. Rank and organization: Staff Sergeant, Battle Company, Company B, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, U.S. Army. Place and date : Korengal Valley, Afghanistan, October 25, 2007. Entered service at: Cedar Rapids, IA. Born: January 21, 1985, Clinton, IA. Date of issue: November 16, 2010. Citation : Specialist Salvatore A. Giunta distinguished himself conspicuously by gallantry and intrepidity at the risk of his life above and beyond the call of duty in action with an armed enemy in the Korengal Valley, Afghanistan, on October 25, 2007. While conducting a patrol as team leader with Company B, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, Specialist Giunta and his team were navigating through harsh terrain when they were ambushed by a well-armed and well-coordinated insurgent force. While under heavy enemy fire, Specialist Giunta immediately sprinted towards cover and engaged the enemy. Seeing that his squad leader had fallen and believing that he had been injured, Specialist Giunta exposed himself to withering enemy fire and raced towards his squad leader, helped him to cover, and administered medical aid. While administering first aid, enemy fire struck Specialist Giunta's body armor and his secondary weapon. Without regard to the ongoing fire, Specialist Giunta engaged the enemy before prepping and throwing grenades, using the explosions for cover in order to conceal his position. Attempting to reach additional wounded fellow soldiers who were separated from the squad, Specialist Giunta and his team encountered a barrage of enemy fire that forced them to the ground. The team continued forward and upon reaching the wounded soldiers, Specialist Giunta realized that another soldier was still separated from the element. Specialist Giunta then advanced forward on his own initiative. As he crested the top of a hill, he observed two insurgents carrying away an American soldier. He immediately engaged the enemy, killing one and wounding the other. Upon reaching the wounded soldier, he began to provide medical aid, as his squad caught up and provided security. Specialist Giunta's unwavering courage, selflessness, and decisive leadership while under extreme enemy fire were integral to his platoon's ability to defeat an enemy ambush and recover a fellow American soldier from the enemy. Specialist Salvatore A. Giunta's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, Company B, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, and the United States Army. Rank and organization: Sergeant, Embedded Training Team 2-8, Regional Corps Advisory Command 3-7, U.S. Marine Corps. Place and date : Kunar Province, Afghanistan, September 8, 2009. Entered service at : Louisville, KY. Born : June 26, 1988, Louisville, KY. Date of issue: September 15, 2011. Citation : Corporal Meyer maintained security at a patrol rally point while other members of his team moved on foot with two platoons of Afghan National Army and Border Police into the village of Ganjgal for a pre-dawn meeting with village elders. Moving into the village, the patrol was ambushed by more than 50 enemy fighters firing rocket propelled grenades, mortars, and machine guns from houses and fortified positions on the slopes above. Hearing over the radio that four U.S. team members were cut off, Corporal Meyer seized the initiative. With a fellow Marine driving, Corporal Meyer took the exposed gunner's position in a gun-truck as they drove down the steeply terraced terrain in a daring attempt to disrupt the enemy attack and locate the trapped U.S. team. Disregarding intense enemy fire now concentrated on their lone vehicle, Corporal Meyer killed a number of enemy fighters with the mounted machine guns and his rifle, some at near point blank range, as he and his driver made three solo trips into the ambush area. During the first two trips, he and his driver evacuated two dozen Afghan soldiers, many of whom were wounded. When one machine gun became inoperable, he directed a return to the rally point to switch to another gun-truck for a third trip into the ambush area where his accurate fire directly supported the remaining U.S. personnel and Afghan soldiers fighting their way out of the ambush. Despite a shrapnel wound to his arm, Corporal Meyer made two more trips into the ambush area in a third gun-truck accompanied by four other Afghan vehicles to recover more wounded Afghan soldiers and search for the missing U.S. team members. Still under heavy enemy fire, he dismounted the vehicle on the fifth trip and moved on foot to locate and recover the bodies of his team members. Corporal Meyer's daring initiative and bold fighting spirit throughout the 6-hour battle significantly disrupted the enemy's attack and inspired the members of the combined force to fight on. His unwavering courage and steadfast devotion to his U.S. and Afghan comrades in the face of almost certain death reflected great credit upon himself and upheld the highest traditions of the Marine Corps and the United States Naval Service. Rank and organization : Staff Sergeant, Special Forces Operational Detachment Alpha 3312, Special Operations Task Force 33, U.S. Army. Place and date : Gowardesh Valley, Konar Province, Afghanistan, January 25, 2008. Entered service at: Oviedo, FL. Born: October 14, 1983. Place of Birth : unknown. Date of issue: October 6, 2010. Citation : Robert J. Miller distinguished himself by extraordinary acts of heroism while serving as the Weapons Sergeant in Special Forces Operational Detachment Alpha 3312, Special Operations Task Force-33, Combined Joint Special Operations Task Force-Afghanistan during combat operations against an armed enemy in Konar Province, Afghanistan on January 25, 2008. While conducting a combat reconnaissance patrol through the Gowardesh Valley, Staff Sergeant Miller and his small element of U.S. and Afghan National Army soldiers engaged a force of 15 to 20 insurgents occupying prepared fighting positions. Staff Sergeant Miller initiated the assault by engaging the enemy positions with his vehicle's turret-mounted Mark-19 40 millimeter automatic grenade launcher while simultaneously providing detailed descriptions of the enemy positions to his command, enabling effective, accurate close air support. Following the engagement, Staff Sergeant Miller led a small squad forward to conduct a battle damage assessment. As the group neared the small, steep, narrow valley that the enemy had inhabited, a large, well-coordinated insurgent force initiated a near ambush, assaulting from elevated positions with ample cover. Exposed and with little available cover, the patrol was totally vulnerable to enemy rocket propelled grenades and automatic weapon fire. As point man, Staff Sergeant Miller was at the front of the patrol, cut off from supporting elements, and less than 20 meters from enemy forces. Nonetheless, with total disregard for his own safety, he called for his men to quickly move back to covered positions as he charged the enemy over exposed ground and under overwhelming enemy fire in order to provide protective fire for his team. While maneuvering to engage the enemy, Staff Sergeant Miller was shot in his upper torso. Ignoring the wound, he continued to push the fight, moving to draw fire from over one hundred enemy fighters upon himself. He then again charged forward through an open area in order to allow his teammates to safely reach cover. After killing at least 10 insurgents, wounding dozens more, and repeatedly exposing himself to withering enemy fire while moving from position to position, Staff Sergeant Miller was mortally wounded by enemy fire. His extraordinary valor ultimately saved the lives of seven members of his own team and 15 Afghanistan National Army soldiers. Staff Sergeant Miller's heroism and selflessness above and beyond the call of duty, and at the cost of his own life, are in keeping with the highest traditions of military service and reflect great credit upon himself and the United States Army. Rank and organization : Sergeant First Class, U.S. Army, Headquarters Company, 10 th Mountain Division U.S. Army. Place and date : Nuristan Province, Afghanistan, June 21, 2006. Entered service at : Rayntham, MA. Born : September 20, 1975, Abington, MA . Date of issue: September 17, 2009. Citation : Staff Sergeant Jared C. Monti distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as a team leader with Headquarters and Headquarters Troop, 3 rd Squadron, 71 st Cavalry Regiment, 3 rd Brigade Combat Team, 10 th Mountain Division, in connection with combat operations against an armed enemy in Nuristan Province, Afghanistan, on June 21, 2006. While Staff Sergeant Monti was leading a mission aimed at gathering intelligence and directing fire against the enemy, his 16-man patrol was attacked by as many as 50 enemy fighters. On the verge of being overrun, Staff Sergeant Monti quickly directed his men to set up a defensive position behind a rock formation. He then called for indirect fire support, accurately targeting the rounds upon the enemy who had closed to within 50 meters of his position. While still directing fire, Staff Sergeant Monti personally engaged the enemy with his rifle and a grenade, successfully disrupting an attempt to flank his patrol. Staff Sergeant Monti then realized that one of his Soldiers was lying wounded in the open ground between the advancing enemy and the patrol's position. With complete disregard for his own safety, Staff Sergeant Monti twice attempted to move from behind the cover of the rocks into the face of relentless enemy fire to rescue his fallen comrade. Determined not to leave his Soldier, Staff Sergeant Monti made a third attempt to cross open terrain through intense enemy fire. On this final attempt, he was mortally wounded, sacrificing his own life in an effort to save his fellow Soldier. Staff Sergeant Monti's selfless acts of heroism inspired his patrol to fight off the larger enemy force. Staff Sergeant Monti's immeasurable courage and uncommon valor are in keeping with the highest traditions of military service and reflect great credit upon himself, Headquarters and Headquarters Troop, 3 rd Squadron, 71 st Cavalry Regiment, 3 rd Brigade Combat Team, 10 th Mountain Division, and the United States Army. Rank and organization : Lieutenant, U.S. Navy SEAL. Place and date : Asadabad, Konar Province, Afghanistan, June 28, 2005. Entered service at : Pensacola, FL. Born : May 7, 1976, Smithtown, NY. Date of issue: October 22, 2007. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty as the leader of a special reconnaissance element with naval special warfare task unit Afghanistan on 27 and 28 June 2005. While leading a mission to locate a high-level anti-coalition militia leader, Lieutenant Murphy demonstrated extraordinary heroism in the face of grave danger in the vicinity of Asadabad, Konar province, Afghanistan. On 28 June 2005, operating in an extremely rugged enemy-controlled area, Lieutenant Murphy's team was discovered by anti-coalition militia sympathizers, who revealed their position to Taliban fighters. As a result, between 30 and 40 enemy fighters besieged his four member team. Demonstrating exceptional resolve, Lieutenant Murphy valiantly led his men in engaging the large enemy force. The ensuing fierce firefight resulted in numerous enemy casualties, as well as the wounding of all four members of the team. Ignoring his own wounds and demonstrating exceptional composure, Lieutenant Murphy continued to lead and encourage his men. When the primary communicator fell mortally wounded, Lieutenant Murphy repeatedly attempted to call for assistance for his beleaguered teammates. Realizing the impossibility of communicating in the extreme terrain, and in the face of almost certain death, he fought his way into open terrain to gain a better position to transmit a call. This deliberate, heroic act deprived him of cover, exposing him to direct enemy fire. Finally achieving contact with his headquarters, Lieutenant Murphy maintained his exposed position while he provided his location and requested immediate support for his team. In his final act of bravery, he continued to engage the enemy until he was mortally wounded, gallantly giving his life for his country and for the cause of freedom. By his selfless leadership, courageous actions, and extraordinary devotion to duty, Lieutenant Murphy reflected great credit upon himself and upheld the highest traditions of the United States Naval Service. Rank and organization: Staff Sergeant, Company D, 2 nd Battalion, 75 th Ranger Regiment, U.S. Army. Place and date: Paktya Province, Afghanistan, May 26, 2008. Entered service at : New Mexico. Born : July 29, 1979, Santa Fe, New Mexico. Date of issue : July 12, 2011. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Staff Sergeant Leroy A. Petry distinguished himself by acts of gallantry and intrepidity at the risk of his life above and beyond the call of duty in action with an armed enemy in the vicinity of Paktya Province, Afghanistan, on May 26, 2008. As a Weapons Squad Leader with D Company, 2 nd Battalion, 75 th Ranger Regiment, Staff Sergeant Petry moved to clear the courtyard of a house that potentially contained high-value combatants. While crossing the courtyard, Staff Sergeant Petry and another Ranger were engaged and wounded by automatic weapons fire from enemy fighters. Still under enemy fire, and wounded in both legs, Staff Sergeant Petry led the other Ranger to cover. He then reported the situation and engaged the enemy with a hand grenade, providing suppression as another Ranger moved to his position. The enemy quickly responded by maneuvering closer and throwing grenades. The first grenade explosion knocked his two fellow Rangers to the ground and wounded both with shrapnel. A second grenade then landed only a few feet away from them. Instantly realizing the danger, Staff Sergeant Petry, unhesitatingly and with complete disregard for his safety, deliberately and selflessly moved forward, picked up the grenade, and in an effort to clear the immediate threat, threw the grenade away from his fellow Rangers. As he was releasing the grenade it detonated, amputating his right hand at the wrist and further injuring him with multiple shrapnel wounds. Although picking up and throwing the live grenade grievously wounded Staff Sergeant Petry, his gallant act undeniably saved his fellow Rangers from being severely wounded or killed. Despite the severity of his wounds, Staff Sergeant Petry continued to maintain the presence of mind to place a tourniquet on his right wrist before communicating the situation by radio in order to coordinate support for himself and his fellow wounded Rangers. Staff Sergeant Petry's extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service, and reflect great credit upon himself, 75 th Ranger Regiment, and the United States Army. Rank and organization: Staff Sergeant, Chosen Company, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade, U.S. Army. Place and date: July 13, 2008, Wanat Village, Kunar Province, Afghanistan. Date of issue: July 21, 2014. Citation: Sergeant Ryan M. Pitts distinguished himself by extraordinary acts of heroism at the risk of his life above and beyond the call of duty while serving as a forward observer in the 2 nd Platoon, Chosen Company, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade during combat operations against an armed enemy at Vehicle Patrol Base Kahler in the vicinity of Wanat Village, Kunar Province, Afghanistan, on July 13, 2008. Early that morning, while Sergeant Pitts was providing perimeter security at Observation Post Topside, a well-organized anti-Afghan force consisting of over 200 members initiated a close-proximity sustained and complex assault using accurate and intense rocket-propelled grenade, machinegun, and small arms fire on Wanat Vehicle Patrol Base. An immediate wave of rocket-propelled grenade rounds engulfed the observation post, wounding Sergeant Pitts and inflicting heavy casualties. Sergeant Pitts had been knocked to the ground and was bleeding heavily from shrapnel wounds to his arms and legs, but with incredible toughness and resolve, he subsequently took control of the observation post and returned fire on the enemy. As the enemy drew nearer, Sergeant Pitts threw grenades, holding them after the pin was pulled and the safety lever was released to allow a nearly immediate detonation on the hostile forces. Unable to stand on his own and near death because of the severity of his wounds and blood loss, Sergeant Pitts continued to lay suppressive fire until a two-man reinforcement team arrived. Sergeant Pitts quickly assisted them by giving up his main weapon and gathering ammunition all while continually lobbing fragmentary grenades until these were expended. At this point, Sergeant Pitts crawled to the northern position radio and described the situation to the command post as the enemy continued to try to isolate the observation post from the main patrol base. With the enemy close enough for him to hear their voices and with total disregard for his own life, Sergeant Pitts whispered in the radio situation reports and conveyed information that the command post used to provide indirect fire support. Sergeant Pitts's courage, steadfast commitment to the defense of his unit, and ability to fight while seriously wounded prevented the enemy from overrunning the observation post and capturing fallen American soldiers and ultimately prevented the enemy from gaining fortified positions on higher ground from which to attack Wanat Vehicle Patrol Base. Sergeant Ryan M. Pitts's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, Company C, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade and the United States Army. Rank and organization : Staff Sergeant, 3 rd Squadron, 61 st Cavalry Regiment, 4 th Brigade Combat Team, 4 th Infantry Division, U.S. Army. Place and date : Kamdesh District, Nuristan Province, Afghanistan, October 3, 2009. Entered service in : California. Born : August 17, 1981, Lake City, CA. Date of issue : February 11, 2013. Citation : For conspicuous gallantry and intrepidity in action at the risk of his life above and beyond the call of duty while serving as a Section Leader with Bravo Troop, 3 rd Squadron, 61 st Cavalry Regiment, 4 th Brigade Combat Team, 4 th Infantry Division, during combat operations against an armed enemy at Combat Outpost Keating, Kamdesh District, Nuristan Province, Afghanistan on October 3, 2009. On that morning, Staff Sergeant Romesha and his comrades awakened to an attack by an estimated 300 enemy fighters occupying the high ground on all four sides of the complex, employing concentrated fire from recoilless rifles, rocket propelled grenades, anti-aircraft machine guns, mortars and small arms fire. Staff Sergeant Romesha moved uncovered under intense enemy fire to conduct a reconnaissance of the battlefield and seek reinforcements from the barracks before returning to action with the support of an assistant gunner. Staff Sergeant Romesha took out an enemy machine gun team and, while engaging a second, the generator he was using for cover was struck by a rocket-propelled grenade, inflicting him with shrapnel wounds. Undeterred by his injuries, Staff Sergeant Romesha continued to fight and upon the arrival of another soldier to aid him and the assistant gunner, he again rushed through the exposed avenue to assemble additional soldiers. Staff Sergeant Romesha then mobilized a five-man team and returned to the fight equipped with a sniper rifle. With complete disregard for his own safety, Staff Sergeant Romesha continually exposed himself to heavy enemy fire, as he moved confidently about the battlefield engaging and destroying multiple enemy targets, including three Taliban fighters who had breached the combat outpost's perimeter. While orchestrating a successful plan to secure and reinforce key points of the battlefield, Staff Sergeant Romesha maintained radio communication with the tactical operations center. As the enemy forces attacked with even greater ferocity, unleashing a barrage of rocket-propelled grenades and recoilless rifle rounds, Staff Sergeant Romesha identified the point of attack and directed air support to destroy over 30 enemy fighters. After receiving reports that seriously injured soldiers were at a distant battle position, Staff Sergeant Romesha and his team provided covering fire to allow the injured soldiers to safely reach the aid station. Upon receipt of orders to proceed to the next objective, his team pushed forward 100 meters under overwhelming enemy fire to recover and prevent the enemy fighters from taking the bodies of the fallen comrades. Staff Sergeant Romesha's heroic actions throughout the day-long battle were critical in suppressing an enemy that had far greater numbers. His extraordinary efforts gave Bravo Troop the opportunity to regroup, reorganize and prepare for the counterattack that allowed the Troop to account for its personnel and secure Combat Post Keating. Staff Sergeant Romesha's discipline and extraordinary heroism above and beyond the call of duty reflect great credit upon himself, Bravo Troop, 3 rd Squadron, 61 st Cavalry Regiment, 4 th Brigade Combat Team, 4 th Infantry Division and the United States Army. Rank and organization: Captain, 1 st Battalion, 32 nd Infantry Regiment, 3 rd Brigade Combat Team, 10 th Mountain Division, U.S. Army. Place and date: Ganjgal, Kunar Province, Afghanistan, September 8, 2009. Entered service at: Fort Benning, GA. Born : November 2, 1978. Date of issu e : October 15, 2013. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty: Captain William D. Swenson distinguished himself by acts of gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as embedded advisor to the Afghan National Border Police, Task Force Phoenix, Combined Security Transition Command-Afghanistan in support of 1 st Battalion, 32 nd Infantry Regiment, 3 rd Brigade Combat Team, 10 th Mountain Division, during combat operations against an armed enemy in Kunar Province, Afghanistan on September 8, 2009. On that morning, more than 60 well-armed, well-positioned enemy fighters ambushed Captain Swenson's combat team as it moved on foot into the village of Ganjgal for a meeting with village elders. As the enemy unleashed a barrage of rocket-propelled grenade, mortar and machine gun fire, Captain Swenson immediately returned fire and coordinated and directed the response of his Afghan Border Police, while simultaneously calling in suppressive artillery fire and aviation support. After the enemy effectively flanked Coalition Forces, Captain Swenson repeatedly called for smoke to cover the withdrawal of the forward elements. Surrounded on three sides by enemy forces inflicting effective and accurate fire, Captain Swenson coordinated air assets, indirect fire support and medical evacuation helicopter support to allow for the evacuation of the wounded. Captain Swenson ignored enemy radio transmissions demanding surrender and maneuvered uncovered to render medical aid to a wounded fellow soldier. Captain Swenson stopped administering aid long enough to throw a grenade at approaching enemy forces, before assisting with moving the soldier for air evacuation. With complete disregard for his own safety, Captain Swenson unhesitatingly led a team in an unarmored vehicle into the kill zone, exposing himself to enemy fire on at least two occasions, to recover the wounded and search for four missing comrades. After using aviation support to mark locations of fallen and wounded comrades, it became clear that ground recovery of the fallen was required due to heavy enemy fire on helicopter landing zones. Captain Swenson's team returned to the kill zone another time in a Humvee. Captain Swenson voluntarily exited the vehicle, exposing himself to enemy fire, to locate and recover three fallen Marines and one fallen Navy corpsman. His exceptional leadership and stout resistance against the enemy during six hours of continuous fighting rallied his teammates and effectively disrupted the enemy's assault. Captain William D. Swenson's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, Task Force Phoenix, 1 st Battalion, 32 nd Infantry Regiment, 3 rd Brigade Combat Team, 10 th Mountain Division and the United States Army. Rank and organization : Sergeant, Company C, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade, U.S. Army. Place and date : Aranas, Afghanistan, November 9, 2007 . Entered service at: Seattle, WA. Born: March 27, 1987. Date of issue: May 13, 2014. Citation: Specialist Kyle J. White distinguished himself by acts of gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as a radio telephone operator with Company C, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade, during combat operations against an armed enemy in Nuristan Province, Afghanistan, on November 9, 2007. On that day, Specialist White and his comrades were returning to Bella Outpost from a shura with Aranas village elders. As the soldiers traversed a narrow path surrounded by mountainous, rocky terrain, they were ambushed by enemy forces from elevated positions. Pinned against a steep mountain face, Specialist White and his fellow soldiers were completely exposed to enemy fire. Specialist White returned fire and was briefly knocked unconscious when a rocket-propelled grenade impacted near him. When he regained consciousness, another round impacted near him, embedding small pieces of shrapnel in his face. Shaking off his wounds, Specialist White noticed one of his comrades lying wounded nearby. Without hesitation, Specialist White exposed himself to enemy fire in order to reach the soldier and provide medical aid. After applying a tourniquet, Specialist White moved to an injured Marine, similarly providing aid and comfort until the Marine succumbed to his wounds. Specialist White then returned to the soldier and discovered that he had been wounded again. Applying his own belt as an additional tourniquet, Specialist White was able to stem the flow of blood and save the soldier's life. Noticing that his and the other soldier's radios were inoperative, Specialist White exposed himself to enemy fire yet again in order to secure a radio from a deceased comrade. He then provided information and updates to friendly forces, allowing precision airstrikes to stifle the enemy's attack and ultimately permitting medical evacuation aircraft to rescue him, his fellow soldiers, Marines and Afghan Army soldiers. Specialist Kyle J. White's extraordinary heroism and selflessness above and beyond the call of duty are in keeping with the highest traditions of military service and reflect great credit upon himself, Company C, 2 nd Battalion (Airborne), 503 rd Infantry Regiment, 173 rd Airborne Brigade and the United States Army. Rank and organization: Corporal, 4 th Platoon, Co. K, 3 rd Battalion, 7 th Marines (Reinforced), Regimental Combat Team 7, 1 st Marine Division (Reinforced), U.S. Marine Corps. Place and date: Karabilah, Iraq, April 14, 2004. Entered service at: Scio, NY. Born : November 10, 1981, Scio, NY. Date of issue: January 11, 2007. Citation: For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty while serving as a Rifle Squad Leader, 4 th Platoon, Company K, 3 rd Battalion, 7 th Marines (Reinforced), Regimental Combat Team 7, 1 st Marine Division (Reinforced), on 14 April 2004. Corporal Dunham's squad was conducting a reconnaissance mission in the town of Karabilah, Iraq, when they heard rocket-propelled grenade and small arms fire erupt approximately two kilometers to the west. Corporal Dunham led his Combined Anti-Armor Team towards the engagement to provide fire support to their Battalion Commander's convoy, which had been ambushed as it was traveling to Camp Husaybah. As Corporal Dunham and his Marines advanced, they quickly began to receive enemy fire. Corporal Dunham ordered his squad to dismount their vehicles and led one of his fire teams on foot several blocks south of the ambushed convoy. Discovering seven Iraqi vehicles in a column attempting to depart, Corporal Dunham and his team stopped the vehicles to search them for weapons. As they approached the vehicles, an insurgent leaped out and attacked Corporal Dunham. Corporal Dunham wrestled the insurgent to the ground and in the ensuing struggle saw the insurgent release a grenade. Corporal Dunham immediately alerted his fellow Marines to the threat. Aware of the imminent danger and without hesitation, Corporal Dunham covered the grenade with his helmet and body, bearing the brunt of the explosion and shielding his Marines from the blast. In an ultimate and selfless act of bravery in which he was mortally wounded, he saved the lives of at least two fellow Marines. By his undaunted courage, intrepid fighting spirit, and unwavering devotion to duty, Corporal Dunham gallantly gave his life for his country, thereby reflecting great credit upon himself and upholding the highest traditions of the Marine Corps and the United States Naval Service. Rank and Organization : Private First Class, Company C, 1 st Battalion, 1 st Infantry Division, U.S. Army. Place and date: Adhamiya, Northeast Baghdad, Iraq, December 4, 2006. Entered service at: Pittsburgh, PA . Born : June 14, 1987, Meadville, PA. Date of issue: June 5, 2008. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Private First Class Ross A. McGinnis distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty while serving as an M2 .50-caliber Machine Gunner, 1 st Platoon, C Company, 1 st Battalion, 26 th Infantry Regiment, in connection with combat operations against an armed enemy in Adhamiyah, Northeast Baghdad, Iraq, on 4 December 2006. That afternoon his platoon was conducting combat control operations in an effort to reduce and control sectarian violence in the area. While Private McGinnis was manning the M2 .50-caliber Machine Gun, a fragmentation grenade thrown by an insurgent fell through the gunner's hatch into the vehicle. Reacting quickly, he yelled "grenade," allowing all four members of his crew to prepare for the grenade's blast. Then, rather than leaping from the gunner's hatch to safety, Private McGinnis made the courageous decision to protect his crew. In a selfless act of bravery, in which he was mortally wounded, Private McGinnis covered the live grenade, pinning it between his body and the vehicle and absorbing most of the explosion. Private McGinnis' gallant action directly saved four men from certain serious injury or death. Private First Class McGinnis' extraordinary heroism and selflessness at the cost of his own life, above and beyond the call of duty, are in keeping with the highest traditions of the military service and reflect great credit upon himself, his unit, and the United States Army. Rank and Organization : Petty Officer Second Class, SEAL Team 3, U.S. Navy. Place and date: Ar Ramadi, Iraq on September 29, 2006. Entered service at: Garden Grove, CA. Born : April 5, 1981, Long Beach, CA. Date of issue: April 8, 2008. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty as automatic weapons gunner for Naval Special Warfare Task Group Arabian Peninsula, in support of Operation Iraqi Freedom on September 29, 2006. As a member of a combined SEAL and Iraqi Army Sniper Overwatch Element, tasked with providing early warning and stand-off protection from a rooftop in an insurgent held sector of Ar Ramadi, Iraq, Petty Officer Monsoor distinguished himself by his exceptional bravery in the face of grave danger. In the early morning, insurgents prepared to execute a coordinated attack by reconnoitering the area around the element's position. Element snipers thwarted the enemy's initial attempt by eliminating two insurgents. The enemy continued to assault the element, engaging them with a rocket-propelled grenade and small arms fire. As enemy activity increased, Petty Officer Monsoor took position with his machine gun between two teammates on an outcropping of the roof. While the SEALs vigilantly watched for enemy activity, an insurgent threw a hand grenade from an unseen location, which bounced off Petty Officer Monsoor's chest and landed in front of him. Although only he could have escaped the blast, Petty Officer Monsoor chose instead to protect his teammates. Instantly and without regard for his own safety, he threw himself onto the grenade to absorb the force of the explosion with his body, saving the lives of his two teammates. By his undaunted courage, fighting spirit, and unwavering devotion to duty in the face of certain death, Petty Officer Monsoor gallantly gave his life for his country, thereby reflecting great credit upon himself and upholding the highest traditions of the United States Naval Service. Rank and Organization : Sergeant First Class, B. Company, 11 th Engineer Battalion, 3 rd Infantry, U.S. Army. Place and date: Baghdad, Iraq, April 4, 2003. Entered service at : Fort Leonard Wood, MO, October 1989. Born : September 24, 1969, El Paso, TX. Date of issue: April 5, 2005. Citation : For conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty. Sergeant First Class Paul Ray Smith distinguished himself by acts of gallantry and intrepidity above and beyond the call of duty in action with an armed enemy near Baghdad International Airport, Baghdad, Iraq on 4 April 2003. On that day, Sergeant First Class Smith was engaged in the construction of a prisoner of war holding area when his Task Force was violently attacked by a company-sized enemy force. Realizing the vulnerability of over 100 fellow soldiers, Sergeant First Class Smith quickly organized a hasty defense consisting of two platoons of soldiers, one Bradley Fighting Vehicle and three armored personnel carriers. As the fight developed, Sergeant First Class Smith braved hostile enemy fire to personally engage the enemy with hand grenades and anti-tank weapons, and organized the evacuation of three wounded soldiers from an armored personnel carrier struck by a rocket propelled grenade and a 60mm mortar round. Fearing the enemy would overrun their defenses, Sergeant First Class Smith moved under withering enemy fire to man a .50 caliber machine gun mounted on a damaged armored personnel carrier. In total disregard for his own life, he maintained his exposed position in order to engage the attacking enemy force. During this action, he was mortally wounded. His courageous actions helped defeat the enemy attack, and resulted in as many as 50 enemy soldiers killed, while allowing the safe withdrawal of numerous wounded soldiers. Sergeant First Class Smith's extraordinary heroism and uncommon valor are in keeping with the highest traditions of the military service and reflect great credit upon himself, the Third Infantry Division "Rock of the Marne," and the United States Army. In 1916, the War Department convened a panel to review the records of each Medal of Honor recipient. Upon review, 911 of these medals were canceled. In 1989, the U.S. Army Board of Correction of Records restored the medal to the following recipients. Rank : Civilian scout. Born : May 15, 1839, Kalamazoo, MI. Organization : Sixth U.S. Cavalry. Place : Washita River, TX. Action Date : September 12, 1874. Date of issue : November 4, 1874. Citation : Gallantry in action. (In 1916, the general review of all MOHs deemed 900 unwarranted. This recipient was one of them. In June 1989, the U.S. Army Board of Correction of Records restored the medal to this recipient.) Rank : Civilian scout. Born : Scott County, IA. Organization : Third Cavalry, U.S. Army. Action date : 26 April 1872. Place : Platte River, NE. Citation : Gallantry in action. (In 1916, the general review of all MOHs deemed 900 unwarranted. This recipient was one of them. In June 1989, the U.S. Army Board of Correction of Records restored the medal to this recipient.) Rank : Scout. Born : 25 October 1850, Ohio County, WV. War : Indian Campaigns. Organization : Sixth U.S. Cavalry. Place : Wichita River, TX. Action date : September 12, 1874. Issue date : November 4, 1874. Citation : Gallantry in action. (In 1916, the general review of all MOHs deemed 900 unwarranted. This recipient was one of them. In June 1989, the U.S. Army Board of Correction of Records restored the medal to this recipient.) Rank : Post guide during Indian Wars. Born : Warren County, TN, 2 May 1820. Entered service at : Fort Richardson, TX. Place: Holliday Creek TX, Little Wichita River. Action date : October 5, 1870. Issue date : November 19, 1879. Citation : Gallantry in action and on the march. (In 1916, the general review of all MOHs deemed 900 unwarranted. This recipient was one of them. In June 1989, the U.S. Army Board of Correction of Records restored the medal to this recipient.) Rank : Civilian scout, U.S. Army, Major General Philip H. Sheridan's headquarters, during Civil War. Birth date : unknown. Entered service at : Winchester, Virginia. Place and date : Virginia, Appomattox campaign, Sailors Creek, March 29 to April 9, 1865. Date of issue: April 25, 1865. Place : Washington, DC, May 3, 1865. Note: Was chief civilian scout for Major General Philip H. Sheridan's Cavalry Corps, which consisted of VI and XIX Corps. Citation : Was chief civilian scout for Major General Philip H. Sheridan's Cavalry Corps, which consisted of VI and XIX Corps. Citation: Captured flag of Brigadier General Rufus Barringer's headquarters brigade. (In 1916, the general review of all MOHs deemed 900 unwarranted. This recipient was one of them. In June 1989, the U.S. Army Board of Correction of Records restored the medal to this recipient.). On July 29, 1986, Charles Liteky became the only known recipient to renounce his MOH. Liteky, a former Army chaplain, renounced his MOH in protest over U.S. policies in Central America. CRS Report 95-519, Medal of Honor: History and Issues , by [author name scrubbed]. U.S. Congress. Senate Committee on Veterans' Affairs. Medal of Honor Recipients 1863-1978 . Senate Committee Print No. 3. February 14, 1979. Washington, GPO. 1113 p. ——. Vietnam Era Medal of Honor Recipients 1964-1972 . Senate Committee Print No. 8. April 15, 1973. Washington, GPO, 236 p. United States of America's Congressional Medal of Honor Recipients and Their Official Citations. Columbia Heights, MN, Highland House II, 1996, 1119 p. Congressional Medal of Honor Society Congressional Medal of Honor Society 40 Patriots Point Road Mt. Pleasant, SC 29464 Telephone: [phone number scrubbed] http://www.cmohs.org ; [email address scrubbed] The Congressional Medal of Honor Society was chartered by an act of Congress and signed into law by President Dwight D. Eisenhower. The purposes of the society are found in 35 U.S.C §33. U.S. Army Human Resources Command, Awards and Decorations Branch Adjutant General Directorate https://www.hrc.army.mil/TAGD/Awards%20and%20Decorations%20Branch Awards and Decorations Branch Related Links and Points of Contact (POC) at https://www.hrc.army.mil/TAGD/Awards%20and%20Decorations%20Branch%20Related%20Links%20and%20POCs U.S. Army Medal of Honor: http://www.army.mil/medalofhonor/ U.S. Army Center of Military History Medal of Honor Citations http://www.army.mil/cmh/moh.html U .S. Army Total Personnel Command Attn: TAPC PDA Hoffman Building II 200 Stovall Street Alexandria, VA 22332-0471 Telephone: [phone number scrubbed] http://www.army.mil/medalofhonor/ U.S. Navy, Chief of Naval Operations (OPNAV09B33) Navy Awards NO9B33 2000 Navy Pentagon Washington, DC 20350-2000 Telephone: [phone number scrubbed] U.S. Navy History and Heritage Command Medal of Honor Recipients, Chronological Listing http://www.history.navy.mil/photos/awd/us-indiv/moh-10.htm U.S. Air Force Personnel Center Attn: Awards and Decorations Branch 550 C Street West, Suite 12 Randolph AFB, TX 78150-4714 Telephone: [phone number scrubbed] Commandant, U.S. Marine Corps Attn: Military Awards Branch (MMMA) Headquarters, U.S. Marine Corps 3280 Russell Road Quantico, VA 22134-5100 Telephone: [phone number scrubbed]

The Medal of Honor (MOH) is the nation's highest award for military valor. It is presented by the President in the name of Congress and is often called the Congressional Medal of Honor. Since its first presentation in 1863, nearly 3,500 MOHs have been awarded. In 1973, the Senate Committee on Veterans' Affairs issued a committee print, Vietnam Era Medal of Honor Recipients 1964-72, followed by the committee print, Medal of Honor Recipients: 1863-1978, in 1979. Both committee prints list recipients and provide the full text of the citation, which describes the actions that resulted in the awarding of the medal. This report covers additions and changes to the list of recipients of the medal since the release of the committee print. For further information, see CRS Report 95-519, Medal of Honor: History and Issues, by [author name scrubbed]. The official citations are not always consistent in wording for all recipients. Some of the citations do not contain information such as company, division, date of birth, or place of birth. An asterisk (*) indicates those individuals who were awarded their medal posthumously.

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This report is part of a suite of reports that discuss appropriations for the Department of Homeland Security (DHS) for FY2016. It specifically discusses appropriations for the components of DHS included in the third title of the homeland security appropriations bill—the National Protection and Programs Directorate (NPPD), the Office of Health Affairs (OHA), and the Federal Emergency Management Agency (FEMA). Collectively, Congress has labeled these components in recent years as "Protection, Preparedness, Response, and Recovery." The report provides an overview of the Administration's FY2016 request for Protection, Preparedness, Response, and Recovery, and the appropriations proposed by Congress in response, and those enacted thus far. Rather than limiting the scope of its review to the third title, the report includes information on provisions throughout the proposed bill and report that directly affect these functions. The suite of CRS reports on homeland security appropriations tracks legislative action and congressional issues related to DHS appropriations, with particular attention paid to discretionary funding amounts. The reports do not provide in-depth analysis of specific issues related to mandatory funding—such as retirement pay—nor do they systematically follow other legislation related to the authorization or amending of DHS programs, activities, or fee revenues. Discussion of appropriations legislation involves a variety of specialized budgetary concepts. The Appendix to CRS Report R44053, Department of Homeland Security Appropriations: FY2016 , explains several of these concepts, including budget authority, obligations, outlays, discretionary and mandatory spending, offsetting collections, allocations, and adjustments to the discretionary spending caps under the Budget Control Act ( P.L. 112-25 ). A more complete discussion of those terms and the appropriations process in general can be found in CRS Report R42388, The Congressional Appropriations Process: An Introduction , by [author name scrubbed], and the Government Accountability Office's A Glossary of Terms Used in the Federal Budget Process . Except in summary discussions and when discussing total amounts for the bill as a whole, all amounts contained in the suite of CRS reports on homeland security appropriations represent budget authority and are rounded to the nearest million. However, for precision in percentages and totals, all calculations were performed using unrounded data. Data used in this report for FY2015 amounts are derived from the Department of Homeland Security Appropriations Act, 2015 ( P.L. 114-4 ) and the explanatory statement that accompanied H.R. 240 as printed in the Congressional Record of January 13, 2015, pp. H275-H322. Contextual information on the FY2016 request is generally from the Budget of the United States Government, Fiscal Year 2016 , the FY2016 DHS congressional budget justifications, and the FY2016 DHS Budget in Brief . However, most data used in CRS analyses in reports on DHS appropriations are drawn from congressional documentation to ensure consistent scoring whenever possible. Information on the FY2016 budget request and Senate-reported recommended funding levels is from S. 1619 and S.Rept. 114-68 . Information on the House-reported recommended funding levels is from H.R. 3128 and H.Rept. 114-215 . Data for FY2016 are derived from P.L. 114-113 , the Omnibus Appropriations Act, 2016—Division F of which is the Homeland Security Appropriations Act, 2016—and the accompanying explanatory statement published in Books II and III of the Congressional Record for December 17, 2015. Generally, the homeland security appropriations bill includes all annual appropriations provided for DHS, allocating resources to every departmental component. Discretionary appropriations provide roughly two-thirds to three-fourths of the annual funding for DHS operations, depending how one accounts for disaster relief spending and funding for overseas contingency operations. The remainder of the budget is a mix of fee revenues, trust funds, and mandatory spending. Appropriations measures for DHS typically have been organized into five titles. The first four are thematic groupings of components: Departmental Management and Operations; Security, Enforcement, and Investigations; Protection, Preparedness, Response, and Recovery; and Research and Development, Training, and Services. A fifth title contains general provisions, the impact of which may reach across the entire department, impact multiple components, or focus on a single activity. The following pie chart presents a visual comparison of the share of annual appropriations requested for the components funded in each of the first four titles, highlighting the components discussed in this report. As shown below, the components funded under Protection, Preparedness, Response, and Recovery would have received in total 27% of the discretionary budget authority requested for FY2016, roughly half of which is designated as disaster relief under the Budget Control Act. As noted above, the Protection, Preparedness, Response, and Recovery title (Title III) of the DHS appropriations bill is the second-largest title in the bill in terms of net discretionary budget authority: NPPD, OHA, and FEMA are funded in this title. Some provisions in Title V, General Provisions, may affect the funding available for some of these components. The Administration requested $6,222 million in FY2016 net discretionary budget authority for components included in this title, as part of a total budget for these components of $19,020 million for FY2016. The appropriations request was $267 million (4.5%) more than was provided for FY2015. The Administration also requested an additional $6,713 billion not reflected in the above totals for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act (BCA, P.L. 112-25 ). This amount is covered by an adjustment under the Budget Control Act (BCA), and does not add to the total adjusted net discretionary budget authority in the bill. Senate-reported S. 1619 would have provided the components included in this title $6,291 million in net discretionary budget authority—$69 million (1.1%) more than requested, and $336 million (5.6%) more than was provided in FY2015—while House-reported H.R. 3128 would have provided $6,122 million—$100 million (1.6%) less than requested, and $167 million (2.8%) more than was provided in FY2015. Both Senate- and House-reported bills included the requested disaster relief funding. On December 18, 2015, the President signed into law P.L. 114-113 , the Consolidated Appropriations Act, 2016, Division F of which was the Department of Homeland Security Appropriations Act, 2016. The act included $6,353 million for these components in FY2016, $398 million (6.8%) more than was provided for FY2015, and $131 million (2.1%) more than was requested. It also included the requested disaster relief funding. Table 1 lists the enacted funding level for the individual components funded under Protection, Preparedness, Response, and Recovery for FY2015, the amounts requested for these accounts by the Administration for FY2016 by the Administration, proposed by the Senate- and House-reported bills, and provided by the enacted annual appropriation for FY2016. The table includes information on funding under Title III as well as other provisions in the bill. The National Protection and Programs Directorate (NPPD) was formed by the Secretary of Homeland Security in response to the Post-Katrina Emergency Management Reform Act of 2006. The Directorate includes the Office of the Under Secretary for NPPD and accompanying administrative support functions; the Office of Infrastructure Protection, the Office of Cybersecurity and Communications, and the Office of Cyber and Infrastructure Analysis, which together manage the Infrastructure Protection and Information Security Program; the Federal Protective Service; and the Office of Biometric Identity Management. Overall, the Administration requested $1,659 million in net discretionary budget authority for NPPD. This is $157 million (10.4%) more than was provided in FY2015. The Senate-reported bill included $1,638 million for the directorate, $21 million (1.3%) less than requested, while the House-reported bill included $1,585 million, $75 million (4.5%) less than requested. The omnibus provided $1,636 million, $24 million (1.5%) below the request, but $133 million (8.8%) above what was enacted for FY2015. Because of the diverse missions of NPPD, this report separately addresses appropriations in detail for three individual subcomponents of NPPD: Infrastructure Protection and Information Security; the Federal Protective Service; and the Office of Biometric Identity Management. Aside from those three subcomponents, a separate appropriation is provided for the directorate's management and administration function, which is reflected in Table 1 . The Infrastructure Protection and Information Security Program (IPIS) supports the programmatic activities of the Office of Infrastructure Protection, the newly formed Office of Cyber and Infrastructure Analysis, and the Office of Cybersecurity and Communications. The Administration requested $1,312 million for the IPIS program for FY2016. This is $123 million above what Congress enacted for FY2015. The request would increase funds for Infrastructure Protection activities by $24 million, Cybersecurity activities by $65 million, and Communications activities by $34 million, above FY2015 enacted levels. These increases reflect the net results of adjustments made to base funding (including realignments of funds between PPAs), programmatic increases, and programmatic decreases. Many of these changes take place below the level of detail reflected in the appropriations committee reports. Note: the following discussion in this report of programmatic increases and decreases within the FY2016 request reflect comparisons between the FY2015 request and the FY2016 request as made in the budget justifications for IPIS. The final FY2015 DHS appropriation had not been finalized by the time the FY2016 budget justifications were released to Congress. Program changes could therefore not be measured against a FY2015 enacted level, so the new FY2016 justifications compared the proposal to the old FY2015 justification. Although FY2015 appropriations were enacted several weeks later, there is no authoritative assessment of proposed program-level changes in the request versus FY2015 allocations. The FY2016 budget request included relatively large programmatic increases for Network Security Deployment ($96 million), Continuous Diagnostics and Monitoring ($87 million in the Federal Network Security PPA), and Next Generation Priority Telecommunication Services ($79 million). It also included an increase ($16 million in the Infrastructure Security Compliance PPA) to support implementation of the Ammonium Nitrate Final Rule. The budget request also included an increase of $10 million to assess the risk to critical infrastructures associated with climate change ($6 million in the Infrastructure Analysis and Planning PPA and $4 million in the Sector Management and Governance PPA). Also of note, adjustments-to-the-base included pay adjustments related to cybersecurity pay reform (totally $16 million distributed across all but two of the PPAs). These proposed increases were balanced to some extent by adjustments to the base level of spending (again, assessed using FY2015 as a baseline). For example, despite a program increase of $87 million for certain Continuous Diagnostics and Monitoring (CDM) activities, the request included a relatively large drop in the request for the overall Federal Network Security PPA, the request for which is $40 million below the FY2015 request. This was because the PPA also included a negative adjustment-to-base of $126 million associated with non-recurring costs from the previous year related to other CDM activities. The budget request also included relatively smaller programmatic reductions, the largest being reduced support for the Multi-State Information Sharing and Analysis Center (-$4 million in the Critical Infrastructure Cyber Protection and Awareness PPA) and reductions in support of the Chemical Security Assessment Tool (-$3 million in the Infrastructure Security Compliance PPA). The Senate Appropriation Committee recommended $1,297 million for IPIS, $15 million below the Administration's request. The Senate Committee report expressed concern regarding the department's difficulties in meeting its hiring goals, and reduced personnel-related funds by $7 million. The committee also recommended reducing the request for Infrastructure Security Compliance PPA by $5 million, noting the delay in issuing a final rule for regulating ammonium nitrate manufacture, sale, and transport. The Senate Committee also disagreed with the Administration in several areas of the budget request associated with the Infrastructure Analysis and Planning PPA. The committee recommended no less than $17 million for the National Infrastructure and Analysis Center (NIAC) (the Administration had planned to realign some funds from the NIAC to develop some low- and mid-level analytical capabilities within NPPD, although it did not state how much). The committee also recommended that funds for vulnerability assessments be kept at last year's level (the Administration had requested a $2 million increase), while adding $2 million to fund the development of a strategic plan to help the Regional Resiliency Analysis Program engage in risk-informed budgeting. The committee also did not agree with the Administration's reduction in cyber education activities within the Global Cybersecurity Management PPA and provided not less than $16 million for those activities. The House Appropriations Committee recommended $1,245 million for IPIS, $67 million below the Administration's request. The committee also expressed concern that the department has not been able to meet its hiring objectives and, therefore, recommended that the full complement of positions asked for by the department not be funded. As a result, the budget request was reduced by $45 million, distributed across the PPAs. In addition, the committee did not approve the $10 million requested for assessing the risks to critical infrastructure associated with climate change. Also noting that the final rule on regulating ammonium nitrate manufacture, sale, and transport has not yet been approved, the committee recommended delaying the appropriation of $16 million that was requested for implementing the rule until next fiscal year. Finally, the committee recommended that the department continue to support the Multi-State Information Sharing and Analysis Center at FY2015 levels. Table 2 outlines the funding levels enacted for FY2015, as well as the proposed and enacted FY2016 funding levels for each PPA within the IPIS program. The omnibus provided $273 million for Infrastructure Protection, $22 million less than requested. The omnibus did not provide the requested $16 million program increase to support implementation of the ammonium nitrate regulations, which accounted for much of this reduction. The explanatory statement noted the delay in implementing a final rule as the reason for the reduction. However, the omnibus did provide $4 million for DHS to help secure ammonium nitrate and other explosive precursors until the regulations are finalized. The omnibus did not provide the requested $10 million program increase to assess the potential impacts of climate change on critical infrastructures. The omnibus also appropriated $4 million less than the request for Regional Field Operations. This reduction is not explained in the explanatory statement. The omnibus provided $2 million for a three-year strategic plan that would guide future vulnerability assessments and the Regional Resiliency Assessment program. It also appropriated an additional $4 million to expedite the development of a new critical infrastructure database (as part of the Sector Management and Governance PPA). The omnibus appropriated $819 million for cybersecurity programs, slightly more than what was requested. While the Administration's request included a reduction in DHS's cybersecurity education efforts, the omnibus supported those activities at FY2015 levels ($16 million). The explanatory statement accompanying the omnibus also rejected a proposed $500,000 reduction to funding for the Multi-State Information Sharing and Analysis Center (MS-ISAC), and provided $500,000 to ensure current services to state, local, and tribal governments are maintained. The explanatory statement required DHS to provide a detailed accounting and justification for its obligation of funds to this activity. The omnibus appropriated $199 million for communication security programs, including fully funding the request for the Next Generations Network PPA. Cutting across all of the PPAs, the omnibus fully supported NPPD's current hiring projections. While both the House and Senate appropriations committees expressed concern about the Directorate's inability to meet its hiring goals, the House committee proposed a greater reduction in personnel-related expenses than did the Senate. Since, according to the House committee, the Directorate has typically redirected the unexecuted funds as the year goes along, the ability to do so this next fiscal year presumably would be restricted more under the House-reported version. Congress's decision will affect how much flexibility the Directorate will have in this next fiscal year. The omnibus fully supported DHS's projection for hiring. While the Senate committee was silent regarding funds for climate change-related risk assessments, it recommended $10 million less for the two PPAs that had funds budgeted for those assessments (equal to the amount the Administration proposed spending). Presumably, under the Senate's version, if the Directorate went ahead with these assessments, it would have to reduce expenditures in other Infrastructure Analysis and Planning and Sector Management and Governance activities. The House committee explicitly did not provide the extra $10 million requested for these assessments. The omnibus explicitly did not provide funds for these assessments. Both committees did not fully support the Administration's request for an additional $16 million to implement ammonium nitrate rules that have not yet been made final. The House committee did not provide any extra funding. The Senate committee reduced the total funding for Infrastructure Security Compliance PPA by $5 million, but directed $13 million toward the Ammonium Nitrate Security Program. It is not clear the relative impact either recommendation may have, if any, on implementing compliance with the rules once they are made final. The omnibus explicitly stated that no funds were appropriated to implement these rules, but it did provide $5 million to allow DHS to take additional measures to secure ammonium nitrate and other explosive precursors. The House and Senate committees also differed on how much to spend on DHS's cybersecurity education-related activities. The omnibus maintained funding for these activities at FY2015 levels ($16 million). Finally, there were a number of bills introduced this session dealing with varying aspects of cybersecurity, including those focused on improving information sharing between the federal government and the private sector. Agreed-upon legislation, entitled the Cybersecurity Act of 2015, was included in Division D of the omnibus. Analyzing the potential impact of these bills on this year's IPIS appropriations is beyond the scope of this report. The Federal Protective Service (FPS), within the National Protection and Programs Directorate (NPPD), is responsible for the protection and security of federal property, personnel, and federally owned and leased buildings. In general, FPS operations focus on security and law enforcement activities that reduce vulnerability to criminal and terrorist threats. FPS protection and security operations include all-hazards based risk assessments; emplacement of criminal and terrorist countermeasures, such as vehicle barriers and closed-circuit cameras; law enforcement response; assistance to federal agencies through Facility Security Committees; and emergency and safety education programs. FPS also assists other federal agencies, such as the U.S. Secret Service (USSS) at National Special Security Events (NSSE), with additional security. FPS is the lead "Government Facilities Sector Agency" for the National Infrastructure Protection Plan (NIPP). FPS anticipates employing 1,386 FTEs in its base workforce, supplemented by approximately 13,000 contract security guards. Unlike other components of DHS, FPS is fully funded by offsetting collections rather than appropriations. Fees are charged to FPS's customers for security services, and the use of those fees is authorized by the appropriations legislation. Because the cost of FPS operations is offset in this way, the resources provided to FPS do not add to the net discretionary budget authority in the legislation, although they do appear in calculations of gross budgetary resources available to the department. The Administration requested $1,443 million for FPS for FY2016, $101 million (7.5%) more than was provided in FY2015. Both Senate- and House-reported bills included the requested authorization to use fees collected to support FPS operations. The Senate-reported bill required the submission of a human capital resource plan, while the House-reported bill did not. However, H.Rept. 114-215 required a certification from OMB that FPS operations would be fully funded by the collected fees. If the collected revenues proved inadequate, an expenditure plan would be required that described how security risks would be addressed. Division F of P.L. 114-113 included the requested authorization to use fees collected to support FPS operations, and a requirement for submission of a strategic human capital plan. The explanatory statement did not contradict or amend the House report's requirement for the OMB certification that collected fees would fully fund FPS operations. The Office of Biometric Identity Management (OBIM) is responsible for collecting, maintaining, and sharing biometric data with the law enforcement and intelligence communities and strategic foreign partners. As part of this mission, it maintains the Automated Biometric Identification System (IDENT)—DHS's central repository for biometric data. The Administration requested almost $284 million for OBIM, $31 million (12.5%) more than was provided in FY2015. The net increase was driven largely by an increase of almost $66 million for the first increment of the replacement for IDENT. Senate-reported S. 1619 included $283 million for OBIM, less than $1 million below the requested funding level, and $31 million more than was provided in FY2015. Report language indicates the Senate Appropriations Committee expected the request for the first increment of IDENT replacement to be fully funded, and that OBIM provide semiannual briefings to the committee on its work and progress on specific projects, including coordination of biometric systems across government. House-reported H.R. 3128 included $283 million for OBIM, less than $1 million less than requested, $31 million more than was provided in FY2015, and $208,000 more than was proposed by the Senate Appropriations Committee. Like the Senate committee report, the House Appropriations Committee report supported the requested level of funding for the first increment of IDENT replacement, and directed OBIM to continue its briefings on coordination of biometric systems. Division F of P.L. 114-113 included $282 million for OBIM. The explanatory statement noted that almost $66 million was for the first increment of funding for the successor system to the IDENT automated biometric identification system. The explanatory statement further noted the current estimates for the next three follow-on increments, and directed OBIM to "find cost savings wherever possible and brief the Committees on any anticipated cost changes." The Office of Health Affairs (OHA) coordinates or consults on DHS programs that have a public health or medical component. These include FEMA operations, homeland security grant programs, and medical care provided at ICE detention facilities. OHA also has operational responsibility for several programs, including the BioWatch program, the National Biosurveillance Integration Center (NBIC), the department's occupational health and safety programs, and the department's implementation of Homeland Security Presidential Directive-9 (HSPD-9), "Defense of United States Agriculture and Food." The Administration requested $124 million for OHA for FY2016, $5 million below the amount appropriated for FY2015. The proposed allocation among OHA's activities was $83 million for the BioWatch program; $8 million for NBIC; almost $1 million for the Chemical Defense Program; $5 million for Planning and Coordination (under which leadership and coordination activities are implemented); and $27 million for Salaries and Expenses. The Senate Appropriations Committee recommended $123 million for OHA for FY2016, $1 million below the amount requested and $6 million below the FY2015 level. The committee proposed the amount requested for all activities except Salaries and Expenses, as follows: $83 million for the BioWatch Program; $8 million for NBIC; almost $1 million for the Chemical Defense Program; $5 million for Planning and Coordination; and $26 million for Salaries and Expenses. The House Appropriations Committee recommended $125 million for OHA for FY2016, $1 million above the amount requested and $4 million below the FY2015 level. The committee proposed $82 million for the BioWatch Program; $11 million for NBIC; almost $1 million for the Chemical Defense Program; $5 million for Planning and Coordination; and $27 million for Salaries and Expenses. The committee proposed sustaining the FY2015 level for NBIC to continue work to operationalize pilot programs. Division F of P.L. 114-113 included $125 million for OHA for FY2016, slightly more than the level recommended by the House Appropriations Committee (0.1%), with the same distribution of resources recommended in the explanatory statement, except for a slight increase (0.6%) in Salaries and Expenses. Table 3 presents the enacted funding amounts for OHA components for FY2015, the Administration's request for FY2016, and the Senate- and House-reported numbers for the same. The BioWatch program deploys sensors in more than 30 U.S. cities to detect the possible aerosol release of a bioterrorism pathogen, in order that medications could be distributed before exposed individuals became ill. Operation of BioWatch accounts for most of OHA's budget. The program had sought for several years to deploy more sophisticated autonomous sensors that could detect airborne pathogens in a few hours, rather than the day or more that is currently required. However, after several years of unsuccessful efforts to procure a replacement for the existing system, DHS announced the termination of further procurement activities in April 2014. The Senate Committee recommended the requested amount for BioWatch for FY2016, to continue current operations, including routine replacement of equipment. However, the committee states that the "current gaps in timeliness and agent detection should be addressed," and directs that OHA and S&T brief the committee within 180 days of enactment regarding DHS plans for future BioWatch detection capabilities. The House Committee recommended $1 million less than the requested amount for BioWatch, saying that additional amounts provided for FY2015 funded equipment replacement costs sufficiently, so that the funding need for FY2016 was reduced. The committee also stated its continued support for efforts to improve the timeliness of detection, and recommended that OHA collaborate with DOD, among other partners, in this effort. The explanatory statement specified $1 million was for replacement and recapitalization of BioWatch equipment, and directed OHA to brief the Appropriations Committees on its response to a GAO report that found DHS lacked information about certain capabilities of the BioWatch system. The primary mission of the Federal Emergency Management Agency (FEMA) is to reduce the loss of life and property, and protect the nation from all hazards. It is responsible for leading and supporting the nation's preparedness for manmade and natural disasters through a risk-based and comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. FEMA executes its mission through a number of activities. It provides incident response, recovery, and mitigation assistance to state and local governments, primarily appropriated through the Disaster Relief Fund (DRF) and the Pre-Disaster Mitigation Fund. It also supports disaster preparedness through a series of homeland security and emergency management grant programs. The Administration requested $4,462 million in net discretionary budget authority for FEMA overall, $115 million (2.6%) more than in FY2015. FEMA's budget includes two large elements that do not count towards the total net discretionary budget authority: funding for major disasters under the Stafford Act, which is paid for under an adjustment to the discretionary spending limits; and the National Flood Insurance Fund, which is considered mandatory spending. The Senate-reported bill included $4,554 million in net discretionary budget authority for FEMA for FY2016, $92 million (2.1%) more than requested and $207 million (4.8%) more than was provided in FY2015. The House-reported bill included $4,437 million in net discretionary budget authority for FEMA for FY2016, $26 million (0.6%) less than requested and $89 million (2.1%) more than was provided in FY2015. Division F of P.L. 114-113 included $4,616 million in net discretionary budget authority for FEMA for FY2016, $154 million (3.5%) more than requested and $269 million (6.2%) more than was provided in FY2015. Details of select individual FEMA appropriations are provided below. State and local governments have primary responsibility for most domestic public safety functions. When facing difficult fiscal conditions, state and local governments may reduce resources allocated to public safety and, consequently, homeland security preparedness, due to increasing pressure to address tight budgetary constraints and fund competing priorities. Since state and local governments fund the largest percentage of public safety expenditures, this may have a significant impact on the national preparedness level. Prior to 9/11, three federal grant programs were available to state and local governments to address homeland security: the State Domestic Preparedness Program administered by the Department of Justice, the Emergency Management Performance Grant (EMPG) administered by the Federal Emergency Management Agency (FEMA), and the Metropolitan Medical Response System (MMRS) administered by the Department of Health and Human Services. Since then, several additional homeland security grant programs were added to amplify state and local preparedness, including the State Homeland Security Grant Program (SHSGP), Citizen Corps Program (CCP), Urban Area Security Initiative (UASI), Driver's License Security Grants Program (REAL ID), Operation Stonegarden grant program (Stonegarden), Regional Catastrophic Preparedness Grant Program (RCPG), Public Transportation Security Assistance and Rail Security Assistance grant program (Transit Security Grants), Port Security Grants (Port Security), Over-the-Road Bus Security Assistance (Over-the-Road), Buffer Zone Protection Program (BZPP), Interoperable Emergency Communications Grant Program (IECGP), and Emergency Operations Center Grant Program (EOC). While some of these programs still receive explicit mention in appropriations reports, others have become allowable uses for funding provided under a larger umbrella grant program, without explicit congressional action. The Administration requested $1,211 million for state and local grant programs and training in FY2016. This is $289 million less than was appropriated in FY2014 and FY2015 ($1,500 million). Additionally, the Administration proposed several structural changes, including a single block grant for preparedness grants—the National Preparedness Grant Program (NPGP). Senate-reported S. 1619 and House-reported H.R. 3128 included a total of $1,500 million for state and local grant programs and training for FY2016, the same level provided in FY2014 and FY2015. The Senate- and House-reported bill and report recommended maintaining the current structure of the grant programs, rejecting the proposed block grant. Division F of P.L. 114-113 included $1,500 million in net discretionary budget authority for state and local grant programs and training for FY2016. Table 4 includes the distribution of those resources among programs as provided in the law and explanatory statement. As has occurred in previous year, legislative language has been included in the annual appropriation for FEMA's state and local grant programs establishing timelines for applications, limiting the use of grant resources for administrative costs, and allowing for installation of communications towers. Guidance included in the explanatory statement accompanying the act encouraged FEMA to consider applications "which will enhance physical security of large venues and for early warning systems." FEMA is also directed to review its grant activities in coordination with the Department of Justice to determine how they can be best used to help address emergent and cross-cutting challenges at state and local levels. Specific direction is provided in the explanatory statement in regards to the Urban Area Security Initiative (UASI). The explanatory statement notes that under P.L. 110-53 , FEMA is to conduct risk assessments for the 100 most populous metropolitan statistical areas. The statement notes that "it is expected that UASI funding will be limited to urban areas representing up to 85 percent of [cumulative national terrorism] risk and that resources will continue to be allocated in proportion to risk." The Administration first proposed the National Preparedness Grant Program (NPGP) in its FY2013 budget request to Congress, and again in FY2014 and FY2015. Congress denied the request all three times. The Administration proposed the NPGP once again in FY2016. The Administration indicated that its latest proposal includes adjustments that responded to congressional and stakeholder concerns. The committee-reported bills and Division F of P.L. 114-113 continued to carry general provisions barring the establishment of the National Preparedness Grant Program or similar structures without explicit congressional authorization. The Administration's FY2016 budget proposed $670 million for firefighter assistance, including $335 million for AFG and $335 million for Staffing for Adequate Fire and Emergency Response (SAFER) grants, a 1.5% reduction from the FY2015 level. As in previous years, funding for management and administration of these grants would be drawn from a separate FEMA account (Salaries and Expenses). The Firefighter Assistance Grants would be categorized under First Responder Assistance Programs (FRAP), which is part of FEMA's State and Local Programs (SLP) appropriation. The Administration requested that all previous SAFER waivers again be enacted for FY2016. The Senate Appropriations Committee bill provided $680 million in firefighter assistance, including $340 million for AFG and $340 million for SAFER. This matched the FY2015 level. The committee continued to fund firefighter assistance under its own account, and declined the Administration's request to place firefighter assistance under the State and Local Programs account. Section 552 of the reported bill continued to grant FEMA waiver authority from certain SAFER requirements. Since FY2009, waiver authority in annual appropriations bills has allowed SAFER grants to be used to retain firefighters, and has allowed DHS to waive cost-sharing and other requirements. In the accompanying report, the committee directed FEMA to work with stakeholders and present a recommendation to the committee no later than the submission of the FY2017 budget on the feasibility of removing these waivers in future appropriations. The committee also stated its expectation that funding for rural fire departments remain consistent with their previous five-year history, and directed FEMA to brief the committee if there is a fluctuation. The House Appropriations Committee bill provided $680 million in firefighter assistance, including $340 million for AFG and $340 million for SAFER. This matched the FY2015 level as well as the Senate Appropriations Committee level. As did the Senate-reported bill, the House-reported bill continued to fund firefighter assistance under its own separate account. However, unlike the Senate-reported bill and the Administration's budget proposal, the House bill did not provide for SAFER waiver authority in FY2016. Under current law (Fire Grant Reauthorization Act of 2012, Title XVIII of P.L. 112-239 ), FEMA has permanent authority to grant SAFER waivers, but only in cases of demonstrated economic hardship. The Homeland Security Appropriations Act, 2016 provided $690 million for firefighter assistance in FY2016, including $345 million for AFG and $345 million for SAFER. Firefighter assistance continued to be funded under its own separate appropriations account. Similar to the House bill, the omnibus did not include a SAFER waiver provision. The Disaster Relief Fund (DRF) is the main account used to fund a wide variety of programs, grants, and other forms of emergency and disaster assistance to states, local governments, certain nonprofit entities, and families and individuals affected by disasters. The DRF is a no-year account—unused funds from the previous fiscal year are carried over to the next fiscal year. The Administration generally requests funding for the DRF based on what FEMA plans to spend on all past declared catastrophic events, plus the 10-year average for non-catastrophic events, and a reserve to prevent shortfalls. Funding currently provided to the DRF can be broken out into two categories. The first is funding for activities not directly tied to major disasters under the Stafford Act (including activities such as assistance provided to states for emergencies and fires). This category is sometimes referred to as the DRF's "base" funding. The second (and significantly larger) category is for disaster relief costs for major disasters under the Stafford Act. This structure reflects the impact of the Budget Control Act ( P.L. 112-25 , hereinafter referred to as the BCA), which allows these costs incurred by major disasters to be paid through an "allowable adjustment" to the discretionary spending caps, rather than having them count against the discretionary spending allocation for the bill (see insert below). The Administration's FY2016 budget proposed $7,375 million for the DRF—a 5% increase compared to the enacted level of $7,033 million from FY2015. $662 million was requested for the base, while $6,713 million was requested for the costs of major disasters. In addition, the Administration requested a $24 million transfer from the DRF to the DHS Office of Inspector General (DHS OIG) for oversight of disaster relief activities. Transfers from the DRF are a long-standing means of supporting the DHS OIG's annual budget for oversight of disaster relief, first occurring in FY2004, the first annual appropriations act for the department. The Administration also requested a $250 million rescission from prior-year DRF appropriations not designated as emergency funding or disaster relief under the BCA. The House- and Senate-reported bills included the amount requested by the Administration for the DRF ($662 million for the base, and $6,713 million for disaster relief) including the $24 million transfer to the DHS OIG. Both Senate- and House-reported bills included deeper rescissions than were requested by the Administration, with the Senate-reported bill rescinding $1,025 million and the House-reported bill rescinding $1,266 million from the DRF. Division F of P.L. 114-113 , the Homeland Security Appropriations Act, 2016 provided $7,374 for the DRF, including transfer of $24 million for the DHS OIG. A general provision included in Title V of the omnibus rescinded almost $1,022 million in unobligated balances from the DRF—balances that were carried over from FY2015 and amounts recovered from previous disasters upon completion of recovery projects. After the rescission, the amount provided for the DRF was $6,713 million, the same amount initially requested by the Administration and recommended by the House- and Senate-reported bills. The amount provided by Division F of P.L. 114-113 was slightly more (4.3%) than what Congress appropriated for the DRF in FY2015. Prior to the enactment of the BCA, funds in the DRF often ran too low to meet federal disaster assistance needs before being replenished by annual appropriations. When the account neared depletion, Congress usually provided additional funding through supplemental appropriations. In some fiscal years, Congress passed two or three supplemental appropriations to fund the DRF. Since the passage of the BCA, an increase in the annual funding level for the DRF may have decreased the need for supplemental funding. As demonstrated in Table 5 , annual appropriations for the DRF have been significantly larger since FY2011, the last year appropriations were provided for the DRF without benefit of the mechanisms of the BCA. Only one disaster relief supplemental appropriations bill has passed Congress since the FY2012 appropriations cycle— P.L. 113-2 , which provided relief in the wake of Hurricane Sandy. Even then, when Hurricane Sandy made landfall, the existing balance in the DRF helped fund the immediate assistance needs in the wake of the storm without a supplemental appropriation. The larger balance provided the Administration and Congress with more time to assess the need for federal assistance and target it rather than requiring immediate legislative action to fund the DRF. Existing balances in the DRF are also attributable in part to FEMA's efforts to recover unused relief funds. Initial obligations of disaster relief funding are based, in part, on initial cost estimates. In some cases FEMA later determines the project will cost less than anticipated. FEMA then "deobligates" the excess funds, returning them to the DRF, and counting the deobligation as a recovery. Monthly FEMA reporting indicates that FEMA currently recovers an average of $67 million a month. This same reporting noted that for FY2015, a total of $14,206 million was available in the DRF: $2,594 million for the base and $11,612 million for the costs of major disasters. The report stated that as of the end of June 2015, there was $7,936 million in unobligated funds remaining in the DRF: $2,095 million in the base, and $5,743 million for the cost of major disasters. FEMA projected that by the end of the year, $3,267 million would be left unobligated. Some may argue a relatively healthy balance is beneficial compared to years prior to the BCA where a large disaster or active hurricane season (or both) could have quickly depleted the remaining unobligated amount, necessitating a supplemental appropriation for additional funds for disaster relief. Others may point at the recoveries and the large DRF balance and question the budgetary practices used to appropriate funds for the DRF. They might conclude the account is being funded at too high a level and any excess funds not used for an emergency or disaster could be transferred or rescinded for purposes other than disaster assistance. From FY2014 through FY2016, rescissions were made from the DRF that offset the cost of the Homeland Security Appropriations Act. These rescissions were limited to unexpended balances that were not designated as being for the costs of major disasters under the Stafford Act or as emergency appropriations. Thus, the funds were either appropriated to the base, or recovered from projects that were funded prior to the BCA's impact on appropriations. The Administration actually requested such rescissions for FY2015 and FY2016, seeking $200 million and $250 million in rescissions respectively. Congress chose to make larger rescissions of the unobligated balances in the DRF, rescinding $375 million in FY2015, and almost $1,022 billion in FY2016. The budget request for the PDM program for FY2016 was $200 million. The Senate-reported bill included $100 million for PDM, while the House-reported bill included $25 million. The Administration's request represented a dramatic increase for the program, as the program had been zeroed out by the Administration in their base budget request in three previous budget cycles. However, the FY2015 budget request, while not suggesting funding for the program itself, did use the PDM Fund as a potential receptacle for funds as part of its "Opportunity, Growth and Security Initiative." That initiative, which was not realized, would have provided significant funding for the PDM fund, although not for the PDM program as currently understood. As the budget request noted, the initiative "would provide $400 million to this fund" for a separate pre-disaster mitigation initiative. Though the Administration was not requesting new funding for PDM in previous years, Congress was providing a base level of $25 million to $30 million during those years. The Administration had previously justified the lack of a funding request on two points: one, a backlog of PDM projects that had created a substantial balance in the PDM fund and two, the existence of the Hazard Mitigation Grant Program (HMGP). The $200 million request for FY2016 may indicate that the project backlog has been reduced. It may also indicate that the program is again being recognized as a logical home for mitigation and resilience initiatives. Division F of P.L. 114-113 included $100 million for PDM. The President's budget for FY2016 requests $100 million for the EFS program, a reduction of $20 million. The Senate Appropriations Committee concurred with the Administration's funding request while the House Appropriations Committee recommended funding the EFS program at the FY2015 level of $120 million. The committees also differed on the Administration's proposal to shift the program from FEMA to the Department of Housing and Urban Development (HUD). The EFS program was established in 1985, and placed at FEMA. The rationale at that time was that the charitable groups that make up the National Board of the program wanted to emphasize that homelessness was a daily emergency. In addition, those same organizations had an established working relationship with FEMA through their disaster response and recovery work. While previous Administrations have suggested moving the EFS program to HUD, the Senate Appropriations Committee's approval of such a transfer in their committee-reported FY2015 appropriations legislation was the first time the move gained any approval in Congress. While authority for the transfer was not included in the final annual appropriation for DHS that year ( P.L. 114-4 ), the explanatory statement accompanying the act indicated that "[s]hould such a transfer be proposed in future budget requests, it is expected that FEMA and HUD will have a comprehensive outreach strategy as well as a full transition plan as part of such proposal." For FY2016, the Senate Appropriations Committee bill mandated the transfer of the program to HUD. The House Appropriations Committee report notes the expected outreach strategy and transition plan has not been provided, and therefore, "[p]ending the receipt of such a transition plan based on stakeholder outreach, the Committee does not recommend the transfer of funding and administrative authority...." Legislative language in P.L. 114-113 directed FEMA and HUD to provide a transition plan within 90 days of the submission of the FY2017 budget. The plan is expected to include administrative details of the transition, demonstrate outreach to stakeholders, and display recognition and maintenance of the original purposes of the program.

This report is part of a suite of reports that discuss appropriations for the Department of Homeland Security (DHS) for FY2016. It specifically discusses appropriations for the components of DHS included in the third title of the homeland security appropriations bill—the National Protection and Programs Directorate (NPPD), the Office of Health Affairs (OHA), and the Federal Emergency Management Agency (FEMA). Collectively, Congress has labeled these components in the appropriations act in recent years as "Protection, Preparedness, Response, and Recovery." The report provides an overview of the Administration's FY2016 request for Protection, Preparedness, Response, and Recovery, and the appropriations proposed by Congress in response, and those enacted thus far. Rather than limiting the scope of its review to the third title, the report includes information on provisions throughout the proposed bill and report that directly affect these functions. Protection, Preparedness, Response, and Recovery is the second largest of the four titles that carry the bulk of the funding in the bill. The Administration requested $6,222 million for these components in FY2016, $267 million more than was provided for FY2015. These three components made up 15.0% of the Administration's $41.4 billion request for the department in net discretionary budget authority, and the proposed additional funding was 15.5% of the total net increase requested. Most of the proposed net discretionary increase was for NPPD ($157 million, or 10.5% more than last year) and its work in cybersecurity and communications. The Administration also requested an additional $6.7 billion not reflected above for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act (BCA, P.L. 112-25). Senate-reported S. 1619 would have provided the components included in this title $6,291 million in net discretionary budget authority. This would have been $69 million (1.1%) more than requested, and $336 million (5.6%) more than was provided in FY2015. The Senate-reported bill also included the requested disaster relief funding. House-reported H.R. 3128 would have provided the components included in this title $6,122 million in net discretionary budget authority. This would have been $100 million (1.6%) less than requested, and $167 million (2.8%) more than was provided in FY2015. Like the Senate-reported bill, the House-reported bill also included the requested disaster relief funding. On December 18, 2015, the President signed into law P.L. 114-113, the Consolidated Appropriations Act, 2016, Division F of which was the Department of Homeland Security Appropriations Act, 2016. The act included $6,353 million for these components in FY2016, $398 million (6.8%) more that was provided for FY2015, and $131 million (2.1%) more than was requested. Additional information on the broader subject of FY2016 funding for the department can be found in CRS Report R44053, Department of Homeland Security Appropriations: FY2016, as well as links to analytical overviews and details regarding appropriations for other components. This report will be updated if supplemental appropriations are provided for any of these components throughout the FY2016 appropriations process.

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AU.S. free trade agreement (FTA) with Oman was concluded on October 13, 2005, after seven months of negotiation, and was signed by U.S. Trade Representative (USTR) Bob Portman and Omani Minister of Commerce and Industry Maqbool bin Ali Sultan on January 19, 2006. The U.S.-Oman (FTA) is the fifth U.S. bilateral free trade agreement with a country in the proposed Middle East Free Trade Area (MEFTA). MEFTA would consist of 16 entities in the Middle East and four in North Africa. The entire proposed MEFTA is included in the map in Figure 1 , with Oman, heavily shaded, in the lower right hand corner. Completion of a MEFTA by 2013 was proposed by President George W. Bush in 2003, as part of a plan to fight terrorism by supporting Middle East economic growth and democracy through trade. To date, besides Oman, the Administration has negotiated and Congress has implemented free trade agreements with four other MEFTA political entities: Israel and Jordan (before MEFTA was announced), Morocco, and Bahrain. A sixth FTA is being negotiated with the United Arab Emirates (UAE). Congressional consideration of the U.S.-Oman FTA is governed by the timeline set forth in the Trade Act of 2002 ( P.L. 107-210 ). Under this law, which lays out the President's trade promotion authority (TPA), the President must give Congress a 90-day prenotification of his intent to enter into the trade agreement. After that, the President must submit to Congress—under no particular time constraints, but on a day when both houses of Congress are in session—both the agreement itself and the implementing legislation. Any House or Senate committees to which the legislation is referred will have 45 days to report (or not report) the bill; and each house has 15 days after the bill is reported (or the 45 days expire) to consider the legislation. If the House passes its bill to the Senate, the Senate has an additional 15 days to consider the legislation. Floor debate in either house is limited to 20 hours, divided equally between supporters and opponents. For final passage, both houses must vote the legislation up or down by a simple majority, and neither the implementing legislation nor the agreement itself may be amended. Figure 1. Oman's Geographic Location in the Proposed MEFTASource: Map Resources. Adapted by CRS. U.S. interest in Oman stems from a number of factors. Oman is a small exporter of oil and natural gas that is strategically located at the entrance to the Persian Gulf, 35 miles directly opposite Iran. It is not a member of the Organization of the Petroleum Exporting Countries (OPEC). Oman is a moderate Islamic country which has sought to maintain good relations with all Middle East countries. It also has a 170 year history of political and economic cooperation with the United States, and has supported the U.S. war on terrorism. Oman is an important gateway to the Persian Gulf region. Oman has many reasons for wanting to negotiate an FTA with the United States. It is a country whose proven oil reserves could be exhausted within 15 or 20 years; yet, almost 40% of the country's GDP, two-thirds of its export earnings and three-fourth of its government revenues currently come from oil revenues. It is therefore trying to liberalize and diversify its trade regime as it seeks to broaden economic opportunities for a fast-growing workforce. As a result, it is looking to expand its economy beyond oil and gas exports. It sees the United States as an important ally in the venture to prepare itself for a time when its economic and social challenges intersect. Oman is a small U.S. trade partner, ranking 88 th among all U.S. trade partners. Total U.S.-Oman trade at $1 billion in 2005 ($593 million in U.S. exports and $555 million in U.S. imports) accounts for 0.04% (four one-hundredths of one percent) of all U.S. trade. As a trading partner it is also 11 th among the 20 MEFTA entities, which together represent 4% of U.S. trade for 2005. The United States, on the other hand, ranks fourth in importance among Oman's trading partners, behind the United Arab Emirates (UAE), Japan, and the United Kingdom for 2004 (most recent data). In 2005, the most important U.S. imports from Oman (see Table 1 ) were oil and natural gas (75%, constituting 1% of all U.S. oil and gas imports from MEFTA countries), and apparel (10%). The most important U.S. exports to Oman were various types of transport equipment and road vehicles (totaling 56%), and various types of machinery (24%). Since 2001, U.S. exports to Oman have almost doubled to $593 million, for various reasons, while U.S. imports from Oman, at $555 million, have increased by about a third, primarily because of increases in the price of petroleum imports. As a result, for 2005, the United States had a small trade surplus with Oman. Total U.S. foreign direct investment in Oman was $358 million in 2003, nearly double the $193 million investment in 2002. The Bureau of Economic Analysis does not report on investment by sector for Oman, when investment is highly concentrated in a small number of investors, and such reporting might reveal the identity of individual investors. However, most of it is likely invested in oil and gas-related facilities. However, the Department of Commerce's Country Commercial Guide for Oman reported that the largest investor in Oman is Royal Dutch Shell Oil which holds 34% of Petroleum Development in Oman, the state oil company, and 30% of Oman Liquid Natural Gas. In addition, U.S. firms, Gorman Rupp (water pumps) and FMC (wellhead equipment), have entered into industrial joint ventures with Omani firms, and Dow Chemical announced a joint venture with Oman Oil Company and the government of Oman in July 2004 to develop a large petrochemical plant in Sohar. The Country Commercial Guide for Oman also reported that total investment in listed Omani companies with foreign participation was $2.4 billion in September 2004, of which 8.94% ($215 million) was (worldwide) foreign investment. Foreign capital also constituted 7.5% of all capital invested in finance, 3% of all capital invested in manufacturing, and 9% of all capital invested in insurances and services. The FTA with Oman is similar to other recent FTAs with MEFTA countries (Morocco and Bahrain), with slight variations. The U.S.-Oman FTA has three basic parts: new tariff schedules for each country, broad commitments to open markets and provisions to support these commitments, and protections for labor and the environment. The USITC argues that the economic effect of the agreement on the U.S. economy is expected to be small but positive, and that the impact on U.S. workers is likely to be minimal because trade with Oman is low. U.S. apparel workers are a group that is potentially adversely affected. Apparel imports from Oman declined by 57% in 2005 over 2004, because the World Trade Organization (WTO) Agreement on Clothing and Textiles (ACT) expired in January of 2005, ending the trade quota system among WTO partner countries. The USITC reports that tariff reductions and elimination under the U.S.-Oman FTA should restore some of the competitiveness of Oman's apparel exports among U.S. purchasers—and estimates that the resulting increase in imports would come at the expense of workers elsewhere in the world, not U.S. workers. Under the U.S.-Oman FTA, the United States and Oman will provide each other immediate duty-free access for tariff lines covering almost all consumer and industrial goods, with special provisions for agriculture and textiles and apparel. For agricultural products, Oman will provide immediate duty-free access for current U.S. exports in 87% of agricultural tariff lines; and the United States will provide immediate duty-free access for 100% of Oman's current exports of agricultural products to the United States. Both countries will phase out all tariffs on the remaining eligible goods within 10 years. Textile and apparel products are divided into three categories. Most U.S. imports from Oman are category A (cotton and manmade fibers) for which duties will be eliminated immediately so long as the goods meet the FTA rules of origin requirements. On category B products (home furnishings—mainly bed and kitchen linens) tariffs will be reduced over five years, and for category C products (wool goods), tariffs will be reduced over 10 years. Most apparel must be assembled in an FTA party from inputs (yarn and fabric) made in an FTA party. At present, virtually all U.S. textile and apparel imports from Oman are dutiable, with an average tariff rate of 15.4% in 2005. At the same time, only 11% of U.S. agricultural imports from Oman are dutiable. These dutiable products carried an average tariff of 10.4% in 2005. Most U.S. exports to Oman incurred the common external Gulf Communications Council (GCC) tariff of 5% to all non-GCC members. The GCC includes, besides Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE. The U.S.-Oman FTA contains broad commitments to open markets in sectors such as banking, insurance, securities, and telecommunications. It also includes protections for U.S. investors, and for holders of copyrights, trademarks, patents, and trade secrets. It includes enforcement measures for intellectual property rights infringement. In addition it contains transparent sanitary and phytosanitary measures, government procurement disciplines, streamlined and transparent customs procedures, commitments to combat bribery, and tools to enforce the trade agreement. More specifically: Oman provides market access across its entire services regime, including audiovisual, express delivery, telecommunications, computer, distribution, and healthcare; and services incidental to mining, construction, architecture and engineering. The agreement will enhance Oman's commitment to the WTO General Agreement on Trade in Services (GATS). Annexes I and II of the agreement indicate the exceptions to the coverage of the agreement that each country has reserved for itself in the case of services. U.S. financial service suppliers have the right to establish subsidiaries, branches, and joint ventures in Oman, to expand their operations throughout Oman, and to offer the full range of financial services. Annex III of the agreement lists the exceptions to the coverage of the agreement that each county has reserved for itself in the area of trade in financial services. All forms of investment are protected under the agreement, including enterprises, debt concessions, contracts, and intellectual property. U.S. investors will have, in most circumstances, the right to establish, acquire, and operate investments in Oman on an equal footing with Omani investors and with investors of other countries. Annexes I and II of the agreement indicate the exceptions to the coverage of the agreement that each country has reserved for itself in the case of foreign investment. U.S. phone companies will have the right to interconnect with a dominant carrier in Oman at nondiscriminatory rates. U.S. firms seeking to build a physical network in Oman will have nondiscriminatory access to key facilities such as telephone switches and submarine cable landing stations. Each government commits to nondiscriminatory treatment of digital products and agrees not to impose customs duties on digital products transmitted electronically. Each government commits to protect copyrighted works, including phonograms, for extended terms consistent with U.S. standards and international trends. Grounds for revoking a patent are limited to the same grounds required to originally refuse a patent, thus protecting against arbitrary revocation. Patent terms can be adjusted to compensate for unreasonable delays in granting the original patent, consistent with U.S. practice. The FTA applies the principle of "first-in-time, first-in-right" to trademarks and geographical indications, so the first person who acquires a right to a trademark or geographical indication will be the person who has the right to use it. Each government will be required to establish transparent procedures for the registration of trademarks. The FTA requires each government to criminalize end-user piracy, providing a strong deterrence against piracy and counterfeiting. The FTA mandates both statutory and actual damages under Omani law for IPR violations. Oman commits to a science-based regime for sanitary and phytosanitary measures and to transparent procedures for developing and implementing technical regulations. U.S. suppliers are granted nondiscriminatory rights to bid on contracts to supply most Omani government entities; and Omani government purchasers may not discriminate against U.S. firms or in favor of Omani firms when making government purchases above a threshold monetary level. The FTA requires transparency and efficiency in customs administration, including publication of laws and regulations on the Internet and procedural certainty and fairness. Each government will publish its laws and regulations governing trade, and will publish proposed measures in advance, and provide an opportunity for public comment on them. Each government will ensure that a trader from the other country can obtain prompt and fair review of a final administrative decision affecting its interest. Each government is required to prohibit bribery, including bribery of foreign officials, and to establish appropriate criminal penalties to punish violators. All core obligations of the FTA, including enforceable labor and environmental provisions, are subject to the dispute settlement provisions of the agreement. Dispute panel proceedings are subject to requirements for openness and transparency. Each government is required to effectively enforce its own labor laws, as with other FTAs negotiated under the presidential trade promotional authority or "fast track" authority of the Trade Act of 2002 ( P.L. 107-210 ). This is the only labor provision enforceable through the agreement's dispute resolution process, and the maximum penalty for each violation is limited to $15 million per violation per year. If the Party complained against fails to pay a monetary assessment, the complaining Party can take other steps to collect the assessment (or otherwise secure compliance), including by the suspension of tariff benefits under the FTA. However, the labor section of the U.S.-Oman FTA also contains other provisions, which are subject to consultation rather than actual enforcement: Each country agrees not to weaken or reduce its labor laws to attract trade and investment. Each government reaffirms its obligations as a member of the International Labor Organization (ILO, which requires it to uphold ILO core labor standards) and commit to "strive to ensure" that its laws provide for labor standards consistent with internationally recognized labor rights (which are defined in the FTA to reflect U.S. trade law, and are slightly different from ILO core labor standards.) Labor ministries together with other appropriate agencies agree to establish priorities and develop specific cooperative activities. (See section below on "The Labor Debate" for a discussion of most recent labor issues.) Each government is required to effectively enforce its own environmental laws. This is the only environmental provision enforceable through the agreement's dispute resolution process, and as with labor provisions, the maximum fine is limited to $15 million per violation per year. Each country also agrees not to weaken or reduce its environmental laws to attract trade and investment. As a complement to the agreement, the governments sign a Memorandum of Understanding on Environmental Cooperation that establishes a Joint Forum on Environmental Cooperation, develop a plan of action, and set priorities for future environment-related projects. Support for the agreement is broad in the business community. Among businesses, support is led by the National Foreign Trade Council and the Business Council for International Understanding which heads up the Middle East Free Trade Coalition (MEFTC), an alliance of about 120 companies and associations including the U.S. Chamber of Commerce, and the National Association of Manufacturers. Support also comes from 24 out of 27 trade advisory committees representing business labor, environment, state and local government, agriculture, various industries, and functional areas (e.g., consumer goods, distribution services, small and minority businesses, customs matters, intellectual property, and standards and technical trade barriers.) Congressional support on the House side was led by the Congressional Middle East Economic Partnership Caucus (MEEPC), a bipartisan group of lawmakers which began with 16 members and six co-chairs including Representatives Ben Chandler, Phil English, Darrell Issa, William Jefferson, Gregory Meeks, and Paul Ryan. Congressional support on the Senate side was led by Senator Charles Grassley, Chairman of the Senate Finance Committee, and by Senator Craig Thomas, Chairman of the Subcommittee on International Trade, which held hearings on the U.S.-Oman FTA on March 6, 2006. USTR Portman asserted that the U.S.-Oman FTA will contribute to economic growth and trade between both countries, generate export opportunities for U.S. companies, farmers, and ranchers, help create jobs in both countries, and help American consumers save money while offering them greater choices. He pointed out that in addition to eliminating tariffs on U.S. exports, Oman will provide substantial market access across the entire services regime, provide a secure, predictable legal framework for U.S. investors operating in Oman, provide for effective enforcement of labor and environmental laws, and protect intellectual property. Furthermore, he argues that this agreement will support and accelerate the market liberalization that Oman started as part of its accession to the WTO in 2000. Portman contends that joint U.S.-Omani efforts will advance economic growth and democracy, raise living standards and promote peace and economic stability in the Middle East—a region of almost 350 million people and a $70 billion trading relationship with the United States. The overall Advisory Committee for Trade Policy Negotiations (ACTPN) also notes that the agreement will strengthen the likelihood of additional agreements in the region and improve and strengthen overall U.S. relations with the countries of the Middle East. In addition, those in favor of the agreement assert that Oman is one of the most "open" countries in the Middle East. Economic Freedom of the World, 2005 , published by Canada's Fraser Institute, reports (p. 4) that when measures of economic freedom and democracy are included in a statistical study, economic freedom is about 50 times more effective than democracy in diminishing violent conflict. Economic Freedom ranked Oman 17 th out of 127 countries in terms of degree of economic freedom afforded in five basic areas. The only MEFTA country it ranked higher was the UAE, which tied for 9 th place (with Australia, Luxemburg, and Estonia.) Other MEFTA country rankings were Bahrain (24 th ), Jordan (25 th ), Israel ( 50 th ), and Egypt, (tied for 78 th with Iran and Morocco.) In 2003, Oman passed a new labor law extending its labor protections for domestic workers to foreign workers (who predominate in the private sector). In response to some calls to strengthen the Omani labor law further, Chuck Ditrich, National Foreign Trade Council vice president, urges patience, acknowledging that Oman still has some areas that may need further legislation, but argues that Omani laws must be viewed in the context of a "very traditional society" that is committed to modernization. For example, the government of Oman reportedly recognizes the need for more explicit provisions for collective bargaining in its laws. Moreover, Oman has reportedly undertaken consultation with the ILO for technical assistance in complying with ILO core labor standards. Three of the 27 reports by trade advisory committees mandated under the trade promotion authority language of the Trade Act of 2002 have some criticisms of the U.S.-Oman FTA: those committees on the environment, intergovernmental affairs, and labor. Most members of the Trade Policy and Environment Committee agreed that the environment and public participation provisions were acceptable; however, they noted that the U.S.-Oman FTA lacks some environmental provisions which have appeared in other agreements and which would have been appropriate. Examples of such provisions are the extensive public participation framework from the Central America Free Trade Agreement (CAFTA) and some basic environmental provisions which appeared in the FTAs with Chile and Singapore. The Intergovernmental Advisory Policy Committee, in principle, supported the trade liberalization objectives of the agreement. However, the committee stressed the need for trade agreements to continue to respect the authority of state and local governments to regulate in areas under their jurisdiction. They also stressed the need for ongoing consultations with sub-federal governments. The labor groups are the most vocal critics. They argue that potential losers from the agreement would be workers in Oman who would miss out on the opportunity to be more fully protected by labor standards. Other implied losers would be U.S. workers for whom the agreement does little to "level the playing field." Main arguments against the FTA offered by labor interests are concentrated primarily on two basic issues: weaknesses in the agreement, and weaknesses in Omani laws and enforcement, for which the agreement does not adequately compensate. Labor critics point out that the Trade Act of 2002 requires U.S. negotiators to "seek provisions that treat U.S. principal negotiating objectives equally with respect to both: (1) the ability to resort to dispute settlement; and (2) the availability of equivalent dispute settlement procedures and remedies. However, critics argue, the agreement does not do this. Further, they argue, the FTA is a step backward from protections offered Oman under the Generalized System of Preferences: Not All Labor Provisions Are Treated Equally . The U.S.-Oman FTA identifies three basic labor commitments for partner countries: (1) commitments to comply with ILO standards; (2) commitments to enforce their own labor standards; (3) and commitments to not derogate from those standards in order to attract trade and investment. However, critics argue, only the second of these three commitments is enforceable through the dispute resolution procedures of the U.S.-Oman FTA. This treatment, they argue, contrasts with provisions of the U.S.-Jordan FTA which makes all three commitments enforceable through the dispute resolution process. Unequal Treatment of Labor Compared to Most Non-Labor Provisions . Second, there are different dispute resolution procedures for labor and non-labor (e.g., intellectual property) violations, For labor (and environmental) violations, the potential penalty for the one labor (and environmental) violation (failure to enforce one's own laws) that is open to the dispute resolution procedures is capped at $15 million per violation per year. For non-labor (and non-environmental) violations, there is no cap on any monetary assessment. A Step Back from GSP . In addition, the AFL-CIO sees the U.S.-Oman FTA as being a step back from the Generalized System of Preferences (GSP) program. Under GSP, trade preferences for developing countries including Oman are dependent on such countries' taking steps to afford their workers internationally recognized worker rights. A challenge to GSP eligibility for any country begins with a petition to the Office of the USTR documenting that a country is not taking steps to afford its workers such rights. In June of 2005, the AFL-CIO petitioned the USTR to remove Oman from GSP status, arguing that it was not affording its workers internationally recognized worker rights. The USTR subsequently rejected the petition and Oman continues to hold GSP status. When there are weaknesses in the agreement, critics argue, if a country's basic laws and enforcement of those laws are strong enough, workers can still be protected. Oman, critics argue, lacks protections in certain areas. First, as of the date of this report, according to the ILO website, Oman has ratified conventions relating to only two of the four basic ILO core labor standards (enumerated in a footnote on p. 7): those protecting against child labor, and those prohibiting forced labor. Oman has not ratified conventions related to the right to organize and bargain collectively and the elimination of employment discrimination. Furthermore, various sources suggest that Omani labor laws and/or enforcement do not fully cover certain aspects of the following areas relating to core labor standards/internationally recognized worker rights: Right to Organize and Bargain Collectively . The State Department's Country Reports on Human Rights Practices, 2004, finds in the area of "right to organize and bargain collectively," that Omani law does not provide workers with the right to form or join "unions" but does permit them to form representation committees with the goal of taking care of their interests. The LAC reports that where representation committees exist, however, they are by law, not authorized to discuss wages, hours, or conditions of employment. Country Reports for 2005 adds an unofficial estimate that 25 representation committees, representing 9.1% of employees in the private sector, have been registered since 2004 and reports that provisions of the law apply to [Omani] women and foreign workers [as well as Omani men]. Right to Strike . Furthermore, according to Country Reports for 2004, the Omani law does not address strikes or explicitly provide for the right to collective bargaining. However, it reports that the 2003 Omani labor law removed a 1973 prohibition on strikes and details procedures for dispute resolution. Country Reports for 2005 also indicates that, while labor unrest was rare, there were four reported strikes during the year. The most significant one closed the largest seaport for two days. Prohibition of Forced or Compulsory Labor . Country Reports for 2004 also finds that the Omani law prohibits forced or compulsory labor, including that of children. Country Reports for 2004 further notes that even though the protections of the 2003 Omani labor law apply equally to foreign and domestic workers, at times foreign workers (who account for 80% of private sector workforce and 50% of all workers in Oman) were placed in situations amounting to forced labor. Country Reports for 2005 echoes the finding that some situations amounted to forced labor and adds that employers sometimes withheld documents that would release workers from employment contracts and allow them to change employers. Without such documents, a foreign worker must continue to work for his current employer or become technically unemployed and consequently a candidate for deportation. Country Reports for 2005 further reports that many foreign workers were not aware of their right to take such disputes to the Labor Welfare Board, which "in most cases" released the worker from the service contract without deportation, awarded compensation for time worked under compulsion, reimbursed the worker for back wages, and subjected the guilty employer to fines. However, Country Reports 2005 states, there were no available statistics on the number of disputes filed or resolutions by the end of 2005. Before the U.S.-Oman FTA and implementing legislation were formally submitted to Congress, both House and Senate committees held preliminary hearings. The House Ways and Means Committee held full committee hearings on April 5, 2005. The International Trade Subcommittee of the Senate Finance Committee held hearings on March 6, 2006. Then, on May 10, the House Ways and Means Committee held "mock" markup hearings on the Administration's draft implementing legislation and approved the bill without amendment on a party-line vote of 23-11. On May 18, 2006, the Senate Finance Committee held its "mock" markup, adopting an amendment before passing the bill unanimously. The amendment reflected recent concerns about sweatshop conditions in Jordan (see section below), and implications for production under the U.S.-Oman FTA. On June 28, the Senate Finance committee approved the draft implementing legislation ( S. 3569 ) for the U.S.-Oman FTA by a vote of 10 to 3. On June 29, the Senate passed the bill by a vote of 60 to 34. On June 29 the House Ways and Means Committee also approved the draft implementing legislation ( H.R. 5684 ) by a vote of 23 to 15. On July 20 the House passed the bill by a vote of 221 to 205. On September 19 the Senate reconsidered the implementing legislation and passed the House version of the same bill by a vote of 63 to 31. This action was necessary because the Constitution requires that all revenue-raising legislation, which encompasses trade bills, since they affect tariffs, originate in the House. The bill was signed by the President and became P.L. 109-283 on September 26, 2006. A report of alleged sweatshop conditions in plants in Jordan producing for export to the United States has been issued by the National Labor Committee (NLC), a nonprofit organization that promotes worker rights around the world. The 161-page report has raised concerns within Congress that similar conditions might exist or occur in other MEFTA countries, including Oman if the U.S.-Oman FTA were to go into effect. The NLC report entitled U.S.-Jordan Free Trade Agreement Descends into Human Trafficking and Involuntary Servitude, released in May of 2006, documents conditions in 28 separate factories in Jordan in foreign trade zones, where clothing is produced by Jordanian and foreign guest workers, mostly for export to the United States. The report estimates that tens of thousands of foreign guest workers who entered employment willingly were subsequently stripped of their passports and trapped in involuntary servitude, sewing clothing in factories for companies including Wal-Mart, K-Mart, Gloria Vanderbilt, Target, Kohl's, J.C. Penney, Victoria's Secret, and L. L. Bean. The Senate Finance Committee responded to the concerns on May 18, 2006, by unanimously adopting an amendment in its mock markup of the Administration's U.S.-Oman FTA draft implementing legislation. The amendment, offered by Senator Kent Conrad, would prohibit any products made in Oman "with slave labor (including under sweatshop conditions so egregious as to be tantamount to slave labor) or with the benefit of human trafficking," from benefitting from the agreement. Committee Republicans, including Chairman Chuck Grassley, joined Democrats in voting for the conceptual amendment. The committee then unanimously approved the U.S.-Oman draft implementing bill as amended. Any amendments passed by a committee during the mock markup process are advisory in nature, rather than obligatory. The Administration responded that while they would consider the amendment, they had some concerns. First, they argued, the amendment might fall outside the scope of the provision in the Trade Act of 2002 , P.L. 107-210 , Sec. 2103(b)(3)(ii), requiring that any new statutory language be "necessary or appropriate" to implement the trade agreement. Second, the Administration argued, Sec. 307 of the Tariff Act of 1930 already prohibits the importation of merchandise produced in whole or in part through prison, forced, or indentured labor, including by those who voluntarily entered into employment but were later subject to de facto slave working conditions. In response to the Administration's argument, Senator Conrad pointed out that Sec. 307 of the Tariff Act of 1930 may not be applicable to apparel produced under slave labor conditions in Oman. This, he argued, is because apparel is no longer made in great quantities in the United States; and Sec. 307 does not apply to goods produced under forced or indentured labor if those goods are not domestically produced in quantities that meet the consumption demands of the United States. Third, the Administration argued that the amendment may be unnecessary because FTA language requiring Oman to enforce its own labor laws, which prohibit forced labor, is strong enough or enforceable enough to discourage or affect its practice. In addition, the Administration pointed out, Oman has approved core labor standards prohibiting forced or compulsory labor and has made commitments to strengthening its labor standards still further. These Omani commitments came from the Omani Minister of Labor as part of an exchange of letters between House Democrats, the Omani Minister, and the USTR. The Omani Minister made eight commitments in March and ten further commitments regarding forced labor and child labor in May. In those commitments Oman promised to issue Royal Decrees and Ministerial Decisions to strengthen the country's labor laws in response to congressional concerns by no later than October 31, 2006. While some Republicans argued that Oman needs time to craft new laws with technical support from the ILO, some Democrats argued for changes in Omani laws before the U.S.-Oman FTA implementing legislation is considered by Congress. On July 8, 2006, the Sultan of Oman issued a Royal Decree (74/2006) amending provisions of Omani labor law to provide some labor rights consistent with ILO core labor standards. As amended by the decree, Omani law would permit the right to form unions, the right to bargain collectively, and to engage in other union activities. The law would also prohibit employers and others from imposing any compulsory or forced labor with specific penalties for noncompliance. Penalties are provided for those who would interfere with union activity, or decline to provide the necessary facilitation or information. The Royal Decree delegates promulgation of regulations to the Ministry of Manpower; therefore, specific details regarding its implementation and enforcement are yet to be determined. Meanwhile, a few days after the Senate Finance Committee markup hearing, Jordan's trade minister Sharif Zu'bi indicated that the NLC report had incorrectly identified three sweatshops that are not even in Jordan, and that three others had been closed before the report was released in May. In addition, he noted that the Jordanian government had formed nine inspections teams to investigate the entire garment trade in the country, and is working with the International Labor Organization, U.S. labor committees, the USTR, the State Department, and U.S. and Jordanian apparel companies to address the challenges and improve their monitoring system. In the Spring of 2006, the U.S. interagency "Committee on Foreign Investment in the United States" raised no objections to the acquisition and continued operation of contracts by the Dubai-owned "Dubai Ports World" company from a British firm that managed port facilities in several cities including New York, New Jersey, Baltimore, New Orleans, Miami, and Philadelphia. After several members of Congress expressed opposition to the $9 billion merger on the grounds that the company might not be as vigilant on port security as required, the company agreed to a 45-day review of its operations at those ports. On March 9, the House Appropriations Committee voted 62-2 on a provision in the FY2006 supplemental funding bill for Iraq and Afghanistan war operations and other costs that would have effectively prevented DP World from operating in the United States. The following day DP World officials announced that they would divest the newly-acquired U.S. port operations to an American owner. A provision in the Oman FTA became the focus of increased attention. Some argue that this provision could obligate the United States to open up landside aspects of its port activities to operation by companies such as DP World. Others argue that the provision is not new to bilateral trade agreements, and does not change current U.S. policy. The provision, contained in Annex II of the U.S.-Oman FTA, addresses cross-border services and investment in the area of transportation. More specifically, the provision sets out two categories of transportation activities: those for which the United States reserves the right to adopt or maintain any measures, and those activities for which the United States does not reserve the right to adopt or maintain any measures—those activities which are exclusions from the above list. The list for which the United States reserves the right to maintain any measure includes requirements for investment in, ownership and control of, and operation of drill rigs, U.S. flagged vessels, fishing vessels; plus requirements related to documenting a vessel under the U.S. flag, promotional programs, certification licensing, and citizenship requirements, programs, certification licensing and citizenship requirements, manning requirements, and all matters under the jurisdiction of the Federal Maritime Commission. The excluded list, for which the United States does not reserve the right to adopt or maintain any measure, includes two categories of activities—one unconditional, and one conditional. The first category (a) is vessel construction and repair. On this category the United States reserves no right to adopt or maintain any measure. The second category (b), for which the United States waives its right to adopt or maintain any of the listed measures on the condition that comparable market access in these sectors is obtained from Oman, includes the following activities: landside aspects of port activities including operation and maintenance of docks; loading and unloading vessels directly to or from land; marine cargo handling; operation and maintenance of piers; ship cleaning; stevedoring; transfer of cargo between vessels and trucks, trains, pipelines, and wharves; waterfront terminal operations; boat cleaning; canal operation; dismantling of vessels; operation of marine railways for drydocking; maritime surveyors, except cargo; marine wrecking of vessels for scrap; and shift classification societies. Some in Congress argue that the provision excluding the above activities from the U.S. government's "right to adopt or maintain any measure" should be removed from the agreement because it poses a potential security risk to the United States. Others are arguing that the provision merely restates what is already the situation in the United States, and is not a problem. The arguments on both sides follow. Those arguing that the provision excluding certain activities from the U.S. "right to adopt or maintain any measure" should remain in the agreement argue that: A basic obligation of free trade agreements such as the U.S.-Oman FTA is the obligation (subject to specified exceptions) to treat service suppliers and investors of other parties no less favorably than the United States treats its own service suppliers and investors. This provision meets those requirements. This provision is already included in other agreements, including the North American Free Trade Agreement (NAFTA), the Dominican Republic-Central America Free Trade Agreement, and FTAs with Australia, Bahrain, Chile, and Morocco. Proponents argued that Omani companies are presumably already able to acquire contracts for and perform these services. Currently there are no U.S. laws that prevent either an Omani-owned company or any other foreign-owned company from contracting with port owners to perform "landside aspects of port activities" in the United States. The U.S. Coast Guard and Customs and Border Protection play an integral role in ensuring security at U.S. ports; and nothing in the agreement amends or diminishes the authority of these agencies. While Oman already provides market access to U.S. service suppliers and investors, the USTR is not aware of any Omani companies that are currently involved in any U.S. port operations or that might be interested in such operations in the future. According to proponents, if an Omani company were to express such interest in the future, the "essential security" (or "national security") exception (explained below) could arguably be invoked to "fully" protect U.S. national security needs. If non-Omani persons set up an enterprise in Oman that was merely a "shell"—i.e., that was engaged in no substantial business activities in Oman—and that enterprise sought to make an investment in the United States, the FTA contains specific language that would arguably permit the United States to deny the FTA's investment-and services-related benefits to that enterprise. Moreover, even if the enterprise set up in Oman had "substantial business activity" in Oman, the United States could deny FTA benefits to it if its owners were nationals of countries subject to U.S. sanctions. Finally, the U.S. government retains the authority to block any potential investment pursuant to the "essential security" exception described below. Chapter 21 of the U.S.-Oman FTA contains several exceptions to the agreement. Article 21.2 addresses "essential security" and provides that: Nothing in the agreement shall be construed: (a) to require a Party to furnish or allow access to any information ... which it determines to be contrary to its essential security interests; or (b) to preclude a Party from applying measures it considers necessary for the fulfillment of its obligations [for] the maintenance or restoration of international peace or security or the protection of its own essential security interests. An "essential security" exception has been included in all U.S. trade agreements dating back to the 1947 General Agreement on Tariffs and Trade (GATT). The United States, among other countries, has consistently interpreted this language (worded similarly to Article 21 of the U.S.-Oman FTA) to be self-judging, and therefore that national security matters are not appropriate for adjudication in a third-party dispute settlement mechanism. In other words, under these provisions it can be argued that nothing in an agreement can prevent the United States from applying measures that it considers necessary for the protection of essential security interests. Moreover, proponents will argue that review of national security claims by international tribunals are without precedent and are highly unlikely because, arguably, no tribunal would accept jurisdiction over the question of what constitutes a country's "national security." In addition, U.S. law—in particular the Exon-Florio Amendment to the Defense Production Act of 1950 —authorizes the President to block proposed foreign investment in the United States that threatens national security. The President has delegated to the interagency Committee on Foreign Investment in the United States (CFIUS) the responsibility to continuously monitor foreign investment in the United States to ensure against threats to national security; and a CFIUS review could still be performed at the discretion of CFIUS. While it is theoretically possible for Oman to bring a legal challenge to the actions of the United States before a third-party tribunal, proponents argued, the United States would appear to be on solid legal grounds for asserting not only that the panel does not have the legal authority to determine the validity of such a matter, but also that the inconsistent measure is permitted and justifiable given the broad "self-judging" language of the national security exception. Those arguing that the exception provision of Annex II should not have been included in the U.S.-Oman FTA argue that such a provision could pose a serious threat to Congress' ability to ensure the security of U.S. port infrastructure. Specific arguments against the provision are as follows: This is because language in Annex II regarding landside port operations introduces new rights of establishment for foreign companies to own sensitive U.S. infrastructure. These FTA provisions arguably subject U.S. laws or policies (whether enacted by Congress, the Executive, or the States) that restrict foreign ownership to a challenge in dispute resolution and/or to suit under the investor-state enforcement provisions. Under the FTA, this right is conditional upon obtaining comparable market access in this sector from Oman. However, this right covers the very port activities about which Congress expressed national security concerns during the Dubai Ports World debate. Generally, the service sectors to which the "right to establish" for foreign companies applies in these FTAs is the same as the service sectors that the United States agreed to in the 1994 WTO's General Agreement on Trade in Services (GATS). However, opponents argue, the Oman FTA adds to the U.S. commitments by specifically including (or by not specifically excluding) "landside operations of ports." The reason for this, they argue, is that neither the GATT agreement nor the FTA expressly exempts these provisions from review by an international tribunal. Nor can either country limit the number or size of such services, or require specific forms of ownership (i.e., require U.S. partners or require that it be a non-profit organization). Under the FTA, such disputes can be brought in two fora, both of which raise concerns: Government-to-government dispute resolution cases are not heard in U.S. courts, but in three-person trade tribunals under procedures agreed to in Article 20 of the FTA. In these cases, each country in the dispute may select one "judge" from its country and these two tribunalists would choose a third "judge"—from a list of trade experts provided by each country. In such a scenario, "judges" with a narrow trade expertise and perspective including non-U.S. individuals would be empowered to balance competing U.S. interests—national security needs against U.S. trade commitments—to decide which comes first. Investor-state enforcement is enumerated in Chapter 10 of the U.S.-Oman FTA. Under these provisions, even if the Omani government were not to initiate a case, an actual investor/company has the right to privately initiate its own case against the United States. Such a case, if brought, would seek a judgement requiring that the United States pay monetary damages equal to part of the expected future profits it would be denied by an adverse U.S. action. The case would be adjudicated by United Nations or World Bank tribunalists, who would be empowered to "second guess" a national security claim, and possibly order the U.S. government to pay the foreign company for its lost future profits. If the U.S. were to raise the "essential security" exception included in Chapter 21, Article 21.2 as a defense before a trade tribunal and a CFIUS review had been completed without a finding of a security threat (as in the case of Dubai World Ports), opponents argue, there is no doubt that an FTA panel would not permit use of the FTA's "essential security" exception to excuse consequent government action that interfered with the FTA investor right to establish port operations. However, the converse is not necessarily true: If a CFIUS review did determine that an acquisition were not in the national security interest of the United States, opponents argued, this would not terminate an FTA claim. This is because the FTA sets out procedures for responding to validly raised claims. Thus, even with a CFIUS review, it is argued that the United States would still be required to respond in a United Nations or World Bank tribunal, essentially requiring litigation on the "essential security" defense. Oman joins four other MEFTA countries with FTAs, and the proposed MEFTA is now one-quarter of the way complete. An agreement with Oman could be a pathway to create private sector jobs for Oman's burgeoning population and a gateway to more openness in the Middle East. If Congress had not approved the U.S.-Oman FTA, any one of a number of things could have happened. On one hand, Oman could have just continued trading with the United States as usual. On the other hand, Oman could have looked elsewhere to countries such as China, Russia, or India for support in diversifying beyond the production of oil which could run out in roughly 15-20 years. In addition, had the U.S.-Oman FTA not been approved, there might have been broader implications. For example, Oman has been letting the United States use several military facilities. While many argued that it would have been be in Oman's interest to continue to cooperate with the United States military, Oman might have been tempted to put further restrictions on the U.S. use of these facilities. Oman might also have shrunk back from its cooperation on counterterrorism which is said to have included sharing/providing tips on intelligence about possible Al Qaeda suspects operating in the Persian Gulf or Oman itself.

In aiming to fight terrorism with trade, the United States negotiated and the President signed on January 19, 2006, the U.S.'s fifth bilateral free trade agreement (FTA) in the proposed 20-entity Middle-East-Free Trade Area (MEFTA). This FTA is with Oman. Other U.S.-FTAs are with Israel, Jordan, Morocco, and Bahrain. A sixth is being negotiated with the United Arab Emirates. Oman is a small oil-exporting U.S. trade partner that has been supportive of U.S. policies in the Middle East and is strategically located at the mouth of the Persian Gulf. Because its oil reserves could be exhausted within 15-20 years, Oman is trying to liberalize and diversify its trade regime beyond oil and gas to provide economic opportunities for its fast growing workforce. Supporters of the agreement typically cite political and economic reasons. Opponents typically point to labor and human rights issues. The FTA with Oman is similar to other MEFTA FTAs and has three basic parts: new tariff schedules, broad commitments to open markets and provisions to support those commitments, and protections for labor and the environment. It provides immediate duty-free access for almost all consumer and industrial goods, with special provisions for agriculture and textiles and apparel. Among all U.S. trade partners, Oman ranks 88th for the United States, while the United States ranks third for Oman (after the United Arab Emirates and Japan). U.S.-Oman trade at about $1 billion for 2005 represents 0.04% (four-one hundredths of one percent) of total U.S. trade. In 2005, the most important U.S. imports from Oman were oil and natural gas (75%), and apparel (10%). The most important U.S. exports to Oman were transport equipment (56%), and machinery (24%). The U.S. International Trade Commission (USITC) predicts that the economic effect of the U.S.-Oman FTA is likely to be minimal since trade levels are low; and any increase in U.S. imports of apparel would come at the expense of workers elsewhere in the world, not in the United States. Total U.S. foreign direct investment in Oman was $358 million in 2003, up from $193 million in 2002. Supporters argue that the U.S.-Oman FTA will contribute to bilateral economic growth and trade, generate export opportunities for U.S. companies, farmers, and ranchers, and help create jobs in both countries. Critics argue that labor protections are inadequate for Omani workers, and that the FTA will not help level the playing field for Omani and U.S. workers. Critics also argue that a provision in Annex II of the FTA could obligate the United States to open up landside aspects of its port activities to operation by companies doing business in Oman—activities about which Congress expressed national security concerns during the Dubai Ports World debate. After the President submitted the agreement and the implementing legislation to Congress, relevant committees had 45 days to consider (or not consider) it, and either chamber had 15 more days to vote the legislation up or down without amendment to the agreement itself or the legislation. The Senate passed implementing legislation on June 29, 2006 (S. 3569); the House passed it (H.R. 5684) on July 20; the Senate re-passed it under the House number on September 19, and it became P.L. 109-283 on September 26, 2006. This report will be updated as events warrant.

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The Department of Energy's Office of Science conducts basic research in six overarching program areas: advanced scientific computing research, basic energy sciences, biological and environmental research, fusion energy sciences, high-energy physics, and nuclear physics. Through primarily these programs, the Department of Energy was the third-largest federal funder of basic research and the largest federal funder of research in the physical sciences in FY2014. This budget and appropriations tracking report describes selected major items from the Administration's FY2016 budget request for the Science account, which funds the Office of Science, and tracks legislative action on FY2016 appropriations. It also provides selected historical funding data. Table 1 shows FY2014 current, FY2015 enacted, and FY2016 requested funding levels; as well as FY2016 House-passed and Senate Committee recommended funding levels for Office of Science programs. Table 2 shows similar data for certain domestic scientific user facilities within the Fusion Energy Sciences program. These tables will be updated to include Senate-passed (if available) and final enacted FY2016 appropriations. For a longer perspective, Table 3 provides Office of Science funding data for FY2010 through the FY2016 request. Figure 1 shows total Science funding in current and constant (FY2015) dollars between FY1998 and FY2015. These trends do not adjust for policy changes or changes in the character of activities funded under the Science line. Table 4 and Table 5 summarize authorized funding levels for the Office of Science under certain proposed, but not yet enacted, reauthorization measures under consideration in the 114th Congress. Science appropriations are typically included in annual Energy and Water Development and Related Agencies Appropriations acts. (CRS tracks these acts each fiscal year. See the "Appropriations Status Table" on CRS.gov, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx .) Science budget requests are published on the Office of Science website at http://science.energy.gov/budget/ . The Obama Administration has requested $5.340 billion for Science in FY2016, a $272 million (5%) increase over the FY2015 enacted level of $5.068 billion. By dollar amount, the largest increase in the FY2016 Science budget request is for Basic Energy Sciences (BES), which would gain $116 million (7%). The largest decrease is for Fusion Energy Sciences (FES), which would decline by $48 million (-10%). By percentage, the largest increase among Science's research programs would go to Advanced Scientific Computing Research (ASCR), which would receive $80 million (15%) more in FY2016. The House-passed Energy and Water Development and Related Agencies Appropriations Act, 2016 ( H.R. 2028 ) would provide $5.100 billion for Science in FY2016. This amount is $29 million (1%) more than the FY2015 enacted funding level and $240 million (-4%) less than the Administration's request. H.Rept. 114-91 (hereinafter referred to as the "House report" or "House recommendation") accompanied H.R. 2028 when it was reported by the House Committee on Appropriations. H.Rept. 114-91 specifies funding for certain Science programs and activities. By dollar amount, the largest increase (over FY2015) in the House recommendation is for Basic Energy Sciences ($37 million). The largest percentage increase in the House recommendation is for Nuclear Physics (3%). Biological and Environmental Research would be reduced the most, measured by both amount and percentage change (-$54 million or -9%). The White House Office of Management and Budget issued a "Statement of Administration Policy" opposing H.R. 2028 as passed by the House. Funding levels for the Office of Science were among several factors cited in the statement. As amended and reported by the Senate Committee on Appropriations, H.R. 2028 would provide $5.144 billion for the Science account in FY2016. This amount is $73 million (1%) more than the FY2015 enacted funding level, $196 million (-4%) less than the FY2016 Administration request, and $44 million (1%) more than the House-passed funding level. S.Rept. 114-54 (herein referred to as the "Senate report" or "Senate recommendation") accompanied H.R. 2028 when it was reported from the Senate Committee on Appropriations. S.Rept. 114-54 specifies funding for certain Science programs and activities. By dollar amount, the largest increase (over FY2015) in the Senate recommendation is for Basic Energy Sciences ($111 million); by percentage, the largest increase is for Advanced Scientific Computing Research (15%). The largest decrease—by both amount and percentage—would go to Fusion Energy Sciences ($197 million, -42%). The Senate Appropriations Committee recommends U.S. withdrawal from the international fusion energy project known as ITER. The following sections highlight selected FY2016 initiatives, programs, and activities within Science research programs, as well as their FY2016 budget and appropriations status. These sections are not intended to provide a comprehensive view of each account, but rather focus mostly on large changes or on activities emphasized in House and Senate Appropriations Committee reports. As described in the FY2016 Science budget request, ASCR's mission is to advance applied mathematics and computer science; deliver the most advanced computational scientific applications in partnership with disciplinary science; advance computing and networking capabilities; and develop future generations of computing hardware and tools for science, in partnership with the research community, including U.S. industry. The strategy to accomplish this has two thrusts: developing and maintaining world-class computing and network facilities for science; and advancing research in applied mathematics, computer science and advanced networking. For FY2016, the Administration seeks $621 million for ASCR, $80 million (15%) more than the FY2015 enacted funding level of $541 million. Most of this increase ($77 million) would go to High Performance Computing and Network Facilities, focused particularly on the Research and Evaluation Prototypes (REP) activity. REP funding will be used to further the design and development of exascale computing systems (i.e., node technologies, hardware, and software). Both Congress and the Administration have prioritized exascale computing in recent budget and appropriations cycles. The FY2016 REP request also includes $10 million for the Computational Science Graduate Fellowship (CSGF), a $7 million increase from FY2015. The House report recommends $538 million for ASCR in FY2016, $3 million (-1%) less than the FY2015 enacted funding level and $83 million (-15%) less than the request. Within this amount, the House report recommends $99 million for exascale computing activities. With respect to scientific user facility operations, the House report recommends the requested levels for both the Argonne Leadership Computing Facility (ALCF, $77 million) and the National Energy Research Scientific Computing Center at Lawrence Berkeley National Laboratory (NERSC, $76 million). The House report would provide $7 million more than the $94 million request for Oak Ridge Leadership Computing Facility (OLCF, $101 million). ALCF, NERSC, and OLCF received $80 million, $76 million, and $104 million, respectively, in FY2015 (enacted). The House report also recommends $176 million for Mathematical, Computational, and Computer Sciences Research, about the same as the FY2015 enacted level; and $8 million for the Computational Sciences Graduate Fellowship program, about $2 million less than the request. The Senate report recommends $621 million (the requested level) for ASCR in FY2016. This amount is $80 million (15%) more than the FY2015 enacted level and $83 million (16%) more than the House recommendation. The Senate report also recommends $158 million for exascale activities within the Office of Science. Within the ASCR total, the Senate report recommends $104 million for the OLCF ($10 million more than the request and $3 million more than the House recommendation); $86 million for NERSC ($10 million more than both the request and House recommendation); and $38 million for the Energy Science Network (ESnet, same as the request). Basic Energy Sciences (BES) supports fundamental research to understand, predict, and ultimately control matter and energy at the electronic, atomic, and molecular levels in order to provide the foundations for new energy technologies and to support DOE missions in energy, environment, and national security. The FY2016 Administration request for BES is $1.849 billion, $116 million (7%) more than the FY2015 enacted funding level of $1.733 billion. About half of the increase ($62 million) would go toward the next phase of the Linac Coherent Light Source–II (LCLS–II) construction and installation activities. Although this amount is slightly less than projected in FY2015, the FY2016 budget request includes projected increases in out-year costs. The FY2016 BES request also seeks an increase of $10 million for Energy Frontier Research Centers (EFRCs, $110 million total request). It would maintain funding for the Batteries and Energy Storage, as well as the Fuels from Sunlight Energy Innovations Hubs at FY2015 levels ($24 million and $15 million, respectively). The House report recommends $1.770 billion for BES in FY2016, $37 million (2%) more than the FY2015 enacted funding level of $1.733 and $79 million (-4%) less than the request. Within this amount, the report would provide $192 million ($8 million below the request) for the LCLS-II. In addition, the House report recommends $98 million ($12 million less than the request) for EFRCs and provides the requested levels for the two Energy Innovation Hubs. The Experimental Program to Stimulate Competitive Research (EPSCoR) would receive $14 million—$6 million more than the request and $4 million more than FY2015 enacted—under the House report. Computational Materials Sciences would receive $8 million, $4 million less than requested and equal to the FY2015 enacted funding level. The Senate report recommends $1.844 billion for BES in FY2016. This amount is $111 million (6%) more than the FY2015 enacted level, $5 million (0%) less than the request, and $74 million (4%) more than the House recommendation. Within this amount, the Senate report would provide $126 million for the first full year of operations at the newly constructed National Synchrotron Light Source-II (NSLS-II) and $255 (the requested level) for High-Flux Neutron Sources. The Senate report recommends the requested levels for the two Energy Innovation Hubs and $20 million for EPSCoR ($11 million more than the request and $10 million more than FY2015 enacted). The mission of the Biological and Environmental Research (BER) program is to support fundamental research and scientific user facilities to achieve a predictive understanding of complex biological, climatic, and environmental systems for a secure and sustainable energy future. For FY2016, the Administration seeks $612 million for BER, $20 million (3%) more than the FY2015 enacted funding level of $592 million. The largest requested increase in BER is for Climate and Earth System Modeling (CESM, $31 million increase). The largest requested increase within CESM is for the Climate Model Development and Validation activity ($18 million request). The Administration sought funding for a similarly titled activity in FY2015, but appropriators ultimately rejected that proposal. The FY2016 BER budget request seeks a $6 million reduction in Biological Systems Science; within this line, Genomic Science would increase and most other activities would decrease. The House report recommends $538 billion for BER in FY2016, $54 million (-9%) less than the FY2015 enacted funding level of $592 million and $74 million (-12%) less than the request. Section 523 of H.R.2028, as passed by the House, would prohibit the Department of Energy from using FY2016 funds for the Climate Model Development and Validation activity. The House report recommends $75 million, the same as the request and the FY2015 enacted funding level, for the three Bioenergy Research Centers. The Senate report recommends $610 million for BER in FY2016. This amount is $18 million (3%) more than the FY2015 enacted level, about the same as the request, and $72 million (13%) more than the House recommendation. Like the House report, the Senate report also recommends the requested level ($75 million) for the three Bioenergy Research Centers. The Senate report recommends $294 million (the request) for Biological Systems Science and $316 million (close to the request) for Climate and Environmental Sciences. Fusion Energy Sciences (FES) seeks to expand the fundamental understanding of matter at very high temperatures and densities and to build the scientific foundation needed to develop a fusion energy source. This is accomplished through the study of plasma, the fourth state of matter, and how it interacts with its surroundings. The FY2016 Administration request for FES is $420 million, $48 million (-10%) less than the FY2015 enacted funding level of $468 million. Most FES activities would decline or remain flat relative to FY2015. The only increase in the FES request is for the GPE/GPP/Infrastructure line within the Burning Plasma Science: Foundations subprogram. Among other things, these funds would support facility and utility improvements associated with full National Spherical Torus Experiment Upgrade (NSTX-U) operations, as well as improvements to the Princeton Plasma Physics Laboratory Computer Center. In FY2015, FES signaled its intention to shutter the Massachusetts Institute of Technology's (MIT) Alcator C-Mod facility in late FY2016. The FY2016 budget request continues this planned shutdown. FES provides funding for the U.S. contribution to the ITER project. ITER is an international effort to design and build an experimental fusion reactor, which is currently under construction in France. According to DOE, ITER "aims to generate fusion power 30 times the levels produced to date and to exceed the external power applied to the plasma by at least a factor of ten." Many U.S. analysts have expressed concern about ITER's cost, schedule, and management. The cost estimate for the U.S. contribution to ITER—which is 9.09% of the total project cost—has grown from between $1.45 billion and $2.2 billion in 2008 to between $4.0 billion and $6.5 billion under current assumptions. Moreover, even the more recent cost estimates may not be reliable. Criticism of the ITER project has generally focused on concerns about the international project, not U.S. ITER. The Director-General of the international ITER project was replaced on March 5, 2015. An FY2015 draft Senate Appropriations Committee report recommended that the U.S. withdraw from ITER; the final FY2015 appropriations agreement included no such provision. The FY2016 request for the U.S. contribution to ITER is $150.0 million, equal to the FY2015 enacted level. The House report recommends $468 million for FES in FY2016. This amount is equal to the FY2015 enacted funding level and $48 million (11%) more than the request. For ITER, the House recommends $150 million, the same as both the FY2015 enacted and FY2016 requested levels. However, the House report warns that the committee will reconsider its support for ITER if management reforms are not implemented. Other items in the House recommendation include $17.5 million for High Energy Density Laboratory Plasmas ($2 million less than FY2015 enacted and $11 million more than the FY2016 request); as well as close to enacted levels ($35 million) for Theory and Simulation. The Administration seeks a $4 million reduction in this item. The Senate report recommends $270 million for FES in FY2016. This amount is $197 million (-42%) less than both the FY2015 enacted funding level and House recommendation, and $150 million (-36%) less than the request. The Senate recommendation includes no funding for the U.S. contribution to ITER and would direct the Secretary of Energy to work with the Department of State to withdraw from the project. In addition, the Senate report would provide $2.8 million for heavy ion fusion science research at the Neutralized Drift Compression Experiment-II at Lawrence Berkeley National Laboratory. Table 2 shows funding for selected domestic tokamak user facilities within the FES account in FY2015 (enacted) and the FY2016 request, as well as the House report recommendations. (The Senate report did not specify funding levels for these activities.) It will be updated to include Senate-passed amounts (if available) and final FY2016 appropriations. The High Energy Physics (HEP) program examines how the universe works at its most fundamental level by discovering the elementary constituents of matter and energy, probing the interactions between them, and exploring the basic nature of space and time. The Administration seeks $788 million for HEP in FY2016, $22 million (3%) more than the FY2015 enacted funding level of $766 million. The FY2016 HEP budget request would make changes to HEP subprograms and activities in order to bring the HEP program into alignment with the recommendations of the Particle Physics Project Prioritization Panel (P5) report. Among these changes is the "internationalization and re-scoping of the Long Baseline Neutrino Experiment" (LBNE), based on the Large Hadron Collider (LHC) project model. The FY2016 LBNE request includes funding to make design changes in order to facilitate international participation. The FY2016 Administration request for HEP also seeks construction funding to continue the Muon to Electron Conversion Experiment (Mu2e) and would shift funding among the program's three major experimental areas—increasing funding for Energy Frontier Experimental Physics and Cosmic Frontier Experimental Physics, while decreasing funding for Intensity Frontier Experimental Physics by a similar amount. The House report recommends $776 million for HEP in FY2016, $10 million (1%) more than the FY2015 enacted level and $12 million (-2%) less than the FY2016 request. The report notes that the committee "strongly supports" efforts to align the HEP program with the P5 report. The House recommendation would provide $22 million for the Long Baseline Neutrino Facility—including funding for both research and development (R&D) and engineering and design—and would adopt the Administration's proposed shift in funding among HEP's three major experimental areas in FY2016. Among other items in the House report, the recommendation also includes the requested levels for Mu2e ($40 million), Fermilab Accelerator Complex operations ($135 million), and Homestake Mine ($15 million). The Senate report recommends $788 million for HEP in FY2016. This amount is $22 million (3%) more than the FY2015 enacted level, the same as the request, and $12 million (2%) more than the House recommendation. The Senate report also notes strong support for the Secretary's efforts to implement the recommendations of the P5 report. Within funds provided, the Senate report recommends $19 million for the Long Baseline Neutrino Facility ($3 million less than the House recommendation) and recommends funding for two major items of equipment: the Dark Energy Spectroscopic Instrument (DESI, $10 million) and the LUX ZEPLIN (LZ, $11 million). The mission of the Nuclear Physics (NP) program is "to discover, explore, and understand all forms of nuclear matter." For FY2016, the Administration seeks $625 million for NP, $29 million (5%) over the FY2015 enacted funding level of $596 million. The request provides increases for research, facilities operations, and construction. In the construction account, a reduction for the 12 GeV Continuous Electron Beam Accelerator Facility (CEBAF) upgrade is as planned in the approved project profile. The House report recommends $616 million for NP in FY2016, $21 million (3%) more than the FY2015 enacted level and $8 million (-1%) less than the FY2016 request. Included in the House recommendation is $100 million (the requested level) for CEBAF operations; $169 million for operations at the Brookhaven National Lab's Relativistic Heavy Ion Collider (RHIC); and $98 million for Facility for Rare Isotope Beams (FRIB) construction. The Senate report recommends $592 million for NP in FY2016. This amount is $4 million (-1%) less than the FY2015 enacted level, $33 million (-5%) less than the request, and $25 million (-4%) less than the House recommendation. Within these funds, the Senate report recommends $95 million for FRIB ($3 million less than the House report) and $175 million ($6 million more than the House report) for the RHIC. The Workforce Development for Teachers and Scientists (WDTS) program mission is "to help ensure that DOE has a sustained pipeline of science, technology, engineering, and mathematics (STEM) workers." The FY2016 Administration request for WDTS is $21 million, $1 million (5%) more than the FY2015 enacted funding level. The request includes funding for Science Undergraduate Laboratory Internships (SULI), Community College Internships (CCI), Office of Science Graduate Student Research (SCGSR), the Visiting Faculty Program (VFP), Albert Einstein Distinguished Educator Fellowship, and the National Science Bowl. The FY2016 request includes increases for SULI, CCI, and the VFP. Other activities would be funded at FY2015 levels. The House report recommends the requested level for WDTS in FY2016 ($21 million). The Senate report recommends the FY2015 enacted level ($20 million). Table 3 shows Office of Science current dollar appropriations from FY2010 to FY2014, as well as FY2015 enacted appropriations and the FY2016 request. The Office of Science subtotal (not including transfers from other accounts, or the use or rescission of prior-year balances) increased by $241 million (5%) between FY2010 and FY2014. Most of the increase—$222 million or 92%—went to ASCR, BES, and FES. Funding for High Energy Physics was reduced by about -2% during this period. Appropriations authorizations to the Office of Science, which were last enacted in the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ), expired in FY2013. Members of the 114th Congress have introduced measures to reauthorize provisions from P.L. 111-358, including provisions that authorize appropriations to the Office of Science. An analysis of these bills may be found in CRS Report R43880, The America COMPETES Acts: An Overview , by [author name scrubbed]. Table 4 summarizes funding levels for the Office of Science under selected proposed reauthorization measures from the 114 th Congress. Unlike H.R. 1898 and S. 1398 , H.R. 1806 specifies funding levels for major Science research programs (such as ASCR and FES). These amounts are included in Table 5 , along with FY2015 enacted and FY2016 requested funding levels (for comparison).

The Department of Energy's Office of Science conducts basic research in six overarching program areas: advanced scientific computing research, basic energy sciences, biological and environmental research, fusion energy sciences, high-energy physics, and nuclear physics. Through primarily these programs, the Department of Energy was the third-largest federal funder of basic research and the largest federal funder of research in the physical sciences in FY2014. This budget and appropriations tracking report describes selected major items from the Administration's FY2016 budget request for the Office of Science and tracks legislative action on FY2016 appropriations for the office. It also provides selected historical funding data. This report has been updated to include House-passed and Senate-proposed amounts for FY2016. It will be updated to include Senate-passed (if available) and final enacted FY2016 appropriations. Overall, the Obama Administration requests $5.340 billion for Science in FY2016, a $272 million (5%) increase over the FY2015 enacted level of $5.068 billion. By dollar amount, the largest increase is for Basic Energy Sciences (BES), which would gain $116 million (7%). The largest decrease is for Fusion Energy Sciences (FES), which would be reduced by $48 million (-10%). By percentage, the largest increase among Science's research programs would go to Advanced Scientific Computing Research (ASCR), which would receive $80 million (15%) more in FY2016. The House-passed Energy and Water Development and Related Agencies Appropriations Act, 2016 (H.R. 2028) would provide $5.100 billion for the Science account in FY2016. This amount is $29 million (1%) more than the FY2015 enacted funding level and $240 million (-4%) less than the Administration's request. By dollar amount, the largest increase (over FY2015) in the House recommendation is for Basic Energy Sciences ($37 million). The largest percentage increase in the House recommendation is for Nuclear Physics (3%). Biological and Environmental Research would be reduced the most, measured by both amount and percentage change (-$54 million or -9%). The White House Office of Management and Budget issued a "Statement of Administration Policy" opposing H.R. 2028, in part due to Office of Science funding levels. As amended and reported by the Senate Committee on Appropriations, H.R. 2028 would provide $5.144 billion for the Science account in FY2016. This amount is $73 million (1%) more than the FY2015 enacted funding level, $196 million (-4%) less than the FY2016 Administration request, and $44 million (1%) more than the House-passed funding level. By dollar amount, the largest increase (over FY2015) in the Senate Appropriations Committee recommendation is for Basic Energy Sciences ($111 million); by percentage, the largest increase is for Advanced Scientific Computing Research (15%). The largest decrease—by both amount and percentage—is for Fusion Energy Sciences ($197 million, -42%). The Senate Appropriations Committee recommends U.S. withdrawal from the international fusion energy project known as ITER.

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T he Mara Salvatrucha (MS-13) is a violent criminal gang operating both in the United States and abroad—namely Central America. U.S.-based members have committed both local and transnational crimes ranging from extortion, homicide, and drug distribution to human and drug trafficking. The gang has a reputation for committing particularly violent crimes, which has generated attention from law enforcement, policymakers, and the public. This report provides a brief background on MS-13 with a focus on its structure and criminal activities in the United States. It highlights U.S. law enforcement initiatives and other federal resources used to counter the gang's illicit activities. It discusses how the gang is conceptualized by the federal government and how this conceptualization may drive specific policy responses to the gang's activities. The report also provides an overview of selected domestic policy issues Congress may examine as part of its efforts to counter MS-13. MS-13 was born on the streets of Los Angeles, CA. It was formed in the 1980s by refugees who were fleeing civil conflict in El Salvador. When these Salvadoran nationals moved into the Los Angeles area, some youth coalesced to form MS-13, in part for protection from existing Latino gangs, such as the 18 th Street gang, as well as for a way to connect with other Salvadorans. By the 1990s, MS-13 had reached the East Coast, particularly Washington, DC, and Long Island, NY. Historically, MS-13 members were mostly Salvadoran nationals or first-generation Salvadoran-Americans, but the group has expanded to include other Central and South American immigrants. MS-13 has largely focused on creating an identity and community, though members do engage in activities that generate revenue for the gang. MS-13 became a transnational gang as members who were deported from the United States to Central America established gang ties there. Legislation enacted in the mid-1990s increased the number of foreign nationals subject to detention and removal from the United States. From 2001 to 2010, nearly 130,000 foreign nationals were deported to Central America because of a criminal conviction, primarily to the Northern Triangle countries of El Salvador, Guatemala, and Honduras. The exact number of these deportees who were gang members is unknown, as is the number of deported gang members who were affiliated with MS-13. However, some of these deportees helped to establish MS-13 gang ties in their home countries (where gangs were already present) and assisted in the spread of U.S. gang culture in Central America. In recent years, law enforcement, the media, and policymakers have shown interest in MS-13 and its violent criminal activities. High-profile incidents of violent behavior committed by gang members have raised questions about whether this reflects a developing organizational structure, increasing size, or changing criminality. In the United States, MS-13's organizational structure largely consists of loosely organized cells, or "cliques." These cliques vary in size and in the number that may exist in a particular locale, but each clique typically has ties to a particular territory. Researchers have noted that this territory serves two purposes: (1) it contributes to a clique's sense of neighborhood and community, and serves as a place where they can recruit, and (2) it is an area where the gang generates money from illicit activities such as extortion or charging "rent" on local businesses. In some areas of the country, MS-13 cliques are more organized, and several operate as part of a larger "program." In some instances, in "places where the MS13 is very organized, such as Los Angeles and El Salvador," there may be an additional organizational layer where programs answer to a ruling council. Generally, the U.S. MS-13 structure of relatively diffuse cliques differs from the gang's more organized structure in El Salvador. Some have suggested that MS-13 may try to consolidate its power structure to exert more direction over the U.S. cliques; this has been attempted unsuccessfully at various times, and the extent to which such control may take hold has been debated. In some instances, leaders in El Salvador, including prison-based leaders, have tried to exert more direction over activities of U.S. programs and cliques; however, researchers have indicated that leadership in El Salvador may have little or no direction over activities of the powerful MS-13 programs and cliques in the United States. While some have suggested that the size of MS-13 has grown in the United States, since at least 2005 the FBI has consistently estimated the domestic size of the gang to be around 10,000 members. Of note, it appears that federal law enforcement may be moving away from generating regular estimates of gang membership in the United States, both in aggregate and for specific gangs. For instance, after 2009 the National Gang Threat Assessments ceased including MS-13 membership estimations. As of June 2018, the FBI had removed from its website the reference to the total estimated number of gang members in the United States. In the United States, MS-13 gang members have been involved in local crimes including extortion, drug distribution, prostitution, robbery, and murder, as well as in more transnational illicit activity such as drug trafficking and human smuggling and trafficking. While some of the illegal activities help support the gang's criminal finances, others facilitate the maintenance of territory as well as gang brand and unity. MS-13 has a reputation for particularly violent criminal activity. Some experts see this violence as serving both internal and external purposes. Internally, violence may help recruit—it serves a brand-identifying purpose—in addition to providing discipline and cohesion. Externally, it can help establish territory as well as social and political control. In recent years, this violence has been demonstrated in a reported wave of violent homicides and other criminality attributed to MS-13 in certain locales. For example, authorities have been investigating a spate of killings and other violent activities on Long Island, NY, attributed to MS-13. In May 2017 testimony before the Senate Judiciary Committee, the Suffolk County (NY) police commissioner estimated that since 2016, 38% of murders in the county were attributable to MS-13. In a series of five superseding indictments, federal prosecutors with the Eastern District of New York have indicted two dozen MS-13 members with crimes including at least 15 murders, as well as assaults, arson, and drug distribution. The series of indictments includes charges in the high-profile killings of teenagers Nisa Mickens and Kayla Cuevas. Illustrating a potential increase in MS-13 activity in the Washington, DC, metro area, some suburban jurisdictions have seen an increase in the number of MS-13 members in their county jails. As of February 2018, the Montgomery County, MD, jail reported a 20% increase in the MS-13 population over the previous year. During that same time, the number of MS-13 members in jail increased by 32% in the Prince William County, VA, jail and doubled in the Fairfax County, VA, jail. Countering gang crime is generally the purview of state and local law enforcement. However, given that gang activity is not constrained by jurisdictional boundaries, and that local law enforcement agencies may not have the capacity to investigate complex gang crimes, federal law enforcement has had a long-standing interest in contending with gangs, including MS-13. There is no single federal agency charged with investigating crimes committed by gangs, and federal resources for confronting this threat are allocated across several departments and agencies including the FBI, Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and U.S. Immigration and Customs Enforcement (ICE), among others. As the FBI and ICE are often seen as having leading roles in federal gang enforcement efforts, this section largely focuses on their activities. Within the Department of Justice (DOJ), the FBI is charged with investigating violent gangs and runs a number of anti-gang initiatives. One of the primary tools the FBI uses to counter the gang threat is Violent Gang Safe Streets Task Forces, which focus on countering violent gangs and violent crimes. The FBI established the Safe Streets Violent Crime Initiative in 1992 and, through this program, administers Violent Gang Safe Streets Task Forces across the United States. These gang task forces include federal, state, and local law enforcement officers that investigate crimes ranging from racketeering to drug conspiracy and firearms violations. In addition to domestic law enforcement initiatives to counter violent gangs such as MS-13, the FBI has transnational policing partnerships. In 2004, the FBI launched an MS-13 National Gang Task Force (NGTF) to coordinate federal, state, and local investigations of MS-13. This has since evolved into the Transnational Anti-Gang Task Force (TAG) initiative that targets transnational gang threats—with a current focus on MS-13 and the 18 th Street gang. The FBI has established TAG task forces, comprised of FBI agents and vetted local officers, in El Salvador, Guatemala, and Honduras. In addition to being operational task forces, these TAGs facilitate intelligence and information sharing. The TAG initiative also includes the Central American Law Enforcement Exchange (CALEE) program, which helps train local law enforcement in the United States and Central America on gang-related issues and techniques for countering the gang threats. Work of the TAG units can be seen in a number of investigations. For example, in September 2017, through Operation Regional Shield, over 3,800 gang members—from MS-13 and the 18 th Street gang—in the United States, El Salvador, Guatemala, and Honduras were charged with crimes including murder, arson, racketeering, and conspiracy to distribute marijuana; the FBI's TAG units were involved with the investigations in Central America. In the United States, over 70 individuals were charged, including 17 MS-13 members who were alleged to have committed murder and other crimes on Long Island, NY. The FBI, through the direction of Congress, established the National Gang Intelligence Center (NGIC) in 2005. The NGIC was established to coordinate intelligence information from federal, state, and local policing agencies. It supports law enforcement investigations by providing strategic and tactical analysis of intelligence. Agencies contributing to the NGIC share gang information and resources to identify and respond to the greatest gang threats. Within the Department of Homeland Security (DHS), ICE Homeland Security Investigations (HSI) has a National Gang Unit (NGU) that works to deter and disrupt domestic gang operations—specifically those of transnational criminal gangs, prison gangs, and outlaw motorcycle gangs (OMGs). The NGU also "identifies and develops intelligence on gang membership, associations, activities, and international networks." One ongoing HSI gang initiative is known as Operation Community Shield, which ICE launched in 2005 to disrupt and dismantle transnational criminal gangs. ICE HSI reports that in FY2017 it arrested 796 MS-13 gang members and associates (up from 434 in FY2016) through this program. To put these 796 MS-13 arrests in the context of other gang-related arrests, during the same time, "HSI made 4,818 criminal arrests related to gang activity and 892 administrative arrests as a result of gang investigations. Additionally, [ICE Enforcement and Removal Operations] administratively arrested 5,225 gang members and associates" in FY2017. Operation Community Shield has included a number of operations that specifically target MS-13. Through Operation Raging Bull, ICE and its domestic and international law enforcement partners arrested 267 MS-13 members and associates from September through November 2017. Of the 267 arrests, 214 were in the United States; of those, 93 suspects were arrested for criminal violations—such as murder, robbery, and drug possession and trafficking—and 121 were arrested for administrative immigration violations (e.g., unlawful presence). Elsewhere, federal law enforcement initiatives that are generally not focused on countering gangs could potentially be leveraged to address certain gang threats, such as those posed by MS-13. For instance, led by the DEA, the Organized Crime Drug Enforcement Task Force (OCDETF) program targets major drug trafficking, money laundering, and transnational criminal organizations. Attorney General Sessions has directed the OCDETF program to make countering MS-13 a priority. However, some have suggested that investigating MS-13 may not truly be an OCDETF priority because the gang is more involved in small-scale drug distribution rather than the larger distribution that is traditionally the target of OCDETF investigations. One challenge in determining the appropriate policy responses to tackle threats posed by MS-13 is developing a clear conceptualization of the gang. There is a range of law enforcement tools and other resources that the federal government could leverage to counter the illicit activities of MS-13. Having a clear conceptualization of MS-13 may help to determine the most appropriate and effective tools and resources to counter their criminal activity. Researchers and authorities have primarily described MS-13 as either a criminal street gang or a transnational criminal organization (TCO); however, policy discussions of the gang often blur these lines. The federal government has offered descriptions of gangs and transnational criminal organizations that may help facilitate both the conceptualization of MS-13 and policy responses to the gang's criminality. These concepts are working definitions to describe criminal phenomena that sometimes overlap in structure, motivation, and criminality. DOJ describes a gang as (1) an association of three or more individuals; (2) whose members collectively identify themselves by adopting a group identity which they use to create an atmosphere of fear or intimidation frequently by employing one or more of the following: a common name, slogan, identifying sign, symbol, tattoo or other physical marking, style or color of clothing, hairstyle, hand sign or graffiti; (3) the association's purpose, in part, is to engage in criminal activity and the association uses violence or intimidation to further its criminal objectives; (4) its members engage in criminal activity, or acts of juvenile delinquency that if committed by an adult would be crimes; (5) with the intent to enhance or preserve the association's power, reputation, or economic resources; (6) the association may also possess some of the following characteristics: (a) the members employ rules for joining and operating within the association; (b) the members meet on a recurring basis; (c) the association provides physical protection of its members from other criminals and gangs; (d) the association seeks to exercise control over a particular location or region, or it may simply defend its perceived interests against rivals; or (e) the association has an identifiable structure; (7) this definition is not intended to include traditional organized crime groups such as La Cosa Nostra, groups that fall within the Department's definition of "international organized crime," drug trafficking organizations or terrorist organizations. DOJ has described MS-13 as an example of a prominent criminal street gang operating in the United States. In addition to DOJ's definition of a gang, 18 U.S.C. §521 defines a "criminal street gang" as an ongoing group, club, organization, or association of 5 or more persons" with three elements: One of its primary purposes is committing crimes including (1) a federal felony involving a controlled substance for which the penalty is at least five years imprisonment, (2) a violent federal felony that uses or attempts to use force, or (3) a conspiracy to commit one of these felonies. In the past five years, its members have engaged in a continuing series of these felony crimes. Its activities affect interstate or foreign commerce. In July 2011, the Obama Administration released the Strategy to Combat Transnational Organized Crime: Addressing Converging Threats to National Security (strategy) . The strategy provides the federal government's first broad conceptualization of transnational organized crime (TOC), highlighting it as a national security concern. It notes the following: Transnational organized crime refers to those self-perpetuating associations of individuals who operate transnationally for the purpose of obtaining power, influence, monetary and/or commercial gains, wholly or in part by illegal means, while protecting their activities through a pattern of corruption and/or violence, or while protecting their illegal activities through a transnational organizational structure and the exploitation of transnational commerce or communication mechanisms. There is no single structure under which transnational organized criminals operate; they vary from hierarchies to clans, networks, and cells, and may evolve to other structures. The crimes they commit also vary. Transnational organized criminals act conspiratorially in their criminal activities and possess certain characteristics which may include, but are not limited to: In at least part of their activities they commit violence or other acts which are likely to intimidate, or make actual or implicit threats to do so; They exploit differences between countries to further their objectives, enriching their organization, expanding its power, and/or avoiding detection/apprehension; They attempt to gain influence in government, politics, and commerce through corrupt as well as legitimate means; They have economic gain as their primary goal, not only from patently illegal activities but also from investment in legitimate businesses; and They attempt to insulate both their leadership and membership from detection, sanction, and/or prosecution through their organizational structure. The strategy noted that TOC networks include transnational gangs. Pursuant to Executive Order 13581, which accompanied the 2011 strategy, the Department of the Treasury can sanction listed transnational criminal organizations. In 2012, the Treasury Department designated MS-13 as a significant transnational criminal organization, noting the gang's "involvement in serious transnational criminal activities, including drug trafficking, kidnapping, human smuggling, sex trafficking, murder, assassinations, racketeering, blackmail, extortion, and immigration offenses." More recently, Executive Order 13773, issued in February 2017, directed federal law enforcement to strengthen efforts to combat transnational criminal organizations, including criminal gangs. This indicates that federal enforcement efforts aimed at TOC may also target various forms of criminal gangs, including street gangs. Table 1 provides some highlights of these definitions of gangs and TOC. There can be overlap in the criminal activities of TCOs and gangs, which can make distinguishing the two difficult. For example, drug distribution is often a source of income for both TCOs and gangs. As noted by the DEA, "[a]lthough gangs are involved in all avenues of criminal activity, the major source of income for most street gangs remains the trafficking of illegal drugs." While TCOs are more involved in wholesale-level drug distribution, gangs are more often involved in retail-level distribution; alliances between the two facilitate product movement. MS-13 has mostly been involved in local drug peddling, and these retail-level drug sales are the "most important revenue stream for the gang." Cliques have developed relationships with transnational drug trafficking organizations to facilitate the flow of drugs within the United States. MS-13's involvement in criminal activity similar to that of TCOs—such as drug distribution—is one factor that may lead to uncertainty in conceptualizing the gang. Further blurring the lines between gangs and TCOs is the fact that both may have similar motivations. As DOJ notes, a gang's purpose is, in part, to engage in criminal activity "with the intent to enhance or preserve the association's power, reputation, or economic resources." Similarly, as the 2011 strategy notes, TCOs operate for the "purpose of obtaining power, influence, monetary and/or commercial gains" and economic gain is their primary goal. As noted, MS-13 has engaged in various forms of violent criminal behavior; however, the gang has focused more on establishing and maintaining identity, community, and turf than on generating money. These definitional issues have contributed to inconsistencies in the conceptualization of MS-13, both within the federal government and among researchers. While the gang has been officially designated by the Treasury Department as a significant transnational criminal organization, federal investigative agencies such as the FBI, DEA, and ICE vary on whether they investigate MS-13 under programs targeting violent gangs or those targeting TCOs. In addition, some researchers argue that MS-13 has evolved into a "fully functional transnational criminal organization," citing the gang's expansion into drug production and trafficking in Central America. Others disagree with this categorization. These dissents generally relate to MS-13's structure and criminal capacity. For instance, some contend that "while the group may play a peripheral role in international crimes such as drug trafficking, at its heart it remain[s] a loose-knit network of street gangs." In addition, those contending that MS-13 has not risen to the level of a TCO note that the gang has not been able to establish a consistent role in international drug distribution, in part because it has been more focused on developing identity, camaraderie, and turf than on creating profit. Given the difficulties of clearly distinguishing between gangs and TCOs with existing definitions, policymakers may question whether drawing a distinction and placing MS-13 into just one of these categories is necessary or important for developing policies and strategies to counter the gang. In some ways, it may not matter whether the federal government classifies MS-13 as a TCO, a gang, or a hybrid of the two. One argument for why it doesn't matter is that federal law enforcement often divides investigations by criminal violation rather than by actor. Being a gang member in and of itself is not a crime (nor is being a member of a TCO). However, engaging in illicit activities on behalf of or in association with a gang or TCO is a crime. As such, members of MS-13 will generally be investigated and prosecuted for crimes committed, not for affiliation. Another factor in why it may not matter whether MS-13 is consistently categorized as a gang or TCO is that, as noted, the federal government does not have definitions that clearly distinguish criminal gangs from TCOs. There are hazy lines. Categorizing MS-13 as one or the other may demand a more precise distinction between gangs and TCOs—something that may or may not be possible, necessary, or desirable. Because of the differences between each criminal organization—gang or TCO—it may be more important to understand a criminal entity rather than to label it. For instance, the NGIC notes that among the spectrum of gangs, "[u]nderstanding the specific mentality of each gang type is integral to disruption and dismantlement." While there are arguments for not strictly categorizing MS-13 as either a TCO or a criminal street gang, there are some policy-focused arguments for doing so. One such discussion involves how federal resources are oriented toward countering TCOs and gangs. Domestic resources aimed at thwarting TCOs are largely enforcement-based. However, there is a mix of enforcement and prevention resources allocated to thwarting gangs. For example, enforcement resources for domestic efforts to counter TCOs include funding for federal law enforcement agency investigation and prosecution priorities, interagency enforcement activities such as the OCDETF program, and Treasury Department efforts to implement sanctions against TCOs. Resources to counter gangs include not only federal investigations, prosecutions, and interagency enforcement activities, but include grants that support prevention and suppression activities like the violent gang and gun crime reduction program and the juvenile justice grants for gang and youth violence education, prevention, and intervention. Following from this, different conceptualizations of a gang—in this case MS-13—implicate different resources available. If officials view MS-13 as a TCO, law enforcement initiatives may be the chief means to counter MS-13. However, if MS-13 is viewed as a criminal street gang, this may open up a range of federal resources, both law enforcement and prevention resources. Defining MS-13 as a criminal street gang or a TCO may also affect federal investigations and prosecutions of gang members. For instance, 18 U.S.C. §521 provides a penalty enhancement on certain convictions if a defendant is found to be a member of a criminal street gang. There is a no similar enhancement for members of a TCO. However, authorities are not constrained by which criminal statues they can prosecute members of gangs or TCOs. In countering the danger posed by MS-13, a foundational challenge is understanding the scope of the threat. Key questions focus on whether the gang is growing in number or in territory. Debate over the number of MS-13 members in the United States raises a question about how U.S. officials determine these numbers. In the past, the NGIC has produced estimates of the number of gangs and the membership numbers. For instance, in 2011 it estimated that there were "approximately 1.4 million active street, prison, and OMG gang members comprising more than 33,000 gangs in the United States." However, since 2011 the National Gang Report has not made estimates on the number of gangs and gang members in the United States. It is unclear whether the federal government is tracking these data in another manner. In this context, some have wondered whether federal law enforcement should maintain a centralized database on gang membership/affiliation that could provide counts of gang membership across the country. A number of federal entities collect related information on gangs; however, federal agencies do not appear to maintain databases that exclusively collect information on gangs. Some databases used by the FBI and ICE, for example, contain information on gang membership, but the databases are not limited to gangs and gang membership. A few examples are discussed below. Federal Bureau of Investigation . The FBI has noted that "[t]he databases of each component agency are available to the NGIC, as are other gang-related databases, permitting centralized access to information." The FBI's website notes that the NGIC shares "timely and accurate information." However, it is unclear whether law enforcement officials from the component agencies who are assigned to the NGIC have automatic access to each agency database or what the procedures may be to access gang-related data. Policymakers may examine the merits of various forms of gang-related intelligence and information sharing—be it through a centralized database or access to various sources of information. In addition to the NGIC's information sharing efforts, law enforcement agencies may be able to obtain certain gang-related information through the FBI's National Crime Information Center (NCIC). Law enforcement agencies nationwide can query and submit information to the NCIC database, which contains 21 files—7 property files and 14 persons files. One of these files is a gang file, containing information on violent gangs and their members. In looking at gang information sharing, policymakers may have questions about how gang intelligence information is collected, the completeness of the gang file, how data may be removed from the file, how often law enforcement partners query the file, and how the information is used. U.S. Immigration and Customs Enforcement . DHS maintains at least two databases in which gang-related information may be stored and accessed. One is the Investigative Case Management (ICM) system, which "serves as the core law enforcement case management tool primarily used by [HSI] special agents and personnel supporting the HSI mission.... Additionally, ICE Enforcement and Removal Operations (ERO) personnel use ICM to manage immigration cases that are presented for criminal prosecution ... and will also use ICM to query the system for information that supports its civil immigration enforcement cases." Agents can link records and documents associated with particular cases, and ICM has a field to notate an individual's gang membership/affiliation and role within the gang. A second system is the Enforcement Integrated Database (EID), which contains "information related to the investigation, arrest, booking, detention, and removal of persons encountered during immigration and criminal law enforcement investigations and operations" primarily conducted by ICE and U.S. Customs and Border Protection (CBP). It has records created, modified, and accessed through several software applications including the EID Arrest Guide for Law Enforcement (EAGLE), used by ICE. EAGLE allows officers to process biometric and biographic information of arrested persons, and it contains specific information fields to notate an individual's gang membership and role. Policymakers may be interested in how the information in these databases may be used by ICE and other law enforcement partners. There are a number of federal enforcement initiatives, task forces, and centers to counter violent gangs such as MS-13 that are coordinated efforts. Reviews from oversight bodies such as DOJ's Office of the Inspector General (DOJ OIG) and the Government Accountability Office (GAO) have critiqued areas in which these efforts could be improved. When the NGIC was established to coordinate intelligence information from federal, state, and local policing agencies, P.L. 109-162 directed that it create a database that would "collect, analyze, and disseminate gang activity information" from participating agencies. In DOJ OIG's November 2009 review of DOJ's anti-gang intelligence and coordination centers (including NGIC), it concluded that the NGIC had not created a gang information database, as had been directed by Congress pursuant to P.L. 109-162 . It also noted that the "NGIC is perceived as predominately an FBI organization, and it has not developed the capability to effectively share gang intelligence and information with other law enforcement organizations." There has not been a subsequent report that speaks to whether these criticisms still hold true, and it is unclear whether there is a centralized database at the NGIC that contains information on gang members and associates. A July 2009 GAO report reviewed, among other things, the roles of DOJ and DHS in countering gangs—including their collaborative efforts, and the departments' assessments of these efforts. While DOJ and DHS implemented the majority of GAO's recommendations that resulted from this report, one was left outstanding. GAO recommended that DOJ "develop a department wide, strategic-level performance measure for the department's anti-gang efforts." However, DOJ informed GAO in 2014 that it ultimately could not develop such a department-wide measure because of the differences in the missions and functions of its component agencies. Policymakers may look into whether or how federal agencies such as DOJ and DHS have changed their approaches and roles in coordinated efforts to counter violent gangs such as MS-13 in response to these critiques. The relationship between transnational gangs such as MS-13 and unaccompanied alien children (UAC) arriving in the United States has received interest from researchers, policymakers, Administration officials, and the public alike. Some observers have suggested that MS-13's evolution in Central America—including challenging government legitimacy, committing crimes with impunity, and expanding into more sectors of the global criminal economy—could continue to drive unauthorized migration into the United States by those seeking to escape the gang and its violence. For instance, in 2013 the United Nations High Commission for Refugees interviewed over 400 UAC from all over the world on factors surrounding their displacement to the United States. Of the 104 UAC from El Salvador, 63% reported that they had experienced or been threatened with gang-related violence. More recently, a number of reports suggest that the increased flow of Central American families seeking asylum at and between U.S. ports of entry at the U.S.-Mexico border stems in part from gang violence. In addition, there have been concerns that MS-13 may exploit the U.S. Southwest border in order to bring gang members from Central America to the United States as UAC or may recruit some of the vulnerable UAC to join the gang's ranks once in the United States. Understanding the nuances of these potential relationships between MS-13 and UAC can be particularly challenging. For instance, CBP data indicate that in FY2017 it apprehended 310,531 individuals not lawfully present in the United States. Of those, 228 were identified as affiliated with MS-13. (This number was down from 437 MS-13 affiliated individuals apprehended in FY2014, the year in which the number of UAC apprehended at the Southwest border reached a peak.) CBP data also indicate that in FY2017 it apprehended 41,435 UAC along the U.S. Southwest border. However, publicly available CBP data do not reflect whether any of these UAC were affiliated with MS-13 at the time that they arrived in the United States. When CBP has provided data regarding UAC gang affiliation, they have only been estimates that are not based on confirmed gang membership. For instance, CBP indicated in June 2017 congressional testimony that since October 2012 there had been about 5,000 individuals apprehended with "confirmed or suspected gang affiliations" and that 159 (3%) of these were UAC. Of these 159 UAC with gang affiliations, "approximately 56 UACs were suspected or confirmed to be affiliated with MS-13." Additionally, even if an MS-13 member arrested in the United States is confirmed to have originally arrived in the country as a UAC, it may be difficult to determine whether he or she arrived as a gang member or was recruited once in the United States. Moreover, it remains unclear the extent to which immigrant youth in the United States join MS-13 on their own for a sense of community or brotherhood or whether they are coerced to join to avoid the consequences of being unaffiliated in a gang environment. In their oversight of federal efforts to counter gang activity, policymakers may be interested in exploring how officials are determining and classifying UAC gang membership and affiliation as well as how this information is tracked. As policymakers debate the best path to tackle threats posed by MS-13, a key challenge is developing a clear conceptualization of the gang, including potential changes in its organizational structure, size, and criminality. This conceptualization may help in understanding the scope of the threat and identify the resources available to counter it. Policymakers may then be poised to evaluate law enforcement's tools and techniques to gather and share gang-related information, conduct anti-gang enforcement initiatives, and respond to evolving threats posed by MS-13 and its affiliates.

The Mara Salvatrucha (MS-13) is a violent criminal gang operating both in the United States and abroad—namely Central America. MS-13 was formed on the streets of Los Angeles, CA, in the 1980s by refugees who were fleeing civil conflict in El Salvador. It became a transnational gang as MS-13 members who were deported from the United States to Central America helped establish gang ties and spread U.S. gang culture abroad. In the United States, MS-13's structure largely consists of loosely organized cells, or "cliques," that each control specific territory. While some have suggested that the size of MS-13 has grown in the United States, since at least 2005 law enforcement officials have consistently cited its membership to be around 10,000. Domestically, MS-13 has been involved in local crimes including extortion, drug distribution, prostitution, robbery, and murder, as well as transnational illicit activity such as drug trafficking and human smuggling and trafficking. The gang is known for its particularly violent criminality, which has been demonstrated in a reported uptick in violent homicides attributed to MS-13 in certain locales. Countering gang crime has often been the purview of state and local law enforcement. However, given that gang activity is not constrained by jurisdictional boundaries, and that local law enforcement agencies may not have the capacity to investigate complex gang crimes, federal law enforcement has had a long-standing interest in countering gangs, including MS-13. One element in determining the appropriate federal policy responses to tackle threats posed by MS-13 may be to have a clear conceptualization of the gang. Researchers and criminal justice system authorities have primarily described MS-13 as a criminal gang or a transnational criminal organization (TCO)—concepts that have some overlap in structure, motivation, and criminality. Whether MS-13 demonstrates elements that are uniquely gang or TCO may help inform the federal policy response to its illegal activities. Another challenge in countering the danger posed by MS-13 is understanding the scope of the threat. Key questions focus on the validity of existing estimates and whether the gang is growing in number or in territory. Thus, policymakers may question how officials define and determine gang membership. While there is no centralized database to track gang membership, a number of agencies maintain datasets that contain gang-related information. Policymakers may also question how this information is shared and utilized. Oversight bodies such as the Department of Justice's Office of the Inspector General (DOJ OIG) and the Government Accountability Office (GAO) have recommended means by which federal law enforcement could enhance its enforcement efforts against violent criminal gangs such as MS-13, and policymakers may take interest in whether some of these recommendations are still relevant. There is also a current debate about the relationship between gangs such as MS-13 and unaccompanied alien children (UAC) arriving in the United States. Some have suggested that MS-13's presence in Central America could continue to drive unauthorized migration into the United States by those seeking to escape the gang and its violence. There are also concerns that MS-13 may exploit the U.S. Southwest border by bringing young gang members from Central America to the United States as UAC or may recruit some of the vulnerable UAC to join the gang's ranks once in the United States. Policymakers may seek more data from officials in order to understand the nuances of these potential relationships between MS-13 and UAC.

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Since 2007, violence perpetrated by warring criminal groups has wreaked havoc on Mexico, partially as a result of the weakness of the justice sector institutions responsible for combating them. Ineffective and often corrupt police forces, weak and unaccountable prosecutors, and an overcrowded and disorganized prison system have undermined anticrime efforts. Recent spikes in violence and criminality have overwhelmed Mexico's justice sector institutions, with record numbers of arrests rarely resulting in convictions. On average, fewer than 20% of homicides have been successfully prosecuted with convictions, suggesting high levels of impunity. Over the last five years, Congress has devoted considerable resources—close to $2 billion—and oversight attention to supporting Mexico's efforts to address a security crisis that has been fueled in part by U.S. drug demand and illicit southbound flows of weapons and money. U.S. assistance under the Mérida Initiative has increasingly focused on supporting Mexico's efforts to reform its justice sector institutions in order to reduce corruption and impunity. Judicial reform is one part of that effort. Policy analysts contend that until Mexico's judicial system is able to prosecute and punish crime, the effects of law enforcement efforts against criminal groups will be limited. The U.S. government is providing significant support for judicial reform efforts in Mexico at a time when those reforms are at a critical juncture. Progress has moved forward in many states, but is stalled at the federal level. Without political will and investment from the new Enrique Peña Nieto Administration, both the federal government and the states may not meet the 2016 constitutional deadline for implementing judicial reforms enacted in 2008. Should the reforms move forward, the U.S. Congress may consider how best to support them. Should the reforms falter, Congress may question the value of continuing U.S. assistance for judicial reform. Mexico's traditional criminal justice system evolved during a period when Mexico experienced 70 years of one-party rule under the Institutional Revolutionary Party (PRI) and presidential power predominated over a weak Congress and judiciary. Although the 1917 Mexican Constitution contained individual guarantees (for victims and the accused) and provided for the presumption of innocence and jury trials, many of those provisions were never implemented. Mexico developed a hybrid criminal justice system containing elements of inquisitorial criminal procedures but with the public prosecutor, rather than a judge, taking a central role in overseeing investigations and in determining a suspect's guilt or innocence. Without due process guarantees and an independent judiciary, some argue that the executive branch, acting through the public prosecutor, used the courts as a means of political control (i.e., a way of punishing its opponents). Under the traditional system, prosecutors have wide latitude during the investigatory stage of a case to gather evidence however they deem appropriate that is then submitted to judges in a written dossier that is rarely challenged. Dossiers often center on the confession of the accused, with potentially coerced confessions frequently occurring , or on unverified eyewitness identifications. Judges then render their decisions behind closed doors. Although 85-90% of crimes brought to trial result in a conviction, in fact, less than 25% of crimes in Mexico are reported and, of those, only a small number are investigated and prosecuted, implying that only a small portion of the country's crimes are seriously addressed (see Figure 1 ). The likelihood of a guilty verdict is particularly high for cases involving poor people who have committed minor offenses. The Mexican criminal justice system has been widely criticized for being opaque, inefficient, and corrupt. Two of its key actors—police and public prosecutors—are viewed by 66% and 43% of Mexicans respectively as frequently engaged in corruption. The judicial system itself has long been plagued by long case backlogs, high pre-trial detention rates, and an inability to secure convictions for serious crimes (see Figure 1 ). On average, fewer than 13% of cases are resolved at the state level (where more than 90% of cases are prosecuted). During the Felipe Calderón Administration (December 2006-November 2012), Mexico extradited record numbers of criminals to the United States, but its Attorney General's Office (PGR) proved unable to convict any major leaders of Mexican drug trafficking organizations. The PGR has also been unable to secure charges in many high-profile cases involving the arrests of politicians accused of collaborating with organized crime. Dysfunction in the judicial system has resulted in overcrowded prisons, particularly at the state level, that are in significant need of reform. Increasing arrests have caused prison populations to swell, as has the use of preventive detention. (See " Provisions on Organized Crime "). Some 40% of inmates in Mexico's prisons are awaiting trials, as opposed to serving sentences. As of July 2011, prisons were at 23% over-capacity. These problems in Mexico's judicial and penal systems are not new. They have been problematic for decades, but have been exacerbated by the recent uptick in violence and criminality in the country. For example, crime victimization surveys that have typically shown that fewer than 25% of crimes are reported in Mexico, evidence of the Mexican people's lack of faith in their justice system (see Figure 1 ). Surveys from 2012 show an even lower percentage of crimes being reported—just 13%. Communities in some states where the police and judicial systems are particularly weak have begun to form armed "self-defense" groups, which many, including Mexico's National Human Rights Commission, view as a worrisome development. The push for judicial reform in Mexico began in the 1990s at the federal and state level. Reforms enacted by President Ernesto Zedillo in 1994 aimed to strengthen the power and independence of the federal judiciary vis-à-vis the other branches of government. At the state level, reformist lawyers became increasingly concerned about the lack of due process in Mexico's judicial system, particularly for poor individuals who lacked access to legal counsel. The movement included lawyers, academics, and human rights advocates. It proved to be particularly strong in Nuevo León, which became the first state to introduce adversarial procedures in 2004. Chihuahua and Oaxaca states soon followed. Each of those early reform states received significant technical assistance from the U.S. Agency for International Development (USAID). In 2004, the first National Action Party (PAN) Administration of Vicente Fox (2000-2006) proposed comprehensive federal judicial reforms. Those reforms failed to pass, but drew popular attention to the weaknesses in Mexico's traditional criminal justice system. Support for federal level judicial reform grew over the next few years until it was enacted with broad, multiparty support in March 2008 under the PAN Administration of President Calderón. The reforms, which involved several constitutional changes, took effect on June 18, 2008. Both U.S. and Mexican officials assert that fully implementing the 2008 judicial reforms is a key goal and a focus of bilateral efforts under the Mérida Initiative, the bilateral security program begun in FY2008. (For more on the Mérida Initiative, see: " U.S. Assistance " section below). Under the judicial reforms, Mexico has until 2016 to replace its trial procedures at the federal and state level, moving from a closed-door process based on written arguments to an adversarial public trial system with oral arguments and the presumption of innocence until proven guilty. These changes should make the system more transparent, participatory (including a greater role for victims, judges, and defense attorneys), and impartial. In addition to oral trials, judicial systems are expected to adopt means of alternative dispute resolution, which should help make them more flexible and efficient, thereby relieving backlogs and ensuring that cases that go to trial are for serious crimes. In order to be successful, Mexico's transition to this New Criminal Justice System (NCJS) will require structural, cultural, and systemic changes to Mexico's law enforcement and judicial institutions, including fundamentally retraining justice sector operators. The transition could take decades to fully take hold. The NCJS will have to be carefully adapted in states with indigenous populations that have their own traditional justice systems. Mexico's judicial reforms seek to create a system that involves a more equal balance of power between prosecutors and defense attorneys and a more active role for judges. The reforms aim to check some of the discretionary power formerly held by public prosecutors. Under the NCJS, prosecutors are expected to present and defend the evidence they and the police whom they oversee have gathered at a public trial where it may be challenged by the defense. Defense attorneys are given the opportunity to challenge the evidence presented by the prosecution, cross-examine witnesses, and present evidence to support their client's innocence. The reforms also envision a more active and high-profile role for judges by, for example, requiring sentencing judges to arbitrate trial proceedings and then render their decisions out in the open. Key elements of the reforms include: Investigation . A greater role will be given to police in investigations under the guidance of the public prosecutor; evidence gathered can be contradicted in an oral, public trial, and convictions can no longer be made based upon confessions alone. This phase of the judicial process will be abbreviated and less formal. Pre-trial detention. The use of this will be limited to violent crimes. Creation of new judgeships for each stage of criminal proceedings. This aims to strengthen judicial impartiality by ensuring that the judge who decides that there is enough evidence to send a case to trial (the due process judge) is not the same judge who presides over the trial phase and issues the final verdict (the sentencing judge). While one judge will preside over most trials, some will function as grand juries and have three judges presiding. The reforms also create a sentencing implementation judge who is to determine when a prisoner has fulfilled the terms of his or her sentence and to monitor processes of restorative justice (including agreements between victims and perpetrators reached through alternative dispute resolution). Individual judges can play all three roles as part of their duties, but not on the same case. A lterna tive methods of resolving cases. This includes plea bargaining and alternative justice mechanisms that may result in compensation agreements between victims and perpetrators. Hearings and trials. Under this reform, hearings and trials are to be conducted in public; attended by judges, prosecutors, and public defenders; based on oral arguments; and videotaped for the record. Open trials and decisions. This reform requires judges to render decisions in public based on evidence presented at a public trial rather than issuing decisions behind closed doors based on written dossiers. Victim rights. This gives greater procedural rights to victims (including the ability to participate in the prosecution and/or to challenge a prosecutor who has declined to take up a case in court); requires that a victim be consulted before a case is suspended or concluded; makes restitution a requisite for alternative justice to be pursued; creates specialized units to protect and assist victims; and prioritizes efficiency. Defendant rights. introduces the presumption of innocence, prohibits torture, guarantees access to public defenders and requires that those defenders be lawyers, provides that only judges can issue search orders, excludes evidence obtained through illegal means, states that confessions made without the presence of a defendant's attorney lack evidentiary value, and provides for alternative sentencing (such as probation) with the goal of rehabilitating prisoners and reincorporating them into society. Mexico's 2008 constitutional reforms also included a number of measures aimed at strengthening the government's ability to combat organized crime that paved the way for subsequent legislation allowing wiretapping and asset forfeiture. Article 16 of Mexico's Constitution defines organized crime as an organization of three or more individuals whose goal is the commission of crimes in a permanent or repeated way, "as provided by the law on the matter," a reference to Mexico's Federal Statute Against Organized Crime. Under the constitutional reforms, those suspected of involvement in organized crime can be held by the authorities for 40 days without access to legal counsel, with a possible extension of another 40 days, a practice known as arraigo which has led to serious abuses by authorities. The law also permits prosecutors in organized crime cases to submit evidence gathered from witnesses during the investigatory phase of a criminal process; that evidence does not need to be presented in front of the judge and defense attorney at trial. Some analysts maintain that these new reforms created a system in which "normal" criminals have their rights protected, whereas those suspected of organized criminal activity have few constitutional rights or guarantees. Many analysts had predicted that progress in advancing judicial reform in Mexico was "likely to be very slow as capacity constraints and entrenched interests in the judicial system delay any changes." Others expressed concerns that the Calderón government appeared to be devoting more funding and political will toward modernizing the police than strengthening the justice system (including the courts and the PGR). Some analysts questioned whether it would be feasible to revamp the judicial system at a time when the government was under pressure to get tough on organized crime since accountability and due process within the judicial system are sometimes portrayed as impediments to law enforcement efforts. Almost five years into the reform process, judicial reform efforts at the federal level remain stalled. Former President Calderón did not propose a new federal criminal procedure code—a key element needed to guide reform efforts—until September 2011, three years after the reforms were enacted. The Mexican Congress did not enact a criminal procedure code during his term. Funding for the PGR lagged behind that of other agencies, as did budgetary support for SETEC, the Technical Secretariat of the Interior Ministry charged with overseeing implementation of the reforms. SETEC responded to requests for assistance from the states, but did not have the authority to push federal and state institutions to support the reform effort, although it did provide $34 million in subsidies to states to support judicial reform in 2012. Inaugurated in December 2012, President Enrique Peña Nieto of the PRI has vowed to advance judicial reforms at the federal level by introducing legislation to establish a new unified penal code (so that crimes would be classified uniformly across the country) and a code of criminal procedure that would annul all state codes. During Peña Nieto's governorship, the state of Mexico became one of only three states fully operating under the NCJS, albeit with some problems. According to the Pact for Mexico agreement that Peña Nieto signed with the two main opposition parties in December 2012, the President plans to introduce legislation to create a unified penal code and code of criminal procedure during the first legislative session of 2013, which runs through April 30, 2013. President Peña Nieto also included a budget increase for 2013 for SETEC's efforts to coordinate implementation of the NCJS and support states with their transitions to the new system. The Mexican Congress is also drafting legislation that would restrict the use of preventive detention for organized crime cases ( arraigo ) and the granting of amparos during this legislative session . In contrast to this lack of progress at the federal level, reforms have moved forward in many Mexican states. Since 93% of crimes in Mexico are prosecuted at the state level, observers have welcomed this progress as a positive sign. As of December 2012, 22 of Mexico's 32 states (67%) had enacted new criminal procedure codes, the first major step in the reform process (see Table 1 below). According to SETEC, the only two entities that did not have a criminal procedure code reform bill in their legislatures as of October 2012 were Nayarit and the Federal District that encompasses Mexico City. The Federal District may be waiting to enact its own code until a federal code passes, as some legal experts maintain that the federal code might cover the local courts there as well. According to an index developed by Professor Matthew Ingram of the University at Albany, while only 12 states (36%) had begun operating at least partially under the new system as of December 2012, most of those states are roughly on track to follow Chihuahua's pace to reach implementation (see Figure 2 on the next page). Chihuahua is often considered a model state in terms of implementing judicial reform due to its early adoption of a criminal procedure code and related reforms, its comprehensive approach to the reform process, and the speed at which it implemented the reforms across the state. From start to finish, Chihuahua's transition to the NCJS took roughly two and a half years. Some may consider Ingram's assessment too optimistic, however, given that there have been significant implementation delays in several states (such as Durango, Nuevo León, and Zacatecas) that have now been partially operating under the system for many years. A study commissioned by USAID, released in November 2012, compared the performance of five states that had operated under the reforms for at least one year (Chihuahua, Oaxaca, Zacatecas, State of Mexico, and Morelos) to states that had not yet implemented the reforms. Although outcomes have been uneven among states that have implemented the reforms, the study found positive effects of the new system on certain key indicators. The study found: Pre-trial detention rates have been reduced in reform states, while they have risen in non-reform states. Some 25,000 individuals have avoided pre-trial detention under the new system in the five reform states. Prosecutors in Chihuahua, Oaxaca and Zacatecas proved twice as efficient at resolving criminal cases as in non-reform states (40% of cases resolved vs. 20%); Reform states have been able to significantly reduce the time it takes to resolve a case. It takes less than 40 days to resolve a case through alternative justice mechanisms and 100 days to resolve a case in the courts compared to 170 days in non-reform states. Alternative Dispute Resolution (ADR) settlements are being fulfilled (89% in Oaxaca and 93% in Chihuahua) and are freeing up the courts to handle more serious crimes. Some 52% of rulings in reform states are for serious crimes compared to 37% in non-reform states. The system has helped increase the role of public defenders in trials and resulted in 100% of judges being present at trials, including at initial hearings. (Some 71% of victims in non-reform states say that a judge was not present at their initial hearing). Significant obstacles to state-level reform remain, both in terms of the level of support that the federal government has provided to back state-level efforts and in how the reform is being implemented in the states. In general, a lack of progress and leadership at the federal level has left states without clear guidance on how the reforms should be implemented. A failure to communicate the goals and prepare the Mexican people for the likely outcomes of the new system—including the possibility that some criminals would plea for lesser sentences—has led the public to believe the new system has been too "soft" on crime. Some commentators suggest that opposition to the new system from some justice operators, including judges and prosecutors fearful that the new system will cut into the power they now hold, has also proved challenging. At least until recently, federal funds available for the construction of new courts and other infrastructure and for technical assistance to states implementing the reforms had been limited. Implementing these judicial reforms has brought major challenges, including the need to revise federal and state criminal procedure codes, build new courtrooms, retrain legal professionals, update law school curricula, and improve forensic technology. At the state level, since there is no re-election in Mexico, some governors have been reluctant to invest in new court systems that they will not be around to see in operation. Others have delayed implementation of the new system due to concerns that it may hurt their popularity if it is perceived as being too "easy" on crime. This perception is understandable given that several state legislatures have rolled back aspects of the reform by, for example, broadening the scope of crimes that require pre-trial detention. There have also been some operational challenges in states that have implemented the new system. A reluctance to use plea bargaining and to refer even simple cases to ADR is overwhelming the court systems in some states. Weak police and prosecutorial capacity to gather the type of evidence required to build strong cases, combined with various institutions' unwillingness to work together, has kept conviction rates low. Courts are particularly ill-equipped to handle large numbers of serious crimes. For example, due to capacity constraints, Chihuahua can only process a few hundred homicide cases each year. The prosecution rate for homicide has actually declined in that state in recent years. Recent survey data gathered from the Mexican public as a whole, and from justice sector operators (judges, prosecutors, and public defenders) in nine states, provide important insights into the challenges facing the reform effort. In general, the surveys revealed a need for more public awareness campaigns, as well as outreach to system operators, on why the reforms were enacted and what positive changes they seek to bring about. While the general public expressed questions about what effects the reforms will have on violence and criminality, justice sector officials were divided about whether they would help reduce crime. The public seemed less concerned about protecting the rights of the accused (presumption of innocence and pre-trial release) than about protecting victims' rights and ensuring that guilty criminals are punished. The general public survey also revealed that 74% of those polled had little or no faith in the criminal justice system and that a similar percentage did not cooperate with law enforcement by reporting crime or participating in crime prevention programs. Some 89% of those surveyed knew nothing about the 2008 judicial reforms, much less how they seek to rectify problems in the old system. In Chihuahua and Morelos, two states that have already implemented the NCJS, the percentage of respondents who did not know their states had implemented a new justice system stood at 30% and 60% respectively, still rather high. When people are told about some of the key elements of the reforms (such as oral trials), 80% of those surveyed said they think the new system will function better than the old. However, there is still a perception that the new system favors the rights of the accused over those of the victims. Some 64% of victims surveyed who had been through the NCJS said that they did not feel treated in an impartial way as compared to 54% who had experienced the old system. Victims also expressed concern that the NCJS moved slower at the beginning than the old system, another challenge that needs to be addressed. Ensuring that people know how to access the justice system and that those whom they encounter when they do so are professional and courteous is another issue that merits attention. A majority of justice sector operators surveyed thought that the traditional system functioned adequately, with judges more likely to express that sentiment than prosecutors or public defenders. In fact, 40% of justice operators thought that the passage of judicial reforms in 2008 was the result of pressure from "foreign governments and organizations" that sought to discredit the old system. While those findings are disconcerting, 84% of those surveyed expressed some level of support for the 2008 reforms, with 79% of respondents agreeing with the importance of oral trials and 94% approving of the use of alternative dispute resolution. Although 70% of justice sector operators felt that the NCJS would help reduce corruption, they were evenly divided about whether the reform will help reduce criminality. Since the 1980s, Congress has provided significant funding for judicial reform projects in Latin America, with Mexico being one of the last countries to seek U.S. assistance. Mexico's federal structure makes its transition from an inquisitorial to an accusatorial system more complicated than in other countries where the United States has previously supported reform efforts. Some view Mexico's federalism as an advantage, however, as states can serve as incubators for reform, with successful experiences in certain states serving as models for others to follow. Mexico's middle income status also means that it is better equipped to scale up U.S.-funded efforts than other countries in Latin America should it choose to make judicial reform a top priority. Although USAID has been providing judicial reform assistance to Mexico since the late 1990s, U.S. support for judicial reform has increased significantly as a result of the Mérida Initiative, a bilateral security effort for which Congress appropriated $1.9 billion from FY2008-FY2012. The strategy behind the Mérida Initiative has evolved over time. That initial strategy was designed in response to the Calderón Administration's request for specific forms of U.S. equipment, training, and technical assistance to help Mexico combat drug trafficking and organized crime. In 2009, U.S. and Mexican officials began to revise the strategic framework underpinning bilateral efforts in order to seek to address some of the deeper causes of criminality in the country— institutional weakness, corruption, and a weak social fabric. The Mérida strategy now focuses on four pillars: (1) disrupting organized criminal groups; (2) institutionalizing the rule of law; (3) building a 21 st century border; and (4) building strong and resilient communities. Funding for "institutionalizing the rule of law" (pillar two) now dwarfs other types of U.S. assistance provided to Mexico under the Mérida Initiative. Nevertheless, while spending plans state that $590.5 million of the $1.9 billion in Mérida funding appropriated from FY2008-FY2012 went to support the purchase of aircraft and helicopters for security forces, it is difficult to parcel out how much of the $1.9 billion in aid has gone to support judicial reform. According to the State Department, total deliveries under pillar two of the Mérida strategy (which includes support for judicial reform) stood at $146.2 million as of November 2012. That total does not include the $104 million in Mérida pillar two aid that USAID is administering (discussed below). Ensuring that U.S. agencies are supporting judicial reform as part of broader justice sector reform efforts in Mexico has been a priority for congressional appropriators. In the first appropriation for the Mérida Initiative, for example, Congress earmarked funding to support Mexico's transition from an inquisitorial justice system to an accusatory system. Congress has since increased funding for rule of law programs; asked the State Department to report on how U.S. programs are helping to achieve judicial and police reform in Mexico ( H.Rept. 112-331 ), and expressed support for future rule of law funding. Congress has also conditioned Mérida assistance to the police and military on ensuring that the Mexican government is enforcing prohibitions against using evidence obtained through torture that were codified in Mexico's 2008 judicial reforms. U.S. rule of law programming is now focusing on supporting Mexico's transition to an oral, accusatorial justice system and helping Mexico address institutional weaknesses in its justice sector institutions. U.S. assistance is geared toward: 1) helping the federal and state governments adopt legislative frameworks to underpin the reform process; 2) providing in-depth training for justice sector operators on their roles in the new system at all levels of government; 3) building support for the reforms in Mexican civil society; and 4) addressing institutional and operational problems at all levels of government that may not directly relate to the reform process. It is also focusing on improving the analytic and quality control capacity of justice sector institutions and on expanding access to justice and victims' assistance. Since high turnover rates of personnel in justice sector institutions has limited the effectiveness of past U.S. training programs, future assistance may focus on helping institutions change their incentive structures, policies, and cultures so that the reforms can be sustained. The three main implementing agencies for the U.S. rule of law programs in Mexico are the State Department, the Department of Justice (DOJ), and USAID. The State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) is the lead funder and coordinator of rule of law programs. INL also implements law enforcement reform (police, forensics, and prisons) and anti-corruption efforts (helping institutions install better vetting and internal controls), while DOJ and USAID have been the lead implementers for justice reform. U.S. law enforcement training and equipment efforts initially focused largely on the Federal Police, but then expanded to support the Attorney General's police force and state-level academies in Chihuahua, Nuevo León, Puebla, and Sonora. State Department funding has helped provide training and equipment to build the forensic capacities of the Federal Police and the Attorney General's Office and to expand and improve the country's federal penitentiaries. The State Department is training Mexican federal and state police for the new investigatory roles they will be called upon to play in the NCJS. Anti-corruption efforts have spanned the full range of Mexican law enforcement and judicial institutions. DOJ is administering some $46 million in State Department funding. DOJ has supported justice reform at the federal level, including the adoption of a federal criminal procedure code. In 2012, DOJ worked with the PGR to design and implement a national training program known as Project Diamante through which prosecutors, investigators, and forensic experts were trained to work as a team rather than in isolation (as was customary). Upon completion of Phase I, in August 2012, 7,700 PGR prosecutors, investigators and forensic experts had been trained to work together to manage cases in the current inquisitorial system as well as together to function once Mexico transitions to an accusatorial system.  Project Diamante also established a cadre of over 200 instructors capable of replicating this and other training to new PGR personnel.  Until recently, U.S. assistance did not provide significant training and assistance for judges, a key constituency that must be convinced about the value of the reforms. DOJ has recently established the Judicial Studies Training Institute, a training program in Puerto Rico for Mexican federal judges. The nine-day training program focuses on building practical experience in the accusatory system with the goal of educating judges about the advantages that it provides. The future of DOJ programming in Mexico may depend upon the extent to which Mexico's Attorney General Jesús Murillo Karam embraces the Diamante model that began late in the Calderón Administration. Some states have reportedly expressed an interest in DOJ replicating the training they provided to federal officials at the state level, but it remains to be seen whether that will take place. Training for federal judges could also potentially be increased. USAID has concentrated most of its work in support of justice reform at the state level, but also sought to strengthen the capacity of SETEC, the federal entity coordinating the federal and state reform efforts, and ProVíctima, the federal entity providing victims' assistance services under the NCJS. USAID had been supporting code reform, judicial exchanges, alternative dispute resolution, and Citizen's Participation Councils, as well as training justice sector operators in five Mexican states since 2004. USAID has helped law enforcement and attorney generals in those states form partnerships with their U.S. counterparts that have involved training and mentoring. USAID expanded its rule of law efforts with roughly $104 million in FY2008-FY2012 Mérida assistance, a significant portion of which is supporting comprehensive judicial reform programs in seven of Mexico's 32 states. USAID has provided more limited help with drafting legislation and implementing policy changes in four additional states. USAID has also provided support to the American Bar Association to help Mexican law schools and bar associations change their curriculums and professional standards to reflect the new system. USAID appears to be trying to strike a balance between providing enough assistance to certain key states to demonstrate the merits of the NCJS and providing more limited assistance to a larger number of states to help Mexico reach its 2016 implementation targets. Although some have urged USAID to continue concentrating its efforts in key states, the agency is in the process of expanding its programs and activities into no less than 20 states. This state-level work will be accompanied by continued technical assistance to SETEC and ProVíctima, as well as increased support for civil society organizations. Mexico enacted historic judicial reforms in 2008 that have the potential to dramatically revamp the country's criminal justice system. Whether or not those reforms are fully implemented is ultimately up to the Mexican government and Mexican society as a whole to decide. The depth and breadth of U.S. assistance provided for judicial reform will in part depend upon whether the Peña Nieto government makes judicial reform a priority. Should Mexico make judicial reform more of a priority, as security experts have long recommended, U.S. technical assistance and training could play a significant role in supporting the reform process. During his confirmation hearing, Secretary of State John Kerry vowed to try to protect U.S. assistance under the Mérida Initiative from budget cuts, including support for judicial reform. However, if Mexico does not prioritize the judicial reforms, Congress may question whether funding for such programs in Mexico should be discontinued, scaled back, or made contingent upon the federal and state governments demonstrating political will to implement the reforms. Should the reforms continue to move forward, congressional funding and oversight of judicial reform programs in Mexico could continue for a number of years. As Congress considers President Obama's FY2014 budget request for Mexico, it may question how funding for judicial reform in particular, and justice sector reform more broadly, fits into bilateral security priorities, including efforts to combat criminal groups and punish corruption. Is the new criminal justice system more effective than the old system at convicting DTO leaders and corrupt politicians? Have any emblematic cases been resolved that might help improve Mexicans' perception of their criminal justice system and its capacity to deter and sanction crime? When faced with funding decisions, Congress may seek to balance the need to ensure that U.S. funds are provided in a way that is flexible enough to respond to changing events in Mexico, while also retaining adequate control over the way those funds are being spent. Congress may also consider weighing in on how implementing agencies divide the assistance provided for judicial reform between the federal and state level reform efforts. Finally, Congress may examine the extent to which U.S. agencies are balancing "top down" support for government entities engaged in the reform process with "bottom up" support to civil society groups. Many argue that the award-winning documentary film, Presumed Guilty , which was theatrically released in 2011, did more to galvanize support for the reforms than any government-sponsored efforts. The State Department used roughly $100,000 in International Narcotics Control and Law Enforcement (INCLE) funding to help promote the film in Mexico. Another area that could be expanded is U.S. support for culture of lawfulness programs that seek to educate all sectors of Mexican society on the importance of upholding the rule of law. Congress has closely monitored human rights conditions in Mexico and compliance with human rights conditions on Mérida assistance. Congress has an oversight interest in ensuring that, as implemented, the new criminal justice system is strengthening human rights protections. Some have urged Congress to make future conditions more specific by, for example, conditioning aid on whether Mexico is videotaping confessions and interviews with witnesses so as to prove that torture or other ill treatment is not occurring. Others have argued against changes to the conditions on U.S. assistance, preferring that the current conditions be more strictly enforced. Congress may also examine how best to ensure that U.S. implementing agencies correctly sequence and coordinate support to key actors within the criminal justice system (police, prosecutors/defense attorneys, courts). At the federal level, is the amount of assistance being provided to the PGR and the courts adequate when compared to the aid provided to the Interior Ministry (which now includes the Federal Police and penitentiary system)? If one federal entity seeks U.S. cooperation more aggressively than another, should that entity receive more assistance? At the state level, are USAID's judicial reform efforts being coordinated with the police assistance that the State Department is providing? Are police in states that have adopted or are close to adopting the new criminal justice system being adequately trained to carry out investigations in support of the public prosecutor? As foreign aid budgets tighten, congressional scrutiny of U.S. programs in Mexico may intensify. Past reports by the Government Accountability Office (GAO) and the Inspector General of USAID have criticized U.S. agencies for failing to develop "outcome" rather than "output" measures to gauge the efficacy of U.S. programs. USAID has adjusted its indicators in response to those criticisms and the State Department is in the process of establishing a Metrics Office in Mexico City that will develop indicators for its ROL programs. The results of those efforts to improve metrics may prove useful for congressional appropriators as they oversee current programs and consider future support for judicial reform in Mexico. Congress might also consider providing funding for more polling and surveys regarding attitudes toward the reforms, since this is an important means of evaluation and assessment of progress toward the reform. In sum, policy experts continue to recommend that Mexico hasten implementation of judicial reforms enacted in 2008 that are aimed at making its judicial system more transparent, efficient, and impartial. Implementing the reforms is a stated priority of both the Mexican and U.S. Administrations. Nevertheless, nearly five years into the reform process, implementation has lagged at the federal level and faced significant challenges in states that have begun operating under the new system. Congress is likely to closely monitor the actions taken by the Peña Nieto government and state governments in Mexico to advance the reform process as it oversees current U.S. justice sector programs and considers future support to Mexico.

Fostering security, stability, and democracy in neighboring Mexico is seen by analysts to be in the U.S. national security and economic interest. Reforming Mexico's often corrupt and inefficient criminal justice system is widely regarded as crucial for combating criminality, strengthening the rule of law, and better protecting citizen security and human rights in the country. Congress has provided significant support to help Mexico reform its justice system in order to make current anticrime efforts more effective and to strengthen the system over the long term. U.S. and Mexican officials assert that fully implementing judicial reforms enacted through constitutional changes in June 2008 is a key goal. Under the reforms, Mexico has until 2016 to replace its trial procedures at the federal and state level, moving from a closed-door process based on written arguments presented to a judge to an adversarial public trial system with oral arguments and the presumption of innocence until proven guilty. These changes are expected to help make the system less prone to corruption and more transparent and impartial. In addition to oral trials, judicial systems are expected to adopt means of alternative dispute resolution, which should help them be more flexible and efficient, thereby ensuring that cases that go to trial involve serious crimes. More than halfway into the reform process, judicial reform efforts in Mexico are at a critical juncture. As of December 2012, 22 of Mexico's 32 states had enacted new criminal procedure codes (67%), but only 12 states (36%) had begun operating at least partially under the new system. Reform states have seen positive initial results as compared to non-reform states: faster case resolution times, less pre-trial detention, and tougher sentences for cases that go to trial. Daunting challenges remain, however, including counter-reform efforts and opposition from some key justice sector operators (including judges). Although reform efforts have lagged at the federal level, President Enrique Peña Nieto, inaugurated in December 2012 to a six-year term, has said that advancing judicial reform will be a top priority. U.S. policymakers are likely to follow how the Peña Nieto government moves to enact a unified penal code and code of criminal procedure to hasten reform at the federal level and to increase support to states transitioning to the new system. The United States has been supporting judicial reform efforts in Mexico since the late 1990s, with assistance accelerating since the implementation of the Mérida Initiative in FY2008, an anticrime assistance program for which Congress has provided $1.9 billion. While the Mérida Initiative initially focused on training and equipping Mexican security forces, it now emphasizes providing training and technical assistance to help reform Mexico's justice sector institutions. Funding for "Institutionalizing the Rule of Law" now dwarfs other types of U.S. assistance to Mexico. This report provides an overview of Mexico's historic 2008 judicial reforms and an assessment of how those reforms have been implemented thus far. It then analyzes U.S. support for judicial reform efforts in Mexico and raises issues for Congress to consider as it oversees current U.S. justice sector programs and considers future support to Mexico. Also see CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by [author name scrubbed] and Kristin M. Finklea.

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Under the Constitution, high-level leadership positions in the executive branch are filled through appointment by the President "by and with the Advice and Consent of the Senate." These posts include most of the approximately two dozen that form the President's Cabinet. Because of the importance of these offices to the implementation of the President's policies and the leadership of federal departments and agencies, they are usually among the first to be filled at the outset of a new Administration. The President may nominate individuals to fill these posts at any point during his time in office, however. From time-to-time, Presidents have made new Cabinet appointments in the midst of a term in response to unexpected resignations or deaths. In recent decades, it also has become customary for each two-term President to reshuffle his Cabinet during the inter-term transition—the transition that takes place at the end of a President's first term in office and beginning of his second term. This process of filling Cabinet vacancies at the beginning of a second term has not been as extensive as the staffing at the beginning of the first term; typically about half the Cabinet members change. Nonetheless, the pace at which these nominations and confirmations are carried out could affect the implementation of the President's policies during his second term, as well as the leadership of the departments and agencies affected. This report discusses nominations to Cabinet positions during inter-term presidential transitions. It begins with a discussion of the positions that make up the Cabinet and the process by which nominations to such positions are considered in the Senate. Following this discussion, the report provides data on, and analysis of, the pace of Senate consideration of inter-term transition nominations to Cabinet positions since 1984. The President's Cabinet is an institution established by custom, rather than by law. The Constitution provides that the President "may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices," but it does not establish any requirement that he meet with them or seek their counsel. Nonetheless, beginning with George Washington, Presidents have met with department heads and other top officials as a formal group. The Cabinet comprises the heads of each of the departments, currently numbering 15, the Vice President, and other positions that have been accorded Cabinet rank by the President. This last group varies according to the preferences of each President. At present, it includes the following positions: White House Chief of Staff; Administrator of the Environmental Protection Agency; Director of the Office of Management and Budget; United States Trade Representative; United States Ambassador to the United Nations; Chairman of the Council of Economic Advisors; and Administrator of the Small Business Administration. Other positions that have been accorded Cabinet rank by past Presidents include, for example, Director of National Drug Control Policy, Counselor to the President, Director of Central Intelligence, and Director of the Federal Emergency Management Agency. At times, a President has changed the composition of his Cabinet during his presidency. For example, President William J. Clinton added four positions to his Cabinet over the course of his time in office. Presidents have used their Cabinets in various ways. In some Administrations, the Cabinet has been a key advisory and decision-making body. In other Administrations, the Cabinet as a collective body has been a mostly symbolic institution, even as each individual exercises considerable influence over his or her department or agency. Regardless of a President's use of this group, the membership in the Cabinet conveys high status. Consequently, nominations to Cabinet-level positions are among the highest priority for consideration by the Senate. The appointments process for advice and consent positions, and therefore for most members of the President's Cabinet, is generally considered to have three stages: selection and nomination by the President, consideration in the Senate, and appointment by the President. This section of the report provides an overview of these three stages. In the first stage, the White House selects and clears a prospective Cabinet appointee before sending a formal nomination to the Senate. There are a number of steps in this stage of the process. First, with the assistance of, and preliminary vetting by, the White House Office of Presidential Personnel, the President selects a candidate for the position. During the clearance process, the candidate prepares and submits several forms, including the "Public Financial Disclosure Report" (also referred to as the Office of Government Ethics (OGE) 278), the "Questionnaire for National Security Positions" (Standard Form (SF) 86), and the White House "Personal Data Statement Questionnaire." The Office of the Counsel to the President oversees the clearance process, which often includes background investigations conducted by the Federal Bureau of Investigation (FBI), OGE, and an ethics official for the agency to which the candidate is to be appointed. If conflicts of interest are found during the background investigation, OGE and the agency ethics officer may work with the candidate to mitigate the conflicts. Once the Office of the Counsel to the President has cleared the candidate, the nomination is ready to be submitted to the Senate. A nominee has no legal authority to assume the duties and responsibilities of the position. Authority to act comes once there is Senate confirmation and presidential appointment, unless the individual is recess appointed or temporarily appointed under another authority. In the second stage of the appointments process, the Senate determines whether or not to confirm a nomination. Primarily, the Senate has shown particular interest in the nominee's views and how they are likely to affect public policy. Much of the Senate confirmation process occurs at the committee level. Administratively, nominations are received by the Senate executive clerk, who arranges for the referral of the nominations to committee, according to the Senate rules and precedents. Committee nomination activity on Cabinet nominations generally includes investigation, hearing, and reporting. As part of investigatory work, committees have drawn on information provided by the White House, as well as information they themselves have collected. Hearings provide a public forum to discuss the nomination and any issues related to the agency for which the nominee would be responsible. Even where confirmation has been thought by most to be a virtual certainty, hearings have provided Senators and the nominee with opportunities to go on the record with particular views or commitments. Senators have used hearings to explore nominees' qualifications, articulate policy perspectives, or raise related oversight issues. After a nomination is referred to committee, the committee may decline to act on the nomination at any point—upon referral, after investigation, or after a hearing. For Cabinet nominations, however, inaction is unusual. If the committee votes to report the nomination to the full Senate, it has three options: it may report the nomination favorably, unfavorably, or without recommendation. A failure to obtain a majority on the motion to report means the nomination will not be reported to the Senate. After a committee reports a nomination, the nomination is assigned a calendar number by the executive clerk, placed on the Executive Calendar , and, if taken up by the full Senate, would be considered in executive session. The Senate imposes no limitation on floor debate on nominations, so cloture may be required to end debate and reach a vote on the nomination. Based upon a precedent set by the Senate on November 21, 2013, a simple majority of those voting would be required to invoke cloture on all nominations to executive branch positions, including Cabinet nominations. The Senate historically has confirmed most, but not all, Cabinet nominations. Rarely, however, has a vote to confirm a Cabinet nomination failed on the Senate floor. Following Senate confirmation, the confirmed nominee is given a commission bearing the Great Seal of the United States and signed by the President. The nominee is then sworn into office. The President may sign the commission at any time after confirmation, at which point the appointment becomes official. Once the appointee is given the commission and sworn in, he or she has full authority to carry out the responsibilities of the office. The remainder of this report examines all Cabinet nominations made during inter-term transition periods of recent Presidents. The Appendix of this report lists nominations to Cabinet positions during inter-term transitions for the four most recent Presidents who served two terms in office (Ronald W. Reagan, William J. Clinton, George W. Bush, and Barack H. Obama). The data included in the Appendix are nominations to Cabinet positions submitted during the inter-term transition period, which is defined as the period between November 1 of a President's re-election year and December 31 of the first year of his second term. In total, there were 48 such nominations, 46 of which the Senate confirmed—two of the inter-term Cabinet nominations made by President Clinton were withdrawn during Senate consideration. A previous version of this report, written prior to the completion of President Obama's inter-term transition, set April 30 as the end of the inter-term transition period. The earlier version included data on nominations received in the Senate prior to this date for Presidents Reagan, Clinton, and G. W. Bush. That six-month period from November 1 to April 30 covered the submission of, and Senate action on, almost all of the inter-term Cabinet nominations of those three Presidents. However, a number of President Obama's inter-term Cabinet nominations had not yet been received in the Senate as of April 30, 2013. As discussed above, the positions that the President chooses to include in his Cabinet vary across Administrations. The data provided in the Appendix include nominations to traditional Cabinet positions as well as nominations to those positions given Cabinet rank by the nominating President. (See section above titled " The Cabinet " for a list of the positions that recent Presidents have accorded Cabinet rank in addition to the heads of the 15 executive departments.) Table A-1 in the Appendix provides information on all the Cabinet nominations made during inter-term transitions for the four Presidents covered by this report, listing the dates of relevant actions from the President's official announcement of the nomination to the date of final Senate action upon each nomination. The table provides (1) the date the President made his announcement; (2) the date the Senate received the nomination; (3) the date(s) the committee held hearings; (4) the date the nomination was ordered reported; and (5) the date on which the Senate confirmed the nomination. For two nominations made during the Clinton Administration, the nominations were withdrawn and not confirmed, as indicated in the table. Table A-2 in the Appendix provides the number of days elapsed between each of the steps listed in Table A-1 . The final two columns in the table present two different measures of the total duration of the appointments process. The first is the number of days elapsed from the President's official announcement of his intention to nominate the individual to Senate confirmation of the individual, provided he or she was confirmed. This number is provided in the second to last column of the table. The final column lists the second measure of the duration of the appointments process: the number of days from the Senate's receipt of the nomination to confirmation of the nomination. Sometimes there was a lapse between the President's announcement and his submission of the nomination, so including both measures is a more comprehensive approach. Finally, the rows at the bottom of the table present the mean (average) and median duration across all confirmed nominations for both measures. Ideally, a true measure of the duration of the appointments process would begin as soon as an individual is selected as a candidate for nomination and the vetting process commences. However, for a variety of reasons, data are not publicly available on timing of the early stages of the vetting process. Often the public may not be aware that an individual is being vetted for a position until the vetting process is partially or entirely compete, at which time the President makes a formal announcement of his intention to nominate the individual. Because of this lack of opportunity for measurement of the entire vetting process, the earliest publicly available point to begin measurement is the date on which the President formally announced his intention to nominate the individual. Sometimes the number of days elapsed during the Senate's consideration of a nomination is used as a proxy measure for how controversial a nomination is considered to be, or for the level of opposition to a nomination. However, the number of days elapsed during the Senate's consideration of a nomination may be affected by other factors as well, such as the Senate's or committee's overall workload, other legislative priorities, and committee and floor scheduling decisions. As the data in the Appendix tables demonstrate, the duration of the Senate's consideration of inter-term Cabinet nominations varied considerably during the presidencies covered in this analysis. As discussed above, several methods might be used to measure the duration of the appointments process. One method is to count the number of days elapsed from the President's announcement of his intention to make a nomination until its confirmation. A second method is to focus only on Senate consideration by counting the number of days elapsed from a nomination's receipt in the Senate to its confirmation. These first two methods provide alternative measures of the total duration of the nomination and Senate consideration process. A third method is to examine the number of days elapsed between individual steps within the process. Table 2 provides a summary of the information in the Appendix tables, by President, using the two different methods of counting the total duration of the nomination process. As shown in the first set of numerical columns in Table 2 , measuring from the date of announcement to the date of confirmation, the mean (average) number of days to confirm was 61.6, while the median was 53.0. In other words, approximately two months elapsed from the President's announcement of his intention to submit a nomination until Senate confirmation of that nomination during this period. Measuring from the date on which each nomination was received in the Senate, rather than from the date of announcement, the mean number of days elapsed before confirmation was 34.8. The median number of days from receipt to final action was 32.5. In other words, nominations to Cabinet positions during these inter-term transitions typically proceeded through the Senate confirmation process in just over a month, once the nomination was received in the Senate. While there was some variation among the four Presidents listed here, the duration of the nominations included in Table 2 does not, on average, tend to vary widely across Administrations as measured from the date of announcement. For each President, an average of approximately two months elapsed from time of announcement of the nomination to confirmation. The medians were lower than the means in all four cases, suggesting that the means were influenced, in each case, by at least one outlier (extreme value). There was more variation, however, in the second set of columns in the table: the measure of days to confirmation once the nomination was received in the Senate. The lowest average number of days for Senate consideration was for President Reagan, whose nominations were under Senate consideration for 22.2 days on average. The highest was for President Obama, whose nominations were under Senate consideration for 57.3 days on average. The median ranged from a low of 16.0 days for President Reagan to a high of 49.0 days for President Obama. The various methods of quantifying the length of Senate consideration of nominations are discussed more in detail in the sections below. As measured from date of announcement to confirmation, President Reagan's nomination of Edwin Meese III to be Attorney General had the longest duration: 156 days. This was in large part due to the fact that between the President's announcement and his submission of the nomination to the Senate, 105 days elapsed. Notably, the duration of Meese's nomination process for Attorney General was even longer than indicated by Table A-1 : Meese had been originally nominated to the post during the previous congressional session on February 3, 1984. The Senate Judiciary Committee held hearings on the nomination, but did not report it to the full Senate. In accordance with Senate rules, the nomination was returned to the President when the Senate adjourned sine die on October 18, 1984. Meese's confirmation was delayed by an investigation related to his financial relationships with some individuals who had obtained federal jobs with his assistance. An independent counsel, appointed by then-Attorney General William French Smith at Meese's request, cleared him of any violations of criminal law. President Reagan first mentioned his intention of renominating Meese on September 7, 1984, under the assumption that the report of the results of the investigation would not reveal any incriminating new information. The President formally announced his intentions on September 20, 1984, after the report's release, and Meese was confirmed to the post by a vote of 63-31 on February 23, 1985. Meese's 1984 nomination falls outside the transition period discussed in this report, and it is therefore not included in the Appendix tables. Using the same measurement of the duration of the consideration of nominations—from the date of announcement of the nominee until the nominee is confirmed—the nomination that took the least number of days was President Reagan's nomination of James A. Baker III to be Secretary of the Treasury. Presidential Reagan announced his intention to nominate Baker on January 8, 1985, and 21 days later, the Senate confirmed Baker by a vote of 95-0. Another measure of the duration of Senate consideration of nominations is to count the number of days elapsed from receipt of a nomination, rather than from the President's announcement of his intention to nominate. Using a measure of the Senate's receipt of the nomination to confirmation, the inter-term Cabinet nomination that took the longest to be confirmed was President Obama's nomination of Regina McCarthy to be Administrator of the Environmental Protection Agency in 2013. A total of 133 days elapsed from the receipt of McCarthy's nomination on March 7, 2013, until confirmation of her nomination on July 18, 2013. McCarthy was confirmed by a vote of 59-40. The Cabinet nomination made during an inter-term transition that proceeded most quickly from receipt to confirmation was also made by President Obama in 2013—the nomination of former Senator John F. Kerry to be Secretary of State. Seven days elapsed between the Senate's receipt of the nomination on January 22, 2013, and the confirmation vote on January 29, 2013. Kerry was confirmed by a vote of 94-3. Approximately one month elapsed after the President's announcement before he submitted the nomination to the Senate (32 days), and it is possible that the Senate committee may have begun preparing for its consideration of the nomination before the President formally submitted it. Another way to measure the duration of Senate consideration of nominations is to calculate the length of particular stages within the confirmation process—for example, the number of days elapsed from receipt of the nomination in the Senate (at which point it is immediately referred to committee) to the date on which a nominee's first hearing is held. The longest period that elapsed from the date a nomination was received to its first hearing was President Clinton's nomination of Alexis M. Herman to be Secretary of Labor in 1997. Seventy days elapsed from when the nomination was received on January 7, 1997, until the hearing was held on the nomination on March 18, 1997. In total, Herman's nomination was under consideration in the Senate for 113 days. Some of the discussion surrounding her nomination was related to her alleged involvement in campaign fundraising activities while employed at the White House. Herman was confirmed by a vote of 85-13. Tied for the fewest number of days elapsed from receipt in the Senate until the first hearing date was President Clinton's nomination of Madeleine K. Albright to be Secretary of State and President G. W. Bush's nomination of Carlos M. Gutierrez to be Secretary of Commerce. Both of those nominations received a hearing one day after they were received in the Senate. Albright's nomination was ultimately confirmed by a vote of 99-0, and Gutierrez was confirmed without a roll call vote. In other cases, a nomination might move through one or more stages of Senate consideration on the same day. For example, President Clinton's nomination of William S. Cohen to be Secretary of Defense had a hearing, was ordered reported, and was confirmed by a vote of 99-0, all on the same day. Two of President George W. Bush's nominations, the nominations of Mike Johanns to be Secretary of Agriculture and Margaret Spellings to be Secretary of Education, both had a hearing and were ordered reported on the same day. The Johanns and Spellings nominations were confirmed without a recorded vote two weeks after their nominations were reported.

Under the Constitution, high-level leadership positions in the executive branch are filled through appointment by the President "by and with the Advice and Consent of the Senate." These posts include most of the approximately two dozen that form the President's Cabinet, which is an institution established by custom, rather than by law. In recent decades, it has become customary for each two-term President to reshuffle his Cabinet during the inter-term transition—the transition that takes place at the end of a President's first term in office and beginning of his second term. Typically about half the Cabinet members change during this transition period. The appointments process for Cabinet and other advice and consent positions is generally considered to have three stages. In the first stage, the White House selects and clears a prospective appointee before sending a formal nomination to the Senate. In the second stage, the Senate initially relies on its committees to investigate each nominee and conduct hearings before taking up and deciding whether to approve the nomination. The Senate historically has confirmed most, but not all, Cabinet nominations. In the final stage of the appointments process, the confirmed nominee is given a commission bearing the Great Seal of the United States and signed by the President. Since 1984, four two-term Presidents—Ronald W. Reagan, William J. Clinton, George W. Bush, and Barack H. Obama—made 48 nominations to Cabinet positions during inter-term transitions. For the purposes of this report, CRS considered an inter-term nomination to be one made between November 1 of each President's reelection year and December 31 of the first year of his second term. In total, the Senate confirmed 46 of these 48 nominations; two nominations submitted by President Clinton were withdrawn during Senate consideration. The duration of the appointments process, including the pace of Senate consideration, of these Cabinet nominations during inter-term transitions varied considerably. The mean (average) number of days elapsed from Senate receipt of Cabinet nominations during inter-term transitions to final action was 34.8. The median number of days from receipt to final action was 32.5. The Appendix of this report lists the data used to calculate these statistics. As measured from the date of receipt in the Senate until the date of confirmation, the inter-term Cabinet nomination under Senate consideration for the shortest period was President Obama's nomination of former Senator John F. Kerry to be Secretary of State in 2013, which was confirmed after seven days. The nomination under Senate consideration for the longest period was President Obama's nomination in 2013 of Regina McCarthy to be Administrator of the Environmental Protection Agency, which was confirmed after 133 days. Another method of measuring the duration of the appointments process during inter-term transitions is to measure the number of days elapsed using, as a starting point, the date of the President's announcement of his intention to nominate the individual, rather than receipt of the nomination in the Senate. The mean (average) number of days elapsed using this methodology was 61.6, and the median was 53.0. This report will be updated as events warrant.

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The ability of unauthorized aliens to claim federal refundable tax credits has received considerable scrutiny. In a July 2011 study, the Treasury Inspector General for Tax Administration (TIGTA) reported that individuals who were not authorized to work in the United States received $4.2 billion by claiming the refundable portion of the child tax credit—the additional child tax credit (ACTC). The ACTC is available to working families with children under age 17. This issue is complicated by the differences in legal classifications of foreign nationals/aliens (e.g., "employment-authorized alien," "legal permanent resident," "resident alien," and "qualified alien") across the federal immigration, tax, and welfare laws. The TIGTA audit was based upon analysis of tax returns filed by persons with Individual Taxpayer Identification Numbers (ITINs). The Internal Revenue Service (IRS) issues ITINs to individuals who are required to have a taxpayer identification number for tax purposes but are not eligible to obtain a Social Security number (SSN) because they are not authorized to work in the United States. The number of tax forms filed with ITINs has increased from 1.55 million in 2005 to 3.02 million in 2010. It is unclear how many of these individuals who filed with ITINs were unauthorized aliens or part of mixed-status families that included U.S. citizens or legally present aliens as well as unauthorized aliens. This report opens with an explanation of refundable tax credits and follows with an overview of unauthorized resident aliens. The report proceeds to analyze the federal tax status of unauthorized aliens and their eligibility for refundable tax credits, including a legal analysis of whether refundable tax credits are "federal public benefits" under Section 401 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). The report concludes with a discussion of selected policy options. Tax credits allow taxpayers to reduce their tax liability dollar-for-dollar up to the value of the credit. Credits are either nonrefundable or refundable. By definition, the value of nonrefundable tax credits cannot exceed a taxpayer's income tax liability. In contrast, refundable tax credits can be larger than a taxpayer's income tax liability, with the taxpayer receiving the difference (or part of the difference in the case of partially refundable tax credits) as a cash payment from the IRS. As a result of this distinction, refundable tax credits can be claimed by taxpayers with little or no income tax liability, which includes many low-income tax filers. The existing refundable tax credits include the earned income tax credit (EITC); the additional child tax credit (ACTC), which is the refundable portion of the child tax credit; the American opportunity tax credit, which is a partially refundable credit for tuition and related expenses; the health coverage tax credit, which provides a credit for health insurance costs of qualifying individuals who receive trade adjustment assistance (TAA) or pension benefits under a plan taken over by the Pension Benefit Guaranty Corporation (PBGC); the credit for tax withheld on wages; the credit for tax withheld at source for nonresident aliens and foreign corporations; the credit for fuel excise taxes paid on fuel used for nontaxable uses; and the credit for overpayment of tax. Additionally, a premium assistance credit, provided under the Patient Protection and Affordable Care Act ( P.L. 111-148 ), will go into effect in 2014. There are also several refundable credits that have recently expired. These are the first-time homebuyer credit, the "recovery rebate" credit in the Economic Stimulus Act of 2008 (2008 stimulus credit), the Making Work Pay credit available in 2009 and 2010, and the adoption expenses credit, which was refundable for 2010 and 2011. Selected credits are summarized in Appendix A . The credits listed in the last four bulleted points above are essentially methods by which taxpayers receive refunds for overpayment of taxes. The other refundable credits can be broadly categorized into those whose value depends on the taxpayer's earnings and those whose value is based on the taxpayer's expenditures for a particular action or good, such as higher education or homeownership. Currently, the two largest refundable tax credits—the EITC and ACTC—fall into the former category and comprise an estimated 95% of the total amount of refundable credits claimed in 2009. These credits effectively subsidize low-wage work, providing additional money for each dollar of wages. In addition, both credits help mitigate the federal taxes that low-income workers pay. In many cases, these workers may not have sufficient income to incur an income tax liability, but they do pay payroll taxes (i.e., the taxes on wages that fund Social Security benefits under the Old-Age, Survivors, and Disability Insurance (OASDI) program and the Medicare hospital insurance (HI) program). For extremely low-wage workers, these credits may result in a net increase in income. For example, in 2011 (when the two-percentage point payroll tax reduction was in effect), taxpayers were directly subject to a payroll tax rate of 5.65%. If a taxpayer had $20,000 of earnings and one child, the taxpayer would owe $1,130 of payroll taxes and $410 of federal income taxes, for a total federal tax liability of $1,540, as illustrated in Figure 1 . This same taxpayer would be eligible for a $1,000 refund from the ACTC and a $2,565 refund from the EITC. Hence, in this example, the taxpayer would receive $2,025 as a refund. Figure 1 also highlights that while taxpayers begin paying payroll taxes on the first dollar they earn, the total amount of refundable credits they receive is greater than their total federal tax liability (net the non-refundable portion of the child tax credit) until taxpayers earn approximately $26,000. Hence, in this example, taxpayers making under approximately $26,000 actually see a net increase in their income as a result of these credits. For reference, in 2011 the poverty level for an adult under 65 with one child was $15,504. The migration and family patterns of unauthorized aliens residing in the United States are central to the question of their ability to claim refundable tax credits. Through the Immigration and Nationality Act (INA), foreign nationals enter the United States in two main categories: as legal permanent residents (LPRs) and temporary nonimmigrants. Unauthorized resident aliens are foreign nationals who overstay their nonimmigrant visas, foreign nationals who enter the country surreptitiously, or foreign nationals who are admitted on the basis of fraudulent documents. In all three instances, these unauthorized aliens are in violation of the INA and subject to removal. The actual number of unauthorized aliens in the United States is not known, as locating and enumerating people who are residing in the United States without permission poses many methodological problems. Estimates derived from the March Supplement of the U.S. Census Bureau's Current Population Survey (CPS) indicate that the unauthorized resident alien population was 11.2 million in 2010. The Pew Hispanic Center reported that 35% of unauthorized adults have resided in the United States for 15 years or more and that 28% have resided for 10 to 14 years. The report also found that the proportion of unauthorized aliens who have been in the country at least 15 years has more than doubled since 2000. Pew researchers have also found that unauthorized aliens tend to be younger than the U.S. population overall and more likely to be in the child-bearing and child-rearing years. As a consequence, nearly half—an estimated 46%—of unauthorized adults are parents of minor children. A significant portion of the households headed by unauthorized aliens may have U.S. citizen children, as well as spouses who may be legal permanent residents (LPRs). Researchers at the Pew Hispanic Center estimated that at least 9 million people were in "mixed-status" families that included at least one unauthorized adult alien and at least one U.S.-born child in 2010. Along with the approximately 1 million unauthorized aliens who are minor children, Pew researchers estimated that 4.5 million minor children were born in the United States to a family in which at least one parent was an unauthorized alien. As Figure 2 shows, the number of U.S.-citizen children with at least one unauthorized parent has more than doubled since 2000. The implications of these demographics for the refundable tax credits heighten the complexity of the debate to restrict such tax credits to those persons legally authorized to work in the United States. In a widely cited 2002 study of federal benefits that may have gone to households headed by unauthorized aliens, Steven Camarota concluded, "[M]any of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth ... greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them." Whether an unauthorized alien who is head of household is permitted to be the payee of a federal benefit for U.S. citizen children varies across programs. Another group of foreign nationals that adds a level of complexity are the "quasi-legal" migrants. More precisely, not all unauthorized aliens lack legal documents giving them permission to work in the United States, which leads many observers to characterize these documented aliens as "quasi-legal" migrants. There are certain circumstances in which the Department of Homeland Security issues temporary employment authorization documents (EADs) to aliens who are not otherwise considered authorized to reside in the United States. Foreign nationals with EADs, in turn, may legally obtain Social Security cards. These "quasi-legal" unauthorized aliens fall in several categories: The government has given them temporary humanitarian relief from removal, such as Temporary Protected Status (TPS). They have sought asylum in the United States and their cases have been pending for at least 180 days. They are immediate family or fiancées of legal permanent residents (LPRs) who are awaiting in the United States for their legal permanent residency cases to be processed. They have overstayed their nonimmigrant visas and have petitions pending to adjust status as employment-based LPRs. None of the aliens described above have been formally approved to remain in the United States permanently, and are not necessarily considered lawfully present. Many with pending cases who are ultimately denied LPR status may have legally obtained SSNs for the temporary periods they were permitted to work in the United States. In addition, some may also be part of mixed-status families who include persons with ITINs. The Internal Revenue Code (IRC) does not have a special classification for individuals who are not lawfully present in the United States. An unauthorized alien is, like all other foreign nationals, classified for tax purposes as a resident or nonresident alien. Resident and nonresident aliens are both subject to U.S. taxes—resident aliens are generally taxed in the same manner as U.S. citizens, while nonresident aliens are subject to special rules. In general, an individual is a nonresident alien unless he or she is a lawful permanent resident or is present in the United States for a sufficient number of days during the current and previous two years ("substantial presence test"). Thus, an unauthorized alien who has been in the United States long enough to meet the substantial presence test is classified as a resident alien; otherwise, he or she is generally classified as a nonresident alien. This classification is for tax purposes only and does not affect the individual's immigration status. For further information on classes of noncitizens eligible to work and possibly qualify as a resident alien, see Appendix B and Appendix C . Since aliens, including unauthorized aliens, are subject to federal taxes, they need a taxpayer identification number. A taxpayer identification number is a unique number that identifies an individual for tax administration purposes. For most individuals, their taxpayer identification number is their Social Security number (SSN). Under current law, SSNs may be issued to lawful permanent residents, aliens who are authorized to work in the United States, and other aliens who are required by federal or state law to have an SSN in order to receive certain public benefits. In FY2011, the Social Security Administration (SSA) issued 5.4 million new SSNs. Of those, 1.3 million were issued to noncitizens allowed to work in the United States and 28,622 were issued to legally present aliens who were not authorized to work. Prior to 1996, unauthorized aliens generally obtained SSNs for nonwork (tax administration) purposes from the SSA or were assigned temporary taxpayer identification numbers by the IRS. In 1996, due to inefficiencies with the temporary numbers and plans by the SSA to tighten the rules under which aliens could obtain nonwork SSNs, the IRS began issuing permanent individual taxpayer identification numbers (ITINs) to alien taxpayers who are not legally able to obtain SSNs. Thus, individuals who are ineligible for SSNs are supposed to file their federal tax returns using ITINs as their identifying numbers. For a discussion of trend data on SSNs issued to noncitizens, see Appendix D . As Figure 3 shows, the number of taxpayers filing with ITINs has increased over the past decade. A 2009 TIGTA audit reported, "(T)here has been a significant increase in the use of ITINs since the IRS began issuing them in Tax Year 1996." This audit specifically found a 246% increase from 530,000 in 2001 to more than 1.8 million in 2007. The 2011 TIGTA audit reported further increases in tax returns filed with ITINs. The initial rise in ITIN filings coincides with provisions in the various comprehensive immigration reform bills of the 2000s that would have required unauthorized aliens to demonstrate that they had paid taxes if they sought earned legalization or "amnesty." As Figure 3 shows, the 2011 audit captured a larger number of ITIN filers for 2007 than the 2009 audit did for 2007. The TIGTA offered this explanation that may account, in part, for the difference: Another reason for the increase is that a significant number of individuals are filing multiple claims to obtain the ACTC [Additional Child Tax Credit] for prior year tax returns (e.g., filing Tax Years 2007, 2008, and 2009 returns at the same time). In Processing Year 2010, approximately 238,000 ITIN filers submitted more than 608,000 tax returns for multiple years at the same time and claimed just more than a billion dollars in ACTCs on those returns. The ACTC claims for these individuals for the combined tax periods can be substantial. However, not all of these claims were refunded because of the statute of limitations rules that apply. These figures may not capture all tax payments by unauthorized aliens. Notably, unauthorized aliens who entered the country legally and had work authorization but who overstayed the terms of their admittance may have a valid SSN that was assigned to them. In addition, the Social Security Actuary estimates that 75% of unauthorized aliens who are working are paying the Federal Insurance Contributions Act (FICA) tax, and thus are using—either their own, someone else's, or a fraudulent—SSN. As a result, some unauthorized aliens appear to be paying federal income taxes using an SSN rather than an ITIN. In determining whether unauthorized aliens may claim the refundable tax credits, two questions arise. The first is whether these individuals are able to claim the credits under the federal tax laws found in the Internal Revenue Code (IRC). The second is whether any refundable tax credits are "Federal public benefits" under Section 401 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). If so, it could then be argued that the credit should be disallowed to any unauthorized alien even if the IRC does not contain any restriction. As illustrated in Table 1 , there are two ways in which the Internal Revenue Code restricts the eligibility of aliens to claim certain refundable tax credits. First, for some credits, Congress has expressly provided in the applicable IRC statute that nonresident aliens are prohibited from claiming that particular credit. Second, Congress has included express statutory requirements in the IRC that taxpayers provide their SSNs when claiming certain credits. For these credits, any alien—whether resident or nonresident—without an SSN would be ineligible to claim the credit. As shown in Table 1 , only the EITC currently requires that taxpayers provide their SSNs, along with those of their spouses (if filing a joint return), and any qualifying children. The SSNs must have been issued for work purposes. The 2008 stimulus credit and the Making Work Pay credit, both of which have now expired, contained a similar requirement, although they did not specify that the SSN be issued for work purposes. As discussed above, individuals who enter the United States illegally may not lawfully obtain SSNs, and therefore they would not be able to claim a credit with an SSN requirement. However, some resident aliens who are currently in the country without proper immigration documents were once lawfully admitted, but have overstayed their visas. These individuals may have lawfully received SSNs while they were authorized to be in the country, and could attempt to use the SSN to claim a credit. The statutes for the EITC, 2008 stimulus credit, and Making Work Pay credit do not make explicit reference to the SSN's current validity, although it appears Congress intended to restrict the credits to taxpayers with valid SSNs. Regardless, at this point in time, the IRS does not determine an individual's immigration status or whether a taxpayer with a facially valid SSN has overstayed his or her visa. The extent to which residents of the United States who are not U.S. citizens should be eligible for federally funded public aid has been a contentious issue since the 1990s. Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ( P.L. 104-193 ) established comprehensive restrictions on the eligibility of all noncitizens for means-tested public assistance, with exceptions for legal permanent residents (LPRs) with a substantial U.S. work history or military connection. The 1996 welfare law divided noncitizens into two general categories for purposes of benefit eligibility. The least restrictive category is that of qualified aliens , legal permanent residents, refugees, aliens paroled into the United States for at least one year, and aliens granted asylum or related relief. The 1996 immigration law added certain abused spouses and children as another class, and P.L. 105-33 added Cuban-Haitian entrants. The other, more restrictive, category is that of non-qualified aliens . It consists of other noncitizens, including unauthorized aliens, nonimmigrants (i.e., aliens admitted for a temporary purpose, such as education or employment), short-term parolees, asylum applicants, and various classes of aliens granted temporary permission to remain. Regarding unauthorized aliens in particular, Section 401 of PRWORA barred them from any federal public benefit except the emergency services and programs expressly listed in Section 401(b). This overarching bar to unauthorized aliens hinges on how broadly the phrase "federal public benefit" is construed. The law defines this phrase to be (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. So defined, this bar covers many programs whose enabling statutes do not individually make citizenship or immigration status a criterion for participation. Thus, unauthorized aliens are statutorily barred from receiving benefits that previously were not individually restricted—Social Services Block Grants and migrant health center services, for example—unless they fall within the 1996 welfare act's limited exceptions. PRWORA also amended the IRC to impose an SSN requirement for claiming the EITC. The provision is aimed at preventing unauthorized aliens from claiming the credit by requiring EITC recipients (and spouses) to file their taxes with SSNs that are valid for employment in the United States. The question has been raised whether any of the refundable tax credits are federal public benefits under PRWORA Section 401. If so, then the argument could be made that unauthorized aliens should be ineligible to receive them, regardless of whether the Internal Revenue Code restricts their eligibility. There is no indication that the IRS considers any refundable tax credits to be subject to PRWORA Section 401. It does not appear the agency has issued any regulations, rulings, or other guidance on this issue. If the IRS were to permit unauthorized aliens to claim any refundable credit that does not include a statutory SSN requirement, as appears to be the case currently, then there is a serious question as to whether that position could be challenged in court. Judicial review of such interpretation would be possible only if challenged by a person with sufficient standing. So long as no taxpayer is denied a credit, it seems unlikely anyone would have standing to sue since it appears doubtful that anyone would be personally injured (a necessary prerequisite for standing) by the IRS's decision to allow the credit. Further, taxpayers generally do not have standing to bring suit by alleging that they, as taxpayers, were harmed by the government's payment of funds from the public fisc in violation of law. Therefore, if the IRS does not interpret Section 401 to apply to refundable tax credits, it is unlikely that this interpretation could be challenged in court. If, however, the IRS were to deny a refundable tax credit to an unauthorized alien due to PRWORA Section 401, then that individual would theoretically have standing to challenge the denial in court. Assuming an unauthorized alien were willing to challenge the denial, a key question would likely be whether the IRS took such a position through a regulation promulgated through notice-and-comment rulemaking or by some other method (e.g., through issuance of a revenue ruling or internal agency memorandum). This is important because courts grant varying levels of deference to agency interpretations of statutes when examining questions such as whether an agency's rulemaking is in excess of its delegated statutory authority or whether the agency interpreted a statute correctly when promulgating a rule. When a statute is open to differing interpretations, as some may argue is the case with PRWORA Section 401 (as discussed below), the level of deference given to the agency's interpretation often plays a pivotal role in determining whether a reviewing court upholds it. The highest level of deference that a court may afford to an agency interpretation is known as Chevron deference, after the case in which the Supreme Court first articulated the standard. It applies when an agency's interpretation is the product of a formal agency process, such as notice-and-comment rulemaking, through which Congress has authorized the agency "to speak with the force of law." A court conducting a Chevron analysis first looks at whether Congress has "directly spoken to the precise question at issue." If the court determines that Congress has done so, then that is the end of the matter because the "law must be given effect." But if the statute does not directly address the issue, then "the court does not simply impose its own construction of the statute," but rather determines whether the agency interpretation is a permissible construction of the statute. If so, the court will generally defer to the agency's position, regardless of whether "it is the only possible interpretation or even the one a court might think best." A court would likely give a lower level of deference to an IRS interpretation of PRWORA's applicability to refundable tax credits if done through some other means, such as issuance of a revenue ruling or other guidance. Courts generally give a lower level of deference to less formal agency interpretations, largely because they are typically not subject to a notice-and-comment period. The level of deference given agency interpretations such as revenue rulings varies, depending on such things as "the degree of the agency's care, its consistency, formality, and relative expertness, and … the persuasiveness of [its] position." Looking at these factors, revenue rulings, which are official interpretations of the tax law by the IRS, are generally provided some deference. However, a court that found a ruling's reasoning unpersuasive would not be bound by it. An IRS position expressed in other types of documents might receive even less deference. A court faced with the issue of whether refundable tax credits are federal public benefits under PRWORA Section 401 would likely begin by examining the statutory language at issue. The Supreme Court often recites the "plain meaning rule," that, if the language of the statute is clear, there is no need to look outside the statute to its legislative history in order to ascertain the statute's meaning. Generally, statutory text is the ending point as well as the starting point for interpretation. Looking at the statutory language of Section 401, the definition of "federal public benefit" lists several types of payments or benefits (e.g., grants, contracts, and loans), but does not expressly include any refundable tax credits or other tax benefits. Thus, the question here seems to be whether refundable tax credits are included in any of the items expressly listed—specifically, whether they would be considered to be a "grant" provided by a federal agency under Section 401(c)(1)(A) or a "benefit" that is "provided to an individual, household, or family eligibility unit" by a federal agency under Section 401(c)(1)(B). When the meaning of specific statutory language is at issue, courts often need to consider the meaning of particular words or phrases. If the word or phrase is defined in the statute or elsewhere in the U.S. Code, then that definition governs if applicable in the context used. If not, courts typically look to see if the term has an accepted meaning in the area of law addressed by the statute, was borrowed from another statute where it had an accepted meaning, or had an accepted and specialized meaning at common law. In each of these situations, the accepted meaning governs and the word or phrase is considered a technical term or "term of art." Here, there appears to be no statutory definition applicable to the law's use of "grant" described in Section 401(c)(1)(A) or "benefit" described in Section 401(c)(1)(B). None of the key terms are defined in PRWORA, and they do not appear to be terms of art. Furthermore, while language similar to Section 401 is found in several other statutes, it does not appear any court has examined whether those statutes apply to refundable tax credits. Under the principles of statutory interpretation, words and phrases that are not terms of art or defined by statute are customarily given their ordinary meanings, often derived from the dictionary. Assuming that a court does not find "grant" or "benefit" to be terms of art, the court may be inclined to give them their ordinary and customary definitions. The Oxford Dictionaries, for example, define the term "grant" as "a sum of money given by an organization, especially a government, for a particular purpose." The language used in Section 401(c)(1)(B) is similarly defined (e.g., the Oxford Dictionaries define "benefit" as "a payment made by the state or an insurance scheme to someone entitled to receive it" and "assistance" as "the provision of money, resources, or information to help someone"). Looking at these definitions, it seems likely a court would find that at least some of the refundable tax credits would not be treated as federal public benefits. To the extent that the definitions of the key terms in PRWORA Section 401 evoke the concept of the government providing some type of assistance, it seems unlikely they would be interpreted to include the refundable credits in IRC Sections 31, 33, 34, and 37. This is because the taxpayers claiming these credits have essentially paid more tax than required, and the credits are merely the means by which the government gives the taxpayer his or her money back. Thus, they seem fundamentally different from the types of payments or benefits listed in Section 401, and it seems unlikely they would be treated as "grants" or "benefits." Furthermore, the government's refusal to pay over the refunds might be challenged as a violation of the Fifth Amendment of the U.S. Constitution, which could also influence a court's reading of Section 401 since courts generally try to interpret statutes to avoid constitutional issues. For the other refundable tax credits, it might be argued that their refundable nature could justify their falling within the plain language meaning of "grant" or "benefit." In such case, it seems that a court, having concluded that a refundable credit is a "grant" under Section 401(c)(1)(A), could then determine that the provision's other criteria are met (i.e., that the payment was "provided by" a federal agency since it came from the Treasury Department). Similarly, a court concluding that a refundable credit is a "benefit" under Section 401(c)(1)(B) might find that the provision's other criteria are met, including that it be "provided to an individual, household, or family eligibility unit by" a federal agency. Furthermore, it seems possible that a court could find that at least some refundable credits could be classified as a type of listed benefit (e.g., welfare, health, or postsecondary education). A court might find support for such a conclusion in case law where courts have looked at whether refundable tax credits are welfare-type benefits for purposes of other laws. For example, some courts have found the EITC to be public assistance for purposes of state law because of its refundable nature and purpose of assisting low-income families. However, other courts have held that the child tax credit is not such a benefit since, unlike the EITC, it is not limited to assisting low-income families. As these cases illustrate, a court might not reach the same conclusion with respect to each credit, finding that some would meet the criteria while others would not. On the other hand, it is possible a court could determine that no refundable tax credits are federal public benefits under Section 401 based on the fact that the provision does not explicitly include refundable tax credits, and, as discussed below, there is no clear evidence in the legislative history that Congress intended such credits to be treated as federal public benefits. This could lead a court to conclude that Congress did not include them in the list of named federal public benefits because it understood them to be excluded (i.e., that the express inclusion of specific types of benefits or payments on the list means Congress intended to exclude anything not listed). Furthermore, one could argue that refundable tax credits are not federal public benefits because tax benefits are not traditionally thought of as the types of "grants" or qualifying "benefits" referred to in Section 401. Additional support for the argument that the credits are not federal public benefits could be found in PRWORA Section 432(a), which directs the Attorney General to consult with the Secretary of Health and Human Services when promulgating regulations for verifying the immigration status of applicants for federal benefits. Because the section does not require consultation with the Treasury Department, it could be evidence that Congress did not intend any tax provisions to be considered federal public benefits. Finally, additional support might be found in other congressional action, specifically the fact that Congress included in PRWORA an SSN requirement for the ETIC and subsequently enacted legislation to impose an SSN requirement for the 2008 stimulus credit and Making Work Pay credit. It might be argued that these actions would be unnecessary had Congress believed that the PRWORA Section 401 applied to refundable tax credits. To the extent that a court reaches the conclusion that any refundable tax credits are not federal public benefits under PRWORA Section 401, then it would appear that unauthorized aliens would be able to claim such credits absent a provision in the Internal Revenue Code explicitly requiring an SSN or disallowing the credit to those individuals (e.g., the IRC expressly disallows some credits to nonresident aliens). In light of the statutory silence, it is possible, although not guaranteed, that a court might look to the provision's legislative history for evidence of congressional intent. PRWORA's legislative history does not clarify whether refundable credits are federal public benefits. The report language describing the law as it existed prior to PRWORA refers to one refundable credit—the EITC: Current law limits alien eligibility for most major Federal assistance programs, including restrictions on, among other programs, Supplemental Security Income, Aid to Families with Dependent Children, housing assistance, and Food Stamps programs. Current law is silent on alienage under, among other programs, school lunch and nutrition, the Special Supplemental Food Program for Women, Infants, and Children (WIC), Head Start, migrant health centers, and the earned income credit [emphasis added]. This statement shows that Congress was aware of the EITC's existence, but does not offer solid evidence of congressional intent to treat it as a federal public benefit, particularly since the statute has been interpreted not to include some of the other programs listed (e.g., Head Start) as benefits under Section 401. It does not appear that there are any other references to the EITC in the legislative history of Section 401. Section 451 of PRWORA intends to disallow the credit to unauthorized resident aliens by amending the IRC to require that EITC claimants provide the SSNs of themselves, their spouse (if filing a joint return), and qualifying children. Thus, Section 451 explicitly addresses the issue seemingly raised by the above report language concerning the eligibility of unauthorized aliens to claim the EITC. This is arguably not responsive to the question of whether the EITC is a federal public benefit under Section 401. On the one hand, it may be unclear why Congress would have felt the need to include Section 451 if Section 401 had already precluded receipt of the EITC by unauthorized aliens. On the other hand, it is possible to interpret Section 451 as an enforcement mechanism—that is, Congress intended for Section 401 to cover the EITC and enacted Section 451 as a way to prevent unauthorized aliens from claiming the credit. The legislative history is silent on this matter. In light of the legislative history's silence, it is uncertain the extent to which a court would find the history to be useful in addressing the issue at hand. This might be especially true in light of the modern view of statutory interpretation that focuses on the language of the statute itself, which would appear to marginalize whatever insight legislative history or other extrinsic aids might provide. Thus, a court might be hesitant to place any significance on the statute's minimal and ambiguous legislative history, particularly since it does not clearly evidence congressional intent one way or the other. In conclusion, until the IRS or a court addresses this issue, it is not possible to say whether any refundable tax credits are federal public benefits under PRWORA Section 401. Thus, at this time, the only clear restriction on the ability of unauthorized resident aliens to claim any refundable credits is the one provided in the IRC for the EITC since it includes a SSN requirement (the now-expired Making Work Pay and 2008 stimulus credits contained a similar requirement). Unauthorized nonresident aliens, meanwhile, are also expressly prohibited in the IRC from claiming those three credits, as well as several others (e.g., the American opportunity tax credit). If there are concerns with the implementation of current law, there are a variety of policy options that could address them. These options could range from clarifying that unauthorized aliens are permitted to claim refundable tax credits to enacting a categorical bar preventing unauthorized aliens from obtaining refundable tax credits. Potential policy options include the following: Amending the IRC to require SSNs of all filers claiming refundable tax credits. A related option would be to amend the IRC to require SSNs of all filers claiming tax credits, not just those that are refundable. This may be particularly relevant to tax credits, like the child tax credit and the American Opportunity Tax Credit, that have both refundable and non-refundable components. In either case, the scope of the SSN requirement (i.e., who would be required to provide the SSN—the taxpayer, the spouse if married filing jointly, and/or the qualifying dependents, if applicable) could impact the ability of some families—especially mixed status families where certain members have SSNs and others do not—to claim the credits. Amending the IRC to absolutely bar unauthorized aliens from claiming refundable credits (similar to the existing IRC provisions that deny eligibility for certain refundable tax credits to nonresident aliens). Amending the IRC to enable mixed immigration status families to obtain a partial amount of refundable tax credits for those members of the filing household who are legally authorized to reside and work in the United States. For example, the value of the credit could be prorated for the proportion of taxpayers who meet the specified criteria (e.g., if three of the four individuals claimed on a tax return have SSNs, the taxpayers would be eligible for 75% of the total value of the credit). Amending Section 401 of PRWORA to clarify that refundable tax credits are not "federal public benefits" and therefore the only bar to unauthorized aliens claiming such credits would be those found in the IRC. Amending Section 401 of PRWORA to expressly include refundable tax credits among the listed "federal public benefits" so that unauthorized aliens would be ineligible to claim the credits even if the IRC were silent on the matter. Authorizing and appropriating funds to the IRS and DHS to facilitate the cross-checking of data on immigration status and tax returns to identify unauthorized aliens claiming credits for which they may not be eligible. When considering these policy options, it should be noted that the existing refundable tax credits are not monolithic and serve different purposes. There may be policy or other reasons to distinguish among them with respect to the eligibility of unauthorized aliens to claim them. In particular, the refundable credits which are effectively refunds of overpayment of taxes would probably have to be treated differently than the others since denying them could raise constitutional concerns. Appendix A. Overview of Selected Refundable Tax Credits Appendix B. Classes of Noncitizens and Their Eligibility to Obtain Social Security Numbers and to Qualify as a Resident Alien Appendix C. Selected Categories of Nonimmigrants Who Are Permitted to Work There are categories of foreign nationals who are not LPRs but who may be working and residing in the United States for periods of time sufficient to qualify under the Internal Revenue Code's "substantial presence" test (and thus are classified for tax purposes as resident aliens , unless there are specific treaty agreements between the United States and their country of citizenship). The classes of nonimmigrants who are expressly permitted to work in the United States include the following: E treaty traders and investors; H temporary workers; NAFTA temporary workers; Certain F foreign students who have obtained permission; J and Q cultural exchange visitors; L intracompany transfers; K fiancés of U.S. citizens; O and P extraordinary athletes, entertainers, and performers; R religious workers; T trafficking victims; U crime victims; and V family members waiting for more than three years. Spouses and minor children of the qualifying nonimmigrant may accompany the alien on a related visa, but in most instances are not given permission to work. Appendix D. Social Security Numbers (SSNs) Issued to Noncitizens As Figure D -1 shows, in FY2011 there were 1.3 million original SSNs issued to noncitizens. The total number of original SSNs issued to noncitizens peaked at 1.8 million in FY1996. In the previous decade, the number of SSNs issued to noncitizens ranged from a peak of 1.5 million in FY2001 to a low of slightly less than 1.2 million in FY2005. Over time, there has been a substantial change in composition of the noncitizen population receiving SSNs. For example, in FY1992, SSA issued SSNs to 200,136 aliens who had permanent work authorization (e.g., LPRs) comprising 12% of the total number of SSNs issued to noncitizens. In FY2011, there were 619,577 aliens with permanent work authorization who received SSNs, which accounted for 49% of all SSNs issued to noncitizens. In addition, as discussed previously, in FY1996 and FY2001, SSA tightened the rules under which aliens could obtain nonwork SSNs. Corresponding with these changes, large declines in the number of nonwork SSNs issued can be seen between FY1996 and FY1997 (325,629 to 141,472), and between FY2001 and FY2002 (72,224 to 25,169). In FY2011, SSA issued 28,622 nonwork SSNs.

In 2011, the Treasury Inspector General for Tax Administration (TIGTA) reported that individuals who were not authorized to work in the United States received $4.2 billion by claiming the refundable portion of the child tax credit—the additional child tax credit (ACTC). The ACTC is available to working families with children under age 17. The report sparked considerable concern that unauthorized aliens were obtaining refundable tax credits. The TIGTA audit was based upon an analysis of tax returns filed by persons with Individual Taxpayer Identification Numbers (ITINs). The Internal Revenue Service (IRS) issues ITINs to individuals who are required to have a taxpayer identification number for tax purposes but are not eligible to obtain a Social Security number (SSN) because they are not authorized to work in the United States. All aliens, including those who are in the country illegally, are generally subject to federal taxes under the Internal Revenue Code (IRC), and even income illegally obtained is subject to taxation. A refundable tax credit is one where the taxpayer may receive a payment from the IRS that exceeds his or her tax liability. Examples include the earned income tax credit (EITC), the additional child tax credit, the American opportunity tax credit, and the health coverage tax credit. While the EITC requires SSNs of all recipients, the other existing credits, including the ACTC, do not. Similarly, several now-expired credits included an SSN requirement, while others did not. Apart from any SSN requirement, the IRC also expressly prohibits nonresident aliens from claiming some refundable credits. In addition to the specific provisions of the IRC, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 (P.L. 104-193) bars unauthorized aliens from any federal public benefit except certain emergency services and programs. So defined, this bar covers many programs whose enabling statutes do not individually make citizenship or immigration status a criterion for participation. The legal question arises as to whether any refundable tax credits are federal public benefits, which under PRWORA unauthorized aliens should be barred from receiving. There is no indication that the IRS considers any refundable tax credits to be subject to PRWORA Section 401. Looking to the statutory text, it is arguably unclear whether refundable credits should be treated as federal public benefits, although there is a strong argument that at least some should not (e.g., the credit for taxes withheld). It does not appear that any court has examined this issue or that the IRS has issued guidance on it. The EITC and ACTC are the largest refundable tax credits—in 2009 taxpayers claimed $53.0 billion and $27.5 billion of each credit, respectively—and primarily benefit working families with children. Estimates derived from the March Supplement of the U.S. Census Bureau's Current Population Survey (CPS) indicate that the unauthorized resident alien population was 11.2 million in 2010. The Pew Hispanic Center reported that two-thirds of the unauthorized resident alien population have resided in the United States for 10 or more years. The report also found that the proportion of unauthorized aliens who have been in the country at least 15 years has more than doubled since 2000. Pew researchers have also found that unauthorized aliens tend to be younger than the U.S. population overall and more likely to be in the child-bearing and child-rearing years. As a consequence, an estimated 46% of unauthorized adults are parents of minor children.

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T he National Aeronautics and Space Administration (NASA) was created in 1958 by the National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. It has four mission directorates. The Science Mission Directorate manages robotic science missions, such as the Hubble Space Telescope, the Mars rover Curiosity, and satellites for Earth science research. The Aeronautics Research Mission Directorate conducts research and development on aircraft and aviation systems. The Space Technology Mission Directorate develops new technologies for use in future space missions, such as advanced propulsion and laser communications. The Human Exploration and Operations Mission Directorate is responsible for human spaceflight activities, including the International Space Station and development efforts for future crewed spacecraft. In addition, NASA's Office of Education manages formal and informal education programs for school children, college and university students, and the general public. While Congress is generally supportive of most NASA programs, government-wide fiscal constraints make funding decisions challenging. This report presents an overview and selected highlights of NASA's proposed FY2017 budget and the FY2017 appropriations legislation reported by the House Committee on Appropriations ( H.R. 5393 , H.Rept. 114-605 ) and the Senate Committee on Appropriations ( S. 2837 , S.Rept. 114-239 ). Pending final action on FY2017 appropriations for NASA, the Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ) provides continuing appropriations at 99.8% of the FY2016 level through April 28, 2017. This report will be updated as Congress takes additional action on FY2017 appropriations legislation. The Administration has requested $19.025 billion for NASA in FY2017. This amount is 1.3% less than the FY2016 appropriation of $19.285 billion. The House bill would provide $19.508 billion. The Senate bill would provide $19.306 billion. See Table 1 . Unusually, the FY2017 request includes $763 million in mandatory funds. The Administration explains this as follows: The President believes that arbitrary funding caps are harmful to the economy and the Nation. Although the recent Bipartisan Budget Act provided important relief from sequester cuts, the constrained top line for discretionary funding, especially in FY 2017, has made it difficult to appropriately fund important national priorities, including research and development. In the FY 2017 Budget, the President proposes fully-paid-for one-year mandatory funding to accelerate progress in Science, Aeronautics, Space Technology, and Exploration, as well as additional multi-year mandatory funding for Aeronautics to support research and development for low carbon emission aircraft, including associated transportation systems, as part of a multi-agency effort to enable a 21 st century clean transportation system. Typically, NASA receives no more than a few million dollars per year of mandatory funding. In FY2015, for example, it received $2 million for Space Operations from the Spectrum Reallocation Fund and $1 million from the Science, Space, and Technology Education Trust Fund. The discretionary portion of the FY2017 request, $18.262 billion, would be 5.3% less than the FY2016 appropriation. The House and Senate bills include no mandatory funding. There is no authorized level for NASA appropriations in FY2017. The most recent authorization act (the NASA Authorization Act of 2010, P.L. 111-267 ) authorized appropriations through FY2013. The NASA Authorization Act for 2016 and 2017 ( H.R. 2039 , ordered reported by the House Committee on Science, Space, and Technology in April 2015, but not yet reported) the NASA Transition Authorization Act of 2016 ( S. 3346 , passed by the Senate on December 10, 2016), and the NASA Transition Authorization Act of 2016 ( H.R. 6531 , introduced December 20, 2016) include proposed authorization amounts for FY2017. The FY2017 request for the Science Mission Directorate is $5.601 billion, an increase of 0.2% from FY2016. Within this total, funding for Earth Science, Astrophysics, and Heliophysics would increase, while funding for Planetary Science and the James Webb Space Telescope would decrease. As shown in Table 1 , the House bill would provide $4 million less than the request, while the Senate bill would provide $206 million less. Relative to the request, the House bill would shift more than $300 million from Earth Science to Planetary Science. In contrast, most of the Senate bill's decrease would be in Planetary Science. Within Earth Science, the request includes $131 million (up from $100 million in FY2016) for the Landsat-9 land imaging satellite. Launch is anticipated "as early as" 2021. NASA previously proposed the Thermal Infrared Free Flyer, a lower-cost satellite intended to reduce the risk of a gap in data availability prior to the launch of Landsat-9. Congress rejected funding for the Thermal Infrared Free Flyer in the FY2016 appropriations cycle, and the mission is not included in the FY2017 request. The House report directs NASA to prioritize funds for Landsat-9 and to evaluate commercially available data in the event of a data gap in the Landsat program. The Senate report recommends the requested amount for Landsat-9 and directs NASA to provide a plan detailing the technical and schedule progress needed for a 2020 launch date. Within Planetary Science, the request includes $50 million (down from $175 million in FY2016) for a mission to Jupiter's moon Europa. Although a mission to Europa was a high priority of the 2011 National Research Council (NRC) decadal survey of planetary science, the NRC expressed reservations about its anticipated cost. For several years, Congress has appropriated more for formulation of a Europa mission than NASA has requested. As directed by the Consolidated Appropriations Act, 2016, NASA's FY2017 congressional budget justification includes a five-year estimate of the funding required assuming a 2022 launch (see Table 2 ). The justification states that "the notional outyear profile in the Budget may support a launch as early as the late 2020s, assuming the mission concept and scope remain stable.... Acceleration of the launch to 2022 is not recommended, given potential impacts to the rest of the Science portfolio." The House report recommends at least $260 million for Europa orbiter and lander missions, with the orbiter launch no later than 2022 and the lander launch no later than 2024. The Senate report calls for "an expeditious launch and reduced travel time" in order to maximize the scientific return of a Europa mission, but it does not specify a funding level or a launch date. It directs NASA to provide a report on options for the mission "to assist the Committee in evaluating potential mission configurations." The FY2017 request for the Aeronautics Research Mission Directorate is $790 million, an increase of 23.5% from FY2016. The request includes New Aviation Horizons (NAH), a new initiative of experimental aircraft and systems demonstrations. NAH projects on subsonic aircraft would receive $100 million in mandatory funding from the President's proposed 21 st Century Clean Transportation Plan. An additional $56 million in mandatory funding would fund a low-boom supersonic flight demonstrator. As shown in Table 1 , the House bill would provide $78 million less than the request for Aeronautics, while the Senate bill would provide $189 million less. The House committee's recommendation includes $61 million (of discretionary funds) for a low-boom flight demonstrator. The House and Senate committee reports both direct NASA to work with the Federal Aviation Administration on research related to the integration of unmanned aerial systems in the National Airspace System. The FY2017 request for the Space Technology Mission Directorate is $827 million, an increase of 20.4% from FY2016. Space Technology was first established as a separate account in FY2011. Each year since then, the Administration has proposed to increase Space Technology funding. Congress has provided increases each year except FY2014, but always less than the Administration's request. Proposed mandatory funding of $136 million would account for almost all of the requested increase in FY2017. The bulk of the mandatory funding would support technology demonstration missions, including the Restore-L satellite servicing mission for which Congress appropriated $133 million in FY2016. As shown in Table 1 , the House bill would provide $88 million less than the request for Space Technology, but more than the FY2016 appropriation, while the Senate bill would provide the FY2016 amount. The Senate committee report recommends $130 million for Restore-L. The House and Senate committee reports both identify nuclear propulsion research and a small launch technology demonstration platform as funding priorities. The Human Exploration and Operations Mission Directorate (HEOMD) is funded by two appropriations accounts: Exploration and Space Operations. The FY2017 request for Exploration is $3.337 billion, a decrease of 17.2% from FY2016. The request for Space Operations is $5.076 billion, an increase of 0.9%. As shown in Table 1 , the House and Senate bills would both provide significantly more than the request for Exploration and somewhat less than the request for Space Operations. The Exploration account primarily funds development of the Orion Multipurpose Crew Vehicle and the Space Launch System (SLS) heavy-lift rocket, the capsule and launch vehicle mandated by the NASA Authorization Act of 2010 for future human exploration beyond Earth orbit. The account previously also funded development of a commercial crew transportation capability for U.S. astronaut access to the International Space Station (ISS), but Congress transferred this activity to Space Operations in FY2016. Within Exploration, the FY2017 request for Orion, the SLS, and related ground systems (known collectively as Exploration Systems Development) is $2.860 billion, a decrease of 22.3% from FY2016. The bulk of the reduction would be for SLS launch vehicle development, which would receive $1.263 billion, down 35.2% from $1.950 billion in FY2016. According to NASA, the SLS program remains on track for a first test flight carrying Orion but no crew (known as EM-1) in November 2018. The launch readiness date for the first flight of Orion and the SLS with a crew on board (known as EM-2) continues to be FY2023. The increases for Exploration in the House and Senate bills, relative to the request, would fund the SLS at the FY2016 level (in the House bill) or higher (in the Senate bill). The House and Senate reports both recommend funding for development of the SLS Exploration Upper Stage (EUS)—$250 million and $300 million, respectively—which is not included in the Administration request. The House report specifies that none of the funds in the House bill are for the Asteroid Redirect Mission, which was first proposed in the FY2014 budget and which has faced ongoing opposition in Congress. The Space Operations account primarily funds operational human spaceflight: the ISS, transportation of crew and cargo to and from the ISS, and formerly the space shuttle program. It also funds the Space and Flight Support program, which consists of launch site operations, space-to-ground communications, and other support activities. Because Congress gave limited direction about how the FY2016 appropriation for Space Operations should be allocated, it is difficult to determine how the allocation of the FY2017 request compares to FY2016. The FY2017 budget is the first to highlight Space Transportation (to and from the ISS) as a top-level item within Space Operations. In previous budgets, the cost of U.S. commercial cargo flights to the ISS and payments to Russia for Soyuz flights carrying ISS crews were subcategories within the ISS budget. Meanwhile, the program to develop a U.S. capability for commercial transportation of ISS crews was funded in the Exploration account. These functions are now combined in the request for Space Transportation. The House and Senate bills would provide $186 million less and $125 million less, respectively, than the request for Space Operations. For the most part, the committee reports do not specify how the recommended funding should be allocated. However, the Senate report does note that its total includes $1.185 billion for Commercial Crew, the same as the request. The balance of funding between Exploration Systems Development and the Commercial Crew program has been contentious. Before the FY2017 request, recent Administration budgets proposed to decrease funding for Exploration Systems Development while increasing funding for Commercial Crew. NASA argued that the amounts it requested for the Commercial Crew program were necessary to maintain the scheduled availability of commercial crew transportation to the ISS starting in 2017. It noted that without a U.S. commercial capability, it would need to pay Russia for additional Soyuz flights (although it has also stated that it will likely purchase some additional Soyuz flights in any case). Meanwhile, NASA officials stated that the schedule for the EM-1 test flight would be difficult to accelerate, even with additional funding, because it depends on technical requirements such as engineering design and manufacturing schedules and the need for adequate testing. Congressional supporters countered that the Orion and SLS programs were not receiving the funds they needed, and many saw this pattern as demonstrating a difference in human spaceflight priorities between Congress and the Administration. Congress has generally appropriated less than the Administration's request for Commercial Crew and more for Exploration Systems Development. In the FY2017 request, the Administration is again requesting a reduction for Exploration Systems Development, especially the SLS, but it appears to be requesting approximately the FY2016 amount for Commercial Crew (although the FY2016 allocation of Space Operations funds is not yet clear). The House and Senate bills would again provide more than the request for Exploration Systems Development, but the Senate bill would provide the requested amount for Commercial Crew. The House report does not specify a recommended allocation for Commercial Crew. The FY2017 request for the Office of Education is $100 million, a decrease of 13.0% from FY2016. Programs of particular congressional interest include the National Space Grant College and Fellowship Program ($24 million), the Experimental Program to Stimulate Competitive Research (EPSCoR, $9 million), and the Minority University Research Education Program (MUREP, $30 million). Note that not all NASA education activities are managed or funded by the Office of Education. For example, the request for Astrophysics in the Science Mission Directorate includes $25 million for science, technology, engineering, and mathematics (STEM) education. However, recent Administration initiatives to consolidate and reorganize STEM education activities across the government (see CRS In Focus IF10229, The Changing Federal STEM Education Effort , by Heather B. Gonzalez) appear to have reduced NASA's efforts outside the Office of Education. Most notably, the previous Science Mission Directorate policy, under which 1% of all Science mission funding was allocated to education and public outreach, is no longer in effect. As shown in Table 1 , the House and Senate bills would both provide more than the request for the Office of Education: $115 million and $108 million, respectively. Within these totals, both would provide the FY2016 amounts for Space Grant ($40 million), EPSCoR ($18 million), and MUREP ($32 million). For education activities in the Science Mission Directorate, the House report recommends $37 million, while the Senate report recommends $42 million. The three remaining NASA appropriations accounts fund cross-cutting, supporting, and oversight activities. The FY2017 request for Safety, Security, and Mission Services, which funds management and operations at the NASA centers and NASA headquarters, is $2.837 billion, an increase of 2.5% from FY2016. In part, this increase reflects the transfer of funding from other accounts to support the consolidation of NASA information technology services. The request for Construction and Environmental Compliance and Remediation is $420 million, an increase of 7.9%. The request for the Office of Inspector General is $38 million, an increase of 1.9%. The House and Senate recommendations for these accounts are shown in Table 1 .

The National Aeronautics and Space Administration (NASA) was created in 1958 by the National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. It has four mission directorates. The Science Mission Directorate manages robotic science missions, such as the Hubble Space Telescope, the Mars rover Curiosity, and satellites for Earth science research. The Aeronautics Research Mission Directorate conducts research and development on aircraft and aviation systems. The Space Technology Mission Directorate develops technologies for use in future space missions, such as advanced propulsion and laser communications. The Human Exploration and Operations Mission Directorate is responsible for human spaceflight activities, including the International Space Station and development efforts for future crewed spacecraft. In addition, NASA's Office of Education manages formal and informal education programs for school children, college and university students, and the general public. While Congress is generally supportive of most NASA programs, government-wide fiscal constraints make funding decisions challenging. The Administration has requested $19.025 billion for NASA in FY2017. This amount is 1.3% less than the FY2016 appropriation of $19.285 billion. Unusually, the FY2017 request includes $763 million in mandatory funds. The House bill (H.R. 5393) would provide $19.508 billion. The Senate bill (S. 2837) would provide $19.306 billion. Neither bill includes mandatory funding. The FY2017 request for the Science Mission Directorate is $5.601 billion, an increase of 0.2% from FY2016. Within this total, funding for Earth Science, Astrophysics, and Heliophysics would increase, while funding for Planetary Science and the James Webb Space Telescope would decrease. The House bill would provide $5.597 billion for Science, while the Senate bill would provide $5.395 billion. Within these totals, the bills differ considerably in their allocation of funding between Earth Science and Planetary Science. The FY2017 request for the Aeronautics Research Mission Directorate is $790 million, an increase of 23.5% from FY2016. The request includes New Aviation Horizons (NAH), a new initiative of experimental aircraft and systems demonstrations. The House and Senate bills would provide $712 million and $601 million, respectively, for Aeronautics. The FY2017 request for the Space Technology Mission Directorate is $827 million, an increase of 20.4% from FY2016. The House and Senate bills would provide $739 million and $687 million. For the Human Exploration and Operations Mission Directorate, the FY2017 request for Exploration is $3.337 billion, a decrease of 17.2% from FY2016, while the request for Space Operations is $5.076 billion, an increase of 0.9%. The Exploration request includes $1.263 billion, a decrease of 35.2%, for Space Launch System launch vehicle development. Funding for the Commercial Crew program (formerly requested in Exploration) is combined with funding for operational cargo and crew transport to the International Space Station in a new Space Transportation item within Space Operations. The House bill would provide $4.183 billion for Exploration, including $2.000 billion for SLS development, and $4.890 billion for Space Operations. The Senate bill would provide $4.330 billion for Exploration, including $2.150 billion for the SLS, and $4.951 billion for Space Operations. The FY2017 request for the Office of Education is $100 million, a decrease of 13.0% from FY2016. The House and Senate bills would provide $115 million and $108 million, respectively. The request would reduce funding for the National Space Grant College and Fellowship Program, the Experimental Program to Stimulate Competitive Research, and the Minority University Research Education Program. Both bills would fund these programs at their FY2016 levels.

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It is surprisingly difficult to measure marriage penalties and bonuses. The measure of the marriage penaltyrequires a counterfactual: what would the combinedtaxes of the two spouses be if they were not married? Unfortunately, there is no simple answer to this questionbecause marriage itself tends to be a life-changingevent. Indeed, the answer may be different if the question is: "What would the tax be if the spouses had nevermarried?" rather than "What would the tax be if thecouple divorced?" These issues become much more important for certain types of married couples. Most coupleswould not have had children without marriage,and having children can dramatically reduce tax liability. In divorce, who gets custody of children can alter taxliability. Never marrying would probably alsohave altered career paths (and thus the amount of earned income of each partner), savings behavior (and thus theamount of unearned income), the allocation ofsavings and consumption into different types (including tax exempt forms such as owner occupied housing that alsotend to affect the choices of itemizingdeductions). Getting divorced would probably also alter these effects, unless the divorce were solely for purposesof tax minimization. The decision about how to measure the marriage penalty does not alter the effects of the two proposals (which are still determined with reference to the marriedcouple's joint circumstances), but rather the original magnitude and remaining magnitude. In the next section we calculate the marriage penalty in general for couples without considering the effects of children, where there is much less uncertainty abouthow to measure the penalty. The following section discusses the issues surrounding marriage penalties for couples. Despite all of the attention focused on marriage penalties, it may be surprising to know that for the middle class,marriage penalties are small or nonexistent,particularly in cases where the penalty is well-defined. According to data from the Internal Revenue ServiceStatistics of Income, about 60% of joint returns thathave tax liability before credits paid taxes at the 15% rate in 1997; for these taxpayers, the marriage penalty can beno larger than $225 (measured at 2001 incomelevels). For taxpayers who itemize and whose itemized deductions are at least as large as the combined standarddeduction for two singles, no penalty exists at all. The "middle class" is typically defined very broadly and in this section we discuss effects that cover taxpayers with marginal tax rates of 15% (covering 60% oftaxable returns and 51-52% of all returns) and with marginal tax rates of 28% (covering 26.2% of taxable returnsand 23% of all returns). Overall this broad rangecovers all but the bottom 12-14% of returns that have a zero marginal tax rate and the top 12% or so. (For thebottom, the 12% refers to no liability before creditsand the 14% with no liability after credits; since the earned income credit, but not other credits is refundable, thenumber with a zero marginal tax rate falls inbetween.) Thus, roughly speaking, these taxpayers represent the broad range of the middle three quarters of thedistribution of joint returns. The following examples, based on 2001 income levels, assume that all income is taxable, and assume a constant rule for the choice of itemizing deductions, sothere is a switch at the point of itemizing. Note that these assumptions overstate the marriage penalty as a fractionof economic income, particularly at the top andbottom of the distribution. At these ends of the distribution, untaxed or preferentially taxed income (transferpayments at the lower end and capital gains anduntaxed income, such as tax exempt interest at the higher end) is common. The middle class also has higher incomesthan adjusted gross income indicates,primarily due to untaxed fringe benefits. Note also that the marriage penalties assume evenly divided income wheremarriage penalties are usually at theirmaximum, especially at higher levels of income. (2) Table 1 shows the marriage penalties from the regular income tax for returns falling in the 15% bracket, representing slightly more than the bottom two thirds ofour "middle class." (It excludes the earned income credit (EIC).) These returns assume income is evenly splitbetween the couples. The income points are chosento show peaks and valleys of the penalty as a percentage of income. The highest level of the marriage penalty asa share of income is reached at the exempt levelfor singles, $14,900 in 2001. But for most joint returns, the marriage penalty is relatively small. Both the secondearner credit, and lower rates, in theAdministration proposal would reduce the marriage penalty (and in cases where taxpayers itemize, turn it into abonus). H.R. 6 would eliminate thepenalty, as would optional filing. Table 2 shows the maximum marriage penalties for returns falling in the current 28% bracket. These returns can be affected by the width of the 15% bracket aswell as the standard deduction, and their marriage penalties peak at about 1.6% of income (again, assuming thatincomes are evenly divided). Table 1: Marriage Penalty as a Percentage of Income, Returns in the 15% Tax Bracket, No Children (ExcludesEIC) Note: Assumes income is evenly split. Assumes itemized deductions at 18.8 % of income. 60% of joint returns with tax liability fell in the 15% bracket in 1997.Note that equally divided incomes can produce smaller penalties or larger bonuses under the Administrationproposal because of the second earner deduction. With incomes divided in a way to create the full penalty under current law and minimize the second earnerdeduction the penalty would be 0.4% at $21,240 and $30,000, and 0.3% at $40,425, but would become a bonus of -0.2% at $48,404 and then gradually decline in value. Table 2: Marriage Penalty As a Percentage of Income, Even Earnings Split, Returns in the 28% Bracket, NoChildren Note: Maximum marriage penalty assumes income is evenly split. Assumes itemized deductions at 18.8 % ofincome. 26% of joint returns fell in the 28%bracket in 1997. H.R. 6 is designed to eliminate the marriage penalty arising from standard deductions and rate brackets, so the penalty is zero in each case. However,the administration proposal virtually eliminates the penalty as well. For the 15% bracket, the peak of the penaltyas a percentage of income comes just as thetaxable level for two singles is reached ($14,900). At this point, the current marriage penalty of $225 is 1.5% of income. The lower rates of 10% for the first$12,000 of taxable income reduce the penalty to $150 and the second earner deduction reduces it further, to $75. As the second earner deduction increases, andthe likelihood of itemizing deductions increases, there is actually a net benefit. Optional filing would also eliminatepenalties. Because the second earner deduction is actually larger the more evenly divided incomes are, there could be a smaller effect, as noted in the footnote to Table 1. Regardless of how it is calculated, however, it is clear that the Administration proposal virtually eliminates thesmall marriage penalty that currently exists. The same is true of the 28% bracket shown in Table 2. The maximum marriage penalty as a percentage of income is reached at the top of the 28% bracket for twosingles (and income of $73,768). This penalty is reduced by the second earner deduction until it is only 2/10 of apercent of income. Again, H.R. 6 in most cases eliminates the marriage penalty, although it does not do so entirely because of the phase outs ofitemized deductions and personal exemptions thatbegin at $132.750. When looking at the marriage penalty, therefore, it is clear that both the Administration proposal and H.R. 6 are approaches that eliminate or virtuallyeliminate these middle class marriage penalties, with H.R. 6 being more precise, but with the Administrationproposal being quite successful. The more important differences arise from the effects of the two proposals on marriage bonuses. Table 3 illustrates the marriage bonus (at its maximum) for therelatively common case of the one-earner family. As this table illustrates, marriage bonuses tend to be larger thanpenalties, and are a significant fraction ofincome. Bonuses begin at the exempt level for a single individual. Bonuses reflect both the higher standarddeduction for joint returns compared to a singleindividual, as well as the additional personal exemption associated with the non-earning spouse. The Administration proposal and its rate cuts lower the marriage bonus at very low income levels, because it lowers the rates from 15% to 10%. However, theproposal creates a new type of bonus because the new 10% rate bracket is twice as wide for joint returns as forsingles, a feature that may have been chosen toavoid increasing the marriage penalty. This new bracket, in fact, follows the general approach used in H.R. 6 , but limited to the new 10% bracket. Inthis income category, however, H.R. 6 increases the marriage bonus at lower and moderate income levels onlybecause it increases the standarddeduction. Hence at the points where deductions are itemized, H.R. 6 has smaller bonuses than theAdministration proposal. Optional filing, ofcourse, would not affect bonuses. In addition to the comparison of H.R. 6 and the Administration proposal, a fourth column has been added calculating the effects of combining H.R. 3 and H.R. 6 , that is, keeping the rate structure of the Administration proposal but altering thestandard deduction and 15% ratebracket to make them double the width of the single bracket. These results indicate that choosing this approach,given the rate structure, would lead to higherbonuses than those with the second earner deduction and higher bonuses than in present law in many cases. Table 4 shows the one-earner bonus for returns in the 28% bracket. In this case the bonuses tend to be smaller for the Administration proposal than either forcurrent law, or for H.R. 6 . That effect occurs because of the lower rate, 25%, which offsets the effect of the10% bracket H.R. 6 ,however, expands the bonus because it increases the 15% rate bracket for married couples to twice that of singles. Table 3: One Earner Marriage Bonus as a Percentage of Income, Returns in the 15% Bracket, NoChildren Table 4: One Earner Marriage Bonus as a Percentage of Income,Returns in the 28% Bracket, NoChildren Note: Assumes itemized deductions at 18.8 % of income. 26% of joint returns fell in the 28% bracket in 1997. For lower income individuals, the tax system still has an impact through the earned income credit, and marriage penalties can arise from this system as twoindividuals who marry can be phased out of the EIC. For example, a married couple without children with equalearnings and total income at the filing thresholdwould have a marriage penalty of 4.6% of income due to the phase-out of the EIC. Of course, an equal split at theselow combined income levels would implyvery low annual earnings, probably reflecting part time work. These measures would, however, be much larger inthe case of couples with children where the EICis much larger. Marriage bonuses can also occur with the EIC, if an individual without children and earnings marries someone with children and little or no earnings. None of the proposals includes significant changes in the earned income tax credit. H.R. 6 has a percentage increase in the earned income tax creditfor joint returns as compared to single and head of household, while the bill that passed last year increased thephase-out threshold by $2,000. (The final billincluded an increase in the phase-out threshold of $3,000). These proposals would not have very large effects, andboth would increase bonuses slightly whilereducing penalties slightly. This decision may reflect in part how difficult it is to address the marriage penalty in the case of the EIC where targeting poor families via their total income isparamount. If we simply allowed even the most targeted of the proposals, optional filing, and even ignoring theconsequences of children, we could find coupleswith very large incomes becoming eligible for the EIC. (A similar point could be made for an additional "secondearners" credit.) For example, a family with acombined income of $100,000 where one spouse earned a low salary (say $8,000) would be eligible for the EICwhich does not phase out until slightly over$10,000. This issue would become even more complicated given the larger EICs with children, where the phase outends at slightly over $28,000 for one child and$32,000 for two children. Thus, relatively wealthy families could become eligible for the EIC. Nor do the alternatives become more palatable. To double the phase out points of the EIC, using the same approach as H.R. 6 for marriage penaltyrelief in the regular income tax system, would mean that families with children and with $60,000 or more wouldbe eligible for the credit. Nor is the approach ofincreasing the credit itself very effective, since the problem is the phase out and not the level of the credit. Higher income couples, representing the top 12-13% of the income distribution, present their own problems in assessing the marriage penalty, even in the absenceof children. First, as incomes increase, the possibility of excluded income and of capital gains income taxed at flatrates increases. For couples in the 15% bracketabout 3% of income is from capital gains; for couples in the 28% bracket perhaps 6% to 10% of income is fromcapital gains (based on the closest matches toincome categories). At higher income categories, the share that was in capital gains rises to 20%, 30% and 60% ofincome. In 1997, half of the individuals in thisupper part of the distribution had a top marginal tax rate that was due to capital gains. Any penalties that arise fromexisting law would, therefore, be lower as apercentage of income than the penalties listed in table 2, and hence effectively eliminated by either approach for halfof these taxpayers. Secondly, problems about the division of non-wage and unearned income become more important, particularly at the very high end. Adjusted gross income rangesfrom $141,000 to $171,000 for the 31% bracket, and up to $368,000 for the 36% bracket. While about 80% ofincome in the $50,000 to $100,000 class is fromwages, only 70% of the $100,000 to $200,000 class is from wages, and the share declines until it reaches less than30% for income over $1,000,000. In addition, an equal distribution, or even close to equal, distribution of income between the spouses becomes much less likely in the upper end of the distribution,so that illustrations based on even incomes would be much less representative of typical two earner couples. Thus,while calculations of bonuses might be morerealistic, calculations of penalties would be misleading. Despite these uncertainties that make illustrative examples problematic, it is clear that the penalties in most of these higher income categories are not very large,and will decline. For the 31% bracket, which includes about 3.3% of joint returns, the maximum penaltiesassuming even division of income and full taxabilitybegin at about 0.9% of income, rise to a peak of 1.3% and then fall to 1.2% at the top of the bracket; theadministration proposal will reduce those penalties to0.3%, largely because the former 28% and 31% brackets are now combined into a single 25% bracket. Most of thepenalty that would now apply in this group isdue to the itemized deduction phase out and not rate brackets. (A proposal by Senate Finance Committee ChairmanGrassley and Ranking Member Baucus wouldmake the former 31% bracket subject to a 28% rate, however, which would restore the marriage penalty effectbecause it reflects the differences in the two rates. The same proposal, however, would increase the itemized deduction phase-out start point, reducing the penalty andalso includes the H.R. 6 proposals). H.R. 6 would actually leave slightly larger penalties than the Administration proposal in manycases, beginning at 0.1% but rising fairlyquickly, with a peak of 0 .7%, then declining to 0.6%. These penalties occur because the other brackets are notcorrected; penalties would be quite similar tothose in the Administration proposal, however, if H.R. 6 were combined with H.R. 3 . Bonuses wouldalso be reduced by theAdministration proposal in general, and would be increased by H.R. 6 . At higher levels, penalties would remain, although they will be reduced by both bills, but these remaining taxpayers account for only 3% of taxpayers. As noted in the previous section, couples with children present serious problems in modeling marriage penaltiesand bonuses. The presence of children in ahousehold can dramatically alter tax liabilities. Children justify a head of household rate schedule which has widerbrackets than the single return, implying alarger penalty and smaller bonus as compared to joint return than would be the case in comparing single and jointreturns. Children increase personal exemptionsand, if under 17, make the taxpayer eligible for a child credit. Earned income credits, which reach much further upthe income brackets and are much larger,accrue with children. Thus, how children are divided between the spouses can have profound consequences for taxliability. At least five potential ways of allocating children's tax consequences might be considered and several have been specifically used in studies. Some of them aremost plausible when thinking of a married couple divorcing rather than never marrying; others are most plausiblewhen thinking of a couple never marrying. (1) The Tax Minimization Model. This model assumes that the children are allocated in a way that minimizes tax liability. If a couple has two children and hassimilar incomes, for example, each would take custody of one of the children and move to a separate household sothat both could obtain head-of-householdstatus. This was the basic approach used initially in the economics literature and by the Congressional BudgetOffice in its study of the marriage penalty. (3) Thischoice tends to lead to the largest measures of penalties and the smallest measure of bonuses. Obviously, as anoptimization strategy, this approach has someshortcomings because it requires not only the emotional and social costs of a sham divorce but also increasedeconomic costs (maintenance of two households) toachieve tax minimization. Except for very high income taxpayers, such a strategy would be unlikely to be followed. (2) Resource Pooling Tax Minimization Model. This model, developed by Treasury, assumes that taxminimization is modified to keep economic costsunchanged, so that divorced individuals continue to share the same household and otherwise maintain theireconomic relationships; i.e. they would be unmarriedcohabitators. (4) Only one parent (the one with thehighest income) would be able to claim head of household status. (3) Divorce Model. This model, used as an alternative by both Treasury and CBO, would allocate children in a way typical of most divorces, where the childrenare allocated to the lesser earning spouse (who is typically the mother). Treasury finds that this model produces anaggregate $28.9 billion net bonus for allcouples, compared to the $1.6 billion net penalty they find in their tax minimization model. (4) Ignore Head of Household Status. In this view, head of household status may be seen as a specialdispensation to help single parents and should not beviewed as the standard against which to measure the marriage penalty. The allocation of children (and their personalexemptions and credits) would still matterfor measuring bonuses and also for measuring penalties where incomes tend to be disparate. One might say thisview is implicit in H.R. 6 and othercongressional proposals where the changes are made to match the single return, not the head of household return. A similar argument might be made for childcredits. (5) Ignore Children. This view would argue that the counterfactual for most couples would be that they would not have had children had they not married. In thiscase the marriage penalties and bonuses would be the same as in the previous section, except there might berecognition that married couples with children willnot have tax liabilities at higher incomes. Because it is impossible to assess these bonuses we do not present tables of penalties and bonuses as we did for single individuals, and it is impossible to makegeneral observations. Nor is it easy to choose a model, in large part because the rationale for the concern about themarriage penalty. In the next section, however,we suggest that common rationales for concern about the marriage penalty would suggest a focus on lower incomeindividuals and then discuss the parameters ofthese bonuses and penalties under various alternatives. As noted at the end of the previous section, part of the uncertainty surrounding the measurement of a marriage penalty is that the reason for being concerned aboutthe penalty has not been clearly articulated. There are two potential reasons to be concerned about the marriagepenalty: fairness and incentives. If the marriage penalty is a case of concern about fairness, then there is a trade-off. There is considerable evidence to suggest that married couples are alreadybeing taxed somewhat more lightly than singles with the same ability to pay, but that in general the system isrelatively even handed. (5) (Families with children aretreated more generously whether headed by married couples or singles.) Thus, any unfairness in the marriagepenalty must arise from the comparison of marriedcouples with cohabitating couples. However, the numbers of these latter groups are very small. According to March1998 Census data, there were 197 millionpeople over 18, and 110 million were married. However, of the 87 million unmarried individuals (some nevermarried, some widowed, and some divorced) onlyabout 8.5 million were living with unmarried partners of the opposite sex. Thus, at most one would be increasinginequities between the 110 million marriedcouples and the slightly under 80 million single individuals, in order to more evenly treat the 110 million relativeto the 8.5 million. Such a fairness argumentdoes not hold up well, especially since some married couples, in fact a significant fraction, receive a bonus frombeing married. Using a "divorce" model(discussed above), CBO found that 37% of married couples have penalties and 60% have bonuses. Thus, simplylowering tax rates for joint returns wouldprobably magnify the existing average favorable treatment of married couples relative to cohabitatingindividuals. It would stress the pursuit of "fairness"between a minority of married couples and a tiny minority of singles, at the cost in increasing the discrepanciesbetween much larger groups. Another reason to be concerned about the marriage penalty is the incentive structure which, again, may cause individuals to cohabitate rather than marry. Thisconcern may be more legitimate, but it is probably of much greater importance for certain types of couples. Ofcourse, the relatively small number of cohabitatingcouples, and the fact that most of them are probably cohabitating for reasons other than tax consequences suggestthat not very many people are discouraged frommarriage or encouraged to engage in a divorce, because of the tax consequences. In particular, it is likely that mostmiddle income individuals would not see thefinancial incentives as large enough to divorce, and that the presence of children, in particular, would make thatoutcome less likely. The characteristics of cohabitating couples also differ from those of married couples in general. About half of married couples have children, but only about athird of cohabitating couples have children; cohabitating couples tend to be relatively young. While no data directlyreport the poverty rates among this group, it islikely that a larger fraction of families with children is not subject to regular income tax liability. These familieswould file tax returns as heads of households orsingles, and the fraction of these groups, particularly heads of household, that do not pay taxes, is higher than in thecase of singles. In 1997, about 35% of head ofhousehold returns had no tax liability before credits, while only 12% of joint returns had no tax liability; 21% ofsingle returns had no tax liability. Data on child poverty are also instructive. In a study that focused on cohabitating couples based on the 1990 census, the poverty rate even after taking intoaccount earnings of both partners was 26.9%, compared to a poverty rate of 5.8% for children whose parents aremarried. (6) If even for those not in poverty, alarge fraction of these families tended not to be much above the poverty line. Another 19% of children would beclassified as poor by considering only one of thepartners, and when income was combined, the average income was only 1.75 times the poverty line. Since thecurrent tax system excludes families with childrenwell above the poverty line from tax and since public assistance received by these families and counted as incomewould not be taxable, it is likely that asignificant fraction of these families do not incur a regular income tax liability. These data do suggest that if our concern is about a comparison to cohabitating couples, there are two important groups: couples, mostly young, who do not havechildren and, in the case of couples with children, mostly lower income couples. The Administration proposal will further remove these families with children from concerns about the tax system, because of the lower rate of 10% and theincreased child credit. Under current law, a family with one child would have no tax liability until income reached$19,633 (assuming that all income is taxable);a family with two children would not have tax liability until income reached $25,866. Under the Administrationproposal, with the larger child credit, theseamounts will rise to $27,684 and $38,456, amounts close to the poverty level, and closer to the income levels whereitemized deductions tend to displace standarddeductions. Thus, a marriage penalty or bonus will be feasible for only a small slice of families in the 15% bracketwhose incomes are high enough to be taxablebut who do not itemize. And even in this case, considering the head-of-household schedule for one of the spouses,the marriage penalty can be no larger than$540. Looking at maximum values, for a $30,000 couple, the penalty would be 1.8%, which would be reduced to$220 (0.7% of income) by the Administrationproposal and to $315 (1.1%) under H.R. 6 . These amounts will decrease as incomes rise and, again, becomesubsidies for itemizers. These taxpayers,along with those with no liability, account for approximately the bottom two-thirds of the joint returns. These couples may experience a penalty due to the earned income credit, but, as noted earlier, none of the proposals are really focused on the EIC and it is difficultto devise a way of correcting for marriage penalties without undermining much of the purpose of the EIC. Andhigher income individuals are not particularlycomparable to most cohabitating couples with children. This analysis of the effects of legislative proposals on the marriage penalty indicates that for the middle class,the marriage penalty, which is already relativelysmall, will be essentially removed by the rate reductions and second earner exemptions in the administrationproposal, capturing essentially the same penaltyelimination objective of the original marriage penalty legislative proposals in the previous Congress. The proposalwill also reduce marriage penalties in thehigher brackets by a larger amount than H.R. 6 standing alone. This result is a natural outcome of the ratereduction and flattening in the President'sproposal, and explains why marriage penalty relief in the form of a second earner deduction was eliminated whenrate were flattened in 1986. H.R. 6 , the congressional marriage penalty proposal, would, however, increase existing marriage bonuses, while the administration proposal wouldreduce them. H.R. 6 combined with the rate cuts and credits portion of the proposal passed by the House as H.R. 3 would increasemarriage bonuses compared to the Administration proposal with the second earner deduction, and in many caseswould increase bonuses compared with currentlaw. Since the final bill included rates cuts similar to those in H.R. 3 , there will be some increase in marriagebonuses, but since the top rates werenot cut as much there will be less reduction in the bonuses at higher income levels.

President Bush's tax proposal and H.R. 6 (passed by the House) have different approaches to the marriage penalty. The Administration proposal, inaddition to rate changes, has a second-earner deduction for 10% of income (up to $30,000) earned by the lowerearning spouse. H.R. 6 wouldincrease the standard deduction and width of the 15% rate bracket for joint returns to twice the size of singles,eliminating the penalties for taxpayers in the 15%and 28% brackets but adding to any marriage bonuses. This report compares these alternative proposals. ( H.R. 1836 , signed by the President on June7, includes these latter proposals along with rate cuts). Taxes can go up or down as a result of marriage, depending on the income of the two spouses. These penalties and bonuses arise from the progressive taxstructure and the decision to impose taxes on a household basis. For much of the middle class, marriage penalties are low. For couples without children, the maximum marriage penalty at 2001 income levels for the 60% oftaxable returns subject to the 15% marginal rate in 1997 is $225; most couples that itemize have no penalty at all. The second-earner deduction in theadministration proposal virtually eliminates the marriage penalty for these couples. Even in the 28% rate, whichcovers another 26% of taxable returns, the secondearner deduction along with the flatter rates results in no or negligible penalties. Overall, these taxpayers accountfor the middle 75% of joint returns. Taxpayerswith children could have small remaining penalties, depending on how penalties are defined. Most of those in the15% bracket who might have still havepenalties that are significant relative to income are removed from the tax roles entirely through the additional childcredits. Lower income couples may incur penalties through the Earned Income Credit (EIC) under either proposal, although it is difficult to address EIC marriage penaltiesand bonuses. The 12% of taxpayers in higher brackets may have remaining penalties. A large fraction of thesereturns do not have large penalties because theirmarginal tax rate is the flat capital gains tax rate. Any penalties are substantially reduced or eliminated, however,due to the lower rate structure in theAdministration proposal. The important difference between H.R. 6 and the Administration proposal is that H.R. 6 expandsmarriage bonuses in most cases whilethe Administration proposal generally reduces them due to flatter tax rates. H.R. 6 combined with rate cutswould increase bonuses in comparison tothe Administration proposal and, in many cases, in comparison to current law. Measurement of the marriage penalty for couples depends on the allocation of children for tax purposes. When married couples are compared with cohabitatingsingles, where issues of incentives and fairness suggest attention be focused, cohabitating singles are less likely tohave children and when they do, have lowincomes unlikely to be subject to regular income tax. Thus, the issues of measuring the marriage penalty forfamilies may be relatively unimportant. This reportwill be updated to reflect legislative developments. .

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As the role of lawyers in most countries has evolved from advocates regulated by local courts and their rules to legal advisors for transactions in economic activities, the increase in cross-border provision of legal services led to the inclusion of such services in the trade agreements and negotiations under the WTO, over the objections of some countries. The scope of agreements under the WTO has expanded over the years to cover issues and sectors not traditionally considered to fall within trade laws and regulations through periodic multilateral negotiations that are called "rounds," the latest being the Doha Round. The commitments the United States has made and may make in current and future negotiations could affect domestic regulation of the legal profession, including ethical issues. Legal services are classified as part of professional services, which in turn are under the business services sector covered by the General Agreement on Trade in Services (GATS), concluded as part of the Uruguay Round of the General Agreement in Tariffs and Trade that created the WTO. Under the GATS, WTO countries undertake obligations with regard to all service sectors, including most-favored-nation treatment (MFN) under GATS Article II; transparency under GATS Article III; the notice and publication of relevant domestic laws and measures; judicial or administrative review of domestic regulation under GATS Article VI(2); and recognition agreements under GATS Article VII. In addition to the general obligations under the GATS, the United States included legal services in its schedule of commitments under the GATS; not all WTO countries included legal services in their schedules. Such schedules set forth specific additional obligations made by a WTO country with respect to specific service sectors, including any limitations or qualifications to obligations undertaken. These obligations include market access under GATS Article XVI, national treatment under GATS Article XVII, and any other additional commitments under GATS Article XVIII, including those regarding qualifications, standards or licensing matters. A schedule also summarizes obligations as they apply via four modes of supply—(1) cross-border supply, the ability of non-resident service suppliers to supply services cross-border into a WTO country; (2) consumption abroad, the ability of a WTO country's residents to buy services located in another WTO country; (3) commercial presence, the ability of foreign service suppliers to establish a branch or representative office in a WTO country, sometimes referred to as the right of establishment; and (4) movement of natural persons, the ability of foreign individuals to enter and stay in a WTO country's territory to supply a service. The U.S. schedule sets forth its obligations in terms of limitations and qualifications under the laws and/or rules governing the practice of law by foreign lawyers and foreign law firms in each of the States, the District of Columbia, the U.S. territories, and before certain federal agencies, such as patent prosecution before the U.S. Patent and Trademark Office (USPTO). As part of the sectors subject to WTO negotiations in the Doha Round, legal services are potentially subject to changes. Indeed, several members have sought concessions from the United States regarding legal services. Such changes could affect the laws and rules governing foreign lawyers and foreign law firms in each of the 50-plus jurisdictions in the United States and the federal agencies. Such laws and rules comprise the bar admission of lawyers who are admitted to practice in a foreign jurisdiction or who are foreign nationals and the eligibility of foreign legal consultants and foreign firms to provide legal services in the United States. Rules regarding foreign legal consultants may address the applicability to such consultants of ethics rules and disciplinary procedures for attorneys. The European Union, which together with the United States has the most active trade in legal services among WTO members, is seeking several new legal services concessions from the United States. One significant change sought by the European Union is to eliminate the requirement in the U.S. states and territories that qualified U.S. lawyers providing legal services must be "natural persons," not law firms or other organizational/corporate persons. This apparently is not a requirement in some other WTO countries. The EU and the United States also propose eliminating the U.S. requirement that an attorney admitted to the patent bar for the purpose of prosecuting a patent before the USPTO must be a U.S. citizen. In addition, there has been consideration of whether disciplines (WTO parlance for certain guidelines) on domestic regulation in the legal services sector should be adopted and applied. This may be accomplished by negotiation of a discipline specific to legal services or by application of the existing Disciplines on Domestic Regulation in the Accountancy Sector to legal services. Under GATS Article VI(4), disciplines on domestic regulation are developed "[w]ith a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services." Disciplines aim to ensure that requirements are not more burdensome than necessary to ensure quality of service and that licensing procedures are not per se restrictions on the supply of the service. After the accountancy disciplines were developed and adopted, there was active consideration and debate about whether they should be extended to legal services, which the International Bar Association recommended against. Any substantive Doha Round concessions or any agreement to a legal services discipline by the United States would obligate it, under GATS Article I(3)(a), to take reasonable measures to ensure that each of its political subdivisions observes such agreements. This could pose federalism issues, since the rules governing practice in a state are a matter for the highest court of a state or for its legislature and not traditionally a matter for federal legislation or policy. The U.S. Trade Representative (USTR) does not make WTO commitments with which the United States is not in a position to comply. This is the reason the current schedule of commitments notes obligations in terms of which states have certain requirements, such as in-state residency for licensure. In accordance with §102 of the Uruguay Round Agreements Act (URAA), the USTR has consulted with several states concerning the negotiating position of the United States on legal services, apparently to consider what changes these states would be amenable to observing. If the United States were to commit to liberalizing the rules for foreign lawyers or firms to provide legal services in the United States, any related complaint against the United States could be brought only by another WTO country and would be resolved through the WTO dispute settlement system. An individual foreign attorney or firm could not bring a complaint because disputes can only be brought by one WTO country against another WTO country. Nor could an individual attorney or firm bring a suit domestically for noncompliance with a WTO obligation. WTO agreements are not self-executing international agreements, so obligations under those agreements must be implemented through domestic legislation or other domestic measures. Section 102 of the Uruguay Round Agreements Act (URAA) provides that only the United States may bring an action to declare a state law invalid because it is inconsistent with an Uruguay Round agreement and that no private person may challenge a state or local law or other measure on the grounds that it is not consistent with an Uruguay Round agreement. The global nature of business, including legal services, and its continued growth has necessitated the consideration and adoption of rules concerning multijurisdictional practice of law. In 2007, 71 persons were licensed as foreign legal consultants in the United States across 16 jurisdictions. Twenty-nine jurisdictions have a rule permitting the licensing of foreign legal consultants. Some adopted a version of the ABA Model Rule on Foreign Legal Consultants (first approved in 1993, most recently revised in 2006), itself modeled on the New York rule first adopted in 1974. Others adopted their own rule differing significantly from the ABA Model Rule. The ABA Model Rule provides that foreign legal consultants may be licensed to provide certain legal services in a jurisdiction without an examination, if they are members in good standing in a recognized legal profession in a foreign country. They are not actually admitted as members of the bar in the host jurisdiction in the United States and are prohibited from providing certain services, such as appearing in court to represent a client or giving advice on U.S. law or a state law in the United States. Foreign legal consultants would be able to provide advice on the laws of their foreign home countries. Additionally, five jurisdictions have rules that expressly refer to temporary practice by foreign lawyers, some similar to the ABA Model Rule for Temporary Practice by Foreign Lawyers (approved in 2002). This ABA Model Rule provides that foreign lawyers not admitted in a U.S. jurisdiction may provide legal services in that jurisdiction in certain circumstances, including, among others, where they are working with a lawyer admitted to practice in that jurisdiction or where they are advising clients with regard to legal proceedings in a foreign jurisdiction where they are admitted to practice. The WTO Secretariat has noted that WTO countries generally require foreign legal consultants to submit to the local code of ethics as a prerequisite to licensing in the host country. The WTO has observed that the legal profession does not consider this a major obstacle to trade in legal services. There are certain common principles shared by the national legal ethical codes, including rules on conflicts of interest, loyalty to the client, and confidentiality. The WTO has observed, for example, that the EU has developed a common legal ethics code applicable to some EU countries; the U.S., Japanese and European lawyers' professional associations have compared their ethical codes and found no serious differences; and a bilateral agreement exists between the ABA and its counterpart for England and Wales with regard to mutual recognition on matters such as ethical standards. However, the agreements of such associations are not binding on the U.S. jurisdictions whose courts or legislatures would implement such recognition in conjunction with the bar disciplinary authorities. Negotiations in the Doha Round of the WTO could help resolve ethical issues that have arisen in the cross-border provision of legal services. The prohibition against the unauthorized practice of law is a basic tenet of U.S. legal ethics; therefore, any new agreement under WTO auspices that may affect the regulation of legal services providers admitted to the practice of law in a foreign jurisdiction could have implications for ethical compliance. However, U.S. legal ethics rules or codes have recognized that business demands and the mobility of society necessitate refraining from unreasonable territorial limitations. Any liberalizing of licensing requirements could facilitate the operations of law firms. ABA Opinion 01-423, dated September 21, 2001, found that U.S. law firms may include partners who are foreign lawyers, as long as the arrangement complies with U.S. and foreign law, and the foreigners are members of a recognized legal profession in the foreign jurisdiction. It cautioned that U.S. lawyers must avoid assisting in the unauthorized practice of law by foreign lawyers in the United States. ABA Opinion 01-423 further noted that many countries recognize only a narrow attorney-client privilege. Some legal authorities cite the opinion in a European Union (EU) case, Australian Mining & Smelting Europe Ltd. v. Commission , as supporting the proposition that attorney-client privilege does not apply to attorneys not admitted to practice in the EU. In response, the ABA passed a resolution that attorney-client privilege should apply to non-European Union attorneys. In a more recent case, Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission , the EU Court of First Instance declined to consider whether the discriminatory non-recognition of privilege with respect to non-EU lawyers violated certain EU principles. A paper summarizing a discussion on Cross-Border Travel Traps: Protecting Client Confidences at the Frontier at the ABA Section of International Law 2007 Fall Meeting discusses the problems posed for U.S. attorneys by the narrower European view of profession privilege/confidentiality with regard to attorney-client communications. With regard to disciplinary measures and proceedings, U.S. legal professional groups have submitted letters to the USTR supporting local disciplinary jurisdiction over foreign attorneys and disciplinary reciprocity with foreign jurisdictions in Doha Round negotiations.

This report provides a broad overview of the treatment of legal services under the World Trade Organization (WTO) agreements and its potential effect on laws and rules governing the provision of legal services by foreign lawyers in the United States and legal ethics rules.

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The Rohingya—a predominately Sunni Muslim minority of northern Rakhine State in Burma (Myanmar)—are facing several concurrent crises precipitated by the reported attack on August 25, 2017, on Burmese security facilities near the border with Bangladesh. The attacks, allegedly conducted by a relatively new and little known Rohingya nationalist group, the Arakan Rohingya Salvation Army (ARSA), and an ensuing "clearance operation" conducted by Burma's security forces have resulted in the rapid displacement of more than 600,000 Rohingya into makeshift camps in eastern Bangladesh, and the internal displacement of an unknown number of people within Rakhine State. These events have created two immediate humanitarian crises in Bangladesh and in Rakhine State. In addition, long-standing policies and attitudes in Burma regarding the Rohingya are creating major challenges to the possibility of their voluntary return. Starting in the 1960s under Burma's military juntas and continuing until today under a mixed civilian/military government, Burma's laws and policies have deprived most of the Rohingya of many of their human rights, including their citizenship. According to some observers, it is likely that many of the displaced Rohingya will not wish to return to Burma unless their safety can be secured, the discriminatory laws and policies are changed, and their human rights restored. If conditions in Burma are not suitable for repatriation, the international community may need to consider other assistance for the Rohingya, including longer-term accommodation in camps in Bangladesh and exploring local integration and resettlement options. Allegations of organized, systematic, and severe human rights abuses by Burmese security personnel, ARSA and its supporters, and local Rakhine "vigilantes" have given rise to claims of possible crimes against humanity, ethnic cleansing, or genocide taking place in Rakhine State. Beyond ensuring that such violence stops, the allegations of human rights abuse present Burma and the rest of the world, including the United States, with the challenge of adequately investigating and documenting the possible human rights abuses, and if necessary, establishing suitable measures for accountability of those found responsible. The ongoing violence in Rakhine State reportedly is another factor contributing to the reluctance of many Rohingya to return to Burma. The displacement of the Rohingya, combined with the alleged violence of the Burmese security force's clearance operation, has also created an environment that could give rise to the radicalization of portions of both the Rohingya and predominately Buddhist Rakhine population. Some Rohingya may join the ranks of ARSA or become supporters of other more militant extremist organizations. Islamist militant groups, in particular, may attempt to recruit Rohingya. In addition, some Rakhine may enlist with the extant Rakhine-based ethnic armed organizations (EAOs) or form local militias to defend themselves from the perceived ARSA threat. The Trump Administration has responded to the crises by making gradual and limited changes to U.S. policy. The initial response from the State Department was to denounce the alleged ARSA attacks, and call upon the Burmese government and military to exercise restraint in responding to the attacks. As the number of displaced persons increased, the Trump Administration provided additional funding for humanitarian assistance, but refrained from commenting on the allegations of serious human rights abuses. More recently, the State Department announced new restrictions on relations with the Burmese military, but indicated that its focus was on solving problems, not punishing people. Congress may choose to consider what actions, if any, the United States should take in response to these various crises and challenges. Among the issues the Rohingya crises raise are the following: Humanitarian Policies and Issues : How much humanitarian assistance is needed in Bangladesh and in Rakhine State, and for how long? What role should the United States play in providing that assistance? How should international assistance be coordinated? Repatriation/Resettlement Issues : What are the prospects for safe and voluntary repatriation of the displaced Rohingya? What arrangements should be made for the resettlement of those who do not wish to return to Burma, and what role should the United States play in such a resettlement program? Issues of Discrimination in Burma : How important is rectifying Burma's discriminatory laws and policies for the voluntary repatriation of the Rohingya and reconciliation between the Rakhine and Rohingya? What measures should the United States take to encourage or pressure the Burmese government to repeal or amend discriminatory laws and policies? Human Rights Abuse Issues : What efforts should be made to investigate and document the alleged human rights abuses, and what role should the United States play in supporting or conducting such efforts? What are the options for securing accountability for those people or organizations determined to be responsible for human rights abuses? Issues Regarding the Risk of Radicalization : How serious is the risk of radicalization of Rakhine or Rohingya, or their recruitment by existing EAOs or Islamist militant groups? What measures, if any, should the United States take to assist the Bangladesh government and the Burmese government to counteract efforts to radicalize members of either ethnic community? Does the treatment of the Rohingya minority pose a radicalization risk for communities elsewhere in the region? Issues R elated to P otential D estabilization of the R egion : Will the displaced Rohingya in Bangladesh raise domestic political tensions related to Islamist agendas for Bangladesh? Will this have an impact on Bangladesh domestic politics and Bangladesh-Burma relations? Issues for U.S. P olicy T oward Burma : Do the events in Rakhine State warrant a rethink or adjustment in current U.S. policy toward Burma? Should some of the previously waived U.S. sanctions on Burma be reinstated to encourage or promote changes in the policies and behavior of the Burmese government or the Burmese military? What forms of assistance should the United States provide to the Bangladesh government and the Burmese government to respond to the various crises coming out of the events in Rakhine State? How will the issue affect U.S. geopolitical interests, given China's substantial influence in Burma? On November 2, 2017, companion bills were introduced in the House of Representatives and the Senate that offer an approach to addressing the Rohingya crises, as well as a reformulation of U.S. policy toward Burma. The Burma Unified through Rigorous Military Accountability Act of 2017 (BURMA Act; H.R. 4223 ) and the Burma Human Rights and Freedom Act of 2017 ( S. 2060 ) would impose sanctions on selected Burmese military leaders, limit security and military assistance, and place conditions on multilateral assistance until the Burmese government and military meet certain criteria to address the various crises in Rakhine State. The Burma Human Rights and Freedom Act of 2017 would also appropriate $104 million for humanitarian assistance to "the victims of the Burmese military's ethnic cleansing campaign targeting Rohingya in Rakhine State." On August 25, 2017, ARSA members and local Rohingya supporters reportedly attacked 30 security facilities, including border outposts and one military base, killing over a dozen Burmese security personnel. The Burmese military, or Tatmadaw, almost immediately began a "clearance operation," deploying more than 70 battalions, or an estimated 30,000-35,000 soldiers, into Rakhine State. According to State Counsellor Aung San Suu Kyi, the clearance operation ended on September 5, 2017. The "clearance operation" in the townships of Buthidaung, Maungdaw, and Rathedaung in northern Rakhine State was a major factor leading to the displacement of more than 600,000 Rohingya into Bangladesh, as well as the internal displacement of an unknown number of Rakhine, Rohingya, Hindu, Magyi, Mro, and Thet in Rakhine State. The current crisis in Rakhine State can be traced further back to October 10, 2016, when ARSA allegedly attacked three border outposts, killing nine police officers. The Tatmadaw responded by initiating a similar "clearance operation" that resulted in approximately 87,000 Rohingya crossing into Bangladesh, and the internal displacement of an unknown number of Rohingya into temporary camps. Rakhine State (also known as Arakan State) is located in western Burma, east of the Bay of Bengal and on the border with Bangladesh. The state is 14,200 square miles in size (slightly larger than the State of Maryland), with an estimated population (pre-crises) of 3.2 million. The largest ethnic group in Rakhine State is the Rakhine (or Arakan), a predominately Theravada Buddhist community. The next largest ethnic group is the Rohingya, a predominately Sunni Muslim community. Other ethnic groups living in Rakhine State include Bamar, Chin, Daingnet, Hindu, Kamar (also Sunni Muslims), Magyi, Mro, and Thet. Various sources estimate the pre-crises Rohingya population of Rakhine State at 1.0 million-1.1 million; the ethnic Rakhine population is thought to be about 2 million. Most of the Rohingya live in the northern Rakhine townships of Buthidaung, Maungdaw, and Rathedaung; the Rakhine are the majority population in central and southern Rakhine State. According to the Rohingya, their ancestors have lived in what is now northern Rakhine State since at least the 9 th century. Prior to the military coup of 1962, the Rohingya were Burmese citizens, and were elected to Burma's parliament, served in the government, and were officers in the military. After the coup, Burma's military leaders began a systematic policy of discrimination against the Rohingya, and carried out military campaigns to drive the Rohingya out of Burma. For example, in 1978, under General Ne Win, the Burmese military swept across northern Rakhine State as part of Operation Dragon King, pushing an estimated 200,000-250,000 Rohingya into Bangladesh. In 1982, Burma's military junta promulgated the Citizenship Law that effectively stripped the Rohingya of their citizenship. The 1982 Citizenship Law remains in effect. The Burmese military, the government led by Aung San Suu Kyi, as well as a majority of Burma's population—including the Rakhine—maintain that most of the Rohingya are illegal immigrants from Bangladesh, and should therefore be identified as "Bengali." According to this narrative, the influx of "Bengalis" into Burma began during the period of British rule, when Burma was part of the British Raj, and continued after Burma's independence in 1948, as "Bengalis" freely moved across the porous border with then-East Pakistan, now Bangladesh. Relations in Rakhine State between the Rakhine majority and the Rohingya minority have vacillated between periods of relatively peaceful coexistence and times of violent confrontation. Predominately Rakhine and Rohingya villages often exist in close proximity, with regular social and economic interaction. Interethnic violence typically arises, however, when members of one ethnic group allegedly mistreat members of the other ethnic group. Such an event precipitated the outbreak of interethnic violence in June to October 2012 that resulted in dozens of deaths, approximately 200,000 Rohingya fleeing to Bangladesh, and another 120,000 Rohingya becoming internally displaced persons (IDPs) living in camps in Rakhine State. UNHCR and other humanitarian organizations report that 94% of the more than 600,000 displaced people in Bangladesh are Rohingya, with a smaller number of ethnic Hindu and Rakhine known to be among them. An estimated 54% of the displaced are children and 4% are elderly. The remaining 42% are adult refugees, roughly 52% of whom are women. Concerns have been raised about the status and whereabouts of "missing men" (mostly men of military age) who are reportedly not among those fleeing the country. As of early November 2017, the estimated range of the total number of displaced (mostly Rohingya) in Bangladesh (including from this crisis and from previous waves of displacement during the past five years) is estimated at between 700,000 to just over 900,000. U.N. Secretary General António Guterres stated, "The situation has spiraled into the world's fastest-developing refugee emergency and a humanitarian and human rights nightmare." Precise figures on the overall number of people displaced—either within Burma's Rakhine State or across the border in Bangladesh—are not available because the situation remains fluid, and access to affected areas of northern Rakhine State is limited. While the pace at which newly displaced persons are entering Bangladesh varies, experts say that at one time up to 20,000 people attempted to cross the border each day. Their ability to enter Bangladesh is reportedly being hampered by Burmese security forces building fencing and allegedly placing landmines along the border. Lack of transport and cost also limit people's ability to cross the border. Bangladesh has so far kept its borders open. Neither Bangladesh nor Burma are States Parties to the 1951 Convention relating to the Status of Refugees or its 1967 Protocol. Little is known about the number of IDPs and the conditions under which they are living within Rakhine State, because Burmese security forces have restricted media access and most humanitarian assistance to that area. Tens of thousands are estimated to have been displaced internally. Many of those who have fled their homes and villages are reportedly being hosted by relatives and friends. Some are living in schools or monasteries, while others are thought to be on the border with Bangladesh or hiding in forests. According to the U.N. Office for the Coordination of Humanitarian Affairs (UNOCHA), an estimated 27,000 IDPs who are ethnic Daingnet, Hindus, Mro, and Rakhine have relocated from northern to southern Rakhine State since August 25, 2017. Some humanitarian organizations are concerned that those Rohingya who remain in Burma may eventually be forced to flee due to a lack of medical care, food, and other basic needs. On October 2, 2017, the Burmese government gave 20 diplomats, several U.N. officials, and local media a guided tour of parts of northern Rakhine State. U.N. Under-Secretary-General for Political Affairs Jeffrey Feltman visited Burma from October 13-17 at the invitation of the Burmese government. Most of the discussions reportedly focused on the situation in Rakhine State and the plight of those displaced since August 25, with an emphasis on unhindered humanitarian access to northern Rakhine State and voluntary and safe returns. Separately, the Burmese government has escorted international and local reporters into the three affected townships. The Burmese government has stated that the humanitarian response is being led by the government under the responsibility of the Minister for Social Welfare and will continue to draw on the support of the Red Cross Movement—which includes the International Committee of the Red Cross (ICRC), the International Federation of Red Cross and Red Crescent Societies (IFRC), and the Myanmar Red Cross Society (MRCS)—to provide humanitarian assistance in Rakhine State. Various national Red Cross societies from other countries are also providing support as the Red Cross Movement scales up its response. Access to northern Rakhine is blocked to all other agencies, and most humanitarian activities across central Rakhine remain suspended or severely interrupted. International aid groups continue to urge the Burmese government to provide unfettered access to Rakhine State. Efforts to move supplies from the capital city of Sittwe to the affected area reportedly have been hampered by Rakhine protesters who oppose the provision of assistance to Rohingya. Bangladesh is a poor, majority-Muslim country with over 160 million people in a nation approximately the size of Iowa. As such, its capacity to accommodate the approximately 600,000 newly displaced Rohingya is limited. It is reported that Border Guard Bangladesh sources estimated in early November 2017 that a further 50,000 Rohingya had gathered on the border seeking entry into Bangladesh. The situation has created enormous humanitarian needs in an area of Bangladesh already affected by earlier refugee influxes since the 1990s, recent floods, and a lack of capacity to cope with a large number of new arrivals. The two existing refugee camps near the city of Cox's Bazar are overflowing with more than double the previous population of 33,000, and well beyond capacity. With the assistance of UNHCR, Bangladesh has reportedly started biometric registration of Rohingya at camps near Cox's Bazar. While new arrivals initially moved into established sites and host communities, due to limited space and severe overcrowding, they have been establishing new, spontaneous settlements. Many of the recently displaced Rohingya are living in the open. Humanitarian partners are continuing to deliver basic assistance, but there are significant gaps and a critical need to scale up health, water, and sanitation interventions due to the risk of disease outbreaks in densely populated areas in addition to basic food assistance, shelter, and protection. Respiratory infections, dysentery, and other ailments are reportedly spreading among the Rohingya in Bangladesh, and there is a great need for clean drinking water, food, and sanitation. Bangladesh is establishing a new 3,000-acre camp at Kutupalong that is to reportedly accommodate 800,000 people in a single, enormous camp.   (This new camp is in addition to the two existing official camps near Cox's Bazar mentioned previously.) The Ministry of Disaster and Relief Management is to coordinate with humanitarian partners to install basic facilities. Besides the new "mega camp" at Kutupalong, Bangladesh has also considered a plan to relocate Rohingya to an island in the Bay of Bengal. The island, Thengar Char, which has been previously suggested by the Bangladesh government in this context, is located near Jaliyar Char (also known as Bhashan Char), where work has reportedly begun to accommodate Rohingya. It is reported that parts of the Thengar Char flood at high tide. An estimated 8-10 million Bangladeshis fled to India in 1971 in the wake of atrocities committed by the West Pakistan army and local sympathizers in East Pakistan during Bangladesh's struggle for independence from Pakistan. Hundreds of thousands of Bengalis died during this conflict. This experience informs many Bangladeshis' perspective on the plight of the Rohingya. Bangladesh Minister of State for Foreign Affairs Mohammed Shahriar Alam has stated that the Rohingya issue is a security issue, as well as a humanitarian one, and that Bangladesh would take prompt action if ARSA tries to enter Bangladesh. It is Bangladesh's policy not to allow ARSA to establish a base in Bangladesh: Prime Minister Sheikh Hasina articulated a five point policy for the Rohingya in a speech to the United Nations in September 2017. Prime Minister Hasina proposed the following.... that Myanmar unconditionally, immediately and forever stop violence and ethnic cleansing in Rakhine State; that the Secretary-General immediately send a fact-finding mission to Myanmar; and that all civilians, irrespective of religion and ethnicity, be protected in Myanmar, including through the creation of United Nations-supervised safe zones. She also proposed the sustainable return of all forcibly displaced Rohingya in Bangladesh to their homes in Myanmar, and the immediate, unconditional and full implementation of the recommendations of the Advisory Commission on Rakhine State. Foreign Secretary M. Shahidul Haque has stated that Bangladesh considers the Rohingya to be "forcibly displaced Myanmar nationals" and not migrants, illegals, or refugees. Bangladesh has called on Burma to repatriate the displaced Rohingya and on international organizations to assist Bangladesh in caring for the Rohingya until they can return to Burma. Foreign Minister A.H. Mahmood Ali stated that Bangladesh would not agree to Burma's proposal to use the 1992 Memorandum of Understanding (MoU) between the two nations as the basis for returning Rohingya to Burma because the situation has changed. The 1992 MoU is based on the Rohingya's ability to "establish their bona fide residency in Myanmar." Bangladesh favors United Nations involvement to assist in discussions on Rohingya repatriation to Burma. While Bangladesh has received international praise for its support for the displaced Rohingya, there are some indications that it is nearing its limit, including the following: Bangladesh's Border Guard has indicated that Bangladesh is planning on fencing the border with Burma. Bangladesh has reportedly barred three NGO organizations, Muslim Aid Bangladesh, Islamic Relief, and the Allama Fazlullah Foundation, from providing assistance to the Rohingya. Bangladesh's Rapid Action Battalion (RAB) has reportedly set up a base camp at Teknaf to monitor the Rohingya to prevent them from becoming militants. Prime Minister Hasina called on the 63 rd Commonwealth Parliamentary Conference to pressure Burma to stop the persecution of its Rohingya people. In addition to national and local capacity in Bangladesh, U.N. entities and numerous international nongovernmental organizations (INGOs) have been providing critical humanitarian protection and assistance to those fleeing Burma. Response efforts are having an impact through the provision of food assistance, water, sanitation and hygiene support, health care, and shelter kits. Vaccination campaigns are underway against measles and rubella, polio, and cholera. Overcrowding is a critical problem. Addressing protection concerns, including the risks of human trafficking, is part of the humanitarian response. Prior to August 25, 2017, the Burmese government and military reportedly limited many national and international humanitarian efforts to provide assistance and protection to IDPs and others affected by conflict, including those in Rakhine State. Most international representatives did not have access to affected areas beyond the main towns. Where access was granted, Burmese staff have often been restricted. Since August 25, 2017, as previously mentioned, access in northern Rakhine State has been suspended for most humanitarian organizations, except the Red Cross Movement. In December 2016, the United Nations, along with humanitarian partners, launched Myanmar's 2017 Humanitarian Response Plan (HRP) for $150 million, in response to the displacements caused by the October 2016 attacks and the subsequent "clearance operation" conducted by the Burmese military. In addition, the U.N. Central Emergency Response Fund (CERF), which provides rapid, initial funding in protracted crises, provided Burma with a total of $104 million between 2006 and 2016. The Myanmar Humanitarian Fund, a multidonor fund that enables organizations to access flexible funding to address gaps in the humanitarian response, also provided funds. These funding appeals have now changed. In September 2017, UNOCHA and its partners released a preliminary response plan requesting $77 million in funding for the situation unfolding in Burma and Bangladesh. The Joint Response Plan has since been revised upwards to $434 million and aims to assist 1.2 million people, including Rohingya refugees and host communities, between September 2017 and February 2018. As of October 16, 2017, $106 million (24%) had been committed or disbursed in support of the appeal. A further $19 million has been allocated from CERF. Individual U.N. agencies and other international organizations are also launching separate appeals. A pledging conference organized by UNOCHA, UNHCR, and the International Organization for Migration (IOM) and cohosted by the European Union and Kuwait took place on October 23, 2017, and raised $360 million as part of an effort to share in the cost of the response. In recent years, U.S. humanitarian policy in Burma has been guided by concerns about access and protection within Burma, as well as with Burmese refugees and asylum seekers in the region and more broadly in Southeast Asia. On November 15, 2016, U.S. Ambassador Scot Marciel reissued a disaster declaration for Burma after the October attacks on security posts and the subsequent "clearance operation." In FY2016, the United States allocated more than $50 million to help meet humanitarian needs in Burma using global humanitarian accounts to fund implementing partners. On September 20, 2017, the State Department announced that it would provide an additional $32 million in humanitarian assistance for the displaced people in Bangladesh and northern Rakhine State, with approximately $28 million allocated to assistance in Bangladesh and $4 million for Rakhine State. According to the State Department, this is in addition to $63 million in humanitarian assistance provided since October 2016 "for vulnerable communities displaced in and from Burma throughout the region." Trump Administration policy on humanitarian assistance to Burma is not known and the amount of humanitarian assistance to be provided in FY2018 has not been determined. The key U.S. agencies and offices providing humanitarian assistance to Burma include the U.S. Agency for International Development (USAID) through the Office of Foreign Disaster Assistance (OFDA) and Food for Peace (FFP) and the State Department's Bureau of Population, Refugees, and Migration (PRM). Although accurate figures are not available, it is estimated that between 700,000 to just over 900,000 displaced (mostly Rohingya) are currently in camps in Bangladesh. Thousands of Rohingya are displaced in other nations in South and Southeast Asia, including India, Malaysia, and Thailand. Potentially more than 1 million Rohingya may wish to return to northern Rakhine State, depending on the conditions set for their return, as well as the likely situation they would face once they do so. If conditions are not acceptable and/or inadequate measures are taken for the security of the returnees, then it is possible that many of the displaced Rohingya would not voluntarily return to Burma, and other provisions would need to be made. Aung San Suu Kyi has indicated that her government would like the repatriation to be managed in accordance with a 1992 agreement between Bangladesh and Burma negotiated following a previous case of mass displacement. As previously stated, Bangladesh does not accept this proposal, and has called for the United Nations to be involved in resolving the conditions of return to Burma. The 1992 agreement stipulated that Burma would accept the return of anyone who could provide evidence of their prior residence in Burma. One Burmese official has stated that this may mean proof of eligibility for Burmese citizenship, which would significantly reduce the number of Rohingya who would be permitted to return to Burma. It is unlikely that many of the displaced Rohingya possess documents to establish their prior residence in Burma given the circumstances under which they fled to Bangladesh. The Burmese government—whether under past military rule or under the current mixed civilian-military government—enforces a number of discriminatory policies specifically toward the Rohingya. Among these policies are the following: Denial of Citizenship —The 1982 Citizenship Law effectively revoked the citizenship of most of the Rohingya in Burma. Prior to August 2017, the U.N. High Commissioner for Refugees (UNHCR) reported that nearly 1 million people (mostly Rohingya in Rakhine) were stateless. Denial of Suffrage and Representation —In 2015, then-President Thein Sein invalidated the temporary identification cards ("white cards") possessed by many Rohingya that had permitted them to vote in past elections. As a result, the Union Election Commission did not allow the Rohingya to vote in the 2015 parliamentary elections, and prohibited Rohingya political parties and candidates from participating in the elections. Denial of Education and Employment —Because they are not citizens, most Rohingyas cannot attend public universities, work for the government, or join the military or the Myanmar Police Force. Restrictions on Movement —Rohingya in rural areas are prohibited from moving out of their home villages without the permission of local authorities. Restrictions on Marriage, Religious Conversion , and Procreation — In 2015, Burma's Union Parliament passed four "Race and Religion Protection Laws" that seemingly targeted Burma's Muslim population and, in particular, the Rohingya. The laws banned cohabitation with someone who is not one's spouse (to ban de facto polygamy), prohibited interfaith marriages and conversion to Islam within a marriage without government approval, and required that women living in certain regions—regions with a high percentage of Muslim households—space pregnancies at least 36 months apart. Aung San Suu Kyi responded to the October 2016 attacks and the ensuing unrest by forming an international commission, the Advisory Commission on Rakhine State, headed by former U.N. General Secretary Kofi Annan, to "identify the factors that have resulted in violence, displacement, and underdevelopment" in Rakhine State. On August 24, 2017, the commission released its final report, cautioning that "a highly militarized response is unlikely to bring peace to the area." Among the commission's recommendations are to promote greater economic development in Rakhine State, to align Burma's 1982 Citizenship Law with international standards and enable the Rohingya to obtain citizenship, and to make arrangements for the resettlement of IDPs. Aung San Suu Kyi has said that the Burmese government is willing to abide by most of the commission's recommendations, and on October 9, 2017, appointed a committee tasked to implement the recommendations of the Advisory Commission, as well as those of the Maungdaw Regional Investigation Commission. The new implementation committee consists entirely of government officials, and while it includes at least one Rakhine member, it has no Rohingya representative. The United Nations, the local and international media, human rights organizations, and international humanitarian organizations have accused Burma's security forces of serious human rights abuses that may constitute ethnic cleansing, crimes against humanity, or possibly genocide during both "clearance operations" conducted following the October 2016 and August 2017 attacks on security installations. U.N. High Commissioner for Human Rights Zeid Ra'ad Al Hussein told the U.N. Human Rights Council the following on September 11, 2017: We have received multiple reports and satellite imagery of security forces and local militia burning Rohingya villages, and consistent accounts of extrajudicial killings, including shooting fleeing civilians. Last year I warned that the pattern of gross violations of the human rights of the Rohingya suggested a widespread or systematic attack against the community, possibly amounting to crimes against humanity, if so established by a court of law. Because Myanmar has refused access to human rights investigators the current situation cannot yet be fully assessed, but the situation seems a textbook example of ethnic cleansing. The Tatmadaw has denied the allegations; the Burmese government and the Tatmadaw assert that ARSA is responsible for any human rights violations that may have occurred in Rakhine State. Many of the Rohingya and others who have arrived in Bangladesh following the two "clearance operations" claim that Tatmadaw soldiers entered their villages, and proceeded to kill civilians, rape women and girls, and then burn down the entire village. International medical teams treating the Rohingya in these camps report that some people bear gunshot wounds consistent with being shot from behind, and some women and girls have injuries consistent with sexual assault. One BBC reporter who obtained access to the area witnessed the looting and destruction of a Rohingya village by what appeared to be a group of Rakhine men. The Tatmadaw soldiers escorting the reporter reportedly made no effort to interrogate or detain those involved. Utilizing satellite imagery, Human Rights Watch and other organizations have documented the destruction of nearly 300 villages and thousands of houses and businesses in northern Rakhine State. According to its assessment of satellite imagery, Human Rights Watch claims that at least 288 villages in northern Rakhine State have been partially or totally destroyed by fire since August 25, 2017. Some of the images show that Rohingya structures have been burned, but neighboring Rakhine buildings are unharmed. In addition, reports say at least 66 villages have been damaged after September 5, 2017, the day the second "clearance operation" supposedly stopped. Commander-in-Chief Senior General Min Aung Hlaing has denied these allegations. In a meeting with U.S. Ambassador to Burma Scot Marciel on October 12, 2017, he said that "unlawful acts [by Burmese security forces] are not allowed," and that "no action goes beyond the legal framework." He also reportedly told Ambassador Marciel that the international media was intentionally exaggerating the number of Rohingya who have fled to Bangladesh. Senior General Min Aung Hlaing, however, has agreed to establish a military investigatory team to examine the allegations of human rights abuses by security personnel. A similar Burmese military investigation conducted after the "clearance operation" following the October 2016 attacks reportedly found no evidence of systemic human rights abuses by Burmese security forces. Senior Burmese government officials have also denied the human rights abuse allegations. Vice President Henry Van Thio stated the following before the U.N. General Assembly on September 20, 2017: The security forces have been instructed to adhere strictly to the Code of Conduct in carrying out security operations, to exercise all due restraint, and to take full measures to avoid collateral damage and the harming of innocent civilians. Human rights violations and all other acts that impair stability and harmony and undermine the rule of law will be addressed in accordance with strict norms of justice. Addressing the U.N. Security Council on September 28, 2017, Burma's National Security Advisor Thaung Tun said, "There is no ethnic cleansing and no genocide in Myanmar." Thaung Tun continued, stating, "I can assure you that the leaders of Myanmar, who have been struggling so long for freedom and human rights, will never espouse policy of genocide or ethnic cleansing and that the government will do everything to prevent it." The Tatmadaw and the Burmese government claim that ARSA and its supporters have committed serious human rights violations. During his meeting with Ambassador Marciel, Senior General Min Aung Hlaing implied that ARSA and its supporters may have been responsible for alleged human rights violations, stating, "Local Bengalis were involved in the attacks under the leadership of ARSA. That is why they might have fled as they feel insecure." The Burmese government also says that ARSA killed over 50 civilians in Rakhine State prior to the attacks on August 25, 2017, because ARSA claimed they were informants for the Tatmadaw. According to Aung San Suu Kyi, it was principally because of these alleged killing of civilians that her government declared ARSA a terrorist organization on August 28, 2017. Official Burmese government and military descriptions have been selective in providing information about the Tatmadaw's "clearance operation" or allegations of human rights abuse. For example, the government-run newspaper, Global New Light of Myanmar , has run several detailed articles about the alleged mass killings of Hindus in one village by ARSA, but has provided little coverage of the reported destruction of Rohingya villages. Evidence has surfaced that questions the accuracy of the Global New Light of Myanmar account of the alleged Hindu mass killings, as some of the women quoted in the article had previously stated the Burmese military, not ARSA, had killed the Hindu villagers. Various military operations in northern Rakhine State over the last 40 years have consistently been followed by the displacement of thousands of Rohingyas, and usually have involved allegations of serious human rights violations of Rohingya by Tatmadaw soldiers. In general, the Tatmadaw speak of and seemingly consider the Rohingya as inferior to the Bamar majority, and by extension, seem to tolerate discrimination and maltreatment of Rohingya. Some Tatmadaw officers have defended their soldiers accused of raping Rohingya women by stating that Rohingya women are too "dirty" and "ugly" for their soldiers to even consider rape. One lingering question is the goal or objective of the Tatmadaw's recent treatment of the Rohingya. As previously stated, U.N. High Commissioner for Human Rights Zeid Ra'ad Al Hussein has concluded the Tatmadaw's activities constitute "ethnic cleansing" of Rohingya. Others maintain the objective is to reduce the percentage of Rohingya in northern Rakhine State by forced displacement plus the immigration of Bamar, Rakhine, and other ethnic minorities into the region. There is some past evidence of the Burmese government's desire to see the removal of all Rohingya from Burma. In July 2012, then-President Thein Sein said that the Burmese government was prepared to hand over the Rohingyas to the UNHCR so they could be resettled in any countries "that are willing to take them." The United Nations rejected President Thein Sein's offer. In March 2017, the U.N. Human Rights Council approved a fact-finding mission to investigate alleged human rights violations in Rakhine State, but Aung San Suu Kyi has so far refused to permit the mission entry into Burma, stating that their presence "would have created greater hostility between the different communities." On August 31, 2017, U.N. Special Rapporteur on the Human Rights Situation in Myanmar Yanghee Lee stated, in reference to the situation in Rakhine State, "The humanitarian situation is deteriorating rapidly and I am concerned that many thousands of people are increasingly at risk of grave violations of their human rights." On September 19, 2017, the United Nations reiterated its request for its fact-finding mission to be granted access to Rakhine State. Under the auspices of the U.N. Human Rights Office of the High Commissioner (OHCHR), on September 26, 2017, seven U.N. experts, or Special Rapporteurs, together called on the Government of Myanmar to stop all violence against the minority Muslim Rohingya community and halt the ongoing persecution and serious human rights violations. Other international actors have taken steps to address the human rights issues. The U.N. Security Council released a presidential statement on November 6, 2017, that, among other things, expressed grave concern over reports of human rights violations and abuses in Rakhine State, including by the Myanmar security forces, in particular against persons belonging to the Rohingya community, including those involving the systematic use of force and intimidation, killing men, women, and children, sexual violence, and including the destruction and burning of homes and property. The statement also called on the Burmese government to "swiftly and in full" implement the recommendations of the Advisory Commission on Rakhine State, and "cooperate with all relevant United Nations bodies," including the Office of the United Nations High Commissioner for Human Rights (OHCHR). The World Bank has postponed a $200 million loan to Burma, stating that it was "deeply concerned about the violence, destruction and forced displacement of the Rohingya," and would withhold the loan until conditions in Rakhine State had improved. The United Kingdom has suspended all its defense cooperation and training programs with Burma's security forces until the violence against the Rohingya has ceased. On October 12, 2017, the European Union said it would halt all ties to Burma's senior military leaders, and is considering additional measures if the situation in Rakhine State does not improve. The displacement of more than 600,000 Rohingya into Bangladesh, the internal displacement of presumably thousands of Rakhine and other ethnic groups within Rakhine State, and the alleged violence associated with those displacements has created a potentially fertile environment for the radicalization of previously apolitical populations. There is speculation that some of the disgruntled and abused Rohingya may choose to support ARSA or more militant Islamic or nationalist organizations. Displaced Rakhine may look to groups such as the Arakan Army, a Rakhine-based ethnic armed organization reportedly active in southern Chin State and northern Rakhine State, to defend them from ARSA. This could open a new front in Burma's long-standing low-grade civil war, and have an impact on the ongoing efforts to negotiate an end to the conflict. There is much uncertainty related to ARSA and the extent to which it has outside support. ARSA has denied its alleged ties to international terrorist groups and portrays itself as an ethno-nationalist group seeking to defend its own people. Despite this, some observers view ARSA as a militant group with ties to international terrorists. Others emphasize that the recent attacks against the Rohingya have created a situation that may present opportunities for recruitment of Rohingya by international terrorist organizations even if ARSA itself has no ties to such groups. An International Crisis Group (ICG) report of December 2016 described the emergence of a Muslim insurgency, the Harakah al-Yaqin (HaY), in Burma. HaY is now known as the Arakan Rohingya Salvation Army (ARSA). ICG described HaY as led by a committee of emigres in Saudi Arabia. ICG described the group as not having a terrorist agenda. The ICG report warned that a disproportionate response by Burma "could create conditions for further radicalizing sections of the Rohingya population." Unconfirmed Indian media reports point to ties between elements within the Rohingya community and Pakistan's ISI and Pakistan- and Bangladesh-based terrorist groups. Some analysts believe that the IS or AQIS may use the Rohingya issue to boost recruitment to their ranks. Even if ARSA has no links with terrorist groups, the presence of so many dispossessed and abused Rohingya in Bangladesh would appear to make it a fertile ground for recruitment by terrorist groups. Recent analysis is highlighting the potential that the Rohingya issue could become a new focus of international jihadism both as a cause to fight for and as a motivating issue for recruitment and support. One February 2017 think tank report said: "Leaders of global terrorist organizations, including al-Qaeda and the Islamic State, have sought to rally their supporters behind a much wider campaign against the Myanmar government and military.... These terrorist groups have defined Myanmar ... as the next great battleground for Islamists worldwide, following the wars in Syria and Iraq." It has also been observed that "marginalized refugees and angry sympathizers are vulnerable to recruitment by extremists who can exploit their causes." The Rohingya issue also has the potential to have an impact on Bangladesh's domestic political landscape and its international relations. The Bangladesh National Party has reportedly criticized the Awami League government for failing to describe the human rights crisis as genocide against the Rohingya and for failing to bring India and China in to resolve the crisis. The Bangladesh Islamist movement Hefazat-e-Islam, which reportedly runs 25,000 madrassas in Bangladesh and is based in Chittagong, has called for the liberation of Rakhine and threatened to wage jihad on Burma if it does not stop torturing Rohingya Muslims. An estimated 20,000 Hefazat supporters and other hardliners marched against the violence against the Rohingya in September 2017. This demonstration followed an earlier rally that gathered in support of the Rohingya in September 2017. Some of the demonstrators have urged the Bangladesh government to go to war with Burma and liberate Rakhine for the Rohingya. Some in the Bangladesh media have also gone as far as contemplating the arming of the Rohingya. Beyond the risk of rising radicalization in the region, the Rohingya crises are creating pressure on regional relations. The Association of Southeast Asian Nations (ASEAN), Southeast Asia's primary regional forum, was unable to agree upon the text of a joint statement issued in September 2017 regarding the situation in Rakhine State, as Malaysia withheld its support, calling the text, "a misrepresentation of the reality of the situation." Malaysia, a predominately Muslim nation that has a moderate-sized Rohingya community, has been pushing ASEAN and the international community for a more active response to the crises, particularly regarding the alleged human rights violations. Indonesia, ASEAN's other predominately Muslim nation, has backed a more measured response, but its government also has to contend with pro-Rohingya political protests advocating a stronger stance on the issue. Other ASEAN members, such as Singapore, have maintained ASEAN's tradition of noninterference in the internal affairs of other nations, while supporting greater humanitarian assistance, condemning ARSA's attacks of October 2016 and August 2017, and calling for an end of violence in Rakhine State. ASEAN's internal disagreement on addressing the Rohingya crisis may preclude it playing a significant role in addressing the short-term and long-term challenges in responding to the crisis. Evolving geopolitical dynamics between China and India may influence those governments' responses to the Rohingya humanitarian crisis. China's approach to the issue may be influenced by its investment in oil and gas pipelines that link Kunming in southern China with the Rakhine coast in Burma as part of its Belt and Road Initiative (BRI). In addition to this energy link, China is seeking to build a deep water port and develop a special economic zone at Kyaukphyu in Rakhine state in order to lessen China's dependence on the Strait of Malacca. The importance of these trade and energy routes may mean that humanitarian or human rights concerns are secondary considerations relative to China's strategic and economic interests in its relationship with Burma. India's response to the Rohingya crisis will also likely be influenced by geopolitical concerns relative to countering rising Chinese influence in the Indian Ocean littoral. Prime Minister Modi has described Burma as a key pillar in India's "Act East" policy. As a result, India may also determine that its economic and security priorities may influence its approach to humanitarian or human rights issues in its relations with Burma. Congress and past Administrations have generally agreed that the overall objective for U.S. policy in Burma is to see the establishment of a democratically elected civilian government that respects the human rights and civil liberties of all of Burma's citizens or residents, regardless of ethnicity or religion. During the period of military rule (1962-2011), Congress passed progressively stricter sanctions on Burma to press Burma's military junta to stop the repression of the Burmese people and possibly transfer power back to a civilian government. From 2009 to 2016, the Obama Administration adopted a strategy of enhanced engagement under which greater contact was made with Burma's military leaders, while the sanctions were to remain in place until sufficient changes had taken place in Burma to warrant the removal of the sanctions. During President Obama's second term, that strategy shifted to removing sanctions to encourage further political and economic reforms in Burma. The Trump Administration's response to the Rohingya crisis has evolved over time. The initial statements from the State Department denounced the alleged ARSA attacks on the border outposts and expressed concern about "serious allegations of human rights abuses, including mass burnings of Rohingya villages and violence conducted by security forces and also armed civilians." As the scope of the crisis expanded, Secretary of State Rex Tillerson expressed his appreciation of the "difficult and complex situation" facing Aung San Suu Kyi, but called for the violence and persecution which "has been characterized by many as ethnic cleansing" to stop. Secretary Tillerson also said, "We need to support Aung San Suu Kyi and her leadership but also be very clear to the military that are power-sharing in that government that this [the violence] is unacceptable." On October 18, 2017, Secretary Tillerson responded to a question about the Rohingya crises by saying the following: What's most important to us is that the world can't just stand idly by and be witness to the atrocities that are being reported in the area. What we've encouraged the military to do is, first, we understand you have serious rebel/terrorist elements within that part of your country as well that you have to deal with, but you must be disciplined about how you deal with those, and you must be restrained in how you deal with those. And you must allow access in this region again so that we can get a full accounting of the circumstances. During the U.N. Security Council meeting held on September 28, 2017, U.S. Ambassador Nikki Haley accused the Burmese government and the Tatmadaw of conducting "a brutal, sustained campaign to cleanse the country of an ethnic minority." She also said it was time for the United Nations to "consider action against Burmese security forces who are implicated in abuses and stoking hatred among their fellow citizens," and called for a global ban on arms sales to Burma's military. Following the October 2, 2017, escorted tour of northern Rakhine State, the U.S. embassy joined 19 other embassies in a joint statement reiterating "our condemnation of the ARSA attacks of 25 August and our deep concern about violence and mass displacement since." The statement also welcomed Aung San Suu Kyi's commitment to investigate and address the allegations of human rights violations, and urged the Burmese government to permit the investigation team established by the U.N. Human Rights Commission to visit Rakhine State. On October 23, 2017, the State Department announced that it would no longer grant visa ban waivers to Burmese military officers and was cutting off assistance to military units and officers involved in operations in Rakhine State (pursuant to the Leahy Law). The State Department also indicated that it was assessing authorities under the Tom Lantos Block Burmese JADE (Junta's Anti-democratic Efforts) Act of 2007 (JADE Act; P.L. 110-286 ) and the Global Magnitsky Human Rights Accountability Act ( P.L. 114-328 , Subtitle F) to impose sanctions on those responsible for human rights violations. Deputy Assistant Secretary of State for Southeast Asia W. Patrick Murphy indicated that the State Department was still assessing "how best to describe the appalling treatment of the Rohingya," and that it was "not shying away from the use of any appropriate terminology." In testimony to both the House Committee on Foreign Affairs and the Senate Committee on Foreign Relations, Murphy would not refer to the situation in Rakhine State as ethnic cleansing, as the State Department had not made such a determination. The State Department's assessment is still pending. A U.S. delegation headed by Acting Assistant Secretary of State for the Bureau of Population, Refugees, and Migration Simon Henshaw travelled to Bangladesh and Burma from October 29 to November 4, 2017, to discuss humanitarian and human rights issues. During the trip, Henshaw reportedly said the following: During our meetings with Myanmar government officials, we told them that is their responsibility to return a secure and stable situation in Rakhine State. It is also their responsibility to investigate the reports of atrocities. While in Dhaka, Under Secretary of State for Political Affairs Thomas Shannon stated, "We have a variety of sanctions available to us should we decide to use them. But right now ... our purpose is to solve the problem, not to punish." Following the trip, Henshaw said about humanitarian assistance, "the situation requires a lot more work ... our commitment has been followed by generous contributions from other donors. However, more is needed." The United States started imposing sanctions on Burma in 1990 as the result of a general, but uneven decline in U.S. relations with Burma and the Tatmadaw since World War II. For the most part, the decline was due to what the U.S. government saw as a general disregard by Burma's ruling military junta for the human rights and civil liberties of the people of Burma. Despite the cooling of relations, U.S. policy toward Burma remained relatively normal until 1990. The United States accepted Burma as one of the original beneficiaries of its Generalized System of Preference (GSP) program in 1976. It also granted Burma Most Favored Nation (MFN, now referred to as Normal Trade Relations, or NTR) status, and supported the provision of developmental assistance by international financial institutions. There were also close military-to-military relations (including a major International Military Education and Training [IMET] program) until 1988. The implementing of sanctions on Burma did not begin until after the Tatmadaw brutally suppressed a peaceful, popular protest that has become known as the 8888 Uprising. Starting in fall 1987, popular protests against the military government sprang up throughout Burma, reaching a peak in August 1988. On August 8, 1988, the military squashed the protest, killing and injuring an unknown number of protesters. In aftermath of the event, the military junta regrouped and the State Law and Order Restoration Council (SLORC) assumed power. Between 1990 and 2008, Congress passed several laws, such as the Burmese Freedom and Democracy Act of 2003 and the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008 (JADE Act), imposing various types of political and economic sanctions on Burma. In addition, U.S. Presidents have imposed sanctions on Burma, such as the imposing of an arms embargo and the withdrawal of GSP benefits. The types of sanction imposed in the past included a prohibition on issuing visas to certain Burmese nationals; a general ban on the import of goods of Burmese origin; a ban on the import of goods produced by certain Burmese companies or containing materials originating in Burma; a prohibition of new U.S. investments in Burma; the suspension of Burma's trade benefits under the Generalized System of Preferences (GSP) program; the freezing of assets owned by certain Burmese nationals and held by U.S. financial institutions; a prohibition of providing financial services to certain Burmese nationals; a prohibition on the sales of arms to Burma; restrictions on the types of bilateral and multilateral aid that can be given to Burma; and limitations on interaction with the Burmese military, or Tatmadaw. The sanction laws typically permitted the President to suspend or waive the imposition of the specified sanctions, if the President determined it was in the national interest or national security interest of the United States to grant such a suspension or waiver. Former President Obama used his authority to waive most of the sanctions on Burma. On October 7, 2016, President Obama issued E.O. 13472, waiving the economic sanctions described in Section 5(b) of the JADE Act. On December 2, 2016, President Obama released Presidential Determination 2017-04, ending restrictions on U.S. assistance to Burma as provided by Section 570(a) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1997. Several non-economic restrictions, however, remain in effect, including a prohibition on issuing visas to enter the United States to certain categories of Burmese officials, as provided by Section 5(a) of the JADE Act; restrictions limiting the types of U.S. assistance to Burma; and an embargo on arms sales to Burma. In addition, Congress has set limits on bilateral relations in appropriations legislation, including limitations on relations with the Tatmadaw (see section below). Section 7043(b) of the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ), for example, places a number of restrictions on bilateral, international security, and multilateral assistance to Burma. Those restrictions remain in effect under the provisions of the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 ( P.L. 115-56 ). The United States has limited engagement with the Burmese military in part due to existing legal restrictions. On June 9, 1993, the State Department's Bureau of Political-Military Affairs issued Public Notice 1820 suspending "all export licenses and other approvals to export or otherwise transfer defense articles or defense services to Burma." Section 5(a)(1)(A) of the JADE Act states that former and present leaders of the Burmese military "shall be ineligible for a visa to travel to the United States." Section 5(a)(1)(B) of the same act also makes officials of the Burmese military "involved in the repression of peaceful political activity or in other gross violations of human rights in Burma or in the commission of other human rights abuses" ineligible for a visa. The JADE Act provides for a presidential waiver of the visa restriction, which has been utilized with some regularity. Section 7043(b) of the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) contains the following restriction on relations with the Burmese military: "Funds appropriated by this Act under the heading 'Economic Support Fund' [ESF] for assistance for Burma ... may not be made available to any organization or entity controlled by the military of Burma." In addition, the section stipulates, "None of the funds appropriated by this Act under the headings 'International Military Education and Training' and 'Foreign Military Financing Program' may be made available for assistance for Burma." The same section also states that ESF funds "may not be made available to any individual or organization if the Secretary of State has credible information that such individual or organization has committed a gross violation of human rights, including against Rohingya and other minority groups, or that advocates violence against ethnic or religious groups and individuals in Burma." Finally, the section states, "the Department of State may continue consultations with the armed forces of Burma only on human rights and disaster response in a manner consistent with the prior fiscal year, and following consultation with the appropriate congressional committees." As previously stated, these restrictions remain in effect under the provisions of the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 ( P.L. 115-56 ). Despite these restrictions, the Department of Defense and the Department of State have had limited interaction with the Burmese military. The Department of Defense has utilized unrestricted funding to support some Burmese officers to attend training courses at the Daniel K. Inouye Asia-Pacific Center for Security Studies (APCSS) in Honolulu, HI. The training courses have included Advanced Security Cooperation, Comprehensive Security Responses to Terrorism, and Transnational Security Cooperation. Burmese military personnel have also participated in workshops hosted by the APSCC. Burmese military officers, as observers, have also attended regional military exercises with U.S. assistance, including "Cobra Gold," the largest annual multinational exercise in Asia. The various crises emerging from Burma's treatment of the Rohingya present Congress with a variety of issues on which it may wish to take action. The humanitarian assistance crises in Bangladesh and Rakhine State have outstripped the current resources available and threaten to worsen, unless better access to affected people is permitted. Problems with repatriation of the refugees raise issues of either finding ways for Bangladesh and Burma to resolve their differences on the repatriation process, and/or preparing for long-term support for the displaced, including making arrangements for resettlement in other nations. Burma's discriminatory laws and policies not only undermine efforts to repatriate the displaced Rohingya, but also contribute to a systemic human rights problem and could lead to the radicalization of some members of both ethnic communities. The continuing use of "force and intimidation" by Burma's security forces also reduces the likelihood that the Rohingya would voluntarily return to Rakhine, raises prospects for radicalization, and brings up issues of accountability for alleged atrocities, including crimes against humanity, ethnic cleansing, and possibly genocide. The Rohingya crises also have the potential to become a security issue for the region. This could unfold if the plight of the Rohingya becomes a cause for international and/or Bangladesh-based terrorist groups. The issue could also affect the domestic political balance between the Awami League and other political factions and movements in Bangladesh that are relatively more Islamist in their ideology. It could also become a regional security issue should it lead to increased tensions between Bangladesh and Burma. It also has the potential to impact regional geopolitical dynamics by facilitating Burma-China relations at a time when the United States and the West are critical of Burma. The Burma Unified through Rigorous Military Accountability Act of 2017 (BURMA Act; H.R. 4223 ) and the Burma Human Rights and Freedom Act of 2017 ( S. 2060 ) were introduced on November 2, 2017, providing similar formulations of U.S. policy toward Burma, and comparable efforts to address the Rohingya crises (see Table 1 ). Both bills would impose a visa ban on senior military officers involved in human rights abuses in Burma, place new restrictions on security assistance and military cooperation, reinstate the jadeite and ruby import ban of Section 3A of the Burmese Freedom and Democracy Act, and require U.S opposition to international financial institution (IFI) loans to Burma if the project involves an enterprise owned or directly or indirectly controlled by the military of Burma. Both bills also call for additional humanitarian assistance to Burma. S. 2060 explicitly appropriates $104 million in funding. S. 2060 also requires the President to review Burma's eligibility for the Generalized System of Preferences (GSP) program.

A series of interrelated humanitarian crises, stemming from more than 600,000 ethnic Rohingya who have fled Burma into neighboring Bangladesh in less than 10 weeks, pose challenges for the Trump Administration and Congress on how best to respond. The flight of refugees came following attacks on security outposts in Burma's Rakhine State, reportedly by the Arakan Rohingya Salvation Army (ARSA), an armed organization claiming it is defending the rights of the region's predominately Muslim Rohingya minority, and an allegedly excessive military response by Burma's military. Some of the displaced Rohingya report that Burmese soldiers systematically killed civilians, sexually assaulted women and girls, and burned down their homes. The Burmese government and military have denied the veracity of these reports. An unknown number of Rohingya, Rakhine, and other ethnic minorities have been forced out of their villages into temporary camps within Rakhine State, while others remain isolated in their home villages under a government-imposed curfew. In Bangladesh, an estimated 700,000-900,000 Rohingya—including people who fled Burma during earlier instances of violence—require urgent humanitarian assistance. In Burma, tens of thousands are in need of humanitarian assistance, but the Burmese government and military have restricted access to the affected areas. Efforts to facilitate the voluntary and safe return of the displaced Rohingya and other ethnic minorities to their original villages face several problems. Bangladesh and Burma have been unable to agree to terms for repatriation. Many of the villages have been destroyed, raising questions about when the people can return and where they will go. It is also uncertain how many of the displaced Rohingya are willing to return to Burma, given the nation's history of discriminatory policies and practices, including a 1982 law that effectively stripped them of their citizenship. The crises raise questions about U.S. policy toward Burma, following its transition to a civilian/military government after six decades of military rule. The day before the August 2017 attacks, a special commission established by Burma's de facto leader, State Counsellor Aung San Suu Kyi, and headed by former U.N. Secretary General Kofi Annan, made a series of recommendations on how to end ethnic tensions in Rakhine State, including calling for the repeal of the anti-Rohingya laws and regulations. While Aung San Suu Kyi accepted most of those recommendations, it is unclear how soon and to what extent they will be implemented. The human rights allegations have led some observers to say the Burmese military is guilty of crimes against humanity, ethnic cleansing, and genocide. The Burmese government and others assert that ARSA is a terrorist organization. The United Nations Human Rights Council has created a special, fact-finding mission to investigate human rights violations in Burma, but the Burmese government and military have dismissed the allegations of widespread human rights violations and have refused to allow the fact-finding mission into Burma. The displaced Rohingya in Bangladesh may also pose a serious radicalization risk. Some Rohingya may be recruited by ARSA or Islamist extremist groups. Some Rakhine may choose to join the Arakan Army, a Rakhine-based ethnic armed organization involved in active resistance against the Burmese government. The Trump Administration and the State Department have adopted a measured approach to the emerging challenges presented by the crises in Bangladesh and Burma. The initial response was to increase humanitarian assistance to both nations by a total of $32 million, raising the amount of assistance provided since October 2016 to $95 million. New restrictions on relations with senior Burmese military officers have been imposed using existing authority. Two bills have been introduced in the 115th Congress since the August attacks and the Burmese military's "clearance operations"—the Burma Unified through Rigorous Military Accountability Act of 2017 (BURMA Act; H.R. 4223) and the Burma Human Rights and Freedom Act of 2017 (S. 2060). Both bills would impose a visa ban on senior military officers responsible for human rights abuses in Burma, place new restrictions on security assistance and military cooperation, reinstate jadeite and ruby import bans, and require U.S opposition to international financial institution loans to Burma if the project involves an enterprise owned or directly or indirectly controlled by the military. S. 2060 also would provide an additional $104 million in humanitarian assistance, and would require the President to review Burma's eligibility for the Generalized System of Preferences (GSP) program. This report will be updated as circumstances require.

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

Congress has, over the past three decades, authorized and funded federal programs to improve understanding of climate changes and their implications. Climate changes have potentially large economic and ecological consequences, both positive and negative, which depend on the rapidity, size, and predictability of change. Some of the impacts of past change are evident in shifting agricultural productivity, forest insect infestations and fires, shifts in water supply, record-breaking summer high temperatures, and coastal erosion and inundation. People and natural systems respond to climate changes regardless of whether the government responds. Over time, the consequences of climate change for the United States and the globe will be influenced by choices made or left to others by the U.S. Congress. Different factors contribute to climate change, their contributions depending on the time periods and geographic locations under examination. Current scientific evidence best supports rising atmospheric concentrations of "greenhouse gases" (GHG) (particularly carbon dioxide, methane, nitrous oxides) and other air pollutants as having driven the majority of global average temperature increase since the late 1970s. The increase in concentrations is due almost entirely to GHG emissions from human activities. Hence, the policy debate has focused on whether and how to abate GHG emissions from human-related activities. Locally, human-related air pollution, irrigation, the built environment, land use change, and depletion of ozone in the stratosphere may be more important but have small overall effect on global average temperature. Policy proposals take different approaches to setting goals or managing climate change-related risks. This report describes four strategies for setting climate change policies: (1) research and wait-and-see, (2) science-based goal setting, (3) economics-based policies, and (4) incrementalism or adaptive management. Each may take into account the concerns, values, and skepticisms of some constituencies, but each also has limitations. It is unclear whether any single conceptual approach could cover all elements of the policy debate, though hybrid approaches may help to build political consensus over whether and how much policy intervention is appropriate. If climate change merits federal action, a variety of generic policy tools may be available (some in use already) to achieve policy goals: regulatory, including market-based, tools to reduce GHGs; distribution of potential revenues from GHG programs; non-regulatory tools that help markets work more efficiently; tools to stimulate technological change; options to ease the economic transition to a lower GHG economy; instruments to encourage international actions; and tools to stimulate adaptation to climate change. Analysts have elucidated the potential usefulness and limitations of each option. Many experts have concluded that, to achieve a given policy goal, strategies using complementary policy tools can increase cost-effectiveness, alleviate burdens on particular constituencies, and address additional concerns of policy-makers. This report seeks to support Congress as it debates and modifies the mix of federal programs that may influence the climate or adaptation to its changes.

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This report was originally published in May 2009, and the majority of the text reflects the authors' analysis of EPA's potential regulation of stationary sources under the Clean Air Act at that time. That analysis has not changed substantially, but s ince that time , EPA has given several further indications of its intentions with regard to the regulation o f stationary sources of greenhouse gases, in congressional testimony, proposed regulations, and proposed guidance . T he agency has formally proposed greenhouse gas emission standards for new motor vehicles, and stated that it intends to promulgate such standards by March 31, 2010. An "endangerment finding,," which is a prerequisite for the motor vehicle and other greenhouse gas standards, was finalized December 7, 2009. The agency has stated in several venues that promulgation of motor vehicle GHG standards would make GHGs "subject to regulation" for the purposes of triggering permitting requirements for new and modified stationary sources under the Prevention of Significant Deterioration requirements of Section 165 of the Clean Air Act, and also for the purposes of the operating permit requirements of Title V. And it has p r oposed a Greenhouse Gas Tailoring Rule to limit the applicability of the PSD and Title V permitting requirements to sources that emit more than 25,000 tons per year of carbon dioxide equivalents. New legislation to address greenhouse gases is a leading priority of the President and many members of Congress, but the ability to limit these emissions already exists under various Clean Air Act (CAA) authorities that Congress has enacted, a point underlined by the Supreme Court in an April 2007 decision (discussed below). Indeed, the U.S. Environmental Protection Agency (EPA) has already begun the process that could lead to greenhouse gas regulations for new mobile sources in response to court decisions. When EPA finalizes the regulation of greenhouse gases from new mobile sources, legal and policy drivers will be activated that will lead to regulation of stationary sources as well. The legal drivers are beyond the scope of this report, which is focused on the policy options and control alternatives available to EPA as it uses existing authorities to regulate greenhouse gases from stationary sources. Stationary sources are the major sources of the country's greenhouse gas emissions. Overall, 72% of U.S. emissions of greenhouse gas come from stationary sources (the remainder come from mobile sources). As indicated in Table 1 , relatively large sources of fossil-fuel combustion and other industrial processes are responsible for about one-half the country's total emissions. If EPA were to embark on a serious effort to reduce greenhouse gas emissions, stationary sources, and in particular large stationary sources, would have to be included. This concentration of greenhouse gas emissions is even more important from a policy standpoint: reductions in greenhouse gas emissions from these sectors are likely to be more timely and cost-effective than attempts to reduce emissions from the transport sector. This report discusses three major paths and two alternate paths of statutory authorities that have been identified by EPA and others as possible avenues the agency might take in addressing greenhouse gas emissions under existing CAA provisions. After discussing the approaches, we identify categories of control options EPA could consider, including an EPA-coordinated cap-and-trade program. Then we discuss the administrative difficulties in using the Clean Air Act for greenhouse gas control, particularly New Source Review – Prevention of Significant Deterioration and Title V permitting requirements. Finally, we conclude by putting the issue into the context of previous environmental challenges the CAA has faced. A regulatory approach using existing Clean Air Act authorities has been under consideration at EPA for more than a decade. In 1998, EPA's General Counsel, Jonathan Cannon, concluded in a memorandum to the EPA Administrator that greenhouse gases were air pollutants within the Clean Air Act's definition of the term, and therefore could be regulated under the Act. Relying on the Cannon memorandum as well as the statute itself, on October 20, 1999, a group of 19 organizations petitioned EPA to regulate greenhouse gas emissions from new motor vehicles under Section 202 of the Act. Section 202 gives the EPA Administrator broad authority to set "standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles" if in her judgment they contribute to air pollution which "may reasonably be anticipated to endanger public health or welfare." EPA denied the petition in 2003 on the basis of a new General Counsel memorandum issued the same day in which the General Counsel concluded that the CAA does not grant EPA authority to regulate CO 2 and other GHG emissions based on their climate change impacts. The denial was challenged by Massachusetts, eleven other states, and various other petitioners in a case that ultimately reached the Supreme Court. In an April 2, 2007 decision ( Massachusetts v. EPA ), the Court found by 5-4 that EPA does have authority to regulate greenhouse gas emissions, since the emissions are clearly "air pollutants" under the Clean Air Act's definition of that term. The Court's majority concluded that EPA must, therefore, decide whether emissions of these pollutants from new motor vehicles contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. If it makes this finding of endangerment, the Act requires the agency to establish standards for emissions of the pollutants. For nearly two years following the Court's decision, the Bush Administration's EPA did not respond to the original petition nor make a finding regarding endangerment. Its only formal action following the Court decision was to issue a detailed information request, called an Advance Notice of Proposed Rulemaking (ANPR), on July 30, 2008. The ANPR occupied 167 pages of the Federal Register . Besides requesting information, it took the unusual approach of presenting statements from the Office of Management and Budget, four Cabinet Departments (Agriculture, Commerce, Transportation, and Energy), the Chairman of the Council on Environmental Quality, the Director of the President's Office of Science and Technology Policy, the Chairman of the Council of Economic Advisers, and the Chief Counsel for Advocacy at the Small Business Administration, each of whom expressed their objections to regulating greenhouse gas emissions under the Clean Air Act. The OMB statement began by noting that, "The issues raised during interagency review are so significant that we have been unable to reach interagency consensus in a timely way, and as a result, this staff draft cannot be considered Administration policy or representative of the views of the Administration." It went on to state that "... the Clean Air Act is a deeply flawed and unsuitable vehicle for reducing greenhouse gas emissions." The other letters concurred. The ANPR, therefore, was of limited use in reaching a conclusion on the endangerment issue and, in any event, it presents the views of an Administration no longer in office. The current Administration made review of the endangerment issue a high priority. On April 17, 2009, EPA proposed a finding that GHGs do endanger both public health and welfare and that GHGs from new motor vehicles contribute to that endangerment. Publication of the proposal in the Federal Register on April 24 began a 60-day public comment period. In addition, public hearings were held May 18 in Arlington, VA, and May 21 in Seattle, WA. The endangerment finding was finalized December 7, 2009. While there has been considerable speculation in the literature about the meaning of Massachusetts v. EPA for stationary sources, there have also been several attempts to invoke the various authorities of the Clean Air Act to begin controlling greenhouse gas emissions from stationary sources. Among the legal initiatives currently underway are the following: In 2006, the EPA revised the New Source Performance Standard (NSPS) for electric utilities and other steam generating units without including any CO 2 standard, or other requirement. Led by New York, several states filed a petition for review of the new NSPS, challenging the omission of any CO 2 requirement. In September 2007 the D.C. Circuit Court of Appeals remanded the case back to EPA for further proceedings "in light of Massachusetts v. EPA ." In 2007, EPA Region 8 granted a Prevention of Significant Deterioration (PSD) permit authorizing construction of a waste-coal-fired electric generating plant near Bonanza, Utah. Appealing the decision, the Sierra Club argued to the Agency's Environmental Appeals Board (EAB) that because the Court had found in Massachusetts v. EPA that CO 2 was an air pollutant under the Act, and that EPA has imposed CO 2 monitoring and reporting requirements, the Bonanza plant was required to install Best Available Control Technology (BACT) for CO 2 emissions. The EAB rejected the Sierra Club's interpretation of the PSD-NSR language, but remanded it back to Region 8 for reconsideration of a CO 2 BACT requirement. In a second case, on February 18, 2009, the EAB remanded a permit issued by the Michigan Department of Environmental Quality for reconsideration of its decision not to regulate CO 2 from a new cogeneration boiler at Northern Michigan University. In a third PSD-NSR (New Source Review) case, EPA Region 9 filed a motion with the EAB in April 2009 for a voluntary remand of the PSD permit for the Desert Rock coal-fired power plant in New Mexico to allow for a reconsideration of its permit to include a CO 2 limitation. Region 9 wants to reconsider its decision not to require Desert Rock to install "carbon-ready" integrated gasification combined-cycle technology instead of allowing current pulverized-coal technology. The EAB remanded the permit September 24, 2009. In 2009, the Environmental Integrity Project, an environmental group, filed a complaint with the D.C. Circuit Court to force the EPA to review nitrous oxide (N 2 O) emissions from nitric acid plants. The group argues that EPA has not reviewed the NSPS for such plants since 1984, despite the statutory requirements for periodic reviews. It should be noted that amidst this legal activity and EPA's commitment to move forward with an endangerment finding, EPA Administrator Jackson and others in the Administration have made clear that their preference would be for Congress to address the climate issue through new legislation. In the press release announcing the proposed endangerment finding, the agency stated, "Notwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy." Similar language was used in the press release accompanying the finalization of the endangerment finding, December 7. When looking at the CAA from the point of view of reducing GHGs from stationary sources, three existing paths are available. As indicated in Table 2 , the three paths are (1) to regulate GHGs as criteria air pollutants, (2) to regulate GHGs as hazardous air pollutants, or (3) to regulate GHGs as designated air pollutants. Each of these paths are discussed below, along with two lesser explored trails: Section 115 and Title VI. The backbone of the Clean Air Act is the creation of National Ambient Air Quality Standards (NAAQS). The need to attain NAAQS, which are set at levels designed to protect public health without consideration of costs or economic impact, is the driving force behind much of clean air regulation. The authority for NAAQS is found in Sections 108 and 109 of the Act. Under Section 108, EPA is to identify air pollutants that, in the Administrator's judgment, endanger public health or welfare, and whose presence in ambient air results from numerous or diverse sources. Under Section 109, EPA is required to set NAAQS for the identified pollutants. Section 109 requires the EPA Administrator to set both primary and secondary NAAQS. Primary NAAQS must be set at a level that will protect public health with an adequate margin of safety. Secondary NAAQS are required to protect public welfare from "any known or anticipated adverse effects associated with the presence of such air pollutant in the ambient air." Public welfare covers damage to crops, vegetation, soils, wildlife, water, property, building materials, etc., and such broader variables as visibility, climate, economic values, and personal comfort and well-being. Over the years, EPA has identified six air pollutants or categories of air pollutants for NAAQS: sulfur dioxide (SO 2 ), particulate matter (PM 2.5 and PM 10 ), nitrogen dioxide (NO 2 ), carbon monoxide (CO), ozone, and lead. These six are referred to as "criteria" pollutants. Each of the criteria pollutants was identified for NAAQS regulation in the 1970s. Since that time, although the specific standards (the allowed concentrations) have been reviewed and modified, no new criteria pollutants have been identified. If carbon dioxide (CO 2 ) or other greenhouse gases were identified as criteria pollutants, NAAQS would then have to be set. CO 2 , the most important greenhouse gas, is an air pollutant that EPA has determined endangers both public health and welfare, and its presence in ambient air results from numerous or diverse sources. Thus, it meets the basic criteria of Section 108. But setting a NAAQS for CO 2 raises a number of potential issues, four of which are discussed in the following sections. An initial difficulty would arise in choosing a level at which to set a NAAQS. Primary and secondary NAAQS are expressed as concentrations of the pollutant in ambient air that endanger public health or welfare. For the six current criteria pollutants, the focus has been on setting primary (health-based) standards—i.e., identifying a concentration in ambient air above which ambient concentrations of the pollutant contribute to illness or death. These standards are based on both concentration-response studies undertaken in laboratory conditions (often animal studies, but some involving humans), and on epidemiology that demonstrates a correlation between greater exposure to the pollutant and higher rates of morbidity and mortality. For CO 2 at current and projected levels, there are not the same direct linkages between higher concentrations and health as there are for each of the current NAAQS. A person exposed to current ambient levels of CO 2 will not be sickened. Nor is it likely that one could demonstrate a connection between CO 2 and morbidity or mortality through epidemiology, in part because CO 2 concentrations are relatively uniform across the globe and change very slowly. The argument that can be made is more indirect: that higher levels of CO 2 are likely over time to cause higher temperatures, and higher temperatures and associated changes in climate-related processes are likely to have health consequences. If EPA concluded that this connection between CO 2 , higher temperatures, and human health were sufficient to justify establishing a primary NAAQS, it would still be difficult to pick out a specific CO 2 concentration for a standard. Among scientists concerned about greenhouse gas concentrations, some argue for a level of 350 parts per million (ppm) as the concentration that must be attained, others argue for 450 ppm, and some for levels of 550-600 ppm. Current concentrations in the Earth's atmosphere are about 385 ppm, increasing by 1 or 2 ppm per year. The mechanics of implementing a standard will be discussed in greater detail below, but it is important to note here that unless one chose a standard at or below the current ambient level, establishing a primary NAAQS would have no consequence. It is only if ambient concentrations of the pollutant exceed the standard that action must be taken. A further point regarding the setting of a NAAQS is the importance of distinguishing primary from secondary standards. If one were to set a NAAQS for CO 2 or other GHGs, it is perhaps the secondary NAAQS that is most relevant to the discussion. As noted above, secondary NAAQS are designed to prevent damage to crops, vegetation, soils, wildlife, water, property, building materials, etc. and such broader variables as visibility, climate, economic values, personal comfort and well-being. EPA—under both Democratic and Republican Presidents—has generally given short shrift to the setting of secondary NAAQS: most have been set at a level identical to the primary standard, with little discussion of the agency's reasoning. In part, this is because secondary NAAQS have no deadlines attached to their attainment and there is no enforcement mechanism or penalty for failure to attain them. Thus, it would hardly be worth the effort to establish a NAAQS for GHGs unless one could establish a defensible case for a specific primary standard that was below ambient levels. Primary NAAQS, unlike their secondary kin, do have deadlines: there are consequences for a failure to attain them in a timely manner. If a CO 2 or GHG NAAQS were set by EPA, the next step would be to identify nonattainment areas (i.e., areas where ambient concentrations of CO 2 and/or other GHGs exceed the NAAQS). The procedure for doing so is specified under Section 107 of the Act. For the six current criteria pollutants, there are distinct local and regional concentrations of each pollutant that can generally be linked to stationary or mobile sources in the area. In some cases, the sources may be relatively distant, with pollutants (or precursors) emitted hundreds of miles away. But with all of the current criteria pollutants, there are significant variations in local and regional concentrations, and only those areas with pollutant readings higher than the NAAQS are designated "nonattainment." For CO 2 , this would not be the case. Concentrations are relatively homogeneous across the entire country—indeed, across the world. Thus, the entire United States would need to be designated nonattainment if concentrations exceeded the standard. A third element of NAAQS that appears ill-suited to the regulation of GHGs is the mechanism used to bring about compliance with NAAQS, the State Implementation Plan (SIP) provisions in Section 110 and Sections 171-179B. SIPs describe the sources of pollution in a nonattainment area and the methods that will be used by the area to reduce emissions sufficiently to attain the standard. They are required to be developed and submitted to EPA for each nonattainment area within three years of its designation. SIPs build on some national standards (for new motor vehicles and new or modified power plants, for example), but they assume that most sources of the pollution to be controlled are local, and therefore, that the measures needed to reach attainment are measures tailored to local conditions. To the extent that significant emission sources are located in other states, downwind states are authorized under Section 126 to petition EPA for controls on such upwind sources. If pollution is uniform throughout the country, there is no reason why the measures taken to reduce it should vary from locality to locality. Nor will a nonattainment area be able to demonstrate that its pollution control measures will have any measurable impact on the ambient concentration of most greenhouse gases. Thus, State Implementation Plans tailored to each nonattainment area would be ill-suited to the nature of the problem. It is also unlikely that any state or nonattainment area on its own could demonstrate reasonable further progress toward attainment of the standard (as is required by Section 172), particularly within the 5- to10-year period specified in Section 172 for attainment of a NAAQS. Greenhouse gases accumulate in the atmosphere, and some can take hundreds of years to diminish, even if current global emissions decline. Global emissions are increasing. Individual states and nonattainment areas would have little chance of reversing this trend through any set of actions they might undertake on their own. Despite all of these difficulties, two groups (the Center for Biological Diversity and 350.org) petitioned EPA on December 2, 2009, to designate carbon dioxide a criteria air pollutant and set a NAAQS for it at no greater than 350 ppm. They further requested that EPA designate six other greenhouse gases as criteria pollutants and establish pollution caps for them "at science-based levels." As revised by the 1990 CAA amendments, Section 112 contains four major provisions: Maximum Achievable Control Technology (MACT) requirements for major sources; health-based standards to be imposed for the residual risks remaining after imposition of MACT standards; standards for stationary "area sources" (small, but numerous sources, such as gas stations or dry cleaners, that collectively emit significant quantities of hazardous pollutants); and requirements for the prevention of catastrophic releases. The MACT and area source provisions would appear to be the most relevant, if GHGs were to be controlled under this section. The MACT provisions require EPA to set standards for sources of the listed pollutants that achieve "the maximum degree of reduction in emissions" taking into account cost and other non-air-quality factors. MACT standards for new sources "shall not be less stringent than the most stringent emissions level that is achieved in practice by the best controlled similar source." The standards for existing sources may be less stringent than those for new sources, but generally must be no less stringent than the average emission limitations achieved by the best performing 12% of existing sources. Existing sources are given three years following promulgation of standards to achieve compliance, with a possible one-year extension; additional extensions may be available for special circumstances or for certain categories of sources. In addition to the technology-based standards for major sources of hazardous air pollution, Section 112 requires EPA to establish standards for stationary "area sources" (small, but numerous, sources such as gas stations or dry cleaners, that collectively emit significant quantities of hazardous air pollutants). In setting these standards, EPA can impose less stringent "generally available" control technologies, rather than MACT. Could EPA regulate GHG emissions as hazardous air pollutants under Section 112? In its comments on the ANPR, the Bush Administration's Department of Energy stated that "... it is widely acknowledged that a positive endangerment finding could lead to ... the listing of one or more greenhouse gases as hazardous air pollutants (HAP) under section 112." EPA, on the other hand, was more circumspect in its analysis, stating: The effects and findings described in section 112 are different from other sections of the CAA addressing endangerment of public health discussed in previous sections of today's notice. Given the nature of the effects identified in section 112(b)(2), we request comment on whether the health and environmental effects attributable to GHG fall within the scope of this section. The language of Section 112 refers to pollutants that may present a threat of adverse human health effects or adverse environmental effects. This language might be broad enough that GHGs could be categorized as hazardous air pollutants and subjected to the regulatory tools provided by the section, but because the section was written to apply to carcinogenic and other toxic air pollutants present in emissions in small quantities, there would be questions as to whether Congress intended the use of the section's authority for pollutants such as GHGs. The legislative history of the Act makes clear that it was designed primarily to regulate pollutants commonly referred to as "air toxics." Hazardous air pollutants are defined as "any pollutant listed pursuant to subsection [112](b)." Congress provided an initial list of 189 hazardous air pollutants in that subsection, and it established criteria and procedures for revising the list in Section 112(b)(2). In the 18 years since the criteria were established, EPA has not added any substances to the list. The procedures for revising the list provide that the Administrator may do so "by rule," adding pollutants that may present, through inhalation or other routes of exposure, a threat of adverse human health effects, or, through a variety of routes of exposure, adverse environmental effects. The human health effects language is qualified with wording that suggests the type of pollutants Congress had in mind when it drafted this section: substances that include, but are not limited to, ones known or reasonably anticipated to be carcinogenic, mutagenic, teratogenic, neurotoxic, acutely or chronically toxic, or which cause reproductive dysfunction. The section is also not well-suited to the most common GHGs, such as CO 2 , that are emitted in very large quantities. For example, it defines a major source as one that emits 10 tons per year or more of any hazardous air pollutant. Annual CO 2 emissions in the United States are about 6 billion metric tons, and hundreds of thousands, perhaps millions of sources (including large residential structures) might qualify as major sources if CO 2 were listed as a hazardous air pollutant under this section. Section 112 might be useful, if at all, for regulating small volume chemicals that are very potent greenhouse gases: sulfur hexafluoride (SF 6 ), for example. SF 6 has a global warming potential 22,800 times as great as CO 2 and accounted for about one-quarter of one percent of total U.S. GHG emissions in 2007, when measured by its global warming potential. SF 6 emissions were 16.5 million metric tons of CO 2 -equivalent in that year. Actual emissions expressed as SF 6 , however, were only 690 metric tons. Nitrogen trifluoride (NF 3 ), another chemical with low emission levels but high global warming potential, might be another candidate, if EPA chose this regulatory route. Section 112 generally considers a major source of emissions to be one that emits more than 10 tons per year of a hazardous air pollutant, and it allows the Administrator to establish a lesser quantity as the major source threshold, based on the potency of the air pollutant or other relevant factors. Once the source categories for hazardous air pollutants are identified, Section 112 establishes a presumption in favor of regulation of the designated pollutants; it requires regulation unless EPA or a petitioner is able to show "that there is adequate data on the health and environmental effects of the substance to determine that emissions, ambient concentrations, bioaccumulation or deposition of the substance may not reasonably be anticipated to cause any adverse effects to human health or adverse environmental effects." Given the difficulties in following the first two paths, much of the attention, including EPA's, has been on the third path. The term "designated pollutant" is a catch-all phrase for any air pollutant that isn't either a criteria air pollutant under Section 108 or a toxic air pollutant under Section 112. Examples of these include fluorides from phosphate fertilizer manufacturing or primary aluminum reduction, or sulfuric acid mist from sulfuric acid plants. The authority to regulate such pollutants is Section 111. Section 111 establishes New Source Performance Standards (NSPS), which are emission limitations imposed on designated categories of major new (or substantially modified) stationary sources of air pollution. A new source is subject to NSPS regardless of its location or ambient air conditions. Section 111 provides authority for EPA to impose performance standards on stationary sources—directly in the case of new (or modified) sources, and through the states in the case of existing sources (Section 111(d)). The authority to impose performance standards on new and modified sources refers to any category of sources that the Administrator judges "causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare" (Sec. 111(b)(1)(A)). In establishing these standards, the Administrator has the flexibility to "distinguish among classes, types, and sizes within categories of new sources" (Sec. 111(b)(2)). The performance standards themselves are to reflect "the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated" (Sec. 111(a)(1)). Both the Administrator and the individual states have the authority to enforce the NSPS. Section 111 appears to provide a strong basis for EPA to establish a traditional regulatory approach to controlling greenhouse gas emissions from large stationary sources. As noted, the section gives EPA considerable flexibility with respect to the source categories regulated, the size of the sources regulated, the particular greenhouse gases regulated, along with the timing and phasing in of regulations. This flexibility extends to the stringency of the regulations with respect to costs, and secondary effects, such as nonair quality, heath and environmental impacts, along with energy requirements. This flexibility is encompassed within the Administrator's authority to determine what control systems she determines have been "adequately demonstrated." As discussed later, this determination has been used to authorize control regimes that extended beyond the merely commercially available to those technologies that have only been demonstrated, and thus are considered by many to have been "technology-forcing." In sum, Section 111 has several advantages in considering greenhouse gas controls including that it (1) has flexibility with respect to the size of the source controlled (Section 111(b)(2)), (2) can prioritize its schedule of performance standards (Section 111(f)(2)), (3) can consider costs and other factors in making determinations, and (4) has discretion with respect to determining technology that has been adequately demonstrated. Essentially, using Section 111, EPA can determine who gets controlled, when they get controlled, how much they get controlled, and at what price. On the face of it, Section 115 would appear the ideal provision to address the global issue of climate change. It is focused on international problems and has unique international triggers. Specifically, Section 115 could be invoked by EPA on one of two bases. First, EPA could act if it receives reports, surveys, or studies from "any duly constituted international agency" that gives EPA: reason to believe that any air pollutant or pollutants emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country…. Unlike the endangerment triggers under other sections of the Act, the endangerment finding under Section 115 refers to international effects based on data from internationally recognized sources. Many would argue that reports by the Intergovernmental Panel on Climate Change (IPCC) would fit this requirement. A United Nations body, created by the World Meteorological Organization and United Nations Environment Programme, the group and its results are referenced by EPA in its ANPR and its endangerment finding under Section 202, announced December 7, 2009. Second, in addition to a unique international endangerment trigger, Section 115 can be invoked without any EPA endangerment finding at all. Specifically, EPA is directed to act "whenever the Secretary of State requests him to do so with respect to such pollution [that endangers public health or welfare in a foreign country] which the Secretary of State alleges is of such a nature.…" (Section 115(a)). Thus, an allegation by the Secretary of State is sufficient cause for EPA to act. The action called for under Section 115 is implemented through Section 110(a)(2)(H)(ii) that requires states to revise their SIPs to prevent or eliminate the endangerment identified. Apparently, based on this reference to SIPs, EPA states in its ANPR that Section 115 could only be exercised if EPA were to promulgate a NAAQS for greenhouse gases. However, this is arguable. Section 110(a)(2)(H)(ii) states that SIPs must be crafted to provide for revisions: …whenever the Administrator finds on the basis of information available to the Administrator that the plan is substantially inadequate to attain the national ambient air quality standard which it implements or to otherwise comply with any additional requirements established under this Act . [emphasis added] In their article arguing in favor of using Section 115 to address climate change, Martella and Paulson state their opposition to EPA's blanket assertion that a greenhouse gas NAAQS would be necessary to invoke Section 115: … based on the plain language of the statute, however, this is unlikely to have been what Congress intended. Section 115 is not in any way limited to criteria pollutants. In fact, the opposite is true. It applies specifically to "any air pollution." Clean Air Act Section 110(a)(2)(H)(ii) makes it clear that SIP must provide for the revision of the plan not only when the plan is inadequate to attain a NAAQS, but also to otherwise comply with any additional requirements, such as a revision required by Section 115. [footnotes omitted] The above actions are prefaced on a condition of reciprocity; Section 115 applies "only to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section." (Section 115(c)) EPA notes in its ANPR that reciprocity with one or more affected countries may be sufficient to trigger Section 115. Many countries currently attempting to comply with the Kyoto Protocol, such as the European Union, could argue that their efforts to reduce greenhouse gases are being hindered by absent or inadequate U.S. controls. Such countries could argue they meet the criteria under Section 115(c) with respect to reciprocity and point to international studies supporting their position. Secondly, countries at substantial risk from climate change, such as low-lying island countries, could argue endangerment from the lack of U.S. action. Thirdly, countries that only contribute a de minim i s level of emissions, such as virtually all of Africa, could argue that their low emissions meet the criterion for U.S. action. Subject to the limitations of the SIP process, EPA notes that Section 115 would provide it with some flexibility in program design. Martella and Paulson take a much more expansive view of the flexibility available, arguing: While designating SIPs as the implementation vehicle, Section 115 otherwise does not impose strictures on the contours and requirements of any prospective program(s) to reduce greenhouse gas emissions…. A Section 115-based program could therefore include model thresholds and source categories set by EPA, similar to the Northeast Ozone Transport. Additionally, EPA could develop a holistic model plan to be implemented by the states. Multiple model approaches also could be presented to the states allowing each state to pick the most appropriate solution for its particular mix of greenhouse gas sources…. Additionally, Section 115 provides a mechanism to limit the scope of the program in terms of the sources…. Because EPA asserts that invoking Section 115 would require a greenhouse gas NAAQS, the action would also invoke NSR under Part C and Title V permitting requirements. One of Martella and Paulson's primary arguments in favor of Section 115 is their belief that Section 115's unique endangerment requirements (or no endangerment requirement if the Secretary of State alleges endangerment) should not trigger PSD-NSR or Title V permitting requirements. Finally, it should be noted that Section 115 has never been implemented, and many countries would prefer a negotiated settlement on climate change, rather than this approach. Added to the Clean Air Act in 1990, Title VI is the country's implementing legislation for the Montreal Protocol and succeeding agreements to address ozone depletion by human-made substances. Some of the substances that deplete the ozone layer also contribute to climate change (e.g., CFCs, HCFCs). In addition, some substances chosen as substitutes for ozone depleting chemicals are themselves greenhouse gases (e.g., HFC-134a, PFCs). Finally, the process of making acceptable substitutes for more powerful ozone-depleting chemicals (e.g., HCFC-22) produces greenhouse gases as a byproduct of production (e.g., HFC-23). Beyond these chemical relationships, there is continuing research on the atmospheric relationship between the stratosphere (and the ozone layer) and climate change. There are two provisions of Title VI that could be used to address greenhouse gas emission under certain conditions. They are discussed below. As noted above, some substitutes for ozone-depleting substances are greenhouse gases, such as HFCs and PFCs. Section 612 authorizes EPA to the maximum extent practicable, to identify substitutes for ozone-depleting chemicals that reduce overall risks to human health and the environment. Specifically, Section 612(c) requires the EPA to make it unlawful to replace an ozone-depleting substance with any substitute substance which EPA determines "may present adverse effects to human health or the environment" where EPA has identified an available, less harmful substitute. The resulting program is called the Significant New Alternatives Policy (SNAP). With appropriate substitutes identified, SNAP could be used to reduce emissions of HFCs and PFCs without invoking any other provisions of the CAA. Like Section 115, Section 615 is potentially a powerful mechanism to control greenhouse gas emissions under certain circumstances. Like Section 115, it has a unique endangerment finding requirement and even broader discretionary authority for EPA to respond. Section 615 states: If, in the Administrator's judgment, any substance, practice, process, or activity may reasonably be anticipated to affect the stratosphere, especially ozone in the stratosphere, and such effect may reasonably be anticipated to endanger public health or welfare, the Administrator shall promptly promulgate regulations respecting the control of such substance, practice, process or activity, and shall submit notice of the proposal and promulgation of such regulation to the Congress. Invoking Section 615 in the case of greenhouse gases would involve a two-part judgment by the EPA: First, that greenhouse gases may reasonably be anticipated to affect the stratosphere (particularly the ozone layer) and, second, that the effect on the stratosphere may reasonably be anticipated to endanger public health or welfare. In its ANPR, EPA determined that it was beyond the scope of its ANPR to assess and analyze the available scientific information on the effects of greenhouse gases on the stratosphere. If EPA were to judge the scientific data adequate to meet the two-part test, the authority available would be broad and deep. As stated by EPA in its ANPR: "... depending on the nature of any finding made, section 615 authority may be broad enough to establish a cap-and-trade program for the substance, practice, process or activity covered by the finding.... " In its Technical Support Document for its ANPR, EPA took a narrow view of the alternatives available to it in imposing greenhouse gas performance standards. For existing electric generating sources, the EPA focused on incremental improvements in the heat rates of existing units through options that "are well known in the industry" with an overall improvement in efficiency likely to be less than 5%. For new electric generating sources, EPA noted the availability of more efficient supercritical coal units, the future availability of ultra-supercritical units, and the possibility of limited biomass co-firing. Continuing along this line of reasoning, EPA also suggested that it could develop regulations that anticipate future technology. For example, a phase-in approach to applying CO 2 standards to powerplants would be to mandate that "carbon-ready" generating technology be required for new construction. The objective would be to anticipate the widespread need for some form of carbon capture technology in the future by preparing for it with compatible fossil-fuel combustion technology now. The technology most discussed is integrated-gasification, combined-cycle (IGCC). As noted earlier, EPA is considering this option with respect to the Desert Rock PSD-NSR permit reconsideration. With respect to some of the carbon capture technology under development, IGCC has certain advantages over pulverized coal technology. However, just how much IGCC is "carbon ready" is subject to debate. EPA states in its ANPR that it believes such a staged approach is available to it under section 111: EPA believes that section 111 may be used to set both single-phase performance standards based upon current technology and to set two-phased or multi-phased standards with more stringent limits in future years. Future-year limits may permissibly be based on technologies that, at the time of the rulemaking, we find adequately demonstrated to be available for use at some specified future date. The technical support document does not mention some more aggressive options. These include a fuel-neutral standard or a technology-based standard. For example, for carbon dioxide emissions from a newly-constructed powerplant, a fuel-neutral standard could follow the example set by the 1997 and 2005 NOx NSPS and the 2005 NOx NSPS for modified existing sources. Under those regulations, the NOx emissions standard is the same, regardless of the fuel burned—solid, liquid, or gaseous. This standard is much more expensive for coal-fired facilities to comply with than for natural-gas-fired facilities, thus encouraging the lower-carbon gas-fired technologies. Likewise, EPA could choose to set a newly-constructed powerplant standard based on the performance of natural gas burned in a combined-cycle configuration – the fuel and technology of choice for construction of new powerplants for the last two decades. If EPA wanted to encourage the rollover of the existing coal-fired powerplant fleet to natural gas, nuclear, or renewable sources, it could apply a fuel-neutral standard to modified sources as well. For example, a CO 2 emission standard of 0.8 lb. per kilowatt-hour output could be met by a new natural gas-fired, combined-cycle facility, as well as any non-emitting generating technology, such as nuclear power or renewables. In contrast, the standard would require a 60% reduction in emissions from a new coal-fired facility – forcing the development of a carbon control technology, such as carbon capture and storage (CCS), in order for a new coal-fired facility to be built or modified. The viability of these options, or even more aggressive technology-forcing standards, would depend on how EPA determined whether a technology had been "adequately-demonstrated" and the seriousness of its costs and energy requirements. As discussed below, EPA has used the NSPS to encourage the installation of pollution control equipment on powerplants, even while the equipment's development status was still being debated. It is an understatement to say that the new source performance standards promulgated by the EPA were technology-forcing. Electric utilities went from having no scrubbers on their generating units to incorporating very complex chemical processes. Chemical plants and refineries had scrubbing systems that were a few feet in diameter, but not the 30- to 40-foot diameters required by the utility industry. Utilities had dealt with hot flue gases, but not with saturated flue gases that contained all sorts of contaminants. Industry, and the US EPA, has always looked upon new source performance standards as technology-forcing, because they force the development of new technologies in order to satisfy emissions requirements. The most direct method to encourage adoption of carbon capture technology would be to mandate it. Mandating a performance standard on stationary sources is not a new idea: The process of forcing the development of emission controls on coal-fired powerplants is illustrated by the 1971 and 1978 SO 2 NSPS for coal-fired electric generating plants. As noted earlier, the Clean Air Act states that NSPS should reflect "the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reductions and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." In promulgating its first utility SO 2 NSPS in 1971, EPA determined that a 1.2 pound of SO 2 per million Btu of heat input performance standard met the criteria of Sec. 111—a standard that required, on average, a 70% reduction in new powerplant emissions, and could be met by low-sulfur coal that was available in both the eastern and western parts of the United States, or by the use of emerging flue gas desulfurization (FGD) devices. At the time the 1971 Utility SO 2 NSPS was promulgated, there was only one FGD vendor (Combustion Engineering) and only three commercial FGD units in operation—one of which would be retired by the end of the year. The number of units and vendors would increase rapidly, not only because of the NSPS, but also because of the promulgation of the SO 2 NAAQS, the 1973 Supreme Court decision preventing significant deterioration of pristine areas, and state requirements for stringent SO 2 controls, which opened up a market for retrofits of existing coal-fired facilities in addition to the NSPS focus on new facilities. Indeed, most of the growth in FGD installations during the early and mid-1970s was in retrofits. Taylor estimates that between 1973 and 1976, 72% of the FGD market was in retrofits. By 1977, there were 14 vendors offering full-scale commercial FGD installation. However, despite this growth, only 10% of the new coal-fired facilities constructed between 1973 and 1976 had FGD installations. In addition, the early performance of these devices was not brilliant. In 1974, American Electric Power (AEP) spearheaded an ad campaign to have EPA reject FGD devices as "too unreliable, too impractical for electric utility use" in favor of tall stacks, supplementary controls, and low-sulfur western coal. This effort was ultimately unsuccessful as the Congress chose to modify the NSPS requirements for coal-fired electric generators in 1977 by adding a "percentage reduction" requirement. As promulgated in 1979, the revised SO 2 NSPS retained the 1971 performance standard but added a requirement for a 70%-90% reduction in emissions, depending on the sulfur content of the coal. At the time, this requirement could be met only through use of an FGD device. The effect of the "scrubber requirement" is clear from the data provided in Figure 1 . Based on their analysis of FGD development, Taylor, Rubin, and Hounshell state the importance of demand-pull instruments: Results indicate that: regulation and the anticipation of regulation stimulate invention; technology-push instruments appear to be less effective at prompting invention than demand-pull instruments; and regulatory stringency focuses inventive activity along certain technology pathways. That government policy could force the development of a technology through creating a market should not suggest that the government was limited to that role, or that the process was smooth or seamless. On the latter point, Shattuck, et al., summarize the early years of FGD development as follows: The Standards of Performance for New Sources are technology-forcing, and for the utility industry they forced the development of a technology that had never been installed on facilities the size of utility plants. That technology had to be developed, and a number of installations completed in a short period of time. The US EPA continued to force technology through the promulgation of successive regulations. The development of the equipment was not an easy process. What may have appeared to be the simple application of an equipment item from one industry to another often turned out to be fraught with unforeseen challenges. The example indicates that technology-forcing regulations can be effective in pulling technology into the market—even when there remain some operational difficulties for that technology. The difference for carbon capture technology is that for long-term widespread development, a new infrastructure of pipelines and storage sites may be necessary in addition to effective carbon capture technology. In the short-term, suitable alternatives, such as enhanced oil recovery needs and in-situ geologic storage, may be available to support early commercialization projects without the need for an integrated transport and storage system. Likewise, with economics more favorable for new facilities than for retrofits, concentrating on using new construction to introduce carbon capture technology might be one path to widespread commercialization. As an entry point to carbon capture deployment, a regulatory approach such as NSPS may represent a first step, as suggested by the SO 2 NSPS example above. Whether EPA can set up a cap-and-trade program under the Clean Air Act is the subject of considerable debate in the literature. Much of the debate surrounds the provisions of Section 111(d). However, there are other authorities in the Act that might serve as a basis for a EPA-coordinated cap-and-trade program. EPA, along with other commenters, has linked the potential effectiveness of Section 111(d) to whether it can be interpreted to allow a cap-and-trade program for CO 2 . As stated by EPA: "EPA also believes that because of the potential cost savings, it might be possible for the Agency to consider deeper reductions through a cap-and-trade program that allowed trading among sources in various source categories relative to other systems of emissions reduction." As noted, Section 111 explicitly allows EPA to take cost into consideration in developing performance standards. Whether that consideration could justify a trading program across different greenhouse gases, and across different source categories with different best available systems of emissions reduction is not known. A lead author of the winning brief in Massachusetts v. EPA makes a case against such authority: Numerous parties have argued that section 111 does not authorize the creation of a cap-and-trade program. Among other things, section 111(h) provides a contingency plan in the event performance standards are "not feasible" to implement. In that case, section 111(h) gives EPA the authority to "promulgate a design, equipment, work practice, or operational standard, or combination thereof, which reflects the best technological system of continuous emissions reduction which … the Administrator determines has been adequately demonstrated." 42 U.S.C. Section 7411(h)(1). One of the ways a performance standard might prove "not feasible" is if "a pollutant or pollutants cannot be emitted through a conveyance designed and constructed to emit or capture such pollutants." 42 U.S.C. 7411(h)(2)(A). Clearly, Congress thought the most likely scenario under section 111 was for pollutants to be "emitted through a conveyance designed and constructed to emit or capture such pollutant[s]" – an assumption at odds with the operation of a trading program. Other aspects of section 111 also point away from the creation of a trading program under this provision [reference omitted]. In sum, whether this authority can be expanded to creating a comprehensive cap-and-trade program is under debate. Focused on existing sources, EPA used Sec. 111(d) to justify its promulgated rule (now vacated) to reduce mercury emissions from powerplants. Although some have argued that the court decision in this case repudiated EPA's reasoning, the case was actually not decided on the basis of Section 111(d). Three other sections of the Act, (Sections 110, 115, and 615) might also be considered as possible authority for establishing an economy-wide cap-and-trade program for GHG emissions, although each has its own weaknesses. Section 110 of the Act establishes requirements for State Implementation Plans (SIPs). While primarily designed to demonstrate how a state with nonattainment areas will bring those areas into attainment with NAAQS, the section also contains language that might serve as the basis for the use of broader GHG regulatory tools once emission standards were issued under any section of the Act. Specifically, Section 110(a)(2)(A) says that each SIP shall ... include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this Act .... The predicate is that there must first be an applicable requirement under the Act. Thus, Section 110 would not be an authority that EPA could use to initiate regulation of GHGs. Also, although the section mentions economic incentives, marketable permits, and auctions, it is not clear that such authority could be used for economy-wide control measures. The precedents for the authority's use that EPA cited in the ANPR, for example, included such regulations as the NOx SIP call, which established a cap-and-trade program for powerplant emissions of NOx, and the Clean Air Interstate Rule, which also allowed trading of emission allowances by powerplants. As stated in the ANPR: EPA has often incorporated market-oriented emissions trading elements into the more traditional performance standard approach for mobile and stationary sources. Coupling market-oriented provisions with performance standards provides some of the cost advantages and market flexibility of market-oriented solutions while also directly incentivizing technology innovation within the particular sector, as discussed below. For example, performance standards for mobile sources under Title II have for many years been coupled with averaging, banking and trading provisions within a subsector. In general, averaging allows covered parties to meet their emissions obligation on a fleet- or unit-wide basis rather than requiring each vehicle or unit to directly comply. Banking provides direct incentives for additional reductions by giving credit for overcompliance; these credits can be used toward future compliance obligations and, as such, allow manufacturers to put technology improvements in place when they are ready for market, rather than being forced to adhere to a strict regulatory schedule that may or may not conform to industry or company developments. Allowing trading of excess emission reductions with other covered parties provides an incentive for reducing emissions beyond what is required. The two other possible authorities for a cap-and-trade program, Sections 115 and Section 615, have never been used to control any pollutant, much less to establish a cap-and-trade program. Assuming Section 115 could be invoked without a supporting NAAQS, there might be sufficient flexibility to institute a cap-and-trade program. The program would have to be created by each state under Section 110 to comply with EPA-determined state GHG emission caps in response to Section 115. Because it would function through Section 110, EPA could not impose a cap-and-trade system on the states; rather, the states would have to voluntarily agree to cooperate in a EPA-coordinated cap-and-trade scheme. As noted earlier, if Section 615 could be successfully triggered by the science, EPA's discretion in setting up a regulatory scheme would be substantial. As stated by EPA in its ANPR: "... depending on the nature of any finding made, section 615 authority may be broad enough to establish a cap-and-trade program for the substance, practice, process or activity covered by the finding.... " Any new or modified facility emitting (or potentially emitting) over 250 tons of any regulated pollutant must undergo preconstruction review and permitting, including the installation of Best Available Control Technology (BACT), except those pollutants regulated under Sections 112 (hazardous air pollutants) and 211(o) (renewable fuels). New sources under the Prevention of Significant Deterioration provisions of Part C (PSD-NSR) must undergo preconstruction review and must install BACT as the minimum level of control. State permitting agencies determine BACT on a case-by-case basis, taking into account energy, environmental, and economic impacts. BACT cannot be less stringent than the federal NSPS, but it can be more so. More stringent controls can be required if modeling indicates that BACT is insufficient to avoid violating PSD emission limitations, or the NAAQS itself. PSD-NSR is required for any pollutant "subject to regulation" under the Clean Air Act, but there are varying interpretations of what the phrase "subject to regulation" means. Environmental groups have argued that CO 2 is already subject to regulation because utilities are required under Section 821 of the Clean Air Act Amendments of 1990 to monitor and report CO 2 emissions to EPA. Others argue that an endangerment finding would make GHGs subject to regulation, and, therefore, trigger PSD-NSR requirements for new sources. In its endangerment finding and in the preamble to the proposed Greenhouse Gas Tailoring Rule, EPA noted its current interpretation of the law is that a final positive endangerment finding for motor vehicles under Section 202 would not per se make greenhouse gas emissions subject to PSD-NSR. Rather, as stated in a September 30, 2009 proposal, "Although several possible triggering events may be considered ..., the latest of these events would be the one that applies under EPA's current interpretation: a nationwide rule controlling or limiting GHG emissions." However, the interpretive memorandum on which this conclusion is based, issued in December 2008, is currently under review by the new Administration. Two aspects of the New Source Review provision create potential difficulties in using the CAA to control greenhouse gases. First, as noted earlier, PSD-NSR has specified thresholds for triggering its provisions: a "major emitting facility is generally defined as emitting or having the potential to emit either 100 tons or 250 tons annually of a regulated pollutant (Sec. 169(1)). With respect to greenhouse gases, this is a fairly low threshold. By comparison, several bills introduced in the 110 th Congress set thresholds for inclusion in the reduction program at 10,000 metric tons annually, and the Waxman-Markey bill ( H.R. 2454 ) generally uses 25,000 tons as a regulatory threshold. The second administrative issue for PSD-NSR is the requirement that BACT be determined on a case-by-case basis. Combined with a 100-ton or 250-ton threshold, this could mean a massive increase in state-determinations of BACT: the resulting increased permit activity would be at least two orders of magnitude, according to EPA (discussed below). On this second issue, it should be noted that several commenters believe this would not be a major problem (unless a cap-and-trade program is implemented). As stated by the Institute for Policy Integrity: Since including GHGs in the PSD program may greatly expand the number of permits issued, making case-by-case determinations for each individual source may stretch the resources of EPA and state permitting authorities. Moreover, traditional technological controls may not exist for every GHG emitted by every regulated facility. However, there is flexibility in the statute to resolve these problems. Though BACT determinations are generally to be made on a case-by-case basis, the D.C. Circuit recognized in Alabama Power that exceptions can be made if "case-by-case determinations would, as a practical matter, prevent the agency from carrying out the mission assigned to it by Congress." The development of "presumptive BACT" determinations should be permissible and may help streamline the permitting process [footnote omitted]." In addition, assuming PSD is triggered by regulation under Section 111, the BACT requirements may be identical to the NSPS determinations under Section 111. It is also likely that most small sources would not have an NSPS as EPA applied its discretion under Section 111 in determining the most cost-effective emissions reductions. With no NSPS floor for a BACT determination, it is possible that NSR requirements for sources not covered under Section 111 could be quite lax. In addition, EPA has proposed to address the threshold problem in a Greenhouse Gas Tailoring Rule. The proposal would set a 25,000-ton CO 2 -equivalent threshold for new source permitting under the PSD-NSR program, and would establish a significance level for determining major modifications of 10,000-25,000 tons of increased annual emissions. In the ANPR, EPA discussed the possibility that an endangerment finding and subsequent regulation of GHGs as air pollutants under any section of the Act could trigger Title V permit requirements, and that all facilities that have the potential to emit a GHG pollutant in amounts of 100 tons per year or more would be required to obtain permits. Under this reasoning, the regulation of CO 2 from motor vehicles under Section 202, for example, could lead to Title V permit requirements for CO 2 from powerplants and other sources. In the ANPR, the agency stated: Using available data, which we acknowledge are limited, and engineering judgment in a manner similar to what was done for PSD, EPA estimates that more than 550,000 additional sources would require Title V permits, as compared to the current universe of about 15,000–16,000 Title V sources. If actually implemented, this would be more than a tenfold increase, and many of the newly subject sources would be in categories not traditionally regulated by Title V, such as large residential and commercial buildings. In the preamble to its September 30, 2009 Tailoring Rule, EPA increased its estimate to more than 6 million sources potentially subject to Title V if the threshold remains at 100 tons per year of emissions. Thus, like PSD-NSR, a major complication that Title V introduces is the potential for very small sources of greenhouse gases to need permits in order to operate. Furthermore, Title V requires that covered entities pay fees established by the permitting authority, and that the total fees be sufficient to cover the costs of running the permit program. The potential for increased permitting activity has led to speculation on its potential extent. For example, some agricultural interests have spun the possibility that Title V could be invoked for emissions from agricultural activities and the requirement for permit fees into something they refer to as the "cow tax." On November 18, 2008, for example, Cattle Network stated "EPA Proposes 'Cow Tax.'" The article even generated specific amounts for the "tax": $175 per dairy cow and $87.50 per beef cow. EPA says that it has no plans to regulate agricultural activities' GHG emissions. Indeed, the agency currently exempts most major agricultural sources from any Clean Air Act controls on conventional air pollutants under an arrangement known as the Air Compliance Agreement. Thus, it would seem unlikely that the agency would now make a priority of subjecting small agricultural sources to GHG requirements. However, the need to deal with the size issue has been noted by EPA and other commenters. Alternatives to lessen the extent and cost of these provisions fall into three categories: (1) legal or regulatory interpretations that increase EPA's flexibility to determine what sources would need permits and when; (2) the expanded use of general permits; or (3) interpretation of different endangerment findings to exclude Title V and/or PSD-NSR. EPA noted two possible legal theories under which it could avoid imposing PSD-NSR or Title V permitting requirements on small sources. Under "the judicial doctrine of administrative necessity," the agency stated that it might be able "to craft relief in the form of narrowed source coverage, exemptions, streamlined approaches or procedures, or a delay of deadlines." The agency also stated that in rare cases, the courts will apply statutory provisions in a manner other than that indicated by the plain meaning, if "absurd, futile, strange, or indeterminate results" would be produced by literal application. Following up on these interpretations, EPA proposed a Title V and PSD-NSR permitting threshold of 25,000 tons per year of CO 2 -equivalents (CO 2 -e) on September 30, 2009. The preamble to the rule states: This proposal is necessary because EPA expects soon to promulgate regulations under the CAA to control GHG emissions and, as a result, trigger PSD and title V applicability requirements for GHG emissions. If PSD and title V requirements apply at the applicability levels provided under the CAA, state permitting authorities would be paralyzed by permit applications in numbers that are orders of magnitude greater than their current administrative resources could accommodate. On the basis of the legal doctrines of "absurd results" and "administrative necessity," this proposed rule would phase in the applicability thresholds for both the PSD and title V programs for sources of GHG emissions. While setting a new threshold for permitting, the proposal does not exempt smaller sources. Rather, the agency and state-permitting authorities, within five years of the rule's promulgation, would conduct a study of the permitting authorities' ability to administer the programs going forward and, within a year of the study's completion, would conduct a rulemaking for the second phase of the program. The study might confirm the threshold, revise it, or establish other streamlining techniques for subsequent permitting activity. Where EPA has the authority, such as under Section 111, it will almost certainly focus on the large sources first. As noted in the introduction, when it comes to stationary sources, size matters. Twenty-eight percent of the country's GHGs comes from an Energy Information Administration (EIA) estimated 670 coal-fired electric powerplants. Farms, by contrast, number more than 2 million, and emit less than 4% of total GHGs. Methane (CH 4 ) provides another interesting contrast in potential priorities: about 1.8% of GHG emissions, in the form of methane, are generated by 1,800 landfills; a slightly larger amount (2.4%) is emitted by roughly a million cattle and swine operations. As stated by the Institute for Policy Integrity: Courts grant agencies much more leeway in deferring full implementation of a statute than in creating permanent exemptions. Invoking the doctrine of administrative necessity, EPA should be able to justify expanding NSR permit applicability to the largest sources first, and then gradually including smaller sources. The timeline set for phasing in smaller sources could not take longer than reasonably necessary given EPA's administrative burdens, but EPA will have a good deal of discretion to determine its own resources and capability [footnotes omitted]. A second means of reducing the administrative burden is to increase the effective size of an affected source by defining "potential to emit" in terms of potential actual emissions. In particular, EPA suggested in its ANPR that determining the potential to emit in terms of actual usage instead of maximum potential could have some benefit in some cases. For example, if a small boiler's potential to emit was based on actual usage of 1000 hours a year, instead of continuous potential usage (8760 hours), many fewer boilers would be subject to NSR. Perhaps the most straightforward method of reducing administrative burden is for EPA to adopt a general permit scheme for PSD-NSR and Title V. For categories with numerous similar sources of emissions, the Clean Air Act provides in Section 504(d) that the permitting authority—be it EPA or a delegated state agency—may issue a "general permit" covering all sources in the category. This provision substantially reduces the administrative burden of issuing permits, allowing notice and opportunity for public hearing on the category as a whole and the provisions of the general permit, rather than requiring the same for each individual source. General permits have been widely used by the agency under the Clean Water Act, and are used by about half the states for control of various air pollution sources. Thus, there is precedent for their use in a Clean Air Act greenhouse gas control program for multiple, relatively minor sources of emissions. A general permit does not relieve the permittee from filing a permit application or from complying with permit conditions, which would include some sort of monitoring and reporting requirements. But a permit application for a general permit can be relatively simple, and since there are few costs to issuing the permit, permit fees, which are required by Section 502(b) to cover the reasonable costs of the permit program, but are to be utilized only to cover such costs, would be relatively low. A sampling of states using general permit fees for other types of air pollutants found fees ranging from $100 to $350 per permittee. Such an approach may also be available to small sources potentially caught under PSD-NSR. Both EPA in the ANPR and the Institute for Policy Integrity provide arguments for PSD-NSR general permits for small sources to avoid absurd results or respond to administrative necessity. If an endangerment finding triggered emissions standards or limitations under the CAA (e.g., Section 111, Part C), it would also bring into play Section 304, Citizen Suits. Section 304 allows any person to commence a civil action against any other person (including government entities and instrumentalities) for violation of an emissions standard or limitation under the Act. It also provides for suits against EPA for failing to perform a nondiscretionary act or duty. Most specifically, Section 304 provides for suits against any person who proposes to construct or constructs any new or modified major emitting facility without a permit required under part C of title I (relating to significant deterioration of air quality) or part D of title I (relating to non-attainment) or who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of condition of such permit. Citizen suits have been widely used by environmental groups to force the Administrator to undertake nondiscretionary duties and to enforce the Act's requirements against emitting facilities. Should the agency fail to move forward with GHG standards following an endangerment finding, suits seeking to force action would almost certainly be filed. The current debate on the appropriateness of using the Clean Air Act to regulate greenhouse gas emissions is not the first such debate that has occurred when a new environmental challenge has been directed at the Act. During the 1980s, suggestions were made that acid rain and/or stratospheric ozone depletion could be addressed via then-existing provisions, rather than by new Amendments. For example, in 1985, the CRS stated the following with respect to addressing acid rain through the existing Clean Air Act: Various Clean Air Act provisions could be used to address acid precipitation , including issuing more stringent secondary ambient air quality standards, setting a sulfate standard, and enforcing SO2 reductions more vigorously. (a) Typically, however, such actions require a demonstration of cause-effect relationship that has not been obtained, at least in the view of many policymakers; and/or they require actions under peripherally related provisions such as visibility protection—which are already subject to controversy on their own right. (b) Any such actions would likely be expensive, both in resources and in political/administrative capital. (c ) Program administrators have therefore said they will not use the Clean Air Act aggressively and innovatively to combat acid precipitation without an explicit Congressional mandate and/or compelling new evidence linking specific damages to specific pollutants [emphasis in original] . In both cases, the Congress moved to add new Titles to the Act (Title IV to address acid rain, and Title VI to address stratospheric ozone depletion). In the case of Title IV, a new market-based approach to reducing pollutants was introduced to implement a statutory reduction requirement (i.e., the SO 2 emissions cap) in hope that the cost would be optimized. The result was so successful that it was used by states and EPA to begin addressing interstate transport of smog (i.e., the NOx SIP Call) and has been suggested by some as the optimal approach to controlling greenhouse gases. However, controlling greenhouse gases is a substantially more complex environmental, technical, economic, and social issue than either acid rain or stratospheric ozone depletion are. It is possible that one size does not fit all in this debate. Some sources may not respond significantly to a market-based approach because they are not particularly price-sensitive. Others may be too small or dispersed to include. For example, the European Union's market-based approach covers only about 40% of the EU's emissions. Other instruments are used to address difficult sectors, such as transportation. Thus, initiatives to use the current Clean Air Act could be designed as a substitute for what is perceived by some as a protracted congressional debate, or as a complementary effort to address sources or gases that a future market-based system may choose to exclude from its provisions. As summarized in 2008 by Lisa Heinzerling in testimony to the Subcommittee on Energy and Air Quality of the House Energy and Commerce Committee: the Clean Air Act contains numerous provisions that might be used to regulate greenhouse gases. The advantages of using these provisions include: they can be deployed now; they use regulatory strategies that are familiar to, indeed are the bread and butter work of, the Environmental Protection Agency; they call for regulation of numerous and diverse sources and thus, taken as a group, they have an inherent fairness to them; they do not pose unusual enforcement difficulties or untoward administrative burdens. There are also disadvantages to using existing Clean Air Act provisions to address climate change. Most of the provisions do not have statutory deadlines.... To the extent one favors cap-and-trade as a regulatory mechanism for addressing climate change, one might worry about the lack of clear authority for such a scheme under the existing statute. The NAAQS program is an ungainly framework for regulating globally harmful pollutants. PSD requirements are triggered for sources that are "large" when it comes to conventional pollution but "small" from the perspective of global pollutants. A final endangerment finding presents EPA with many options. However, the ultimate decision on what the Nation's greenhouse gas policy should be rests with the Congress. If it disagrees with any approach undertaken by EPA, it can override the agency's decision, or respond as it did with acid rain and stratospheric ozone depletion—with new statutory authorities.

Although new legislation to address greenhouse gases is a leading priority of the President and many members of Congress, the ability to limit these emissions already exists under Clean Air Act authorities that Congress has enacted – a point underlined by the Supreme Court in an April 2007 decision, Massachusetts v. EPA. In response to the Supreme Court decision, EPA has begun the process of using this existing authority, issuing an "endangerment finding" for greenhouse gases (GHGs) December 7, 2009, and proposing GHG regulations for new motor vehicles in the September 28, 2009 Federal Register. On September 30, 2009, the agency took another step toward Clean Air Act regulation of GHGs, proposing what it calls the Greenhouse Gas Tailoring Rule. The rule would define when Clean Air Act permits would be required for GHG emissions from stationary sources. The proposed threshold (annual emissions of 25,000 tons of carbon dioxide equivalents) would limit which facilities would be required to obtain permits; for the next six years, the nation's largest GHG emitters, including power plants, refineries, cement production facilities and about two dozen other categories of sources, would be the only sources required to obtain permits. Smaller businesses and almost all farms would be shielded from permitting requirements during this period. By tailoring the permit requirement to the largest sources, EPA says it would focus on about 13,000 facilities accounting for nearly 70% of stationary source GHG emissions. Like the proposed standards for motor vehicles, the Tailoring Rule is part of a two-track approach to controlling emissions of GHGs. On one track, Congress and the Administration are pursuing new legal authority (for cap-and-trade, carbon tax, or other mechanisms) to limit emissions. At the same time, on a parallel track, the Administration, through EPA, has begun to exercise the Clean Air Act's existing authority to regulate GHGs. Despite EPA's commitment to move forward on this second track, EPA Administrator Jackson and others in the Administration have made clear their preference that Congress address the climate issue through new legislation. The first step in using the Clean Air Act's existing authority is for the EPA Administrator to find that GHG emissions are air pollutants that endanger public health or welfare. The Administrator proposed this endangerment finding in the April 24, 2009 Federal Register and finalized it December 7. With the finding finalized, the agency can (indeed, must) proceed to set GHG emission standards for new motor vehicles, as it proposed to do, September 28. Motor vehicle GHG standards will lead EPA and state permitting authorities to require permits for stationary sources: language in the Act triggers permitting under the Prevention of Significant Deterioration (PSD) program and Title V of the Act whenever a pollutant is "subject to regulation" under any of the Act's authorities. It is this trigger that the Tailoring Rule addresses. This report reviews the various options that EPA could exercise to control GHG emissions from stationary sources under the Act. The PSD and Title V permitting requirements that are automatically triggered may be the most immediate point of interest, but an endangerment finding for GHGs would present the agency with other options, as well. Five of these options are discussed in this report. Among these, particular attention should be paid to Section 111 of the Act, which provides authority to set New Source Performance Standards and, under Section 111(d), requires the states to control emissions from existing sources of the same pollutants. As EPA moves forward, Section 111 appears to be the most likely authority it will use to establish emission standards for stationary sources.

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The health reform debate in the 111 th Congress continued and expanded upon the work begun in the 110 th Congress. On November 12, 2008, the chairman of the Senate Finance Committee, Senator Baucus, released a white paper detailing his principles for health reform. This provided a framework for work within the committee for the 111 th Congress. Several bills were introduced when the 111 th Congress first convened, and these bills focused on a broad spectrum of approaches to health reform. On November 7, 2009, the House passed H.R. 3962 , the Affordable Health Care for America Act. H.R. 3962 is based on H.R. 3200 , America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. The U.S. Senate passed its version of health insurance reform on December 24, 2009, the Patient Protection and Affordable Care Act, in H.R. 3590 , as amended by the Senate (hereafter referred to simply as H.R. 3590 ). H.R. 3590 consolidated and amended bills passed by the two committees with principal jurisdiction, the Committee on Health, Education, Labor, and Pensions, which ordered reported S. 1679 , the Affordable Health Choices Act on July 15, and the Senate Finance Committee, which ordered reported S. 1796 , America's Healthy Future Act of 2009, on October 19, 2009. The House and Senate must agree to the same measure with the same legislative language before a bill can be presented to the President. Congress did not chose to appoint a formal conference committee to negotiate a compromise that would then reported to each chamber for consideration, opting for negotiations between the chambers. In an effort to move the process forward, the President released a health reform proposal on February 22, 2010, which combines and modifies provisions in the Senate and House passed bills. On February 25, 2010, the President held a bipartisan meeting on health reform, attended by both Democrats and Republican Members of Congress. This report presents basic background information on health insurance that may be useful to legislators considering health insurance reforms. It describes health insurance reform approaches and provides brief descriptions of health insurance reform bills introduced in the 111 th Congress. The discussions in this report will not summarize all currently introduced legislation, but may be helpful in understanding the range of options that are currently being considered by Congress. The potential impact of various reform approaches and bills is not analyzed in this report. As a result, it does not provide evaluations of how well different bills, once enacted, would meet their objectives. However, all of these bills have a common focus: to address some or all of the current issues surrounding health insurance and health services. The costs of health insurance and health care services are consuming a growing portion of workers' compensation, and the percentage of individuals with job-based health insurance coverage is declining. Some states are seeking reforms in their state systems, providing useful trials and errors to potentially inform the debate at the federal level. Just as the federal debate in the 1990s was spurred by rising health care and health insurance costs, declining numbers of individuals with private coverage, and state experimentation and innovation, those same issues are at the center of the debate today. Many of the issues addressed through health reform legislation are exacerbated by the existing recession. Health insurance reform is a broad term spanning a large range of policy options, each of which has its own inherent strengths and weaknesses. Health insurance reform can focus on a discrete health insurance problem or issue, such as expanding public health insurance coverage for uninsured children or reducing the number of costly state benefit mandates and premium taxes on private health insurance plans. At the opposite end of the spectrum, however, are proposals that operate on a broader scale—changing the way people access public and/or private health insurance, investing large amounts of government resources to assist individuals with the cost of health care or health insurance, reducing costs and improving quality. The wide variation across proposed reforms is one factor that makes a simple yet comprehensive discussion of all of the important options challenging. Other fundamental differences separating health insurance reform approaches include different objectives of reforms and different priorities among important stakeholders. Health insurance reform may have a wide range of primary objectives, which can include the following: Reducing the number of people without health insurance. Most health insurance reforms seek to improve access to health insurance. In the United States, access to medical care is largely dependent on whether an individual has health insurance. Reducing the reliance on health insurance for at least some portion of needed medical care. Some approaches to reform reflect the position that part of the insurance problem in the United States is that people have too much of it—that the presence of insurance has desensitized Americans to the cost of health care services, allowing both the demand for and the prices of medical care, whether necessary or unnecessary, to grow too quickly. Legislation may include provisions intended to encourage cost-consciousness in individuals' choices of health insurance and health care and include a group of approaches sometimes referred to as promoting "consumer directed" health care. Reducing the cost of health insurance. Some advocates of reform believe that the rising cost of health insurance must be addressed before other problems can be dealt with. Their reform approaches reflect the belief that more people will purchase insurance once more affordable plans are available. Thus, they assert reducing the number of uninsured is secondary to reducing the cost of the insurance. Cost-reducing approaches span the continuum, from preempting the application of state laws which increase the price of insurance, to establishing a single government payer for all health insurance. Advocates of single payer approaches believe such a system would improve administrative efficiencies, thereby reducing overall health insurance costs. Legislation has also been introduced in the 111 th Congress that features objectives related to improving the quality of medical care or the quality of health insurance products. Proposals to improve health outcomes, increase the availability of information about high-quality health care and providers, and establish disease management systems are raising interest among private insurers, government programs, and employers. These provisions alone, however, will not reduce the number of people without any insurance, and their effect on medical costs is as yet undetermined. What constitutes adequate health insurance is an important consideration that is beyond the scope of this report. Nonetheless, sponsors of bills extending coverage are likely to grapple with complex questions about the kind of coverage that should be extended. Sponsors of bills offering generous government subsidies for health insurance may feel that it is their duty to set a minimum standard for qualifying coverage as a way to ensure that taxpayers' funds are being used responsibly. One of the challenges of undertaking comprehensive health insurance reform is that every U.S. legal resident is a stakeholder whose individual preferences and needs may differ. Reform approaches reflect different choices about the relative importance of needs among stakeholder groups, including federal, state, and local governments, health care providers, medical researchers, insurance carriers, employers, workers, and consumers. Needs can vary considerably among stakeholder groups, and even within them. For example, health care consumers may prefer low-cost health insurance obtained through lower profits to health insurers while, according to standard economic theory, those health insurers will seek to maximize profits. Within consumer groups, there are healthy people who may prefer limited insurance coverage or none at all, while elderly or less healthy consumers may prefer more comprehensive coverage. Sometimes meeting the needs of one group can exacerbate the problems encountered by others. For example, requiring health care premiums to be community rated—that is, based on the average costs of everyone in a large group—can reduce premiums for individuals with expensive medical conditions. On the other hand, community-rated rates could lead to higher premiums for the healthiest individuals. Since the early 1990s, a number of incremental health insurance reforms have been enacted (see Text Box 1 ). Health insurance reform in the 111 th Congress may use a variety of approaches, ranging from incremental improvements that build on the nation's current patchwork of coverage to reforms of a much broader scope. A number of incremental reforms enacted over the past 15 years have improved the availability of health insurance for some populations. However, they have been built on a system in which some continue to have no access to any insurance and others to only unaffordable options, and the number of uninsured has continued to rise; such changes may also have exacerbated the loss of privately sponsored coverage. For example, a body of research has concluded that expanding Medicaid and the State Children's Health Insurance Program (CHIP) has generated some crowd-out of private coverage; on the other hand, children are the only subpopulation in which uninsurance rates have fallen over the past decade. Questions about the scope of reforms extend to the cost of the reform plans. At one end of the federal financing spectrum are approaches that feature subsidies for individuals to use toward the cost of health insurance. Such bills presume that a financial commitment from the federal government is essential to achieve universal or near-universal coverage, whether coverage is provided through government programs or private plans. A fair amount of research supports the notion that significant subsidies would be needed to induce many of the uninsured to purchase coverage. On the other end of the spectrum are a number of market reform approaches that reflect the position that government laws and regulations have raised the cost of insurance, reduced the number of options available to people, and created disincentives to purchase low-cost insurance. For example, state benefit mandates are blamed for increasing costs and reducing choices. Bills at this end of the spectrum aim to make the market for insurance work better, proposing to achieve higher coverage rates without subsidies because people would find health insurance products are more affordable by meeting, but not exceeding, their insurance needs. While the 111 th Congress is still relatively new, several health insurance reform bills have already been introduced. These bills, as well as other proposals currently under consideration, can be classified as expanding coverage using one of the following approaches: Largely replace existing coverage with a national government-provided health insurance program (or a national health service). Expand existing public programs for certain individuals. Expand privately sponsored coverage. Encourage state-based reforms. Simultaneously expand private and public coverage options. Some of the proposals introduced in the 111 th are directed at the creation of a national health insurance program. While the legislation can take a variety of forms, the general thrust of such proposals is to make basic health insurance available to all Americans so that access to health care would not be contingent on individuals' ability to pay or their employment status. These proposals all share at least three common features: replacement of most or all of the existing sources of coverage, universal entitlement to health care or health insurance, and government-provided health coverage. National health insurance legislation in the 111 th Congress generally takes one of two approaches: social insurance or a national health service. Under the social insurance approach, all individuals would obtain their health insurance through a government-administered and financed system. Medicare is an example of a social insurance program for elderly and disabled individuals. Private insurers can retain a role in such a system, essentially acting as contractors. In contrast, the national health service approach, modeled after systems like Britain's National Health Service, includes universal coverage, as well as reforms of some or all of the factors of health care production—such as public ownership of hospitals, or public employment of physicians. Private insurers may or may not have a role in such a system. Because of the magnitude of the changes in such approaches, they could be subject to criticism, particularly about the level of governmental intrusion they would potentially introduce. The counterargument could be that the continuation of more incremental changes cannot be relied on to achieve universal or near universal insurance coverage. Members of the 111 th Congress have also introduced bills that would expand public health insurance programs for certain targeted groups of individuals. For example, legislation has been introduced to eliminate the two-year Medicare waiting period for people who are disabled. Other bills would expand Medicaid coverage to individuals who are not currently eligible for the program. None of these partial coverage bills are summarized at the end of this report. Instead, the list of introduced legislation is focused on only those bills that are not limited to particular demographic groups. Although the bills characterized in this section are not listed at the end of this report because of their narrow scope, that is not to suggest their impact would be insignificant. If one measures the success of past health insurance reforms by the number of previously uninsured individuals who obtained health coverage, then the expansion of public programs (Medicare, Medicaid, and CHIP) must be considered great successes. For example, in the years after the creation of CHIP, the percentage of children who were uninsured fell by more than one-third; this is in contrast to a 12% increase of uninsured among non-aged adults over the same period. Legislation offered in the 111 th Congress would build on those programs to extend coverage to more uninsured individuals. One advantage that public program expansions have over other types of reforms is that the programs are already operational and their administrative costs may be lower, relative to the costs of benefits, than for typical private coverage. If the target population of a reform proposal is predominantly those who cannot afford private coverage, or if the proposal includes sliding scale subsidies, utilizing existing programs that already conduct income determinations and administer subsidies may be efficient. On the other hand, proposals to expand public coverage while maintaining the existing private market for insurance face an obstacle in "crowd out." There is evidence that in the presence of expanding public coverage, private coverage will be lower than it would have been. This may lead to fewer new covered lives than expected and/or greater public expenditures than expected. However, analyses have concluded that when public programs cover the lowest income people, for whom few affordable private sources of coverage exist, crowd-out is low. But when public programs extend into higher income levels, crowd-out rises. Private health insurance sponsored by employers covers more than 60% of the U.S. population. As a result, a major portion of health insurance in this country is funded privately by workers and their employers. Some of the bills focus on expanding employer-based or "group" coverage generally, and others address the particular needs of small employers or the problems present in the individual market for insurance. Still other approaches focus on freeing private markets for insurance from the laws, regulations, and incentives that raise costs and reduce flexibility, with the hope that such changes would improve the availability and affordability of health coverage. Because more than 80% of uninsured individuals under age 65 are employed or are family members of a person with ties to employment, efforts to expand or strengthen the employer-based, or group, market for insurance can potentially be effective in reducing the number of uninsured. Work-focused approaches, of course, have limited impact on people who have no or tenuous ties to the workforce. Members of the 111 th Congress have introduced bills that would subsidize workers' or employers' share of premiums (directly or through tax credits, exclusions or deductions; see Text Box 2 ), mandate that some or all employers offer coverage, or improve pooling in the small employer market for insurance. Some of the proposals are intended to address the disadvantages that small employers face in providing health insurance as a benefit relative to large employers. (A number of these approaches are discussed more thoroughly in the " Market Reforms " section below.) Large employer groups are able to spread risk more broadly among their employees and enjoy economies of scale that keep per person administrative costs low. When a large employer self-insures, its health benefits are not subject to state insurance laws and regulation (because it is not defined as "insurance"). This, along with the broad risk spreading and low per person administrative costs, can confer a considerable cost advantage over similar benefit plans in the small group or individual markets for insurance. Most health insurance in the United States is obtained through employment. This is due to a number of factors—workers perceive employers as paying for most of the cost of group health insurance, and payments for group plans have tax-advantaged status. Further, the cost of group plans is calculated for an entire group, whereas people in the individual, or non-group, market are often "underwritten" based on their own health status—that is, the price of the insurance policy is based on an individual's own set of health conditions. While health underwriting could result in low-cost plans for healthy individuals seeking coverage, those with medical conditions could be at a significant price disadvantage relative to the price they might be charged if their premiums were averaged across an employment-based group. Insurers selling plans in many states can even refuse to sell to individuals with health conditions, or sell policies that exclude coverage for particular conditions and sometimes for entire body systems. Approaches addressing these issues are designed to make the individual market work better for more people. Potential advantages of improving the individual market for insurance include increasing individuals' choices (coverage options would not be limited to those chosen by their employer), and increasing the portability of health insurance (portable health insurance does not have to be discontinued when one leaves a job). Tools utilized by individual market bills include giving individually purchased insurance the same tax-advantaged status as employer-sponsored coverage, and providing subsidies for the purchase of coverage in the individual market. One option includes eliminating the tax benefits for employer-based health insurance premiums and replacing them with new tax benefits for coverage in the individual market. (See Text Box 3 for summaries of tax policies related to health insurance.) This is intended, over time, to provide incentives for people to move from employer-based coverage to coverage in the individual market. However, because of the market limitations discussed above, such as health underwriting, lack of guaranteed availability of plans, and the absence of employer contributions, these proposals by themselves may improve options for some individuals, but not others. For example, employer contributions fund a large portion of the nation's health insurance bills. Without replacing those funds, some people may find individual insurance less affordable than their employer-sponsored plan, at least in the short run. In addition, risk pooling in the individual market in many states is limited, and individual underwriting common. This could mean that if and when employers drop coverage, healthy people could easily find replacement policies in the individual market, but those less healthy and arguably most in need of health insurance could become a new and possibly needier group of uninsured. Finally, the administrative costs in an environment with few economies of scale are high. For these reasons, most bills proposing individual market solutions tend to be combined with other reforms addressing some of these issues. For example, some bills would establish a "connector" or "exchange" whose role could range from a simple clearinghouse for purchasing insurance (a Travelocity model) to an active participant in negotiating with plans and performing other functions. A connector or exchange might offer one plan or a selection of plans with enrollment available either to all small employers or to both small employers and individuals. Bills offered in the 111 th Congress may include other market improvements intended to make private health insurance more accessible and affordable. These approaches are intended to reduce state regulation of health insurance plans, with an objective of increasing affordability; broaden risk pools so that premiums for health insurance products are averaged over a larger group of individuals; and/or encourage "consumer driven" health plans and health choices. In general, such approaches would retain the current sources of coverage. States are primarily responsible for regulating the business of insurance. Over the years, states have developed a significant body of law dealing with all aspects of health insurance. State laws and regulations include patient protections, instructions on how insurance carriers may develop the rates charged for their products, and procedures for approval of those rates. They address how entities in the business of selling health insurance fund their enterprises and guard against the risk of insolvency. Insurance carriers are subject to fair marketing practice laws, requirements related to the filing of grievances against the plans, and appeals processes of plan decisions. States also have benefit requirements that ensure that certain medical services must be available for a product to be sold and marketed as health insurance. Proposals to reduce state regulation would move insurance markets closer to an unrestrained free market and would invariably reduce costs for some purchasers of health insurance. (However, they may increase costs for others.) They would also address insurers' complaints about the challenges of selling products across state lines when laws in some states are significantly different from others. Many of the state laws were developed, however, to protect consumers from certain business practices; bills that would preempt those state laws raise concerns about those business practices reemerging. Pooling proposals often focus specifically on small employers. Small employers have a harder time providing insurance to their employees for a number of reasons. Small groups are not able to spread their highest health risks broadly. As a result, premiums for small firms, particularly those with older or less healthy workers (or workers' dependents), are relatively high for similar benefits than for larger employers. Proposals encouraging small employers to join into health purchasing groups (sometimes called health insurance purchasing cooperatives or regional purchasing cooperatives) are meant to pool together those small groups, raising the number of individuals over which premiums are calculated. Bills encouraging professional and trade associations to offer coverage were considered in the 109 th and 110 th Congresses and were ostensibly about such pooling. In addition, those bills would provide regulatory relief for insurers selling products through associations. Most of those bills, however, did not require premiums to be calculated across the entire group, and so would not increase the size of the risk pools. Increasing the size of risk pools is one objective of bills that would establish programs similar to the Federal Employees Health Benefits Program (FEHBP). In general, those bills would identify an existing federal agency or create a new one to negotiate with a limited number of health plans. The coverage would be modeled on existing plans, such as those offered through FEHBP. In general, the bills would require that premiums for plans offered through the program would be averaged across all of the enrollees for each plan—the largest possible risk pool. In addition, those bills usually include significant subsidies for low-income employees or individuals and sometimes for employers as well. Spreading risk broadly, however, is not a panacea. Community-rating (setting the level of premiums based on the average expenses of all subscribers) in an area could result in increased prices for young healthy people with low health risk and lower prices for those who are older or have health problems. If the goal of such approaches is to increase insurance coverage among those who need it most, this trade-off may be acceptable. If, however, the healthier and younger groups find their rates excessive, they may drop coverage altogether (where enrollment is voluntary), making the pool increasingly costly and undermining the objective of spreading risk. Only one state, New York, has "pure community rating," where no individual-market premiums can vary by any individual factor, even age. More than 15 other states have taken other steps in the individual market, such as rate banding or adjusted/modified community rating (generally using at least age as a rating factor), that effectively pool some risk. Federal policies in this area might take into account the unique state markets that have developed in response to state laws to ensure that federal policies do not undermine improvements that states have already made. "Consumer driven" reforms are those that seek to encourage more choices for individuals in terms of the cost and coverage, and to raise cost consciousness, encouraging a preference for low-cost plans and better decision making about health care use. Ultimately, these reforms are intended to reduce overall premium growth and the use of marginally beneficial health care. For example, proposals to create tax preferences for high deductible health plans combined with health savings accounts are intended to encourage price reductions in coverage through several mechanisms: high deductible health insurance plans offer limited coverage relative to what may be covered by more typical comprehensive products, and health savings accounts encourage people to think more before seeking care for which money could be drawn from their account. As in the early 1990s, state experimentation with health insurance reform is generating interest and discussion at the federal level. A number of states are experimenting with comprehensive insurance reforms toward a primary objective of achieving universal or near universal coverage (see Text Box 4 ). Some of these reforms may serve as a blueprint for federal changes, providing demonstrations that can better inform a federal debate. Many legislators, however, would rather have states continue to undertake reforms to address coverage gaps for their citizens. As a result, legislative proposals may include providing grant funds for states to continue and expand health insurance reforms on their own. Some maintain that state-led reform can better reflect local needs, particularly in smaller or more homogeneous states. Access to health insurance and health care can be very localized, reflecting the close relationship between private health insurance and local health care providers, labor markets and economic conditions. State-based reforms, however, face several significant obstacles. The Employee Retirement Income Security Act of 1974 (ERISA) impedes states from passing certain laws that affect employer benefits, such as health insurance. For example, ERISA has generally pre-empted states' ability to require employers to offer or pay for health insurance. Further, states' track record includes a number of failed initiatives—often related to inability to fund the rising costs of the reforms. States' ability to pay for reforms can be subject to the peaks and valleys of the states' tax collections. During challenging economic times, a need for state assistance of all kinds, including health insurance, rises often at the same time that states' tax base erodes, reducing states' ability to fund such needs. Finally, to ensure equity across states, federal reforms may be necessary. Another legislative approach is to include provisions incorporating combinations of the approaches discussed above. Proponents of such proposals tend to rely on existing sources of private insurance in combination with expanding public programs to extend coverage among the uninsured. They reflect a view that no single approach (except for what some maintain is politically unlikely national health insurance) with its inherent strengths and weaknesses will be sufficient to get all Americans insured. Bills advocating multiple approaches often include market improvements to extend the availability of plans and subsidies to help low-income populations pay for their health coverage, and allowing individuals to keep the health insurance they currently have. Health reform bills in the 111 th Congress include both new and reintroduced bills from earlier Congresses. Bills advocating multi-system reforms may include provisions to improve quality of care, better manage chronic diseases, and encourage healthier living. The combination approach is favored among many in the policy community and has been advocated by the President. Proposals offered by America's Health Insurance Plans (AHIP, www.americanhealthsolution.org ) and The Health Coverage Coalition for the Uninsured ( www.coalitionfortheuninsured.org/amuninsured/amuninsured.html ), which includes groups such as AARP, Blue Cross Blue Shield Association, and the American Hospital Association, among many others, advocate such multidimensional approaches. Brief summaries of the major provisions of most of the health insurance reform bills introduced in the 111 th Congress are provided below. The bills are loosely classified into the following reform approaches, similar to the discussion above: Largely replace existing coverage with a national government-provided health insurance program (or a national health service). Expand privately sponsored coverage. Encourage state-based reforms. Simultaneously expand private and public coverage options. As discussed previously, there are some bills that have been introduced in the 111 th Congress to expand public health insurance programs for certain targeted groups of individuals—for example, to waive the two-year waiting period for disability coverage under Medicare. None of these narrow scope bills are summarized in the list that follows. Similarly, bills affecting private health insurance that only targeted certain individuals or narrow issues—for example, to prohibit pre-existing condition exclusions for children or to restrict private plans' ability to use lifetime limits—are also excluded from the list that follows. The National Health Insurance Act was introduced in January 2009 by Representative John Dingell. In general, the bill would require that medical services, hospital services, and other personal health services be made available to all eligible individuals, including U.S. wage earners and their dependents who are not eligible for Medicare. Eligible individuals could choose to receive services from any qualified provider. Those not otherwise eligible for benefits could receive the same services, financed by public federal, state and local agencies. States and local administrative committees or officers would administer the health benefits. The Act would establish a National Health Insurance Board in the Department of Health and Human Services and a National Advisory Medical Policy Council. The Board's duties would include (1) determining the amount of funds required to provide benefits, (2) limiting certain personal health care services (such as home-nursing and dental services) if funds are inadequate, and (3) determining allotment amounts to states for services. The bill would establish a National Health Care Trust Fund, into which proceeds from a value added tax would be deposited for the purpose of funding the provisions of the Act. The United States National Health Care Act, or the Expanded and Improved Medicare for All Act, was introduced by Representative John Conyers in January 2009. It would establish the United States National Health Care (USNHC) program to provide all individuals residing in the United States and territories with all medically necessary health care with no cost-sharing. Care would be provided by public or not for profit institutional providers, HMOs, and participating physicians. It would establish annual operating and capital budgets, along with methods to pay institutional providers of care and health professionals for services. It would prohibit health insurers from selling coverage that duplicates USNHC benefits; however, they could sell coverage for services not considered to be medically necessary. The bill would establish a USNHC Trust Fund to finance the program with amounts deposited by using (1) existing sources of government revenues for health care (including Medicare, Medicaid, and CHIP), (2) revenues from increasing personal income taxes on the top 5% income earners, (3) revenues from instituting a progressive tax on payroll and self-employment income, and (4) revenues from instituting a tax on stock and bond transactions. Additional sums would be appropriated annually to maintain maximum quality, efficiency and access. The bill would establish a National Board of Universal Quality and Access to provide advice on quality, access, and affordability. The American Health Security Act of 2009 was introduced in the House by Representative Jim McDermott in February 2009 and in the Senate by Senator Bernard Sanders in March 2009. The bill would require each participating state to establish a State Health Security program to provide every U.S. citizen, national, or lawful resident alien with comprehensive health care services, as specified in the bill. Cost-sharing would not be allowed for acute care and preventive benefits. Special rules would apply for home and community-based long-term care services. Eligible individuals would be automatically enrolled (including newborns). The Act would eliminate Medicare, Medicaid, CHIP, FEHBP, and the Civilian Health and Medical Program of the Uniformed Services. It would require each state to prohibit the sale of health insurance in that state that duplicated benefits provided under the program and require states to establish participation agreements with providers. It would establish an American Health Security Standards Board to (1) develop policies, procedures, guidelines, and requirements to carry out the Act related to eligibility, enrollment and benefits; (2) establish uniform reporting standards; (3) create the American Health Security Advisory council to provide advice; (4) consult with other private entities; (5) review and approve State Health Security program plans; and (6) establish a national health security budget, specifying total federal and state expenditures for covered health care services, including state allocations. It would create the American Health Security Quality Council to review and evaluate practice guidelines, standards of quality, performance measures, and medical review criteria. Finally, it would create the American Health Security Trust Fund and appropriate to the Fund specified tax liabilities, including an excise tax on employers and employees, a health care income tax, as well as current health program receipts. The American Health Benefits Program Act was introduced by Representative James Langevin on May 15, 2009. This bill amends the Social Security Act (SSA) to establish under a new title XXII (American Health Benefits Program) a program to provide comprehensive health insurance coverage to all Americans who are (1) not covered under certain federal health insurance programs and (2) not eligible for employer-provided insurance coverage. This bill would require provision of such coverage in a manner similar to that in which coverage has been provided to Members of Congress, federal government employees, retirees, and their dependents under the Federal Employees Health Benefits Program. The provisions encompass requiring federal government contributions toward the coverage of eligible individuals, establishing in the Treasury an American Health Benefits Program Trust Fund, directing the Administrator of Health Benefits to establish a schedule of cost-sharing subsidies for lower-income individuals, and establishing an independent Health Benefits Administration, headed by the Administrator. The Health Care Tax Deduction Act of 2009 was introduced by Representative Cliff Stearns in January 2009. The bill would allow an above the line deduction (i.e., a deduction that is subtracted from gross income) for health insurance and unreimbursed prescription drug expenses. It may be claimed by individuals whether they take the standard deduction or itemize. The Health Care Freedom of Choice Act was introduced by Representative Michele Bachmann in January 2009. The bill would remove the 7.5% adjusted gross income floor that currently applies to the itemized deductions for health insurance and other unreimbursed medical expenses. The Affordable Health Care Expansion Act of 2009 was introduced by Representative Kay Granger in February 2009. The bill would allow individual taxpayers a refundable tax credit for health insurance costs. The credit would not be allowed to someone eligible for employer-subsidized insurance or Medicare, or a participant in Medicaid or CHIP. The Comprehensive Health Care Reform Act of 2009 was introduced by Representative Ron Paul in March 2009. Among other things, it would allow individual taxpayers a refundable tax credit for health insurance costs and remove the 7.5% adjusted gross income floor that applies to the itemized deduction for health insurance and other unreimbursed medial expenses. The Health Care Freedom Act was introduced by Senator DeMint on June 23, 2009. The bill provides individuals without employer-based health insurance with a refundable tax credit up to $2,000 for individuals and $5,000 for families to purchase health insurance. Concurrently, it allows individuals to pay for their health insurance premiums using their health savings accounts (HSA). The bill would provide block grants to states to develop models to ensure those with pre-existing conditions can attain affordable, quality health coverage. $5 billion would be authorized to appropriate for each fiscal year from 2010-2014. The refundable tax credit would be funded by the repealing of the Troubled Asset Relief Program (TARP, P.L. 110-343 ). The Small Business Empowerment Act was introduced by Senator Sherrod Brown in January 2009. The Secretary of Health and Human Services would establish a national program to make quality, affordable health insurance available to small employers and self-employed individuals which spread risk on a national basis, modeled on FEHBP. The Secretary would contract with an eligible entity for administration of the program to provide health insurance coverage to employees of participating employers and individuals. The entity would (1) establish a pilot program to provide for the offering by carriers of a model health benefits plan and (2) contract with the Institute of Medicine to assess the impact of the program on health care coverage costs and access. Existing state mandated benefit laws for plans would remain in place. The bill would set minimum standards for health benefits plans. The National Health Coverage Commission would be established, whose duties would include developing (1) a model that ensures adequate coverage for medically necessary services, promotes disease and chronic disease management, and provides incentives for health provider compliance with best practices protocols, and (2) model cost-sharing mechanisms that do not discriminate and that accommodate lower income individuals. The Secretary would establish a program to provide reinsurance to qualified carriers. The reinsurance program would be funded by the newly created Small Business Health Coverage Trust Fund, with amounts appropriated to or credited to the fund through assessments on each participating health insurance issuer offering health insurance coverage. The Health Insurance Tax Relief Act was introduced by Senator Barbara Boxer in January 2009. The bill would allow individual taxpayers an above the line deduction for health insurance costs, limited to $2,000 ($4,000 in the case of a married couple filing jointly). There would be income ceilings for eligibility. The Small Business Health Option Program act of 2009 (the SHOP Act) was introduced by Senator Durbin and Representative Kind in May 2009. The bill would amend the Public Health Service Act to establish a nationwide health insurance purchasing pool for small businesses and the self-employed. The Secretary would designate an office within the Department of Health and Human Services to administer the program under this bill that would (1) enter into contracts with health insurance issuers to provide health insurance coverage to individuals and employees who enroll in health insurance coverage under this Act, (2) ensure that insurers comply with requirements, (3) ensure that employers meet eligibility requirements, and (4) collect premiums, among other duties. There would be established a Small Business Health Board to monitor implementation of the program. Entities would apply to the Administrator to serve as a navigators who would coordinate with the Administrator on education activities, distribute information on enrollment, the availability of a tax credit and perform other duties. The Administrator could enter into contracts with qualified health insurance issuers to provide health benefit plans to employees of participating employers and self-employed individuals. Participating employers could not offer a comprehensive health insurance plan, other than a plan offered under this Act. For 2012 and 2013, state rating rules would apply, but premiums could not vary based on health status related factors. The National Association of Insurance Commissioners (NAIC) would study and develop recommendations for Congress, with federal fallback rating rules specified if Congress does not enact legislation on rating rules beginning in 2014. The Act would also apply 3% risk corridor to insured gains/losses during the first three years. Pre-existing conditions exclusions would be limited. The Secretary would contract with the Institute of Medicine to develop a minimum set of benefits to be offered by nationwide plans. Qualified small businesses would be eligible for a health insurance tax credit. The SIMPLE Cafeteria Plan Act of 2009 was introduced by Senator Snowe on May 6, 2009. This bill would amend the Internal Revenue Code of 1986 to allow small businesses (those with an average of 100 or fewer employees during a two-year period) to set up simple cafeteria plans to provide nontaxable employee benefits to their employees, and to make changes in the requirements for cafeteria plans, flexible spending accounts, and benefits provided under such plans or accounts. In addition, this bill sets a dollar limit (equal to the sum of $7,500, or $10,000 for employees with one or more dependents) on employer-provided coverage of health flexible spending arrangements. It would require employers to make a contribution to the cafeteria plan for employees who are not highly compensated, subject to limits. The Health Coverage, Affordability, Responsibility, and Equity Act of 2009, or the HealthCARE Act of 2009, introduced in February 2009 by Representative Marcy Kaptur, would allow states to apply to the Secretary of Health and Human Services (HHS) for waivers of federal statutes to make comprehensive, affordable health coverage available for state residents. A refundable tax credit would be available for the cost of qualified health insurance, and advance payments would be made to health insurance providers for the costs of eligible low-income individuals. The Secretary would establish a program to ensure that eligible individuals could enroll in private group health insurance through a purchasing pool operator in participating states. The Secretary would establish the National Advisory Commission on Expanded Access to Health Care to assess the effectiveness of programs designed to expand health care coverage. The bill would also expand Medicaid and CHIP. The States' Rights to Innovate in Health Care Act of 2009, introduced in April 2009 by Senator Bernard Sanders, would encourage states to develop plans for universal health care systems for their residents. The Secretary would establish a state-based Universal Health Care Coverage Commission to provide guidance to states regarding the application for grants, reviewing and recommending the approval of applications, and suggesting appropriate levels of funding for applications for planning grants, among other responsibilities. A state could apply for a grant to develop a state plan to offer universal comprehensive health care, with simplified administration and to improve the cost-effectiveness of the health care delivery system. A state that developed a state plan could apply to the Secretary for approval of a demonstration grant. Up to five states could be awarded a demonstration grant for up to five years each. The state plan would be required to provide for health benefits that are at least actuarially equivalent to the Standard Blue Cross/Blue Shield FEHBP, with assurances that the plan would not reduce benefits or increase cost-sharing and premiums for any allowed federal programs that are incorporated in to the plan. On November 3, 2009, an amendment in the nature of a substitute to H.R. 3962 was offered by Representative Boehner of Ohio. The amendment includes provisions to develop state reinsurance programs and high-risk pools, private insurance reforms, state innovation programs, and administrative simplification. The bill would also establish Association Health Plans, establish requirements for interstate purchasing of health insurance coverage, and expand tax preferences for health savings accounts and high-deductible health plans. It would establish national medical malpractice laws that would effectively preempt existing state medical malpractice laws, with certain exceptions. For employee wellness programs, it would specify how a group health plan or a health insurer offering group health coverage could vary premiums and cost sharing based on participation in a standards-based wellness program. The America's Affordable Health Care Act of 2009 was introduced by Representative Jeff Fortenberry in March 2009. The bill would permit the Secretary of HHS to create three health insurance coverage policies that could be available in the individual market in any state, would be subject to specified federal requirements without regard to state benefit requirements, and would require such plans to cover inpatient hospital services and physicians' surgical and medical services. The Secretary would be required to review the impact of this bill, as implemented, on the availability and purchase of health insurance coverage. The bill would amend the Public Health Service Act to increase funding for grants to states for the creation and operation of qualified high risk health insurance pools. States would be required provide the Secretary with evidence-based information on the operation of their pools for purposes of creating best practice guidelines, as a condition of their eligibility for a grant. The Secretary would be required to (1) recommend and publicly post a list of best practices on the operation of qualified high risk pools and (2) give a bonus grant to states that demonstrate that their pool was operated in accordance with such best practices. The AmeriCare Health Care Act of 2009 was introduced in January 2009 by Representative Pete Stark. All U.S. residents would be eligible for AmeriCare and would be automatically enrolled (including at birth). Individuals could opt out of AmeriCare if they were covered under an employer-sponsored group health plan that was at least equivalent to AmeriCare coverage. AmeriCare benefits would include those provided under Medicare parts A and B (Hospital and Supplementary Medical Insurance, with certain adjustments including deductibles and catastrophic limits). Prescription drug coverage would be equivalent to the Blue Cross Blue Shield standard plan of FEHBP. Additional coverage would be provided to children under age 24, pregnant women, and low-income individuals. Medicare, CHIP, and other federal health programs would be modified to avoid duplication of coverage with AmeriCare. Policies to provide supplemental coverage would be regulated. The bill would establish the AmeriCare Trust Fund. Financing for the program would come from individual premiums, employer contributions, state maintenance of effort payments, and general revenue funds. Premium subsidies would be available for individuals based on income. The Healthy Americans Act was introduced by Senator Wyden in February 2009 and would require each adult to purchase a Healthy American Private Insurance (HAPI) plan, except for those with religious objections or those covered through other qualified programs/plans, such as Medicare or an employer benefit plan. Dependent children would enroll through their family plan. There would be a late enrollment penalty for those that did not initially enroll in a HAPI plan or other qualified plan. States would establish a Health Help Agency (HHA) responsible for requiring that at least two HAPI plans were offered to provide benefits for health care items and services that were at least actuarially equivalent to benefits offered in 2009 under the Blue Cross/Blue Shield FEHBP standard plan, among other required services. Each HAPI plan would also be required to meet certain standards, such as limiting preexisting condition exclusions, providing guaranteed availability and renewability, and prohibiting discrimination based on health status. The legislation would provide for school-based health centers, would authorize states to establish and operate a State Choices for Long-Term Care Program, and would require the Secretary to establish Chronic Care Diseases Management programs and Education Centers, among other changes. There would be a federal fallback providing access to HAPI plans, for states that did not establish a HHA. The Internal Revenue Code would be amended to require employers and individuals to each make shared responsibility payments for HAPI plan premiums. The exclusion for employer-based coverage would be terminated and replaced with a premium subsidy and a standard deduction for health coverage, with some exceptions. Similarly, the deduction for employer paid health coverage is eliminated, with some exceptions. The Act would establish the Healthy Americans Public Health Trust Fund for the payment of (1) premium subsidies and (2) bonuses to states for implementing medical malpractice reform. Any amounts in the Trust Fund not expended at the end of a fiscal year would be transferred to the general revenues account of the Treasury. The bill would terminate federal health benefits coverage, including coverage provided under FEHBP, Medicaid and CHIP (Medicaid and CHIP would serve as wrap-around programs to HAPI plans). The Healthy Americans Act was introduced by Representative Anna Eshoo in March 2009. There are some differences between S. 391 and H.R. 1321 , including but not limited to (1) differences in the timing for implementation of HAPI plans and variations in the tax changes, such as using a standard deduction for the individual shared responsibility in the Senate as compared to a refundable tax credit in the House bill; (2) provisions found only in the Senate bill relating to family planning, Part D gap coverage, and end-of-life planning; and (3) provisions in the House bill relating to comparative effectiveness research. The Affordable Health Care for America Act was passed in the House on November 7, 2009. H.R. 3962 would require individuals to maintain health insurance and employers to either provide insurance or pay a payroll assessment, with some exceptions. Several market reforms would be made, such as modified community rating and guaranteed issue and renewal, which would help to level the playing field for access to and affordability of health insurance. Also, there is the authorization to appropriate funds to create health cooperatives, in addition to a public option. In Division A, there would be an individual and employer mandates linked to acceptable health insurance coverage, which would meet required minimum standards and incorporate the market reforms included in the bill. Division B details Medicaid eligibility expansions and payment reforms in Medicare, Medicaid, and CHIP. Division C encompasses a series of provisions intended to improve the delivery of health care services. They include provisions to expand the primary care workforce, emphasize clinical community-based prevention and wellness, and promote high-quality care. H.R. 3400 , the Empowering Patients First Act, was introduced by Representative Tom Price on July 30, 2009. This bill has various provisions that rework coverage, both for individuals and employers. There is a reliance on tax code through deductions and credits to purchase coverage in the individual market. Changes in the CHIP (Children's Health Insurance Program) expansion would be prohibited for those with incomes above 300% of FPL (federal poverty level) and restricted for those between 200% and 300%. Also, this bill would require states to cover 90% of kids below 200% of the federal poverty level (FPL) and to provide vouchers for Medicaid and CHIP beneficiaries. States would be required to offer group coverage and other private coverage options under Medicaid and CHIP. This bill provides no individual mandate. However, incentives would be given to employers to offer employees the option of a contribution toward other health insurance coverage instead of the employer plan. A tax deduction and an income-related refundable tax credit would be provided for health insurance purchased by individuals (i.e., outside the group insurance market). Insurance pooling/market reforms would allow association health plans and insurance companies to sell insurance across state lines. The tax credit is applicable only to individuals living in states operating a high-risk health insurance pool. Also, federal grant funding would be provided to states for these pools. To promote new or existing high-risk pools to offer at least one high deductible plan in combination with a health savings account (HSA), block grants would be established for states. In terms of regulation, state insurance laws would be overridden to permit the sale of individual health insurance plans across state lines. This bill provides cost containment measures in the effect of medical malpractice reform (establishing federal limits on medical liability claims), initiatives in fraud, waste and abuse prevention, reforms for the sustainable growth rate (SGR), and disproportionate share payment (DSH) reforms. In assisting in physician supply, this bill would create student loan opportunities and forgiveness to medical students. Financing of this bill would be through reduced discretionary spending, repeal of stimulus bill provisions, and other provisions. The Access to Insurance for all Americans Act was introduced on July 30, 2009, by Representative Darryl Issa. This bill would amend Title 5 of the United States Code, expanding the Federal Employee Health Benefit Program to individuals not employed by the federal government. This bill would establish a national health program administered by the Office of Personnel Management to offer federal employee health benefits plans to eligible individuals. Individuals enrolled or eligible to enroll in Medicare, Medicaid, or other state plans would not be eligible to enroll in the federal plans. On December 24, 2009, the U.S. Senate passed the Patient Protection and Affordable Care Act, in H.R. 3590 , as amended by the Senate (hereafter referred to simply as H.R. 3590 ). This bill would establish an individual mandate, requiring U.S. residents to obtain insurance or pay a penalty, with some exceptions. This bill contains market reforms such as coverage on a guaranteed issue basis, and prohibiting the exclusion from coverage based on pre-existing health conditions. Also, limited benefit plans and lifetime limits would be prohibited. This bill would establish new insurance exchanges and would subsidize the purchase of health insurance for individuals and families with income between 133% and 400% of the federal poverty level (FPL) through these exchanges. Although it would not explicitly require employers to offer health insurance, firms with more than 50 workers that do not offer coverage would be subject to a penalty for any workers who obtained subsidized coverage through an exchange. Full-time employees who were offered coverage from their employer would not be eligible to obtain subsidies through the exchange, with an exception for those not offered affordable coverage by their employer. This bill includes an authorization to appropriate the necessary funds to establish Consumer Operated and Oriented Plans (CO-OP), non-profit, member-run cooperatives that function in one or more states. The bill includes a multi-state qualified health plan option for plans that would be offered by the Exchange, with responsibilities such as contracting and negotiation to be conducted by the Office of Personnel Management. Also, this bill details substantive public financing reforms to Medicare and Medicaid. On February 22, 2010, the President released a health reform proposal that "includes a targeted set of changes to the Patient Protection and Affordable Care Act, the Senate-passed health insurance reform bill. The President's proposal reflects policies from the House-passed bill and the President's priorities." As there is no legislative language for the proposal, the following description is based on the proposal. The President's proposal includes market reforms, such as prohibition against (1) rescissions, (2) annual and lifetimes limits, and (3) pre-existing condition exclusions, among others. The President's proposal would require individuals to have health insurance or to pay a penalty. There is no specific employer mandate; however, certain employers would be required to pay for their workers who were receiving a premium or cost-sharing assistance. Small businesses would be eligible for tax credits. There would be an excise tax on the most expensive health plans, beginning in 2018, and the threshold would be higher than the threshold included in the Senate bill. The President's proposal would eliminate the Nebraska Federal Matching Assistance Percentage (FMAP), close the donut hole for Medicare Part D prescription drug coverage, and create a new Health Insurance Rate Authority helping States to review unreasonable premium rate increases and other unfair health insurance practices. Absent from the proposal is a public option.

The health reform debate in the 111th Congress continued and expanded upon the work begun in the 110th Congress. On November 12, 2008, the chairman of the Senate Finance Committee, Senator Baucus, released a white paper detailing his principles for health reform. This provided a framework for work within the committee for the 111th Congress. Several bills were introduced when the 111th Congress first convened, and these bills focused on a broad spectrum of approaches to health reform. On November 7, 2009, the House passed H.R. 3962, the Affordable Health Care for America Act. H.R. 3962 is based on H.R. 3200, America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. The U.S. Senate passed its version of health insurance reform on December 24, 2009, the Patient Protection and Affordable Care Act, in H.R. 3590, as amended by the Senate (hereafter referred to simply as H.R. 3590). H.R. 3590 consolidated and amended bills passed by the two committees with principal jurisdiction, the Committee on Health, Education, Labor, and Pensions, which ordered reported S. 1679, the Affordable Health Choices Act on July 15, and the Senate Finance Committee, which ordered reported S. 1796, America's Healthy Future Act of 2009, on October 19, 2009. The House and Senate must agree to the same measure with the same legislative language before a bill can be presented to the President. In an effort to move the process forward, the President released a health reform proposal on February 22, 2010, which combines and modifies provisions in the Senate and House passed bills. On February 25, 2010, the President held a bipartisan meeting on health reform, attended by both Democrats and Republican Members of Congress. The health reform bills passed by the House and Senate focus on simultaneously expanding private and public coverage options. Some of the other bills introduced in the 111th Congress take a similar approach to health reform. Additionally, other bills have focused on other solutions, attempting to expand coverage using one of the following approaches: Largely replace existing coverage with a national government-provided health insurance program (or a national health service). Expand existing public programs for certain individuals. Expand privately sponsored coverage. Encourage state-based reforms. Simultaneously expand private and public coverage options. This report presents basic background on health insurance that may be useful to legislators considering health insurance reforms. It describes reform approaches and provides brief descriptions of health insurance reform bills introduced in the 111th Congress, as well as some of the general principles currently being considered by the Congress. The potential impact of the various approaches and bills is not analyzed in this report, however. As a result, it does not provide evaluations of how well different bills, once enacted, would meet their objectives. This report will be updated periodically to reflect recent congressional activity in health reform.

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Comprehensive refugee reform legislation, the Refugee Protection Act of 2011 ( S. 1202 / H.R. 2185 ), would make significant revisions to asylum policy. Senate Committee on the Judiciary Chairman Patrick Leahy and House Committee on the Judiciary Subcommittee on Immigration Policy and Enforcement Ranking Member Zoe Lofgren introduced the companion bills on June 15, 2011. Among the asylum revisions in S. 1202 / H.R. 2185 , the bill would eliminate the time limits on seeking asylum in cases of changed circumstances; proscribe conditions under which an asylum seeker who was a victim of terrorist coercion would not be excluded as a terrorist; provide alternatives to detention of asylum seekers; modify certain elements necessary for the asylum seeker to meet the conditions for the granting of asylum; and, allow aliens interdicted at sea the opportunity to have an asylum interview. The United States has long held to the principle that it will not return a foreign national to a country where his life or freedom would be threatened. This principle is embodied in several provisions of the Immigration and Nationality Act (INA), most notably in provisions defining refugees and asylees. Foreign nationals seeking asylum must demonstrate a well-founded fear that if returned home, they will be persecuted based upon one of five characteristics: race, religion, nationality, membership in a particular social group, or political opinion. Foreign nationals arriving or present in the United States may apply for asylum with the United States Citizenship and Immigration Services (USCIS) in the Department of Homeland Security (DHS) after arrival into the country, or they may seek asylum before a Department of Justice Executive Office for Immigration Review (EOIR) immigration judge during removal proceedings. Foreign nationals arriving at a U.S. port of entry who lack proper immigration documents or who engage in fraud or misrepresentation are placed in expedited removal; however, if they express a fear of persecution, they receive a "credible fear" hearing with a USCIS asylum officer and—if found credible—they are referred to an EOIR immigration judge for a hearing. The INA makes it clear that the Attorney General and Secretary of Homeland Security can exercise discretion in the granting of asylum. Foreign nationals who participated in the persecution of other people are excluded from receiving asylum. The law states other conditions for mandatory denials of asylum claims, including when the alien has been convicted of a serious crime and is a danger to the community; the alien has been firmly resettled in another country; or there are reasonable grounds for regarding the alien as a danger to national security. The INA, moreover, has specific grounds for exclusion of all aliens that include criminal and terrorist grounds. This report opens with an overview of current policy, discussing the threshold of what constitutes asylum and the procedures for obtaining it. The second portion of the report identifies the top sending countries and includes a time series analysis of six selected source countries for asylum seekers. The third section of the report analyzes asylum approvals by country of origin. The report rounds out with a discussion of selected legislative policy issues. In 1968, the United States became party to the 1967 United Nations Protocol Relating to the Status of Refugees (hereafter referred to as the U.N. Refugee Protocol), agreeing to the principle of nonrefoulement . Nonrefoulement means that an alien will not be returned to a country where his life or freedom would be threatened, and it is embodied in several provisions of U.S. immigration law. The U.N. Refugee Protocol does not require that a signatory accept refugees, but it does ensure that signatory nations afford certain rights and protections to aliens who meet the definition of refugee. At the time the United States signed the U.N. Refugee Protocol, Congress and the Administration thought that there was no need to amend the INA, assuming that the provisions to withhold deportation would be adequate. In 1974, the former Immigration and Naturalization Service (INS) issued its first asylum regulations. The Refugee Act of 1980 codified the U.N. Refugee Protocols definition of a refugee in the INA and included provisions for asylum in INA 208. The law defined asylees as aliens in the United States or at a port of entry who meet the definition of a refugee. As Figure 1 illustrates, asylum claims spiked immediately after passage of the Refugee Act in 1980, when over 120,000 Cubans and about 25,000 Haitians set sail for Florida. Known as the Mariel Boatlift, this mass exodus of asylum seekers put the new law to the test. In the 1980s, political violence and civil wars in Central America prompted mass migration of asylum seekers from El Salvador, Guatemala, and Nicaragua. Asylum cases filed with the INS surpassed 100,000 for the first time in 1988. The Tiananmen Square massacre of Chinese protesters in 1989 symbolized events that triggered asylum seekers from China, who contributed, along with conditions in Central America, to the second spike depicted in Figure 1 . The December 1991 military coup d'etat deposing Haiti's first democratically elected president, Jean Bertrand Aristide, led thousands of Haitians to flee by boat to the United States in FY1992. The following year, 285 Chinese came ashore in New York on the "Golden Venture" and a total of 683 Chinese came ashore in three different ocean-going vessels along the coast of California in the summer of 1993. Asylum claims with the INS peaked at 149,566 in FY1995 ( Figure 1 ). Almost half of those cases, however, resulted from the 1990 settlement of the American Baptist Church (ABC) case that allowed Salvadorans and Guatemalans living in the United States who had not obtained asylum in the past to apply for asylum. By the end of FY1995, there were 457,670 asylum cases in the backlog, as the INS asylum corps was unable to keep pace. The Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA, P.L. 104-208 ) of 1996 made substantial changes to the asylum process, most notably by establishing summary exclusion provisions (now known as expedited removal), adding time limits on filing claims, and limiting judicial review in certain circumstances. IIRIRA also added a provision enabling refugees or asylees to request asylum on the basis of persecution resulting from resistance to coercive population control policies. Asylum claims with the INS dropped in the years following the passage of IIRIRA, as Figure 1 depicts. It remains difficult to assess the extent to which the IIRIRA revisions to asylum policy affected this decline. The Real ID Act of 2005 ( P.L. 109-13 ) further revised asylum law. Foremost, it established expressed standards of proof for asylum seekers, including that the applicant's race, religion, nationality, social group, or political opinion was or will be one of the central motives for his or her persecution. It also required that the asylum seeker provide evidence which corroborates otherwise credible testimony; such evidence must be provided unless the applicant cannot reasonably obtain it. Because "fear" is a subjective state of mind, assessing the merits of an asylum case rests in large part on the credibility of the claim and the likelihood that persecution would occur if the alien is returned home. These two distinct concepts—the credibility of the claim, or "credible fear," and the likelihood that persecution would occur, or "well-founded fear"—are fundamental to establishing the standards for asylum. A third dimension that overlays these concepts is the matter of "mixed motives" for persecuting the alien. Each of these standards are discussed below. The INA states that "the term credible fear of persecution means that there is a significant possibility , taking into account the credibility of the statements made by the alien in support of the alien's claim and such other facts as are known to the officer, that the alien could establish eligibility for asylum under §208." Integral to expedited removal, which is discussed below, the credible fear concept also functions as a pre-screening standard that is broader—and the burden of proof easier to meet—than the well-founded fear of persecution standard required to obtain asylum. The standards for "well-founded fear" have evolved over the years and been guided significantly by judicial decisions, including a notable U.S. Supreme Court case. The regulations specify that an asylum seeker has a well-founded fear of persecution if (A) The applicant has a fear of persecution in his or her country of nationality or, if stateless, in his or her country of last habitual residence, on account of race, religion, nationality, membership in a particular social group, or political opinion; (B) There is a reasonable possibility of suffering such persecution if he or she were to return to that country; and (C) He or she is unable or unwilling to return to, or avail himself or herself of the protection of, that country because of such fear. The regulations also state that an asylum seeker "does not have a well-founded fear of persecution if the applicant could avoid persecution by relocating to another part of the applicant's country.... " In evaluating whether the asylum seeker has sustained the burden of proving that he or she has a well-founded fear of persecution, the regulations state that the asylum officer or immigration judge shall not require the alien to provide evidence that there is a reasonable possibility he or she would be individually singled out for persecution if (A) The applicant establishes that there is a pattern or practice in his or her country of nationality or, if stateless, in his or her country of last habitual residence, of persecution of a group of persons similarly situated to the applicant on account of race, religion, nationality, membership in a particular social group, or political opinion; and (B) The applicant establishes his or her own inclusion in, and identification with, such group of persons such that his or her fear of persecution upon return is reasonable. The intent of the persecutor is subjective and may stem from mixed or multiple motives. The courts have ruled that the persecution may have more than one motive, and so long as one motive is one of the statutorily enumerated grounds, the requirements have been satisfied. A 1997 Board of Immigration Appeals (BIA) decision concluded "an applicant for asylum need not show conclusively why persecution occurred in the past or is likely to occur in the future, [but must] produce evidence from which it is reasonable to believe that the harm was motivated, at least in part, by an actual or imputed protected ground." Generally, the asylum seeker must demonstrate in mixed motive cases that even though his/her persecutors were motivated for a non-cognizable reason, one of the persecutor's central motives was the asylum seeker's race, religion, nationality, social group, or political opinion. An applicant for asylum begins the process either in the United States, if he or she is already present, or at a port of entry while seeking admission. This process differs from a potential refugee who begins a separate process wholly outside of the United States. Depending on whether or not the applicant is currently in removal proceedings, two avenues exist to seek asylum: "affirmative applications" and "defensive applications." The affirmative and defensive applications follow different procedural paths but draw on the same legal standards. In both processes, the burden of proof is on the asylum seeker to establish that he or she meets the refugee definition specified in the INA. An asylum seeker who is in the United States and not involved in any removal proceedings files an I-589, the asylum application form, with the USCIS. The USCIS schedules a non-adversarial interview with a member of the Asylum Officer Corps. There are eight asylum offices located throughout the country. The asylum officers either grant asylum to successful applicants or refer to the immigration judges those applicants who fail to meet the definition. The asylum officers make their determinations regarding the affirmative applications based upon the application form, the information received during the interview, and other information related to the specific case (e.g., information about country conditions). If the asylum officer approves the application and the alien passes the identification and background checks, then the foreign national is granted asylum status. There has been a 79% decrease in affirmative asylum cases filed since the enactment of IIRIRA in 1996, falling from 116,877 in FY1996 to 24,550 in FY2009, with a modest rebound in FY2000 and FY2001. As Figure 2 depicts, the number of asylum cases approved more than doubled from 13,532 in FY1996 to 31,202 in FY2002, and then fell to the lowest point over the 14-year period—9,614—in FY2009. This decline in cases approved represents a 29% change over the period. The asylum officer does not technically deny asylum claims; rather, the asylum applications of aliens who are not granted asylum by asylum officers are referred to EOIR immigration judges for formal proceedings. In some respects, these applicants/aliens are allowed a "second bite at the apple." Asylum applicants in the affirmative process are not subject to the mandatory detention requirements while their applications are being adjudicated, though there is broader authority under the INA to detain aliens for other grounds. Defensive applications for asylum are raised when a foreign national is in removal proceedings and asserts claim for asylum as a defense to his/her removal. EOIR's immigration judges and the BIA, entities in DOJ separate from the USCIS, have exclusive control over such claims and are under the authority of the Attorney General. Generally, the alien raises the issue of asylum during the beginning of the removal process. The matter is then litigated in immigration court, using formal procedures such as the presentation of evidence and direct and cross examination. If the alien fails to raise the issue at the beginning of the process, the claim for asylum may be raised only after a successful motion to reopen is filed with the court. The immigration judge's ultimate decision regarding both the applicant's/alien's removal and asylum application is appealable to the BIA. Applicants/aliens seeking asylum via the defensive application method may be detained until an immigration judge rules on their application. The applicant/alien is not detained due to their asylum claim, but rather because of the broader authority in the INA to detain aliens. Defensive asylum claims made during EOIR proceedings started at a lower level in FY1996 (84,293) than affirmative USCIS claims (116,877). Since that time, defensive asylum claims have dropped by 53%, to 39,279 in FY2009. The number of asylum cases that EOIR judges have approved, however, has risen by 99% over this 14-year period. EOIR approved 5,131 in FY1996 and 10,186 in FY2009, as shown in Figure 3 . DHS' Customs and Border Protection (CBP) officer must summarily exclude a foreign national arriving without proper documentation, unless the alien expresses a fear of persecution if repatriated. Absent a stated fear, the CBP officer is allowed to exclude aliens without proper documentation from the United States without placing them in removal proceedings. This procedure is known as expedited removal. According to DHS immigration policy and procedures, CBP inspectors, as well as other DHS immigration officers, are required to ask each individual who may be subject to expedited removal the following series of "protection questions" to identify anyone who is afraid of return: Why did you leave your home country or country of last residence? Do you have any fear or concern about being returned to your home country or being removed from the United States? Would you be harmed if you were returned to your home country or country of last residence? Do you have any questions or is there anything else you would like to add? If the foreign national expresses a fear of return, the alien is supposed to be detained by Immigration and Customs Enforcement (ICE) and interviewed by a USCIS asylum officer. The asylum officer then makes the "credible fear" determination of the alien's claim. Those found to have a "credible fear" are referred to an EOIR immigration judge, which places the asylum seeker on the defensive path to asylum. If the USCIS asylum officer finds that an alien does not have a credible fear, the alien may request that an EOIR immigration judge review that finding. The number of "credible fear" claims that USCIS has considered has steadily increased from 4,712 in FY2005 to 5,454 in FY2009—a 16% increase. The number of "credible fear" reviews by EOIR is much lower overall than it is for USCIS, as one would expect. Nonetheless, EOIR numbers have seen a notable rise from 114 in FY2005 to 887 in FY2009. Consistent time series data on "credible fear" claims are not available before FY2005. On November 13, 2002, the former INS published a notice clarifying that certain aliens arriving by sea who are not admitted or paroled into the United States are to be placed in expedited removal proceedings and detained (subject to humanitarian parole). This notice concluded that illegal mass migration by sea threatened national security because it diverts the U.S. Coast Guard and other resources from their homeland security duties. The Attorney General expanded on this rationale in his April 17, 2003, ruling that instructs EOIR immigration judges to consider "national security interests implicated by the encouragement of further unlawful mass migrations ..." in making bond determinations regarding release from detention of unauthorized migrants who arrive in "the United States by sea seeking to evade inspection." The case involved a Haitian who had come ashore in Biscayne Bay, FL, on October 29, 2002, and had been released on bond by an immigration judge. The BIA had upheld his release, but the Attorney General vacated the BIA decision. All foreign nationals seeking asylum are subject to multiple background checks in the terrorist, immigration, and law enforcement databases. Those who enter the country legally on nonimmigrant visas are screened by the consular officers at the Department of State when they apply for a visa, and all foreign nationals are inspected by CBP officers at ports of entry. Those who enter the country illegally are screened by the U.S. Border Patrol or the ICE agents when they are apprehended. When aliens formally request asylum, they are sent to the nearest USCIS-authorized fingerprint site. They have all 10 fingers scanned and are subject to a full background check by the Federal Bureau of Investigation (FBI). Distinct from asylum law and policy, aliens claiming relief from removal due to torture may be treated separately under regulations implementing the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (hereafter, Torture Convention). Article 3 of the Torture Convention prohibits the return of any person to a country where there are "substantial grounds" for believing that he or she would be in danger of being tortured. The alien must meet the three elements necessary to establish torture: 1. the torture must involve the infliction of severe pain or suffering, either physical or mental; 2. the torture must be intentionally inflicted; and 3. the torture must be committed by or at the acquiescence of a public official or person acting in an official capacity. Generally, an applicant for non-removal under Article 3 has the burden of proving that it is more likely than not that he would be tortured if removed to the proposed country. If credible, the applicant's testimony may be sufficient to sustain this burden without additional corroboration. In assessing whether it is "more likely than not" that an applicant would be tortured if removed to the proposed country, all evidence relevant to the possibility of future torture is required to be considered. However, if a diplomatic assurance (deemed sufficiently reliable by the Attorney General or Secretary of State) that the alien will not be tortured is obtained from the government of the country to which the alien would be repatriated, the alien's claim for protection will not be considered further and the alien may be removed. For many years, most foreign nationals who sought asylum in the United States were from the Western Hemisphere, notably Central America and the Caribbean. From October 1981 through March 1991, for example, Salvadoran and Nicaraguan asylum applicants totaled over 252,000 and made up half of all foreign nationals who applied for asylum with the INS. In FY1995, more than three-fourths of asylum cases filed annually came from the Western Hemisphere. In FY1999, the People's Republic of China (PRC) moved to the top of the source countries for affirmative asylum claims, with 4,209 new cases. Somalia followed as a leading source country with 3,125 cases in FY1999. As the overall number of asylum seekers fell in the late 1990s, the shrinking numbers from Central America contributed to the decline. Simultaneously, the number of asylum seekers from the PRC began rising and reached 10,522 affirmative cases in FY2002. The PRC remained the leading source country throughout the 2000s. Asylum seekers from the PRC dominated both the affirmative and defensive asylum caseloads in FY2009, as Figure 5 shows. They comprised 36% of the 24,550 affirmative cases filed with USCIS and 24% of the 39,279 defensive cases filed with EOIR. Five of the top 10 source countries of asylum seekers were Western Hemisphere nations in FY2009. The five were Haiti, Mexico, Guatemala, El Salvador, and Colombia. Ethiopia was the only African nation that was a top 10 source country for asylum seekers in FY2009. As evident in Figure 6 , "credible fear" claims are much smaller in overall numbers—5,454 in FY2009—than the affirmative and defensive asylum caseloads, and the top 10 source countries exhibit a somewhat different pattern as well. The PRC (18%) was still the leading source country, but El Salvador (17%) sent a comparable number of "credible fear" claimants in FY2009, as Figure 6 illustrates. Indeed, more Western Hemisphere nations are among the top 10 source countries for "credible fear" claimants than among the EOIR and USCIS asylum caseloads. As discussed above, "credible fear" typically comes up when an alien arrives without proper documentation and is put into expedited removal proceedings. Those deemed to have a credible fear proceed to a defensive asylum hearing with EOIR. Given the ebbs and flows of asylum seekers over time that Figure 1 , Figure 2 , and Figure 3 depict, the representativeness for policy analysis of FY2009 data—or any single year's data—comes into question. One approach that refines the policy study is the analysis of a subset of source countries' trends in asylum seekers. This section of the report focuses on six major source countries: the PRC, Colombia, El Salvador, Ethiopia, Haiti, and Mexico. Each of the six selected countries were among the major source countries of asylum seekers from FY1997 through FY2009. The analysis presents data on the three asylum gateways of affirmative, defensive, and "credible fear" claims for each of these source countries from FY1997 through FY2009. As noted above, time series data on "credible fear" claims were available only since FY2005. Bear in mind that EOIR defensive cases included many asylum claimants that first appeared as "credible fear" or affirmative cases with USCIS. As a consequence, defensive claims display an echo effect of the spikes and valleys in "credible fear" and affirmative cases. PRC asylum cases peaked in FY2002 for both affirmative and defensive claims—10,522 and 11,499, respectively ( Figure 7 ). The ebbs and flows of PRC asylum seekers over the 13-year period, however, exhibit different patterns depending on the asylum gateway. Affirmative claims rose by 268.4%, from 2,377 cases in FY1997 to 8,758 cases in FY2009. The 13-year average for affirmative claims was 5,607. In contrast, defensive claims increased by only 11.4%, from 8,381 cases in FY1997 to 9,336 cases in FY2009. However, the year-to-year fluctuations in defensive claims were substantial, going from a low of 4,913 in FY1998 to a high of 11,499 in FY2002. The 13-year average for defensive claims (8,581) was higher than the average for the affirmative claims. The "credible fear" claims dropped from a high of 1,711 in FY2005 to 602 in FY2008, and then rose to 962 in FY2009. Colombian asylum cases exhibit a classic bell curve in Figure 8 , peaking in FY2002 at 7,967 (affirmative) and 9,526 (defensive). Although both gateways of affirmative and defensive claims have decreased since FY2002, the overall trends of Colombian asylum seekers from FY1997 through FY2009 are up by 48.2% and 53.6%, respectively. The 13-year average for affirmative claims was 2,351, and for defensive claims it was 3,072. The "credible fear" claims have dipped by 54.6%, from 185 in FY2005 to 84 in FY2009. Affirmative asylum claims from El Salvador have steadily declined by 90.4%, from a high of 4,706 in FY1997 to 453 in FY2009. The 13-year average of affirmative claims is 1,289. Salvadoran defensive claims exhibit more of a u-shaped distribution in Figure 9 , with spikes of 8,126 in FY1998 and 9,955 in FY2007. The 13-year average of defensive claims is 4,908. Overall, defensive asylum claims are down by 53.2% for Salvadorans, despite peaking at 9,955 in FY2007. Furthermore, the number of "credible fear" claims during expedited removal has risen sharply from 73 in FY2005 to 945 in FY2009, and the number of these "credible fear" claims have surpassed the number of affirmative cases for FY2007 through FY2009. Asylum seekers from Ethiopia comprise the smallest number of cases among the six source countries studied. The 13-year average was 972 for affirmative claims and 689 for defensive claims, with only modest variations from year to year. Ethiopian asylum seekers were also noteworthy among the six source countries because each year from FY1997 through FY2009 they filed more affirmative cases than defensive cases ( Figure 10 ). Although small, the number of Ethiopian "credible fear" claims during expedited removal has risen markedly from 13 in FY2005 to 107 in FY2009. Many Haitians who flee Haiti are interdicted by the U.S. Coast Guard and do not appear among those who claim asylum in the United States. The number of asylum seekers from Haiti who do reach the United States has not fluctuated greatly over the 13-year period. All three asylum gateways of affirmative, defensive, and "credible fear" claims, however, have each evidenced a drop since FY2006, when defensive claims peaked at 6,056. The 13-year average was 3,162 for affirmative claims and 4,324 for defensive claims. Affirmative claims hit 4,938 in FY2001 and surpassed the number of defensive claims that year, as Figure 11 illustrates. Overall, the number of Haitian asylum seekers filing affirmative claims fell by 74.5%, defensive claims fell by 65.3%, and "credible fear" claims fell by 57.4%. Asylum seekers from Mexico reached a 13-year high point in the late 1990s. As Figure 12 shows, defensive claims reached 18,389 and affirmative claims hit 13,663 in FY1997. Mexican affirmative cases evidenced a moderate surge in FY2001 (8,747) and FY2002 (8,977), but the overall trend line has declined by 89.8% from FY1997 through FY2009. The number of defensive claims has decreased as well, by 84.7% from FY1997 through FY2009. The 13-year average was 4,258 for affirmative claims and 5,797 for defensive claims. Mexican "credible fear" claims during expedited removal have risen from 107 in FY2005 to 338 in FY2009, but they have not reach the numbers that the PRC and El Salvador claims have. The asylum patterns of these six selected source countries over the 13-year period varied considerably. Asylum seekers from Colombia, for example, were peaking in the early 2000s while the asylum seekers from El Salvador were dipping. Ethiopians and Haitians tracked steadily and revealed similar levels of affirmative versus defensive asylum claims (albeit Haiti's levels were higher overall). In contrast, Chinese, Salvadoran and Mexican levels of affirmative versus defensive asylum claims each yielded unique fluctuations over time. Regardless of the overall decrease in asylum cases since the enactment of IIRIRA in 1996, this data analysis suggests that conditions in the major source countries—whether economic, environmental, political, religious or social—were likely the driving force behind asylum seekers. Country conditions lie at the core of the principle that the United States will not return a foreign national to a country where his life or freedom would be threatened on account of race, religion, nationality, membership in a particular social group, or political opinion. As discussed more fully above, individualized persecution or persecution resulting from group identity may form the basis of the asylum claim. In the individualized instance, if the asylum seeker demonstrates that there is a reasonable possibility of suffering such persecution as an individual if he or she were to return to that country; and he or she is unable or unwilling to return to, or avail himself or herself of the protection of, that country because of such fear; then the fear of persecution is deemed reasonable. In the group identity instance, if the asylum seeker establishes that there is a pattern or practice in his or her home country of persecution of a group of persons similarly situated to the applicant on account of race, religion, nationality, membership in a particular social group, or political opinion; and establishes his or her own inclusion in and identification with such group of persons; then the fear of persecution is deemed reasonable. Given the sheer number of asylum seekers from the PRC in FY2009, it is not particularly surprising that the PRC led in the number of asylum cases approved by USCIS and EOIR in FY2009 ( Figure 13 ). Moreover, abuse of human rights in the PRC has been a principal area of concern in the United States for many years. Presumably, PRC asylum seekers are also benefiting from the provision enabling aliens to claim asylum on the basis of persecution resulting from resistance to coercive population control policies, given the well-known population control policies of the PRC. The portion of approved asylum cases from Haiti was consistent with its portion of asylum seekers in FY2009. Specifically, Haiti represented shares of asylum cases that USCIS and EOIR approved—4.8% and 4.0%, respectively ( Figure 13 )—that were comparable to the portion of asylum cased filed with USCIS and EOIR in FY2009—4.5% and 4.6%, respectively ( Figure 5 ). As noted above, the U.S. Coast Guard interdiction of Haitians has undoubtedly suppressed the number of asylum seekers from that nation. Although the continent of Africa was not home to many of the asylum seekers from the top source countries discussed above, the African nations of Cameroon and Eritrea, as well as Ethiopia, appear in the top 10 source countries for asylum cases approved by USCIS and EOIR in FY2009 ( Figure 13 ). The emergence of the African nations in the top source countries for approved asylum cases is revealed in Table 1 , which presents the top 20 sources countries over the past decade for approved affirmative and defensive asylum cases. Ethiopia, Somalia, Cameroon, Liberia, Egypt, and Sudan were among those countries. Although they were not top 10 source countries for asylum seekers, Middle Eastern and South Asian nations do appear in the top 20 source countries over the past decade for approved affirmative and defensive asylum cases. Iran, Iraq, Indonesia, and Pakistan were top 20 source countries for those who received asylum from FY2000 through FY2009, as were Indonesia, India, and Burma. Iraq and India were the only ones among these countries (along with Nepal) to be among the top 10 in FY2009. Several top sending countries were also among the decade's top 20 approved affirmative and defensive asylum cases: Colombia, Haiti, Guatemala, and, of course, the PRC. For year-by-year data on the top 20 source countries for approved asylum cases, see the Appendix . Research studies of the approval rates of cases filed by asylum seekers consistently reveal disparities by USCIS regional asylum offices and EOIR immigration courts. Fredric N. Tulsky of the San Jose Mercury News was a finalist for the Pulitzer Prize for investigative reporting in 2001 "for his illuminating reporting on the arbitrary and inconsistent administration of the federal system that grants political asylum." In 2006, researchers at Syracuse University's Transactional Records Access Clearinghouse (TRAC) found "a surprising lack of consistency" among similarly situated asylum cases considered by EOIR from FY1994 to the early months of FY2005. The Stanford Law Review published "Refugee Roulette: Disparities in Asylum Adjudication" in 2007, which analyzed decisions of USCIS asylum officers as well as EOIR immigration judges. The example of asylum seekers from the PRC offers striking differences in the percentage of cases approved across regions and jurisdictions, despite national data trends that appeared consistent. A study of 290 asylum officers who decided at least 100 affirmative cases from the PRC from FY1999 through FY2005 found that the approval rate of PRC claimants spanned from zero to over 90% during this period. In one regional asylum office, the grant rates for affirmative applications from the PRC varied from zero to 68%. Sixty percent of the officers in that regional office deviated from their office's average PRC asylum approval rates by more than 50%. Nationwide, immigration judges granted asylum to 47% percent of defensive cases of PRC claimants from January 1, 2000, through August 31, 2004, but exhibited a pattern of variation similar to the USCIS asylum officers when the cases were broken down by court. The immigration court in Atlanta approved 7% of defensive PRC cases; however, the court in Orlando, FL, approved 76% of defensive cases from PRC claimants. The disparity continued if the applicant lost at the Board of Immigration Appeals and petitioned for review in the U.S. Court of Appeals. From FY2003 to FY2005, the Fourth Circuit did not remand a single case from the PRC (i.e., the court never decided in favor of the applicant), while the Ninth Circuit remanded in 37% of the PRC cases. The authors of this extensive study of affirmative and defensive decisions, "Refugee Roulette: Disparities in Asylum Adjudication," offered the following observations: Asylum seekers from three of these countries faced a grant rate in at least one court that was more than 50% below the national average, and applicants from four of these countries enjoyed a grant rate in at least one court that was more than 50% above the national average.... For one of these countries, China, the high grant rate and the low grant rate deviated by more than 50% from the national average.... Colombian asylum seekers also faced major disparities: those who appeared before the Orlando Immigration Court had a 63% grant rate, while those heard by the Atlanta Immigration Court faced a grant rate of 19%. The average national grant rate for Colombian asylum seekers is 36%. Figure 14 presents the data for the asylee producing countries in the high-volume immigration courts from which these conclusions are drawn. The U.S. Government Accountability Office (GAO) analyzed the disparity in asylum decisions as well and found that "significant variation existed." GAO performed multivariate statistical analyses on asylum cases from 19 immigration courts that handled almost 90% of the cases from October 1994 through April 2007. GAO identified nine factors that affected these outcomes: (1) filed affirmatively (originally with DHS at his/her own initiative) or defensively (with DOJ, if in removal proceedings); (2) applicant's nationality; (3) time period of the asylum decision; (4) representation; (5) applied within 1 year of entry to the United States; (6) claimed dependents on the application; (7) had ever been detained (defensive cases only); (8) gender of the immigration judge; and (9) length of experience as an immigration judge. GAO then statistically controlled for these nine factors and found disparities across immigration courts and judges: "For example, affirmative applicants in San Francisco were still 12 times more likely than those in Atlanta to be granted asylum. Further, in 14 of 19 immigration courts for affirmative cases, and 13 of 19 for defensive cases, applicants were at least 4 times more likely to be granted asylum if their cases were decided by the judge with the highest versus the lowest likelihood of granting asylum in that court." GAO also found that the grant rate for affirmative cases exceeded 50% for asylum seekers from countries such as Albania, the PRC, Ethiopia, Iran, Russia, Somalia, and the former Yugoslavia. In contrast, GAO found that the grant rate for affirmative cases was lower than 10% for asylum seekers from El Salvador, Guatemala, Honduras, and Mexico. In terms of defensive cases, GAO observed that about 50% of asylum seekers from Iran and Ethiopia were granted asylum and almost 60% of such cases from Somalia were granted asylum. However, this outcome occurred for 13% or less of the defensive asylum cases from El Salvador, Honduras, and Indonesia. GAO also offered the following important caveat: Because data were not available on the facts, evidence, and testimony presented in each asylum case, nor on immigration judges' rationale for deciding whether to grant or deny a case, we could not measure the effect of case merits on case outcomes. However, the size of the disparities in asylum grant rates creates a perception of unfairness in the asylum adjudication process within the immigration court system. Researchers at Syracuse University's TRAC have been conducting analyses of the immigration courts for several years and were among the earliest to identify wide variations in asylum outcomes that were dependent on the immigration judge. "The typical judge-by-judge denial rate—half denied more and half denied less—was 65% . There were, however, eight judges who denied asylum to nine out of ten of the applicants who came before them and two judges who granted asylum to nine out of ten of theirs." Most recently, analysis performed by TRAC has continued to find disparities in asylum approvals that are similar to their earlier research. TRAC's latest study of the FY2008-FY2010 period found that judge-to-judge disparities in asylum decisions have moderated since their earlier studies, but it concluded that the disparities remained substantial. In the New York immigration court, for example, one judge denied only 6% of the asylum cases, while another denied 70% of the asylum cases. The judge-to-judge range in the San Francisco immigration court was from 32% to 92%. The disparities were also evident when immigration court decisions were analyzed by the asylum seeker's country of origin. As Table 2 indicates, TRAC analysis of decisions on PRC asylum seekers continued to show wide disparities in the New York court, ranging from 4% to 74% denial rates. The denial rates of Iraq asylum seekers were the lowest, spanning from zero to 4%, and their variation was also the lowest at 4%. In contrast, the denial rates of Salvadoran asylum seekers were the highest, spanning 90% to 98%, with only a 8% variation. Although there are many who would revise U.S. asylum law, those advocating change have divergent perspectives. Some cite the seemingly inexplicable disparities in asylum approvals rates and urge broad-based administrative reforms. Others argue that given the religious, ethnic, and political violence in various countries around the world, it has become more difficult to differentiate the persecuted from the persecutors . Some express concern that U.S. sympathies for the asylum seekers caught up in the current political uprisings in the Middle East, northern Africa, and South Asia could inadvertently facilitate the entry of terrorists. Others maintain that current law does not offer adequate protections for people fleeing human rights violations or gender-based abuses that occur around the world. Some assert that asylum has become an alternative pathway for immigration rather than humanitarian protection provided in extraordinary cases. At the crux of the issue is the extent to which an asylum policy forged during the Cold War is adapting to the competing priorities and turbulence of the 21 st century. Some of these issues are highlighted below. Some have asserted that U.S. asylum policy attracts asylum seekers who have weak or bogus claims and that additional safeguards are needed to curb abuses and protect U.S. national interests. One critic has concluded that the "U.S. asylum system has become the hole in the fence for millions of dubious claimants—and a major immigration magnet in itself." Others have maintained that migration "push" factors, such as rapid population growth, poverty, and political instability in the sending countries of asylum seekers, are factors over which the United States has little control. Some have warned of "the ongoing separation of asylum from any grounding in the national interest" and argued for a serious examination of the forces that propel asylum seekers. In contrast, others have asserted that the United States should re-calibrate asylum policy to provide more protections for asylum seekers, maintaining that it is in the United States' national interest to set an example. These proponents have expressed a desire for the United States to reaffirm its welcome to those who have fled persecution as well as its commitment to humanitarian efforts. They have argued that some of the statutory revisions in 1996 and 2005 created unnecessary barriers for genuine asylees and that these provisions can be reformed without making the United States more vulnerable to unauthorized migrants, criminals, or terrorists. The body of research that has revealed disparities in asylum decisions has led many to call for greater congressional oversight of the immigration courts. According to a number of observers, while the immigration courts have experienced a substantial increase in caseload, EOIR has not received a commensurate increase in resources. Some are pushing for an increase in funding for immigration judges and law clerks, which they assert would improve the quality of judicial hearings. Others, however, contend that the problems related to disparities in asylum decisions lie less in the funding shortages and more in the quality of immigration judges. Some are recommending higher recruitment standards for immigration judges and more training, particularly training in the culture of asylum seekers' homelands. Some further recommend a requirement of written opinions in asylum cases. Still others maintain that the USCIS asylum officers also display disparate outcomes among similarly situated asylum cases, and that enhanced training and research support should be available for the asylum corps and the immigration judges. Establishing mechanisms to foster communication among asylum offices is offered as an option to improve consistency. A further recommendation is to consider cases in pairs or panels of three asylum offers. Despite concern over the disparate decisions, there is an argument that greater congressional oversight might politicize the process. Legislative intervention to promote more consistent decisions presumably might undermine the independence of the asylum adjudicators and immigration judges. Because none of the studies that documented the disparities had access to the case facts and evidence, the rationale for decisions remains unknown and thus may indeed be justified. Immigration removal proceedings are civil in nature and, thus, do not entail the right to legal counsel that criminal proceedings do. Foreign nationals can be represented by counsel when they appear in immigration court, but according to the statute, "at no expense to the Government." A list of available pro bono counsel must be provided to aliens in removal proceedings. The issue of asylum seekers' access to counsel, especially during removal proceedings, has arisen in recent years. Many maintain that few can adequately represent themselves and that charitable and pro bono legal projects cannot afford to serve all asylum seekers. Some offer that providing legal counsel is an option for addressing the disparities in outcome. Many cite the GAO study, which found that asylum seekers were three times as likely to obtain asylum if they had legal representation, to emphasize the need for legal counsel. Some further argue that lack of counsel for a bona fide asylum seeker might result in deportation to a country where the person's life and liberty are threatened. Under current law, a foreign national has one year after the date of arrival to apply affirmatively for asylum, unless there are changed circumstances or extraordinary circumstances related to the delay in filing the application. Supporters of current law maintain that the one-year rule prevents abuses of the asylum system and cite the drop in asylum applicants after the 1996 revisions to the law that added the one-year rule. They point out that foreign nationals have the option of seeking asylum defensively during removal proceedings. Others have observed that many asylum seekers who fail to file within one year of arrival subsequently receive withholding of removal or relief under the United Nations Convention Against Torture. Since both of these forms of relief have a higher burden of proof than asylum, they assert such people would have qualified for asylum but for the one-year deadline. They advocate for a good cause exemption to the time rule. Opponents to the mandatory detention of asylum seekers in expedited removal usually cite the United Nations High Commissioner on Refugees, who maintains that detention of asylum seekers is "inherently undesirable." Detention is psychologically damaging, some further argue, to an already fragile population that includes aliens who are escaping from imprisonment and torture in their countries. Asylum seekers are often detained with criminal aliens, a practice that many consider inappropriate and unwarranted. Some contend that Congress should provide for alternatives to detention (e.g., electronic monitoring) for asylum seekers in expedited removal. Others argue that the mandatory detention of asylum seekers provision should be deleted, maintaining that there is adequate authority in the INA to detain any alien who poses a criminal or national security risk. Proponents for current law warn that releasing asylum seekers in expedited removal undermines the purpose of expedited removal and creates an avenue for bogus asylum seekers to enter the United States. They argue that mandatory detention of asylum seekers is an essential tool in maintaining immigration control and homeland security. Any loosening of these policies, they allege, would divert the CBP and ICE officers from their homeland security duties to track down wayward asylum seekers. Supporters of current law also contend that it sends a clear signal of deterrence to aliens who consider using asylum claims as a mechanism to enter illegally. Some have long been concerned that terrorists would seek asylum in the United States, hoping to remain hidden among the hundreds of thousands of pending asylum cases. Critics point to asylum seekers from countries of "special concern" (i.e., Saudi Arabia, Syria, Iran, North Korea, China, Pakistan, Egypt, Lebanon, Jordan, Afghanistan, Yemen, and Somalia) as potential national security risks. Some argue further that because asylum is a discretionary form of immigration relief, national security risks should outweigh humanitarian concerns, and thus, asylum relief should be restricted and judicial review of asylum cases more limited. Others point out that asylum seekers are subject to multiple national security screenings and that if an asylum seeker is a suspected or known terrorist, the law already bars alien terrorists from entering the United States. They argue that to the extent to which security risks had existed, those risks resulted more from the limits of intelligence data on terrorists in the past rather than the expansiveness of asylum policy. Some further assert that asylees from countries of "special concern" may be beneficial to U.S. national security because they may have useful information that assists in the war on terrorism, much like the assistance provided by communist defectors during the Cold War. Opponents of limiting the judicial review of asylum cases contend that it would erode two traditional values of U.S. polity—the right to due process and freedom from repression and persecution. Some argue that the law should be amended to provide an exception for people who have been forced by terrorists to provide support. The law states that an alien who commits an act that he "knows, or reasonably should know, affords material support" to a terrorist organization is inadmissible. It makes no exception for instances where the alien has been coerced into providing support, and whether it should do so is an issue. Over the past decade, the United States has admitted or adjusted about 1 million foreign nationals to legal permanent resident (LPR) status each year, and annual asylee adjustments have ranged from 1% to 9% of the total. Overall, asylee adjustments comprised only 4% (411,972) of the 10.3 million LPRs admitted or adjusted from FY2000 through FY2009. Unlike other facets of U.S. immigration policy, asylum issues are less about the number of foreign nationals involved and more about the qualities of the policies and the efficacy of the procedures. Asylum is an adjudication of a person based upon facts, evidence, beliefs, and circumstances that might be clear at some times yet nebulous at other times. The policy tensions of asylum often pit the promotion of our humanitarian values against the prevention of fraudulent abuses; the protection of the persecuted against the security of our borders; and the obligations of our moral responsibilities internationally against the commitments of our social priorities domestically. The balance of these competing concerns may be shaken by a crisis in a neighboring nation or by larger world events. The U.S. Congress plays the key role in considering when and whether revision or re-calibration of asylum law and policies is warranted.

Foreign nationals seeking asylum must demonstrate a well-founded fear that if returned home, they will be persecuted based upon one of five characteristics: race, religion, nationality, membership in a particular social group, or political opinion. Foreign nationals arriving or present in the United States may apply for asylum affirmatively with the United States Citizenship and Immigration Services (USCIS) in the Department of Homeland Security after arrival into the country, or they may seek asylum defensively before a Department of Justice Executive Office for Immigration Review (EOIR) immigration judge during removal proceedings. Asylum claims ebbed and flowed in the 1980s and peaked in FY1996. Since FY997, affirmative asylum cases decreased by 79% and defensive asylum claims dropped by 53% by FY2009. Asylum seekers from the People's Republic of China (PRC) dominated both the affirmative and defensive asylum caseload in FY2009. Five of the top 10 source countries of asylum seekers were Western Hemisphere nations in FY2009: Haiti, Mexico, Guatemala, El Salvador, and Colombia. Ethiopia was the only African nation that was a top source country for asylum seekers in FY2009. Despite the general decrease in asylum cases since the enactment of the Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA ) in 1996, data analysis of six selected countries (the PRC, Colombia, El Salvador, Ethiopia, Haiti, and Mexico) suggests that conditions in the source countries are likely the driving force behind asylum seekers. Roughly 30% of all asylum cases that worked through USCIS and EOIR in recent years have been approved. Affirmative asylum cases approved by USCIS more than doubled from 13,532 in FY1996 to 31,202 in FY2002, and then fell to the lowest point over the 14-year period—9,614—in FY2009. The number of defensive asylum cases that EOIR judges have approved has risen by 99% from FY1996 through FY2009. The PRC led in the number of asylum cases approved by USCIS and EOIR over the decade of FY2000-FY2009. Despite national data trends that appeared to be consistent, approval rates for asylum seekers differ strikingly across regions and jurisdictions. For example, a study of 290 asylum officers who decided at least 100 cases from the PRC from FY1999 through FY2005 found that the approval rate of PRC claimants spanned from zero to over 90% during this period. In a separate study, the U.S. Government Accountability Office (GAO) analyzed asylum decisions from 19 immigration courts that handled almost 90% of the cases from October 1994 through April 2007 and found that "significant variation existed." At the crux of the issue is the extent to which an asylum policy forged during the Cold War is adapting to the competing priorities and turbulence of the 21st century. Some assert that asylum has become an alternative pathway for immigration rather than humanitarian protection. Others argue that—given the religious, ethnic, and political violence in various countries around the world—it has become more difficult to differentiate the persecuted from the persecutors. Some express concern that U.S. sympathies for the asylum seekers caught up in the democratic political uprisings in the Middle East, northern Africa, and south Asia could inadvertently facilitate the entry of terrorists. Others maintain that current law does not offer adequate protections for people fleeing human rights violations or gender-based abuses that occur around the world. Some cite the disparities in asylum approvals rates and urge broad-based administrative reforms. The Refugee Protection Act of 2011 (S. 1202/H.R. 2185) would make significant revisions to asylum policy.

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The Family and Medical Leave Act (FMLA, P.L. 103-3 ) requires covered employers to provide job-protected leave to eligible employees. The act allows employees to take up to 12 weeks of leave during any 12-month period to care for a newborn, adopted, or foster child; to care for a family member with a serious health condition; or because of the employee's own serious health condition. The act allows employees to take up to 12 weeks of leave for reasons called "qualifying exigencies" when a family member who is in the Armed Forces or National Guard is deployed overseas. An employee may also take up to 26 weeks of leave during a single 12-month period to care for a military servicemember who has been seriously injured while on active duty. This report begins with a brief description of the FMLA. Proposals have been made to expand or limit the FMLA. To help identify some of the potential effects of these proposals, the report analyzes data on changes over time in the percentage of employees ages 18 and over who meet some of the main employee eligibility criteria for FMLA leave. The report then compares selected characteristics of employees who may be eligible for FMLA leave with employees who are likely ineligible for leave. The report also compares the use of leave for FMLA-related reasons by employees who may be eligible for leave and employees who are likely ineligible for leave. The report ends with a discussion of several FMLA policy issues. In recent Congresses, legislation has been introduced that would amend the FMLA to expand employee eligibility or employer coverage, allow eligible employees to take leave to care for additional family or household members, and expand the types of FMLA leave. Other proposals would limit access to FMLA leave. The FMLA was enacted in 1993. As amended, the act requires covered employers to provide eligible employees with two types of job-protected leave: regular leave and military family leave. Military family leave consists of qualifying exigency leave and military caregiver leave. Under the FMLA, an eligible employee is an employee who has worked for an employer for at least 12 months (the 12 months need not be consecutive) and for a minimum of 1,250 hours in the 12 months preceding the start of FMLA leave. An employee must be employed at a worksite where the employer has at least 50 employees or there are at least 50 employees who work for the employer within 75 miles of the employee's worksite. The FMLA covers both private and public sector employers. Private employers who employed at least 50 employees for at least 20 weeks in the preceding or current calendar year are covered by the FMLA. Public employers are covered regardless of the number of employees. Although the FMLA covers public employers of all sizes, to be eligible for leave, public employees must meet the above employee eligibility requirements. After returning from FMLA leave, employees generally have the right to return to the same, or an equivalent, job with the same pay, benefits, and working conditions. FMLA leave is generally unpaid leave. But, an employee may substitute paid leave for FMLA leave. Private employers may require an employee to substitute paid leave for unpaid FMLA leave. Federal agencies cannot require employees to substitute paid leave for unpaid FMLA leave. When paid leave is substituted for unpaid FMLA leave, the employee receives pay while on leave and receives the job protections of the FMLA. While an employee is on FMLA leave, an employer must maintain the employee's group health insurance coverage. An eligible employee may take up to 12 weeks of leave during any 12-month period for the birth and care of a child; to care for an adopted or foster child; to care for a spouse, child under the age of 18, or parent with a serious health condition; or if the employee is unable to work because of the employee's own serious health condition. The 12 weeks of FMLA leave may be continuous or "intermittent." The FMLA requires an employer to allow an employee to take intermittent leave or work part-time if the employee has a medical need for leave. Although it is not required by the FMLA, an employer may voluntarily allow an employee to take intermittent leave or work part-time due to the birth of a child or to care for an adopted or foster child. Covered employers must allow eligible employees to take two types of military family leave. First, eligible employees may take up to 12 weeks of leave during a 12-month period for a "qualifying exigency." Eligible employees include the spouse, son or daughter of any age, or parent of a member of the regular Armed Forces who is deployed to a foreign country or a member of the National Guard or Reserves who has been called to active duty and is deployed to a foreign country. A qualifying exigency includes a "short notice deployment" (which is a notice that a member of the employee's family will be deployed in seven days or less); time for the employee to arrange for childcare, make financial or legal arrangements, or attend official ceremonies; or up to five days of leave to spend time with a member of the military who is on temporary leave for rest and recuperation during a deployment. Second, eligible employees may take up to 26 weeks of military caregiver leave during a single 12-month period. An employee who is the spouse, son or daughter of any age, parent, or next of kin of a covered servicemember may take military caregiver leave to care for a servicemember who has suffered a serious injury or illness while on active duty. A covered servicemember is either a current member of the regular Armed Forces or the National Guard or Reserves or a veteran who was a member of the regular Armed Forces or National Guard or Reserves during the five years before the date on which the veteran receives treatment. Special FMLA rules apply to airline pilots, flight attendants, and other airline crewmembers. A member of an airline flight crew is eligible for FMLA leave if he or she worked (a) at least 504 hours during the previous 12-month period for the employer and (b) at least 60% of the minimum number of hours that the employee was scheduled to work in any given month or, for an employee who is in "reserve status," at least 60% of the hours that an employee was paid for any given month. The hours that airline flight crews work include the hours spent in flight and the hours that a crewmember is on duty but not in flight. The hours that a crewmember is on duty may include hours between flights or hours during which a crewmember is on reserve status waiting to be called to duty. Proposals have been made to expand or restrict employee eligibility for FMLA leave. One proposal would eliminate the requirement that employees must work 1,250 hours or more during the preceding 12 months for the same employer. Other proposals would expand employer coverage to include more employers or allow leave to care for additional members of an employee's family or household. A proposal aimed at restricting employee eligibility would narrow the definition of a serious health condition. To assist Congress in evaluating how these proposals may affect the availability of FMLA leave, this section analyzes data from two household surveys: The Annual Social and Economic (ASEC) supplement to the monthly Current Population Survey (CPS) and a survey of employees conducted in 2012 by Abt Associates for the U.S. Department of Labor (DOL). Data from the ASEC supplement are used to estimate the number of employees who may or may not be eligible for FMLA leave, while data from the 2012 DOL employee survey are used to examine the use of leave for FMLA-related reasons by employees who may or may not be eligible for leave. Data from the ASEC supplement for the years 1993 to 2011 are used to estimate the number of employees ages 18 and over who may be eligible for FMLA leave. The ASEC supplement is a nationally representative survey that is conducted each year. Data from the supplement can be used to determine if employees worked 1,250 hours or more during the previous calendar year and worked for an employer with 50 or more employees. Data from the supplement can also be used to compare the characteristics of workers who may or may not be eligible for FMLA leave. A disadvantage of the ASEC supplement is that it does not ask respondents if they are eligible for FMLA leave. (See the Appendix for more information on the data used in this report.) Using data from the ASEC supplement, employees are categorized as "may be eligible" for FMLA leave if they worked at least 1,250 hours in the previous calendar year and worked for an employer with 50 or more employees. This methodology is subject to certain limitations. First, to be eligible for FMLA leave an employee must have worked 1,250 or more hours for at least 12 months for his or her current employer. Data from the ASEC supplement may show that an employee worked more than 1,250 hours in the previous calendar year, but eligibility for FMLA leave is based on the number of hours worked during the 12 months before the start of FMLA leave. In addition, if a person worked for more than one employer, he or she may not have worked for more than 1,250 hours for his or her current employer. On the other hand, an employee who worked 1,250 hours or more during the previous year for his or her current employer may not have worked for that employer for 12 months. To be eligible for FMLA leave an employee must work for an employer with at least 50 employees working within 75 miles of the employee's worksite. The ASEC supplement asks employees how many persons work for their employer, but it does not ask how many persons are employed by their employer within 75 miles of the employee's worksite. Information on the number of employees who work for employers with 50 or more employees is only available from the ASEC supplement beginning in 2010. Therefore, for years before 2010, it is not possible to estimate how many persons worked for employers with 50 or more employees. For that reason, the estimates in this section, for the years 1993 to 2011, of the number of employees who may be eligible for FMLA leave include all employees, regardless of the size of their employer. Changes over time in the percentage of employees who work for employers with 50 or more employees could affect the estimates of the number of employees ages 18 and over who may be eligible for FMLA leave. For example, according to data published by the Small Business Administration (SBA), from 2000 to 2010, the percentage of employees in the private sector who worked for firms with 50 or more employees increased from 70.4% to 71.3%. If information were available from the ASEC supplement for the years before 2010 of the number of employees who worked for employers with 50 or more employees, this information could affect the change in the number of employees who may be eligible for FMLA leave. Data from the 2012 DOL employee survey are used to compare the use of FMLA leave by employees who may or may not be eligible for FMLA leave. These comparisons are also for employees ages 18 and over. The DOL survey was conducted from February to June 2012 and covers the period from January 2011 to June 2012. The DOL employee survey asked employees if they took family or medical leave in the past year. The sample for the survey was smaller than the sample for the ASEC supplement, which limits the comparisons that can be made between workers who took or did not take leave for FMLA-related reasons. In the DOL survey, employees are categorized as "may be eligible" for FMLA leave if they were employed at a worksite with at least 50 workers employed by the employer within 75 miles of the worksite, worked for the employer for 12 consecutive months, and worked at least 1,250 hours for that employer in the past year. However, an employee who did not work for his or her employer for 12 consecutive months may have worked for that employer for 12 nonconsecutive months and, therefore, may have been eligible for FMLA leave. Demographic, social, and economic changes can affect the number of employees who may be eligible for FMLA leave. Some of these changes may reflect longer-term trends, while others may be due to shorter-term factors. For example, the size of the U.S. population is increasing, but it is also getting older. Also, the labor force participation rate for men has decreased in recent decades. After rising for several decades, the labor force participation rate for women has been falling since about 1999. Employment and hours worked generally rise during an economic expansion. But, during a recession, employers may lay off workers and reduce the average number of hours worked. Thus, the number of employees who may be eligible for FMLA leave may change over the course of the business cycle. An analysis of employees ages 18 and over shows that, from 1993 to 2000, the percentage of employees who worked 1,250 hours or more in the preceding year increased by 4.4 percentage points (after rounding, from 76.8% to 81.3%). From 2006 to 2011, the percentage of employees who worked 1,250 hours or more fell by 2.7 percentage points (from 82.0% to 79.3%). See Figure 1 . From 1993 to 2000, the percentage of employees ages 18 and over who may have been eligible for FMLA leave may have increased because of both longer-term and shorter-term changes. First, the economic expansion of the 1990s was the longest expansion since business cycle data were first collected at the end of the 19 th century. More people were working in 2000 than in 1993. The total number of jobs increased by 20.9 million (from 110.8 million to 131.8 million, after rounding). Although the average number of hours worked per week by private nonfarm workers was the same in 2000 as in 1993 (34.3 hours), more workers were employed full-time, year-round (63.1% in 1993 and 69.4% in 2000). The decline, from 2006 to 2011, in the percentage of employees who may have been eligible for FMLA leave, may also have been due to both longer-term and shorter-term changes. The recession that officially began in December 2007 and ended in June 2009 was the longest and one of the deepest since the Great Depression of the 1930s. From 2006 to 2011, the number of jobs fell by 4.6 million (from 136.1 million to 131.5 million). The average number of hours worked was falling before, and continued to fall after, the recession (from 34.3 hours in 2000 to 33.6 hours in 2008 and 33.4 hours in 2010). The number of employees working full-time, year round fell from 70.4% in 2006 to 67.4% in 2011. According to the 2012 DOL employee survey, among all employees who took medical leave in the previous year, the most common reason for taking leave was for the employee's own illness. An estimated 56.6% of employees said that the reason for their most recent use of medical leave was for their own illness. The percentage of employees who take medical leave for their own illness may have been affected by two longer-term demographic trends. First, from 1993 to 2011, among employees who may have been eligible for FMLA leave, the percentage who were married fell by 3.2 percentage points (after rounding, from 61.9% to 58.6%). The percentage of eligible employees who had never been married increased by 3.0 percentage points (from 22.8% to 25.8%). Thus, the percentage of employees eligible for FMLA leave with a spouse has fallen. Second, from 1993 to 2011, among employees who may have been eligible for FMLA leave, the percentage who had children under the age of 18 fell by 5.4 percentage points (after rounding, from 26.8% to 21.5%). To further understand the potential impact of proposals to expand or limit the availability of FMLA leave, this section uses data from the ASEC supplement for 2011 to compare employees who may or may not have been eligible for leave. This information is then compared to data from the 2012 DOL employee survey, which provides estimates of the percentage of employees who took leave for FMLA-related reasons in the past year. The latter estimates are provided for employees who may have been eligible for FMLA leave and for employees who were likely ineligible for leave. Using data from the ASEC supplement, Table 1 shows the estimated percentages of employees who may have been eligible or ineligible for FMLA leave. Unlike the data in Figure 1 , the estimates of the number of employees who may have been eligible for FMLA leave include employees who worked at least 1,250 hours in the previous year and worked for an employer with at least 50 employees. Employees who are categorized as ineligible for FMLA leave worked fewer than 1,250 hours, worked for an employer with fewer than 50 employees, or both. Columns 1 through 3 of Table 1 show the estimated number of wage and salary workers who may have been eligible or were likely ineligible for FMLA leave. The table shows two different percentage calculations. In columns 4 through 6, the percentage calculations, by row, show the percent of employees who may have been eligible and the percent who were likely ineligible for FMLA leave. In columns 7 through 9, the percentage calculations, by column, show the percent of employees by characteristic who may or may not have been eligible for FMLA leave. Using data from the 2012 DOL employee survey, Table 2 shows, for both eligible and ineligible employees, the percentage of employees who used leave in the past year for FMLA-related reasons. Employees who may have been eligible for FMLA leave were employed at a worksite with at least 50 workers employed within 75 miles of the worksite, worked for their current employer for at least 12 consecutive months, and worked at least 1,250 hours in the past year for that employer. The estimates in Table 1 and Table 2 are for employees ages 18 and over. All estimates are for wage and salary workers in the private and public sectors. The estimates do not include self-employed workers. Their jobs are presumably protected after returning from family or medical leave. The remainder of this section summarizes the data in Table 1 and Table 2 . All Employees . Estimates from both the ASEC supplement and the 2012 DOL employee survey indicate that a majority of employees are eligible for FMLA leave. Data from the ASEC supplement show that, in 2011, an estimated 80.9 million wage and salary employees (56.5%) may have been eligible for FMLA leave because they worked 1,250 hours or more for an employer with at least 50 employees. An estimated 62.3 million employees (43.5%) were likely ineligible for leave. Data from the DOL employee survey show that approximately 59.2% of employees may have been eligible, and 40.8% ineligible, for FMLA leave. Data from the 2012 DOL employee survey show that an estimated 15.9% of eligible employees took leave for FMLA-related reasons in the past year, compared to 10.2% of ineligible employees who took leave for FMLA-related reasons. Gender . In 2011, among employees who may have been eligible for FMLA leave, a majority were men (52.9%). Men were also more likely than women to be eligible for leave (57.2% compared to 55.6%). However, the DOL employee survey shows that women were more likely than men to take leave for FMLA-related reasons. Among employees eligible for leave, 17.9% of women and 14.1% of men took leave in the past year. Age . Employees between the ages of 34 and 49 were more likely than younger or older workers to be eligible for FMLA leave. While 62.7% of workers ages 34 to 49 may have been eligible for leave, 48.5% of workers ages 18 to 33 and 57.9% of workers ages 50 to 82 may have been eligible for leave. Based on the DOL employee survey, among workers likely eligible for FMLA leave, older workers were more likely than younger workers to have taken leave in the past year; 17.8% of workers 50 and over took leave, compared to 15.6% of workers ages 34 to 49 and 14.7% of workers ages 18 to 33. By contrast, among employees likely ineligible for leave, younger workers were more likely than older workers to have taken leave; 11.2% of workers ages 18 to 33 took leave, compared to 10.0% of workers ages 34 to 49 and 9.2% of workers ages 50 and over. Marital S tatus . Almost three-fifths (58.8%) of employees who may have been eligible for FMLA leave were married. Married workers were also more likely (60.4%) than workers who have never been married (48.1%) to be eligible for leave. An estimated 58.8% of employees who were widowed, divorced, or separated may have been eligible for leave (see Table 1 ). Among employees who were likely eligible for leave, married workers were more likely than unmarried workers to have taken leave in the past year: 16.8% and 14.9%, respectively. Among employees likely ineligible for leave, equal percentages of married (10.2%) and unmarried (10.1%) workers took leave (see Table 2 ). Differences in the use of leave between married and unmarried workers may not fully account for the need for leave. For married couples, one spouse may not be working or may be working part-time. He or she may, therefore, be available to care for a newborn, adopted, or foster child or to care for a child with a serious health condition. For single employees, there may not be anyone else in the household who can care for a newborn child or a child with a serious health condition. Children Under the Age of 18 in the Household . In 2011, approximately 29.1 million, or 20.4%, of employees had children under the age of 18 in the household. Among these employees, an estimated 60.5% may have been eligible for FMLA leave. Among employees with children, married employees (62.6%) and employees who were widowed, divorced, or separated (60.5%) were more likely than employees who had never been married (52.1%) to be eligible for leave. Among employees with children, those who had never been married represented a disproportionate share of employees who were likely ineligible for FMLA leave. Among employees with children, an estimated 16.3% had never been married. But, these employees accounted for approximately 19.8% of employees who were likely ineligible for leave. According to the DOL employee survey, in the past year, employees with children in the household were more likely than employees with no children to have taken leave for FMLA-related reasons. This was the case both among employees who may have been eligible for leave (19.5% versus 13.2%) and employees who were likely ineligible for leave (13.4% versus 7.7%). Race . Almost four-fifths (79.4%) of employees who may have been eligible for FMLA leave were white. But, African American employees (61.4%) were more likely than white employees (55.9%) or employees of other races (55.6%) to have been eligible for leave. Among employees who were likely eligible for FMLA leave, roughly equal percentages of whites (16.0%) and nonwhites (15.6%) took leave in the past year. By contrast, among employees who were likely ineligible for leave, whites (11.1%) were more likely than nonwhites (7.7%) to have taken leave. One reason why African Americans may have been more likely than white employees to be eligible for FMLA leave is that 19.8% of African Americans worked in the public sector, compared to 15.6% of whites. Public sector employees are more likely than private sector employees to be eligible for FMLA leave. (See the paragraph below on the "Private and Public Sectors.") Ethnicity . An estimated 86.4% of employees who may have been eligible for FMLA leave were non-Hispanic. Non-Hispanics were also more likely than Hispanics to be eligible for leave (57.6% compared to 50.4%). Education . Among employees who may have been eligible for FMLA leave, an estimated 39.3% had a Bachelor's, advanced, or professional degree. But, these employees were significantly more likely than employees with less education to be eligible for leave. An estimated 70.2% of employees with a post-graduate degree and 64.6% of employees with a Bachelor's degree may have been eligible for leave. By contrast, just over half of employees with an Associate's degree or some college (53.5%) or a high school diploma (53.4%) may have been eligible for leave. Employees with less than a high school diploma were the least likely (38.4%) to have been eligible for leave. Although workers without a college degree were less likely than other workers to have been eligible for leave, they were more likely to have taken leave in the past year. This was the case both among employees who may have been eligible for leave and employees who were likely ineligible for leave. Among employees who may have been eligible for FMLA leave, 16.5% of employees with a high school degree or less and 18.5% of employees with some college took leave, compared to 13.7% of employees with a Bachelor's or advanced degree. Among employees who were likely ineligible for leave, 11.0% of employees with a high school degree or less and 9.9% of employees with some college took leave, compared to 8.9% of employees with a Bachelor's or advanced degree. Private and Public Sectors . Almost four-fifths (77.6%) of employees who may have been eligible for FMLA leave worked in the private sector. But public sector employees (i.e., federal, state, or local governments) were more likely to be eligible for leave. While 91.0% of federal, 80.5% of state, and 73.5% of local government employees may have been eligible for leave, 52.1% of private-sector employees may have been eligible for leave. Industry . Employee eligibility for FMLA leave varies significantly by industry. The industry with the highest percentage of employees who may have been eligible for leave was Public Administration (84.0%). While an estimated 76.1% of employees in the Mining industry may have been eligible for leave, these employees accounted for only 0.8% of all employees who may have been eligible for leave. Other industries with above average percentages of employees who may have been eligible for leave included Information (71.6%), Manufacturing (71.5%), Educational Services (69.9%), Transportation and Utilities (68.9%), Financial Activities (65.1%), and Health Services (63.7%). Industries with below-average percentages of employees who may have been eligible for leave were Wholesale and Retail Trade (53.1%), Professional and Business Services (46.8%), Leisure and Hospitality (38.5%), Social Assistance (37.6%), Construction (33.1%), Agriculture, Forestry, Fishing, and Hunting (26.0%), and Other Services (22.0%). Occupation. The percentage of employees who may be eligible for FMLA leave also varies significantly by occupation. The occupations with the highest percentages of employees who may have been eligible for leave were employees in Professional and Related occupations (67.3%) and Management, Business, and Financial occupations (65.0%), and Production occupations (63.7%). Occupations with lower shares of employees who may have been eligible for leave were Sales and Related (49.1%), Services (43.1%), Construction and Extraction (36.0%), and Farming, Fishing, and Forestry occupations (28.5%). Annual Wages and Salary . The percentage of employees who may be eligible for FMLA leave increases with earnings. An estimated 39.8% of employees with annual wages and salary of less than $35,000 may have been eligible for leave, compared to 73.4% of employees with earnings of $35,000 to $75,000 and 77.8% of employees with earnings of more than $75,000. Results from the DOL employee survey show that, among employees who may have been eligible for FMLA leave, those with higher family incomes were more likely to have taken leave in the past year. An estimated 17.4% of employees with family incomes of more than $75,000 took leave in the past year, compared to 15.2% of employees with family incomes of less than $35,000. On the other hand, among employees who were likely ineligible for leave, those with lower incomes (13.9% of those with incomes below $35,000) were more likely than those with higher incomes (8.0% of those with incomes above $75,000) to have taken leave. The U.S. workforce and American family were changing in the years before the FMLA was enacted in 1993. The labor force participation rate of women had been rising steadily, more married women with children were working, and more families were headed by single parents. For employees who did not have job-protected family or medical leave, the FMLA was a response to these changes. Other policymakers may question whether the leave employers are required to allow under the FMLA is a proper role for the federal government. Some may believe that this is an issue that should be left to the states, a matter between individual employees and their employer, or a subject for collective bargaining. Instead of mandated leave, some policymakers may favor government incentives to encourage employers to provide family and medical leave. Supporters of the FMLA have proposed amendments to the act that would expand employee coverage. Some of these suggestions would make it easier for employees to qualify for leave, allow employees to take leave to care for more members of their family or household, expand the types of leave, or expand employer coverage to include employees of smaller employers. On the other hand, others have proposed changes in the law that would narrow the definition of a serious health condition or curtail the use of intermittent leave for a chronic health condition. This section examines some of these proposals. The discussion in this section uses data from different sources. These include responses from the 2012 DOL employee survey discussed in the previous section, a 2012 survey of 1,812 employers conducted by Abt Associates for DOL, and information collected by the Society for Human Resource Management (SHRM). The FMLA is intended to help employees balance work and family life. Proponents of the objectives of the FMLA have suggested ways to expand employee eligibility. These proposals would (1) eliminate the requirement that employees must work 1,250 hours or more during the preceding 12 months for the same employer, (2) prorate the 12 weeks of leave based on the number of hours worked, (3) eliminate or reduce the requirement that employees must work for the same employer for at least 12 months, and (4) lower employee eligibility from the current threshold of 50 employees who work within 75 miles of an employee's worksite. Other proposals would allow eligible employees to take leave to care for additional members of the family or household. These additional persons may include grandparents, grandchildren, nondisabled children ages 18 or older, domestic partners, or same-sex spouses. Some employers may oppose an expansion of employee eligibility for FMLA leave. Such an expansion could increase employer administrative and operating costs. Employers may need to make additional adjustments to work schedules if more employees become eligible for, and take, FMLA leave. To maintain the same level of output of goods and services, some employers may need to hire more workers or pay more workers for overtime. Employers must continue health insurance coverage while employees are on FMLA leave, which could increase employer costs if more employees take FMLA leave. An expansion of FMLA coverage could create an incentive for employers to hire more part-time workers, who may not be eligible for FMLA leave. Some proposals to amend the FMLSA would expand the reasons for which employees could take FMLA leave. One proposal would allow employees to take "parental leave," where employees could take limited amounts of leave to attend parent-teacher conferences, participate in their children's educational and extracurricular activities, or take children (or other family members) to routine medical or dental appointments. Other proposals would allow employees to take leave to participate in activities that result from domestic violence or because of a death in the family. Using data from the 2012 DOL employer survey, Table 3 shows the percentage of employers that offer parental leave to their employees. An employer is defined as a unique worksite. A firm may have one or more worksites. Column 1 shows the percentage of all worksites that offered parental leave. Column 2 shows the percentage of worksites with FMLA-eligible employees, which are worksites with at least 50 employees within 75 miles of the worksite. Table 3 shows that, compared to all worksites, employers with FMLA-eligible employees are more likely to offer parental leave. Again, for the reasons discussed above, some employers may oppose an expansion of the FMLA to cover additional types of leave. FMLA leave is generally unpaid leave. Some policymakers favor legislation to provide employees with paid leave. These proposals may not involve amendments to the FMLA, however. At least three approaches have been suggested to provide employees with paid time off while taking leave for reasons covered by the FMLA. One approach would require employers to provide leave with pay to employees to care for their own health or the health of other eligible individuals. Two different methods have been proposed: one would require employers to offer their employees a paid sick leave benefit. The other would use a payroll tax to fund a wage-replacement program for eligible employees while on leave. A second approach would create a grant program to assist states interested in supplementing the income of individuals who take leave for family-related reasons. A final approach would amend the Fair Labor Standards Act (FLSA). Private sector employers would be required to pay an overtime premium to hourly employees who work more than 40 hours in a week. Instead of paying employees in cash for overtime, employers would be allowed to offer them compensatory time, which employees could use as they choose. Requiring employers to provide paid leave may raise a number of concerns. First, many employers already provide their employees with paid leave. These paid leave programs may not be subject, however, to minimum federal standards. Table 4 shows the percentage of employers who offer different types of paid leave. Compared to all worksites, employers with FMLA-eligible employees are more likely to offer paid leave. Those employers that do not offer paid sick leave may oppose a federal mandate that would require them to provide it. Some employees may oppose a payroll tax to fund a program for paid leave. Some employers and employees may not favor a federal program to provide employees with paid leave, even if the cost is offset by a reduction in taxes or spending elsewhere. For instance, as may be the case if employee eligibility for FMLA leave were expanded, legislation to require employers to offer paid leave may raise concerns about the potential effects on employer administrative and operating costs. Some may argue that government-required paid leave is not a federal, but a state, issue or that it is an issue that should be left to negotiations during collective bargaining. Instead of mandated paid leave, some policymakers may prefer government incentives to encourage employers to provide such leave. For their part, some employees may prefer to choose the types of benefits they receive. Requiring employers to offer paid leave may result in the substitution of paid leave for some other type of compensation (whether other benefits or wages) that some workers may prefer. To make FMLA leave available to more employees, some have suggested an expansion of employer coverage. Currently, the FMLA covers private sector employers who employed at least 50 employees for at least 20 weeks in the preceding or current calendar year. Proposals have been made to expand employer coverage to include employers with, perhaps, 25 or 15 employees. According to the report on the 2012 DOL employee survey, an estimated 59.2% of employees may be eligible for FMLA leave. According to the report, if the threshold for employer coverage were lowered from 50 to 30 employees, approximately 63.2% of employees could be eligible for leave. If the threshold were lowered to 20 employees, approximately 66.6% of employees could be eligible for leave. In addition to the questions that could be raised about expanding employee eligibility or the types of FMLA leave, expanding FMLA coverage to smaller employers may raise other concerns. In particular, smaller employers may have less flexibility than larger employers in adjusting to employee absences (of up to 12 weeks, or up to 26 weeks for military caregiver leave). The absence of one or more employees may impose a greater burden on smaller than larger employers. Concerns have been raised about the administration of FMLA leave. In particular, some have argued that DOL regulations have expanded the meaning of a serious health condition beyond the intent of Congress and that the application of intermittent leave imposes undue administrative burdens on employers. The 2012 DOL survey of employers asked covered employers how easy or difficult it is to comply with the FMLA. These findings are shown in Table 5 . The data in column 1 are for covered worksites, which are employers that reported that they were covered by the FMLA. Because some of these employers did not have 50 workers employed within 75 miles, column 2 is a subset of covered worksites. These are employers who reported that they were covered by the FMLA and had at least 50 employees employed within 75 miles. Among all covered employers, 65.5% reported that it was "very" or "somewhat" easy to comply with the FMLA. A larger percentage, 75.3%, of employers with FMLA-eligible employees reported that it was very or somewhat easy to comply with the FMLA. Conversely, among all employers, 6.1% said that it was "very" or "somewhat" difficult to comply with the FMLA, compared to 14.6% of employers with FMLA-eligible employees. Currently, regulations define a serious health condition as an illness, impairment, injury, or mental or physical condition that involves: inpatient care, which means an overnight stay in a hospital, hospice, or residential mental facility; or continuing treatment by a health care provider, which includes (1) a period of incapacity of more than three consecutive days and any subsequent treatment or period of incapacity due to the same condition; (2) any period of incapacity due to pregnancy or for prenatal care; (3) any period of incapacity or treatment due to a chronic serious health condition that requires visits at least twice a year for treatment by (or under the supervision of) a health care provider, continues over an extended period, and may cause episodic (rather than continuing) periods of incapacity (e.g., asthma or diabetes); (4) a period of incapacity that is permanent or long-term due to a condition for which treatment may not be effective (e.g., Alzheimer's disease or terminal stages of a disease); and (5) any period of absence to receive multiple treatments (including any period of recovery there from) by a health care provider for a condition that likely would result in incapacity of more than three consecutive days absent medical intervention (e.g., chemotherapy, physical therapy for severe arthritis, or dialysis for kidney disease). Some have argued that DOL regulations expanded the meaning of a serious health condition beyond the kinds of health problems envisioned by lawmakers. For example, the U.S. Chamber of Commerce has said that it supports reforms of the FMLA, including "restoring the original definition of 'serious health condition' to clarify that the FMLA does not cover minor ailments such as the common cold.... " At a February 2008 hearing before the Subcommittee on Children and Families of the Senate Committee on Health, Education, Labor, and Pensions, Katheryn Elliott, Assistant Director of Employee Relations at Central Michigan University, stated: Although Congress intended medical leave under the FMLA to be taken only for serious health conditions, SHRM [Society for Human Resource Management] members regularly report that individuals use this leave to avoid coming to work even when they are not experiencing a serious health condition. Changes in the FMLA have been proposed to remedy this possible problem. One suggestion is that the law should be amended to explicitly state that an illness, injury, impairment, or condition for which treatment and recovery are brief (e.g., fewer than 7 or 14 days) does not constitute a serious health condition. It has also been suggested that the FMLA should be amended to provide specific examples of serious health conditions. But, others contend that an overnight stay in a hospital is an indicator of a serious health condition. For instance, at a 1999 hearing before the Subcommittee on Children and Families of the Senate Committee on Health, Education, Labor, and Pensions, the Deputy Administrator of the DOL's Wage and Hour Division expressed concern that, under a narrower definition of serious health condition, some illnesses that "everyone would agree are normally not serious conditions" could never warrant FMLA leave. He argued that the flu—an often-used example of a nonserious condition for which FMLA leave can be taken—kills tens of thousands of people each year. According to the 2012 DOL survey of employers, 17.4% of those with FMLA-eligible employees said it was "very" or "somewhat" difficult to determine if a health condition was a serious health condition. By contrast, 70.0% of employers with FMLA-eligible employees said it was "very" or "somewhat" easy to determine if a health condition was a serious health condition. Among employers with FMLA-eligible employees, employers suspected that 2.9% of leave involved the misuse of the FMLA. According to DOL's 2012 employee survey, among employees who took leave, 85.7% of the most recent leave taken required a doctor's care, and 46.9% of that leave required an overnight stay in a hospital. Some have argued that the use of intermittent leave under the FMLA is both difficult to administer and disruptive to both employers and other employees. One argument against intermittent leave is that it can be difficult for employers to respond to employee absences, especially when employees provide little advance notice. Others maintain that intermittent leave may lead to the misuse of FMLA leave. According to FMLA regulations, employers must account for intermittent or part-time leave in the smallest increment that the employer uses to account for other types of leave. But, an employer must account for FMLA leave in increments of no more than an hour. The 2012 DOL employee survey defined intermittent leave as two or more episodes of FMLA-related leave for the same condition in the previous year. Among FMLA-eligible employees, 35.3% said they had taken leave five or more times for the same condition. By contrast, 26.6% of ineligible employees said they had taken leave at least five times in the past year. FMLA-eligible employees took leave an average of 4.8 times, compared to an average of 5.0 times among ineligible employees. Most intermittent leave was for six days or more. Among FMLA-eligible employees, 75.9% of the most recent absences were for six days or more, compared to 73.1% among ineligible employees. Among FMLA-eligible employees, an estimated 2.5% of the most recent absences were for a day or less, compared to an estimated 0.0% for ineligible employees. According to a 2007 SHRM report, 80% of human resources (HR) professionals reported that tracking intermittent leave was the most difficult part of the FMLA to administer. According to the 2012 DOL survey of employers, 31.3% of all employers said it was "very" or "somewhat" difficult to deal with planned intermittent leave, but 50.9% said it was very or somewhat difficult to deal with unplanned intermittent leave. Among employers with FMLA-eligible employees, 35.8% said it was very or somewhat difficult to deal with planned intermittent leave. But, 59.3% of employers said it was very or somewhat difficult to deal with unplanned intermittent leave. In order to lessen the record-keeping burden for employers, some have suggested that the minimum increment of leave be increased. Others have countered that expanding the increment would substantially penalize leave-takers by withholding, for example, half a day's pay when the employee only needs to be absent for an hour or less. The size of the penalty could potentially discourage some employees from taking intermittent leave. Concerns have been raised about effect of the FMLA on employees who must fill in for employees who are on leave. These effects may differ if FMLA leave is intermittent or for a longer period. The burden on co-workers could also change if FMLA leave is expanded. In the above-mentioned 2007 report, SHRM reported that 66% of HR professionals said that there are morale problems when employees are asked to cover for employees who take FMLA leave. The HR professionals also reported that employees may be more likely to have a negative view of FMLA leave when it is taken intermittently as opposed to leave taken to care for a newborn or newly placed adopted or foster child or for a catastrophic health condition. According to the 2012 DOL survey of employers, the most common response when an employee is taking leave for a week or more is to assign work temporarily to other employees. Among all employers, 64.5% said that they assigned work to other employees, while 17.8% said that they put work on hold until the employee returned to work. Among employers with FMLA-eligible employees, 83.3% said that they assigned work to other employees, but 6.3% said that they hired a temporary worker. The 2012 DOL employee survey asked employees how their work changed when their coworkers took leave. The responses were virtually the same among all employees and FMLA-eligible employees. Among all employees 51.0% said there was no change in their work, 34.1% said they took on more duties, 26.0% said they worked more hours, and 25.7% said they took on different job responsibilities. Among FMLA-eligible employees, 53.3% said there was no change, 34.3% said they took on more duties, 24.5% said they worked more hours, and an identical 25.7% said they took on different responsibilities. This appendix provides additional information on the data and methodology used in this report. Annual Social and Economic Supplement to the Monthly Current Population Survey This report uses data from the Annual Social and Economic (ASEC) supplement to the monthly Current Population Survey (CPS). The CPS is a household survey conducted by the U.S. Census Bureau for the Bureau of Labor Statistics (BLS). The sample for the ASEC supplement is representative of the civilian, noninstitutional population of the United States. The sample for the supplement includes members of the Armed Forces living in civilian housing units on a military base or in a household not on a military base. The sample does not include persons living in institutions (such as psychiatric hospitals, nursing homes, or correctional facilities). Approximately 76,000 households are interviewed for the supplement. In this report, data from the ASEC supplement are for employees ages 18 and over. For 2011, the survey includes 91,349 wage and salary workers ages 18 and over. When weighted to represent the noninstitutional U.S. population, the sample represents 143.2 million wage and salary workers. The ASEC supplement collects information on the longest job a person held during the previous calendar year. In this report, data by sector, occupation, and industry are for the longest job a person held in the previous year. From 1993 to 2011, job growth in Health Services accounted for over three-fifths of the increase in jobs in the major industry of Educational and Health Services. Therefore, in this report, the Educational and Health Services industry is separated into three industries: Health Services, Educational Services, and Social Assistance. The ASEC supplement asks respondents how many persons worked for their employer at their longest job. Data on the number of weeks worked and usual hours worked are for all jobs held during the previous year. In the ASEC supplement, wages and salary are defined as money earnings received by persons who are employees (i.e., wage and salary workers). Money earnings include wages, salary, commissions, tips, piece-rate pay, and bonuses. Earnings are before taxes or other deductions. Employees with children under the age of 18 in the household include employees who have a child under the age 18 who has a child of his or her own. Otherwise, employees under the age of 18 with children are not included in the analysis. U.S. Department of Labor 2012 Surveys of Employers and Employees In 2012, Abt Associates of Cambridge Associates, under contract with the U.S. Department of Labor, conducted surveys of employers and employees to determine employee eligibility and use of FMLA-related leave. According to the final report, the definition of leave used in the surveys "aligns" with the types of leave covered by the FMLA. The DOL employee survey consisted of 2,852 completed interviews and includes employees 18 and over who were employed for pay in the previous 12 months. The worksite survey consisted of 1,812 completed interviews and included employers who had at least 50 employees on the payroll at the time of the survey. The employee survey included both private and public sector employees, while the employer survey included only private sector worksites. The interviews were conducted between February and June 2012.

The Family and Medical Leave Act (FMLA) requires covered employers to allow eligible employees to take up to 12 weeks of leave during any 12-month period to care for a newborn, adopted, or foster child; to care for a family member with a serious health condition; or because of the employee's own serious health condition. The act allows eligible employees to take up to 12 weeks of leave because of "qualifying exigencies" when a family member who is in the Armed Forces or National Guard is deployed overseas. An employee may also take up to 26 weeks of leave during a single 12-month period to care for a servicemember who was seriously injured while on active duty. To assist Congress in evaluating proposals to expand or limit the availability of FMLA leave, this report uses data from two household surveys. The Annual Social and Economic (ASEC) supplement to the monthly Current Population Survey (CPS) is used to estimate the number of employees who may or may not be eligible for FMLA leave. Data from a 2012 survey conducted for the U.S. Department of Labor (DOL) are used to compare the use of leave for FMLA-related reasons by employees who may or may not be eligible for leave. An analysis of employees ages 18 and over shows that a majority of employees may be eligible for FMLA leave. Based on responses from 91,349 employees to the ASEC supplement, in 2011 an estimated 56.5% of employees were likely eligible for FMLA leave. According to the 2012 DOL survey of 2,852 employees, approximately 59.2% of employees may be eligible for FMLA leave. According to the 2012 DOL employee survey, an estimated 15.9% of employees who may have been eligible for FMLA leave used leave for FMLA-related reasons in the year before they were surveyed. By contrast, approximately 10.2% of employees who were likely ineligible for FMLA leave took leave for FMLA-related reasons. According to the ASEC supplement, in 2011 men were more likely than women to be eligible for FMLA leave (57.2% compared to 55.6%). However, according to the 2012 DOL employee survey, women were more likely than men to take leave for FMLA-related reasons. Among employees who were likely eligible for leave, 17.9% of women and 14.1% of men took leave in the past year. Employees between the ages of 34 and 49 were more likely (62.7%) than younger (48.5%) or older (57.9%) workers to be eligible for FMLA leave. But, workers ages 50 and over were more likely (17.9%) to have taken leave in the past year for FMLA-related reasons. Married employees were more likely (60.4%) than employees who were not married to be eligible for FMLA leave. Married workers were also more likely (16.8%) than unmarried workers to have taken FMLA-related leave in the past year. For a majority of employees (56.6%), the most recent medical reason for taking leave was for the employee's own illness. Employees with a Bachelor's or advanced degree were more likely than other employees to be eligible for FMLA leave. By contrast, employees with a high school degree or less were more likely than other employees to have taken FMLA-related leave in the past year. An estimated 91.0% of federal, 80.5% of state, and 73.5% of local government employees may be eligible for FMLA leave, compared to 52.1% of private-sector employees. The percentage of employees who may be eligible for FMLA leave increased with annual earnings. On the other hand, among employees who were likely ineligible for FMLA leave, the percentage who took leave for FMLA-related reasons in the past year was higher among employees with lower incomes. Approximately 75.3% of employers with FMLA-eligible employees report that it is "very" or "somewhat" easy to comply with the FMLA, while 14.6% report that it is "very" or "somewhat" difficult to comply with the FMLA. In the years before 1993, when the FMLA was enacted, the U.S. workforce and American family had changed. The labor force participation rate for women had been rising steadily, more married women with children were working, and more families were headed by single parents. For employees who did not have job-protected family or medical leave, the FMLA was intended to address these changes. Since it was enacted, supporters of the FMLA have proposed different ways to expand the program. Among the changes are proposals to expand employee eligibility, cover more employers, allow eligible employees to take leave to care for more family or household members, or expand the types of FMLA leave. On the other hand, others have proposed changes that would narrow the definition of a serious health condition or curtail the use of intermittent leave for a chronic health condition. In general, those who favor expanding the FMLA argue that these changes would further the objectives of the act. For a number of reasons, some employers and policymakers may oppose an expansion of FMLA leave. For instance, expansion could increase employer administrative and operating costs. If additional employees become eligible for, and take, FMLA leave, employers may have to make more adjustments to work schedules. In order to maintain the same level of output of goods or services, some employers may need to hire more workers or pay more workers for overtime. An expansion of FMLA leave could create an incentive for employers to hire more part-time workers. Extending FMLA coverage to smaller employers could impose greater costs on those employers than on larger employers.

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On September 11, 2009, the White House announced that additional tariffs would be placed on imports of certain Chinese tires for three years under Section 421 of the Trade Act of 1974, 19 U.S.C. §2451, a trade remedy statute aimed at import surges from China. The action was based on earlier findings by the U.S. International Trade Commission (ITC) that Chinese tire imports into the United States were causing market disruption to domestic tire producers. The new tariffs took effect on September 26, 2009. Although six petitions had been filed under Section 421 in the past to remedy surges of other Chinese products and the ITC found that U.S. market disruption existed in four out of six of its Section 421 investigations, this was the first time that a President chose to grant import relief under the statute. Further, while President Obama was authorized to review the tariffs after six months and to modify, reduce, or terminate them, he allowed the tariffs to remain in place as originally imposed. Section 421, which was enacted as one element of an October 2000 statute addressing various issues involving the accession of China to the World Trade Organization (WTO), authorizes the President to impose safeguards—that is, temporary measures such as import surcharges or quotas—on Chinese products in the event that the ITC finds that these imports have resulted in market disruption in the United States. Market disruption occurs under Section 421 if an import surge of a Chinese product is a significant cause of material injury or threat of material injury to the domestic industry producing the like or directly competitive product. China's WTO Accession Protocol permits WTO members to impose safeguards to remedy domestic market disruption caused by imports of Chinese goods until December 2013. This provision is separate from XIX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the WTO Agreement on Safeguards, which allow WTO members to respond to injurious import surges generally but on a stricter basis than provided for under China's Accession Protocol. China requested consultations with the United States under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes on September 14, 2009, and requested a panel on December 21, 2009, claiming that the additional tariffs are inconsistent with U.S. GATT obligations to accord Chinese tires MFN tariff treatment and not to exceed negotiated tariff rates, that the United States imposed tariffs under the special safeguard mechanism in China's WTO Accession Protocol without first attempting to justify them under general GATT and WTO safeguard provisions, and that Section 421 and its application in this case are inconsistent with U.S. obligations under the Protocol. A dispute panel was established in January 2010, with panelists appointed the following March. In a report issued December 13, 2010, the WTO panel rejected all of China's claims. China appealed various panel findings as they related to China's Accession Protocol. In a report circulated September 5, 2011, the WTO Appellate Body upheld the challenged panel determinations and thus U.S. actions under the Protocol. The panel and Appellate Body reports were adopted by the WTO Dispute Settlement Body on October 5, 2011, terminating the dispute. This report discusses WTO safeguards provisions contained in Article XIX of the GATT and the Agreement on Safeguards; the WTO China-specific safeguard and how it differs from pre-existing WTO provisions; authorities and procedures set out in Section 421 of the Trade Act of 1974; the ITC determination and the President's decision to provide relief in the 2009 China tires case; and China's WTO case against the U.S. tire safeguard. Article XIX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the WTO Agreement on Safeguards permit WTO members to apply safeguards—that is, to suspend temporarily GATT tariff concessions or other GATT obligations owed other WTO members—in order to remedy serious injury to domestic industries caused by surges of imported products from other WTO member countries. The China-specific safeguard contained in China's WTO Accession Protocol, discussed below, raises the possibility that a WTO member may impose safeguards under the stricter provisions of the GATT and the Safeguards Agreement instead of under the China-specific provision. Safeguard measures are generally authorized under U.S. law in Title II of the Trade Act of 1974, 19 U.S.C. §§2251-2254. Article XIX of the GATT 1994, captioned "Emergency Action on Imports of Particular Products" and referred to as the GATT "escape clause," was intended to provide GATT parties with a means of addressing temporary emergencies that might arise as a result of their GATT commitments to reduce tariffs and adopt other trade liberalizing laws and policies. Article XIX:1(a), which sets out the WTO legal foundation for safeguards, provides as follows: If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party [i.e., WTO member] under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part. A safeguard may take the form of a tariff surcharge, which involves the suspension of a negotiated tariff concession under Article II of the GATT, or an import quota, which involves the suspension of the obligation in GATT Article XI:1 not to impose quantitative restrictions on imports from other WTO members. Another option is a tariff-rate quota (TRQ), under which a specified volume of goods may be entered under a lower tariff rate, with out-of-quota items subject to higher rates. Article XIX safeguards are to be considered exceptional measures. As explained by the WTO Appellate Body: As part of the context of paragraph 1(a) of Article XIX, we note that the title of Article XIX is: " Emergency Action on Imports of Particular Products ". The words "emergency action" also appear in Article 11.1(a) of the Agreement on Safeguards. We note once again, that Article XIX:(1)(a) requires that a product be imported " in such increased quantities and under such conditions as to cause to threaten serious injury to domestic producers". (emphasis added). Clearly, this is not the language of ordinary events in routine commerce. In our view, the text of Article XIX:1(a) of the GATT 1994, read in its ordinary meaning and in its context, demonstrates that safeguard measures were intended by the drafters of the GATT to be matters out of the ordinary, to be matters of urgency, to be, in short, "emergency actions." And, such "emergency actions" are to be invoked only in situations when, as a result of obligations incurred under the GATT 1994, a member finds itself confronted with developments it had not "foreseen" or "expected" when it incurred that obligation. The remedy that Article XIX:1(a) allows in this situation is temporarily to "suspend the obligation in whole or in part or to withdraw or modify the concession". Thus, Article XIX is clearly, and in every way, an extraordinary remedy. The Agreement on Safeguards expands on Article XIX, providing that safeguards may only be imposed if the importing member has conducted an investigation to determine if the conditions for imposing a safeguard have been met and stating that a WTO member may not "take or seek any emergency action on particular products as set forth in Article XIX of the GATT 1994 unless such action conforms with the provisions of this Article as applied in accordance with this Agreement." It adds that the increased quantities of imports that are a prerequisite of a finding of serious injury may be "absolute or relative to domestic production." The Agreement also sets out requirements for domestic safeguards investigations and for determinations of serious injury made in the course of such investigations. In addition, a WTO member imposing a safeguard is subject to detailed obligations to notify the WTO Committee on Safeguards and the WTO Council on Trade in Goods and to consult with other affected WTO members. Although the Agreement on Safeguards does not contain language requiring the existence of "unforeseen developments," the WTO Appellate Body has determined that the requirement continues to apply. In a 1999 report (which also contains the paragraph quoted above), the Appellate Body found that a safeguard measure must comply with both Article XIX and the Safeguards Agreement, that Uruguay Round negotiators intended that the provisions of the GATT and the provisions of the Safeguards Agreements "would apply cumulatively except to the extent of a conflict between specific provisions," and that, there being no such conflict in this situation, "unforeseen developments" must exist in order to impose a safeguard measure. The "serious injury" standard contained in Article XIX and carried forward in the Safeguards Agreement is defined in the Agreement as meaning "a significant overall impairment in the position of a domestic industry." The WTO Appellate Body has found that this standard is "on its face, very high" or "exacting," particularly when contrasted with the "material injury" standard contained in the WTO Antidumping Agreement, the Agreement on Subsidies and Countervailing Measures, and Article VI of the GATT. According to the Appellate Body, this "much higher standard of injury" is consistent with the object and purpose of the Safeguards Agreement since the application of a safeguard is predicated on the existence of increased import volume and not on "'unfair' trade actions [i.e., dumping or subsidization], as is the case with anti-dumping or countervailing measures." The Safeguards Agreement makes clear that an Article XIX safeguard must be applied on a nondiscriminatory basis, that is, it must be applied to the product at issue regardless of its source. The Agreement also places a time limit on a safeguard measure, providing that it may not be initially applied for more than four years. The safeguard may be extended, however, so long as the full period of application does not exceed eight years. While WTO members may apply quantitative restrictions or quotas under the Safeguards Agreement, they may not "seek, take or maintain any voluntary export restraints, orderly marketing agreements or other similar measures on the export or the import side," whether such actions are taken by a single member or as actions under "agreements arrangements and understandings entered into by two or more members." Article XIX requires that the WTO member intending to impose the safeguard notify the WTO "as far in advance as may be practicable" before doing so and afford the WTO and WTO members having a substantial export interest in the subject product an opportunity to consult on the proposed action. These consultation requirements are expanded upon in the WTO Safeguards Agreement, which requires the member to notify the Committee on Safeguards immediately upon initiating an investigation relating to serious injury or threat as well as at other stages of the process. A member may apply a provisional safeguard in the event of "critical circumstances," that is, "where delay would cause damage which it would be difficult to repair," so long as the member has preliminarily determined that "there is clear evidence that increased imports have caused or are threatening to cause serious injury" and that it has notified the Safeguards Committee. Article 8 of the Safeguards Agreement requires that the member proposing to apply a safeguard measure "endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing under GATT 1994 between it and the exporting members which would be affected by such a measure." To achieve this objective, the members may agree on "any adequate means of trade compensation for the adverse effects of the measures on their trade." GATT Article XIX:3(a) provides that if the importing member and the affected exporting members cannot reach an agreement regarding the safeguard, the importing member is "free to" impose or continue to impose the measure. If the member applies the safeguard, the affected exporting members have a conditional right to suspend "substantially equivalent concessions or other obligations" under the GATT owed that member. The Safeguards Agreement, at Article 8.2, provides that the right to suspend concessions owed the importing member, sometimes referred to as a "rebalancing" of concessions, may be invoked if no agreement is reached within 30 days of WTO consultations between or among the members concerned. If an affected exporting member invokes this right, it must first inform the WTO Council on Trade in Goods of its proposed measure. The member may then suspend concessions no later than 90 days after the safeguard is applied, provided 30 days have lapsed since the Council received the notification of the suspension and the Council has not disapproved (i.e., blocked) the proposed action. Notwithstanding the 90-day limitation described above, Article 8.3 of the Agreement prohibits members from exercising their "right of suspension" for the first three years that a safeguard measure is in effect, provided that the safeguard (1) is taken as a result of an absolute increase in imports and (2) is consistent with the Safeguards Agreement. Absent a mechanism in the Safeguards Agreement for establishing whether a safeguard conforms to the Agreement at this stage, affected WTO members have claimed that the three-year limitation did not apply based on unilateral determinations of WTO-consistency, but, more often, have waited or sought to wait until adverse panel and Appellate Body reports involving another member's safeguard were adopted by the WTO Dispute Settlement Body. Four U.S. safeguards have been successfully challenged in the WTO. Among other findings, the WTO Appellate Body determined that the United States had acted inconsistently with Article XIX of the GATT or the Safeguards Agreement, as the case may be, due to inadequate or improper analysis of one or more of the following: the existence of unforeseen developments, increased imports, serious injury or threat, and causation—that is, whether increased imports had caused or were causing serious injury—including issues related to non-attribution of injury to factors other than increased imports. When a country seeks to accede to the World Trade Organization (WTO), it negotiates its terms of accession both multilaterally with the WTO members as a whole, as well as bilaterally with individual WTO members. Bilateral negotiations involve market access concessions and commitments in goods as well as specific commitments in services. The terms of all bilateral agreements eventually become a part of the country's overall accession agreement with the WTO. In their bilateral negotiations, the United States and China agreed to a temporary China-specific safeguard that could be imposed in the event that import surges of Chinese products occurring after China became a WTO member resulted in material injury to domestic producers. The provision was later included as paragraph 16 of Part I of China's Protocol on Accession to the WTO (Accession Protocol) under the caption "Transitional Product-Specific Safeguard Mechanism." On November 10, 2001, WTO members agreed that China could accede to the WTO on the terms and conditions set out in its Accession Protocol. China became a WTO member 30 days later, on December 11, 2001. The China-specific safeguard provision will terminate 12 years after the date of China's accession, or December 10, 2013. The China-specific safeguard contains both substantive and procedural requirements. It may be invoked by a WTO member "in cases where products of Chinese origin are being imported into the territory of … [the] member in such increased quantities or under such condition as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products." The Accession Protocol provision defines "market disruption" as occurring: whenever imports of an article, like or directly competitive with an article produced by the domestic industry, are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury to the domestic industry. In determining whether market disruption exists, the importing member must look at "objective factors," including import volume, the effect of imports on prices for like or directly competitive articles, and the effect of the imports on the domestic industry producing such articles. As explained earlier, a "material injury" standard is considered less onerous than the "serious injury" standard contained in the Article XIX of the GATT and the Agreement on Safeguards. Under paragraph 16.1 of the Accession Protocol, a WTO member that finds that the described market disruption exists may request consultations with China aimed at resolving the situation, including whether the member should instead pursue applying a measure under the Agreement on Safeguards. Any such request must be immediately notified to the WTO Committee on Safeguards. Further, if in the course of the consultations, "it is agreed" that Chinese imports are causing or threatening to cause market disruption and that remedial action is "necessary," China must take "such action as to prevent or remedy the market disruption." If consultations do not lead to such an agreement within 60 days after China receives the request for consultation, the importing member "shall be free, in respect of such products, to withdraw concessions or otherwise to limit imports only to the extent necessary to prevent or remedy such market disruption." The safeguard may be applied only to goods of Chinese origin, a significant difference from the WTO Safeguards Agreement, which requires that a safeguard be imposed on the subject product regardless of its source. In addition, the China-specific safeguard does not contain the prohibition contained in Article 11.1(b) of the Safeguards Agreement against utilizing "voluntary export restraints, orderly marketing agreements or other similar measures on the export or the import side" as forms of safeguard measures, nor does it otherwise expressly limit the type of safeguard measure that may be applied. Although paragraph 16.6 of the Accession Protocol allows a safeguard to be imposed "only for such period of time as may be necessary to prevent or remedy the market disruption," the Accession Protocol differs from the Safeguards Agreement in that it does not limit the duration of the measure. Paragraph 16.6 does state, however, that China "has the right" to suspend the application of "substantially equivalent" GATT concessions or obligations to the trade of the WTO member imposing the safeguard if the safeguard is still in effect after two years where the safeguard was taken as a result of a relative increase in imports, or after three years where the increase was absolute. Similar to Article XIX of the GATT and the Safeguards Agreement, paragraph 16.7 of the China-specific safeguard permits the importing WTO member to apply a provisional safeguard measure, after it makes a preliminary determination that market disruption exists, where there are "critical circumstances," that is, where "delay would cause damage which it would be difficult to repair." A member may impose a provisional safeguard for no more than 200 days and, once it takes the action, it must immediately notify the Committee on Safeguards and request bilateral consultations with China. In addition, paragraph 16.8 provides a remedy for WTO members who have suffered significant trade diversion from China, that is, increased imports of Chinese product into their own territory, due to another member's transitional safeguard measure. At the time the U.S.-China bilateral WTO agreement was concluded, a White House summary addressed differences between the China-specific safeguard and the Agreement on Safeguards, stating that the former was "in addition to" the latter and that it "differs from traditional safeguards in that it permits China to address imports that are a significant cause of material injury through measures such as voluntary export restraints." The statement said that the United States would in addition "be able to apply restraints unilaterally based on standards that are lower than those in the WTO Safeguards Agreement." This nature of the standard and other features of the safeguard were described in congressional testimony of U.S. Trade Representative Barshefsky, who stated that the China-specific safeguard "applies to all industries, permits us to act based on lower showing of injury, and act specifically against imports from China." Section 421 of the Trade Act of 1974, 19 U.S.C. §2451, which implements the China-specific safeguard in U.S. law, was enacted in P.L. 106-286 as part of a package of provisions addressing various issues arising from the accession of China to the WTO. The statute, which also permitted the President to grant most-favored-nation (MFN) tariff treatment to Chinese goods upon China's accession to the WTO, was enacted in October 2000, a little more than a year before China became a WTO member. Section 421 is described in legislative history as "a temporary, extraordinary trade remedy specifically designed to address concerns about potential increased import competition from China in the future." Section 421, related provisions on trade diversion and regulatory action, as well as any regulations issued under these provisions, will expire 12 years after the date that China's WTO Accession Protocol enters into force, or December 10, 2013. Section 421 is modeled on Section 406 of the Trade Act, 19 U.S.C. §2436, which authorizes import relief for U.S. market disruption caused by products of "Communist countries." Section 406 in turn was adapted from Section 201 of the Trade Act of 1974, 19 U.S.C. §2251, the general U.S. safeguard statute, which authorizes the President to impose import restrictions or take other action if the U.S. International Trade Commission (ITC) finds that a surge in imports of a product regardless of origin is a "substantial cause of serious injury, or threat" to a domestic industry producing a like or directly competitive product. Among the differences between the two was an intent that the market disruption test in Section 406, under which an import surge of a product must be "a significant cause of material injury or threat" to a domestic industry (a definition that is replicated in Section 421), would be met more "more easily" than the serious injury test contained in Section 201. Section 421 provides domestic legal authority for the President to respond to injurious import surges as follows: If a product of the People's Republic of China is being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of a like or directly competitive product, the President shall, in accordance with the provisions of this section, proclaim increased duties or other import restrictions with respect to such product, to the extent and for such period as the President considers necessary to prevent or remedy the market disruption. The statute incorporates the definition of "market disruption" contained in paragraph 16 of China's WTO Accession Protocol, but adds that the term "significant cause," a term that is not defined in paragraph 16, means a cause "which contributes significantly to the material injury of the domestic injury, but need not be equal to or greater than any other cause." The Section 421 process involves (1) initiation of the process by private petition or governmental action; (2) an investigation by the ITC of the import concerned; (3) an ITC vote on its market disruption determination and, if affirmative, recommendations to the President on a remedy; (4) submission of a report by the ITC to the President and to the United States Trade Representative (USTR); (5) if the determination is affirmative, negotiations between the USTR and China seeking agreement by China to take action to prevent or remedy the market disruption; (6) a public hearing on remedies and a USTR recommendation to the President regarding what responsive action, if any, should be taken; (7) assuming a bilateral agreement has not been reached, a presidential determination as to whether to take action and, if so, what the action will be; and (8) if a remedy will be applied, a presidential proclamation increasing tariffs or imposing the chosen import restriction. The entire process from petition or other invocation of the section to any proclamation of relief should be completed within 150 days. Section 421 investigation may be instituted in one of four ways: (1) by petition; (2) upon the President's request; (3) upon resolution of either the House Ways and Means or Senate Finance Committee; or (4) on the ITC's own motion. A petition may be filed by "an entity, including a trade association, firm, certified or recognized union, or group of workers, which is representative of an industry." Unlike antidumping and countervailing duty investigations, there is no industry support requirement for investigations initiated by petition. Once an investigation is requested or otherwise initiated, the ITC must "promptly make an investigation" to determine whether the Chinese products at issue are causing the requisite market disruption. To determine whether "market disruption" exists, the ITC must look at "objective factors, including (1) the volume of imports of the products which is the subject of the investigation; (2) the effect of imports of such products on prices in the United States for like or directly competitive article; and (3) the effect of imports of such product on the domestic industry producing like or directly competitive articles." The presence or absence of any of these factors "is not necessarily dispositive of whether market disruption exists." The ITC must make its determination and transmit it to the President generally no later than 60 days after the date the petition is filed, the request or resolution is received, or the ITC motion is adopted. If the commissioners are evenly divided on their determination, then the determination agreed upon by either group may be considered by the President and the USTR as the ITC determination. In the event of an affirmative determination, the ITC must propose "the amount of increase in, or imposition of, any duty or other import restrictions necessary to prevent or remedy the market disruption." Only those commissions that agreed to the affirmative determination may vote on the proposed action to prevent or remedy market disruption. Members who did not agree to an affirmative determination may, however, submit separate reviews regarding what action, if any, should be taken to prevent or remedy the market disruption that was found. Within 20 days after its determination, the ITC must submit a report on the investigation to the President and the U.S. Trade Representative (USTR). The report must include (1) the commission's determination and an explanation of its basis; (2) in the event of an affirmative determination, ITC recommendations for proposed remedies and the reasons for them; (3) any separate and dissenting views; (4) a description of the short-term and long-term effects that implementation of the recommended action is likely to have on the petitioning domestic industry, on other domestic industries, and on consumers; and (5) a description of the short-term and long-term effects of not taking the recommended action on the petitioning domestic industry, its workers, and the communities where production facilities of the industry are located, and on other domestic industries. Within 20 days after receiving the ITC report, the USTR must publish a notice in the Federal Register of any safeguard measure that the USTR proposes should be taken under the Section 421(a) and of an opportunity for the submission of public views and evidence on "the appropriateness of the proposed measure and whether it would be in the public interest." Within 55 days after receiving the ITC report, the USTR, taking into account the views and evidence submitted, must make a recommendation to the President "concerning what action, if any to take to prevent or remedy market disruption." The statute does not require that the USTR's recommendation or a summary of the recommendation be made public. In addition, the USTR is authorized "to enter into agreements for the People's Republic of China to take such action as necessary to prevent or remedy market disruption" and "should seek to conclude" such agreements before the end of the 60-day consultation period provided for in paragraph 16 of China's WTO Accession Protocol. Any such negotiations are to begin no later than five days after the USTR receives an affirmative ITC determination. In order to carry out any agreement that is concluded, the President is authorized to prescribe regulations governing the entry or withdrawal from warehouse of goods covered by the agreement. If no agreement is reached with China, or if the President determines that a concluded agreement "is not preventing or remedying the market disruption at issue," the President is to provide import relief "in accordance with" Section 421(a). Within 15 days after receiving a recommendation by the USTR regarding what action, if any, the President should take, the President is to provide import relief for the industry concerned "unless the President determines that the provision of such relief is not in the national economic interest of the United States or, in extraordinary cases, that the taking of action ... would cause serious harm to the national security of the United States." The President may make a negative economic interest determination "only if the President finds that the taking of such action would have an adverse impact on the United States economy clearly greater than the benefits of such action." As noted earlier, Section 421(a) authorizes the President "to proclaim increased duties or other import restrictions" on the product concerned. The President's decision, including his reasons for his decision and the scope and duration of any action taken, must be published in the Federal Register . Import relief must take effect no later than 15 days after the President's determination to provide such relief. If import relief is provided, the President must, by regulation, provide for "the efficient and fair administration" of any restriction that he proclaims under the statute and for "effective monitoring of imports under [421(a)]." Once a safeguard is in effect for six months, the President may request that the ITC provide a report on the probable effect on the relevant industry were the safeguard to be modified, reduced, or terminated. The ITC must transmit the report to the President within 60 days after the report is requested. The President may then "take such action to modify, reduce, or terminate relief that the President determines is necessary to continue to prevent or remedy the market disruption at issue." The statute also authorizes the President to extend the safeguard if certain conditions are met. Upon a presidential request or a "petition of the industry concerned" filed with the ITC between six to nine months before the safeguard is set to expire, the ITC must investigate whether a safeguard continues to be necessary to prevent or remedy the market disruption involved. The ITC must provide for a public hearing and transmit a report on its investigation and its determination within 60 days before the safeguard expires. If the ITC's determination is affirmative, the President may extend the safeguard if he also determines that the action "continues to be necessary to prevent or remedy the market disruption." Six ITC investigations were conducted under Section 421 prior to the 2009 investigation of Chinese tire imports. These covered the following products: pedestal actuators, wire hangers, brake drums and rotors, ductile water works fittings, uncovered innerspring mattress units, and circular welded non-alloy steel pipe. The ITC made affirmative market disruption determinations with regard to imports of pedestal actuators, wire hangers, ductile water works fittings, and circular welded non-alloy steel pipe. Negative determinations were made with regard to imports of brake drums and rotors and innerspring mattress units. President George W. Bush declined to provide relief in each of the cases in which an affirmative determination was rendered on the ground that providing import relief was not in the U.S. economic interest. The President's decision not to provide relief under Section 421 has been held to be a discretionary act and thus not reviewable by a court. In Motion Systems Corp. v. Bush , an en banc decision of the U.S. Court of Appeals for the Federal Circuit (CAFC) affirming a decision of the U.S. Court of International Trade, the industry plaintiff argued that the President had acted outside the scope of his statutory authority following a recommendation by the ITC that import quotas were required to remedy the market disruption that had been found to adversely affect the domestic pedestal actuator industry, the first industry to have filed a petition under Section 421. The plaintiff also argued that the United States Trade Representative, inter alia, committed procedural violations involving the public hearing that must be held following the ITC's determination and recommendation, which was focused on the ITC's recommendations regarding import relief. Noting that there exists "no explicit statutory cause of relief granting a petitioner who is denied import relief under Section 421 the right to sue the President and the Trade Representative in the Court of International Trade," the CAFC stated that there were only two options left to the plaintiff to seek relief: (1) judicial review provisions of the Administrative Procedure Act (APA), 5 U.S.C. §701-706, or (2) "some form of nonstatutory review." The plaintiff had conceded that it could not proceed under the APA given the Supreme Court's 2002 decision in Franklin v. Massachusetts, 505 U.S. 788 (1992), that the President is not an "agency" for purposes of APA provisions providing a right of judicial review for those adversely affected by "agency action." The court described the plaintiff's remaining source of relief (i.e., nonstatutory review) as reducing itself to a question whether plaintiff could "challenge the President's discretionary actions under 19 U.S.C. §2451 as outside the scope of authority of delegated to him by Congress." The court relied on the Supreme Court's decision in Dalton v. Specter , 511 U.S. 462 (1994), which it viewed as acknowledging that a suit against the President could proceed where the presidential action alleged to exceed the scope of delegated statutory authority was claimed to constitute a constitutional violation (e.g., a violation of the separation-of-powers doctrine), but holding that, where there is no constitutional issue and assuming that a statutory basis for suit exists, judicial review of presidential action is not available where a statute commits a decision to the President's discretion. The court concluded that Section 421, in giving the President "broad discretion" to determine that providing relief is "not in the national economic interest" and that taking action would cause "serious harm" to U.S. national security, "accords the President the same discretion found to remove Presidential action from judicial review" in Dalton as well as in other Supreme Court cases. The court further held that the acts of the USTR under Section 421 were not final actions for purposes of the APA, but only recommendations to the President, and thus not subject to judicial review. On April 20, 2009, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition with the U.S. International Trade Commission requesting that it institute a Section 421 investigation involving certain passenger vehicle and light truck tires from China. As Section 421 permits an investigation to be requested by a union or group of workers, the absence of an industry petitioner does not foreclose the initiation of an investigation under the statute. The ITC instituted the investigation (TA-421-7) on April 24, 2009. As a result of its investigation, the ITC in June 2009 voted 4-2 that imports of the subject tires were causing market disruption to domestic producers and recommended that the President impose an addition duty on the imported tires for three years, beginning with an additional 55% ad valorem duty in the first year, 45% ad valorem in the second year, and 35% ad valorem in the third year. The ITC also recommended expedited consideration of trade adjustment assistance if applications for such assistance were filed by affected firms or workers. The agency submitted its report to the President and the U.S. Trade Representative on July 9, 2009. The President subsequently decided to provide import relief regarding the subject tires and on September 11, 2009, proclaimed increased tariffs for three years, albeit at lower rates than those recommended by the ITC, effective September 26, 2009. The President also directed the Secretaries of Labor and Commerce to expedite applications for trade adjustment assistance and to provide other available economic assistance to affected workers, firms, and communities. The products subject to the ITC investigation and the domestic like product were determined to be rubber tires used on passenger vehicles (with the exception of racing cars) and on-the-highway light trucks, vans, and sport utility vehicles. The ITC also found that various sizes and types of domestic passenger vehicle and light truck tires, including tires produced for the replacement and original equipment manufacturer [OEM] markets are "part of a continuum of products, with no clear dividing line between them." The ITC determined that the period of investigation for the Section 421 proceeding was 2004-2008. It found that the imports of the subject tires were increasing rapidly in both relative and absolute terms during this period, summarizing its conclusions as follows: In absolute terms, imports of the subject tires from China increased throughout the period of investigation and were the highest, in terms of both quantity and value, in 2008, at the end of the period. The quantity of subject imports rose by 215.5 percent between 2004 and 2008, by 53.7 percent between 2006 and 2007, and by 10.8 percent between 2007 and 2008. The value of subject imports rose even more rapidly, increasing by 294.5 percent between 2004 and 2008, by 60.2 percent between 2006 and 2007, and by 19.8 percent between 2007 and 2008. Both the ratio of subject imports to U.S. production and the ration of subject imports to U.S. apparent consumption rose throughout the period examined, and both ratios were at their highest levels of the period in 2008. The ratio of subject imports to U.S. production increased by 22.0 percentage points between 2004 and 2008, with the two largest year-to-year increases occurring at the end of the period in 2007 and 2008. The ratio of subject imports to U.S. apparent consumption increased by 12.0 percentage points during the period examined, with the two largest year-to-year increases also occurring at the end of the period in 2007 and 2008. We do not agree with respondents that the increases in subject imports from China during the period examined were "gradual" or "small," or that the subject imports had "abated" by the end of the period. Rather, we find that the subject imports increased, both absolutely and relatively, throughout the period by significant amounts in each year and, as stated above, were at their highest levels at the end of the period in 2008. Whether viewed in absolute or relative terms, and whether viewed in terms of the increase from 2007 to 2008 alone or the increase in the last two full years (or even the last three years), the increase were large, rapid, and continuing at the end of the period—and from an increasingly large base. The domestic injury producing passenger vehicle and light truck tires was found by the ITC to consist of 10 U.S. producers "ranging from large multinational companies with global production and sales and varying levels of vertical integration to smaller producers with only domestic operations." It found that in 2008, "U.S. producers manufactured such tires in 28 plants, with most of these plants producing the tires with dedicated equipment, machinery, and workers." It further found that during the same period "approximately 82 percent of the domestic shipment of U.S. producers went to the replacement market, and the remaining shipments went to original equipment (new cars and like truck) manufacturers (OEMs)." These domestic producers were found to "collectively manufacture a full range of styles and sizes of passenger vehicle and light truck tires, which are sold in various price ranges." The ITC determined that the domestic industry was materially injured, having found that "[v]irtually all industry indicators declined during the period examined": U.S. producers' capacity, production, shipments, number of U.S. PRWs [production and related workers] and hours worked, productivity, and financial performance were all at their lowest levels of the period in 2008. U.S. producers' capacity utilization, which was at its lowers in 2006, nearly equaled that level in 2008. Four plants were closed during the period examined, and in light of the current conditions, U.S. producers have announced plans to close three more plants in 2009. Only two indicators, R&D expenses and capital expenditures, appear to have increased toward the end of the period. Virtually all the industry indicators declined during the period. In determining whether the rapidly increasing tire imports were a significant cause of material injury, the ITC looked to the three statutory factors relating to a causation analysis: (1) the volume of subject imports, (2) the effect of the subject imports on prices, and (3) the effect of subject imports on the domestic industry. The ITC referenced its earlier finding of a large and rapid increase in tire imports, an increase that it found "is also reflected in those imports' large and growing share of the U.S. market." Regarding the effect of the imports on prices of U.S. tires, the ITC stated that the "close substitutability of the domestic product and the subject imports combined with pervasive underselling by significant and growing margins enhanced the ability of subject imports to displace domestically produced tires in the U.S. market." The ITC then found that "there is a direct and significant connection between the rapidly increasing imports of subject tires from China and the domestic tire industry's deteriorating financial performance and declining capacity, production, shipments, and employment," with the "large and rapidly increasing volumes of subject tires from China having greatly displaced U.S. producers" in the lower-priced end of the U.S. market, the area in which Chinese producers were found to primarily compete. The ITC also found that "significant and continuous" underselling by "large and rapidly increasing volume" of Chinese tires during the period of investigation "eroded the domestic industry's market share, leading to a substantial reduction since 2004 in domestic, capacity, production, shipments, and employment during the period examined." The ITC further found that "[a]s imports of low-priced Chinese tires increased, U.S. producers were forced to reduce capacity so as to focus on the parts of their business in which they could expect to remain profitable despite the impact of subject imports from China." As a result, the ITC found that the "substantial reduction in domestic capacity and the closures of U.S. plants during the period examined were largely in reaction to the significant and increasing volume of subject imports from China, and were not, as respondents argue, part of a strategy by domestic tire producers to voluntarily abandon the low-priced 'value' segment of the U.S. market." Petitioners had recommended that the ITC propose a three-year quota on Chinese tires in the amount of 21 million in the first year, with increases of 5% in each subsequent year due to its concern that "Chinese government policies might undermine the effect of a duty." Respondents argued that no remedy was appropriate for several reasons including that "any restriction would contravene the domestic industry's strategy of moving away from the economy segment of the market" and that "a remedy would only result in the U.S. market being supplied by third countries." Instead, the ITC proposed a three-year duty increase, declining from 55% ad valorem in the first year, to 45% ad valorem in the second year, and 35% ad valorem in the final year. The ITC explained its recommendation as follows: This increase in the tariff would significantly improve the competitive position of the domestic industry, increasing domestic production, shipments, and employment and restoring the domestic industry to at least a modest level of profitability. The increase should accomplish this by reducing the quantity of subject imports and raising their price in the U.S. market. In proposing this remedy, we are mindful of record evidence that domestic producers have already significantly reduced their capacity to produce for the lower-priced end market of the market in which imports from China compete most extensively. Nevertheless, there is substantial competition between U.S.-produced tires and imports from China in all segments of the market, and the imposition of higher duties will increase prices and permit U.S. producers to utilize their available capacity to increase production, sales, and employment. Additional revenue from increased process and sales will improve the profitability. We have recommended that the increased duties be phased down in annual 10 percentage-point increments over the three-year remedy period. This recommendation recognizes that the remedy is only temporary in nature and is designed to give the domestic industry and its workers breathing space in which to adjust to import competition, which will be encouraged by the phasing down of the duties. In addition, reducing the size of the duty each year is likely to limit the extent to which non-subject suppliers may increase their exports to the United States in response to the relief on imports from China. We also expect the level of tariff protection that is necessary to offset market disruption to decrease as new investments and other adjustments are implemented. The action we are recommending is not intended to address the effects of the current recession or to restore the domestic industry to a level of shipments and profitability that might prevail in a healthier national economy, but only to address the market disruption caused by the subject tires. We expect this remedy to have little or no effect on the U.S. automobile and light truck industry because tires account for a very small part of the cost of manufacturing a car or light truck. We recommend that the remedy remain in place for a three-year period because we believe that a remedy of such duration is needed to give firms and workers in the industry the time to identify and implement needed adjustments in their questionnaire responses. Other information in the record indicates that domestic producers have put plant and equipment upgrades on hold pending more favorable market opportunities. Moreover, we anticipate that the relief may encourage certain domestic producers to reconsidered planned plant closures. The two dissenting commissioners suggested that a "trade-restricting remedy" would not provide relief to the domestic industry, stating that "[i]n an industry where domestic producers have already taken positive steps to adjust to global competition, we find that not only will trade restrictions not provide effective relief to the tire industry workers but will risk disrupting the U.S. market by creating an adverse impact on U.S. producers." Noting the worker displacement that occurred during the period of investigation and the adverse effect on workers of announced plant closings, the commissioners "respectfully urge[d] the President to focus on providing economic adjustment assistance to displaced tire workers through continued use of Trade Adjustment Assistance or other programs that might be available to suppliers of the battered U.S. automobile industry." If a trade measure were to be chosen, they suggested that it be a tariff-rate quota with a quota of 41.5 million tires and an over quota rate of 55% in the first year, 45% in the second year, and 35% in the third year. The commissioners stated that this approach "avoids a large increase in the base cost of the tires purchased by the poorest customers, and provides greater stability in pricing in the U.S. market." As noted earlier, the President decided to utilize the overall remedy proposed by the ITC, that is, increased tariffs for three years to decline annually, but decided to apply lower annual tariff rates than those recommended by the agency. The President proclaimed the increased tariffs on September 9, 2009, directing that they enter into effect on September 26, 2009. Under the President's proclamation, Chinese passenger and light truck tires are subject to additional tariffs of 35% ad valorem above the current most-favored-nation rate for the first year, 30% ad valorem above this rate for the second year, and 25% ad valorem above this rate for the third year. The President also followed recommendations made by commissioners for the provision of economic assistance by directing the Secretary of Commerce and the Secretary of Labor to expedite the consideration of any applications for trade adjustment assistance "from domestic passenger vehicle and light truck producers, their workers, or communities and to provide such other requested assistance or relief as they deem appropriate, consistent with their statutory mandates." After the tariffs were in effect for six months (i.e., after March 25, 2010), the President was authorized to request the ITC to report on "the probable effect" of modifying, reducing, or terminating them, and, after receiving the report, to take any of these three actions. The President did not exercise these authorities. No formal requests have been made under section 421(o) for the ITC to investigate whether it is necessary to extend the tariffs, which are scheduled to expire on September 25, 2012. On September 14, 2009, China requested consultations with the United States under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding or DSU) over the additional tariffs imposed on Chinese tire imports by the President under Section 421 "and any other measures the US may announce to implement" the President's decision. Consultations not having resolved the issue, China requested a dispute settlement panel on December 21, 2009. The WTO Dispute Settlement Body (DSB) established a panel on January 19, 2010. Absent an agreement on panelists by the disputing parties, China requested the WTO Director-General to appoint the panelists in the case. Panelists were appointed on March 12, 2010. Although other WTO members had invoked the China-specific safeguard, China did not challenge these other actions and, thus, this was the first panel to review a special safeguard action taken against Chinese goods. China claimed in its panel request that the higher tariffs, "not having been justified as emergency action under relevant WTO rules, are inconsistent with Article I:1 of the GATT 1994 because the US does not accord the same treatment it grants to passenger and light truck tires originating in other countries to the like products originating in China, and Article II of the GATT 1994, since these higher tariffs consist of unjustified modifications of US concessions thereunder." Article I:1, the general most-favored-nation obligation of the GATT, provides, in pertinent part, that, where customs duties are concerned, any advantage that a WTO member grants to any product originating in one country must be accorded "immediately and unconditionally" to the like product originating in all other WTO members. As discussed above, the China-specific safeguard permits a safeguard to be applied only to Chinese products. Article II of the GATT 1994 prohibits WTO members from imposing tariffs on products imported from other WTO members in excess of negotiated rates. China further maintained that the United States "has not even attempted to justify these restrictions as a safeguard action pursuant to GATT Article XIX and the Agreement on Safeguards ," justifying them only under the China-specific safeguard contained in paragraph 16 of China's Accession Protocol. In such case, China challenged both the statutory basis of the safeguard as well as its specific application in the case of Chinese tires as inconsistent with the Protocol provision. First, China argued that the statutory basis of the safeguard is inconsistent "on its face" with the Protocol in that the Section 421 "impermissibly weakens the standard of 'significant cause' by imposing a definition of the term that contradicts Article 16.4 of the Protocol of Accession." Second, China claimed that imposition of the tire tariffs is inconsistent with the following elements of the China-specific safeguard: (1) "Articles 16.1 and 16.4, because imports from China in this case were not occurring 'in such increased quantities' and were not 'increasing rapidly,' and instead had begun to decline in response to changing US demand conditions"; (2) "Articles 16.1 and 16.4, because imports from China were not a 'significant cause' of material injury or threat of material injury, and are being improperly blamed by the US for the condition of the industry that, in fact, reflected other factors in the market"; (3) "Articles 16.3, because the restrictions are not necessary, and are being imposed beyond the 'extent necessary to prevent or remedy' any alleged market disruption, and should not have been set at the high tariff levels being imposed"; and (4) "Article 16.6, because the restrictions in this case are being imposed for a period of time longer than 'necessary to prevent or remedy' any alleged market disruption, and need not have been imposed for three years." By beginning its legal argument with a reference to Article I:1 of the GATT, China highlighted an element of the China-specific safeguard provision that distinguishes it from safeguards permitted under GATT Article XIX and the WTO Agreement on Safeguards, namely, the absence of a requirement that the safeguard be applied to all imports of the product involved regardless of their source. The reference to GATT Article II seemingly emphasizes that WTO members may impose safeguard tariffs on injurious imports and thereby temporarily escape their Article II obligations to maintain tariff concessions owed other members only if requirements in GATT Article XIX and the Safeguards Agreement are met. The China-specific provision was agreed to, however, by China and all other WTO members and thus the fact that it does not require global application does not in itself appear to provide a legal basis for complaint. Further, while China's request sought to raise questions regarding the relationship between the China-specific safeguard and GATT Article XIX and the Safeguards Agreement, the major focus of the request appeared to be the consistency of the U.S. statute and its application to Chinese tires with paragraph 16 of China's Accession Protocol. In a report issued December 13, 2010, the WTO panel rejected all of China's claims. Before proceeding with its analysis, the panel set out context for the case, including that the case raised questions that had not yet been dealt with in a WTO dispute settlement proceeding, such as the relationship of the China-specific safeguard to the WTO global safeguard mechanisms; that the U.S. International Trade Commission causation determination was not unanimous, warranting "very careful consideration" by the panel of this aspect of the determination; that the unanimous ITC material injury finding was not before the panel, thus making causation a crucial issue, though complicated by the fact that the ITC's period of investigation had "involved in part a period of massive global economic downturn or recession"; that the Section 421 petition had been filed by a labor union concerned with job losses and not by the domestic tire industry, which had reduced investment in the United States and increased investment in China, arguably precipitating the increase in Chinese tire imports that resulted in the safeguard; and that the domestic industry indicated that it would not make adjustments even though a safeguard was put in place. Notwithstanding this context, the panel emphasized that its task was to interpret the China-specific safeguard and "not to seek to recalibrate what the WTO members had agreed to in the negotiations that led to the accession of China to the WTO in the light of what the Panel might perceive as changing economic circumstances that perhaps had not been considered when the Protocol was negotiated." In considering the proper standard of review under Paragraph 16, the panel agreed with the disputing parties that in trade remedy cases the panel "should neither conduct a de novo review, nor grant total deference to an investigation authority" and added that "it is also well established that the Panel's standard of review 'must be understood in the light of the obligations of the particular covered agreement at issue.'" In this case, the panel stated that it would consider whether the ITC had "evaluated 'objective factors', as required by Paragraph 16.4," whether the ITC had "provided a reasoned and adequate explanation of its determination, in line with its obligation under Paragraph 16.5," and, regarding the latter, whether the ITC's reasoning "seems adequate in light of plausible explanations of the record evidence or data advanced by China in this proceeding." Further, in interpreting the phrases "increasing rapidly" and "significant cause," the panel stated that it would take into account the provisions of GATT Article XIX and the Safeguards Agreement to the extent they were "relevant." Regarding the ITC's determination that imports were "increasing rapidly" as required under Paragraph 16.4, the panel rejected China's contention that the phrase requires that the investigating authority focus on imports in the most recent past and that there also be "a quick progression in the rate of increase of the volume of imports." Citing panel and appellate decisions under the WTO Safeguards Agreement, the panel found that while some retrospective analysis is required, focus on the "movements of imports during the most recent past, or during the period immediately preceding the authority's decision" is not. The panel further found that the Protocol does not require a rapid increase in the rate of increase of imports and instead demands only the rapid increase in imports be on an absolute or relative basis. Among other panel findings involving the rapidity of increase, the panel dismissed China's argument that a "low base" existed at the beginning of the ITC's period of investigation and that the agency did not put this figure into context. The panel found instead that "[h]aving five percent of the market at a value of 450 million dollars, and being the fourth largest import source are far from humble beginnings" and that "gaining 12 percentage points in market share at a value of 1.7 billion dollars, and becoming the largest import source over the period of investigation means subject imports were a large and significant presence in the market at the end of the period." Regarding the causation standard in the U.S. statute, the panel found that the "contributes significantly" standard in Section 421(c)(2), which, as explained by the United States, demands the existence of a "direct and significant causal link" between the rapidly increasing imports and the market disruption, does not require the United States to establish causation inconsistently with Paragraph 16. The panel also considered arguments on the nature of the causation analysis required under Paragraph 16 itself, specifically (1) whether the investigating authority must consider conditions of competition and correlation, that is, a coincidence of trends between increasing imports and declines in the relevant injury factors and (2) how the investigating authority should evaluate injury factors other than the subject imports. First, the panel found that Paragraph 16.4 does not obligate the importing member to apply any particular methodology for establishing market disruption, including causation, requiring only that it consider "objective factors." The panel stated, however, that "an analysis of the conditions of competition and correlation will often be relevant, and may on the facts of a given case prove essential, to a consideration of 'significant cause'" and, as the ITC had considered both of these factors in this case, the panel would consider these analyses as part of its task to objectively assess the ITC's overall determination of significant cause. Second, the panel found that Paragraph 16.4 does not require the strict "non-attribution" analysis demanded under the WTO Safeguards Agreement—that is, that the injurious effects of all of the different causal factors at play be distinguished and separated from the injurious effects caused by increased imports—but that "this does not mean that the obligation to demonstrate that rapidly increasing imports are a significant cause of material injury should not entail some form of analysis of the injurious effects of other factors." The panel thus found that "the causal link between rapidly increasing imports and material injury must be assessed 'within the context of other possible causal factors'" and that, in particular, "a finding of causation for purposes of Paragraph 16.4 should only be made if it is properly established that rapidly increasing imports have injurious effects that cannot be explained by the existence of other causal factors." The panel upheld the ITC's analysis of the conditions of competition between Chinese and domestic tires, as well as the ITC's approach to correlation. Responding to China's argument that the ITC had failed to properly establish correlation between rapidly increasing imports and material injury, the panel noted that Paragraph 16.4 did not require a showing of correlation between the two, that correlation is instead a investigative tool that may be used to demonstrate causation, and that it was not necessary that causation be based on correlation "only if the varying degrees of increase in imports over the period of investigation are reflected in the varying degrees, or rates of decline, in injury indicators." The panel stated: While a more precise degree of correlation between the upward movements in imports and the downward movements in injury factors might result in a more robust finding of causation, and might indeed suffice on its own to demonstrate causation, a finding of "significant cause" is not excluded simply because an investigative authority relies on an overall coincidence between the upward movement in imports and the downward movement in injury factors, especially if that finding of overall coincidence is combined—as it was in the present case—with other analyses indicative of causation. China had also argued that material injury was attributable to a number of factors other than increased imports, including the domestic industry's relocation strategy, and that the ITC did not fully assess these factors or establish that any injury that they caused was not instead attributed to the subject imports. The panel noted that the majority and dissenting ITC Commissioners drew opposite conclusions regarding industry strategy from the same evidence, the majority finding that the strategy to reduce U.S. production and relocate in China was a response to increased imports and thus not an alternative cause that prevented increasing imports from China from constituting a significant cause of injury and the dissenting commissioners finding that the relocation strategy was an independent business strategy that began before imports were increasing. The panel stated that it would be inappropriate for it to choose between these views and instead found that its own assessment "indicates that it is difficult to separate out the business strategy from the increasing imports." The panel continued: It may well be, as the dissenting commissioners say, that the strategy of relocating to China began before 2004 and before the substantial increases in subject imports. It is also true that plant closures occurred after the increase in imports and may well have been linked to the competition from imports. Indeed, the decision to locate production in China might have been the result of an independent business strategy, but the decision to close plants might well have been a response to imports. In light of these considerations, the panel could not find that the ITC's analysis of the alternative business strategy was in error, a prima facie case of which China had failed to make. The panel also rejected China's non-attribution arguments relating to other factors, such as changes in demand and imports of tires from countries other than China. The panel also dismissed China's claims regarding the scope and duration of the U.S. remedy. China had argued (1) that the U.S. safeguard addressed all market disruption including that caused by factors other than rapidly increasing imports and thus was imposed beyond the "extent necessary" as required under Paragraph 16.3 and (2) that the three-year duration of the safeguard exceeded the period of time necessary to prevent or remedy the market disruption. Regarding the scope of the remedy, the panel found that since the Protocol did not require a "full-blown" non-attribution analysis, it did not contain a benchmark by which to measure the scope of the remedy, but that, even so, China had failed to show that the measure was excessive. The panel found that a measure was not necessarily excessive simply because it seeks to improve the condition of the domestic industry, the deterioration of which is to some extent due to increased imports. It further determined that because the ITC had found that "the domestic industry suffered market disruption as a result of rapidly increasing subject imports that were underselling domestic production, a measure that is aimed at 'reducing the quantity of subject imports and raising their price in the U.S. market' can be justified." The panel noted, however, that such a remedy "does allow for the possibility of the expansion of non-subject imports rather than the improvement of the condition of the domestic industry" and that "that is a consequence of a country-specific safeguard and not a defect of the remedy in this case." The panel similarly found that China had failed to make a prima facie case that a three-year safeguard was excessive, noting that the United States was under no obligation to explain why a measure of this length was needed nor to quantify the injury caused by increasing imports or separate and distinguish that injury from injury caused by other factors. Finally, the panel quickly disposed of China's claims under GATT Articles I and II. The panel found that China's GATT claims were "entirely dependent" on Paragraph 16 of the Protocol and because it had rejected the Paragraph 16 claims, it similarly did not accept the claims under the GATT. China appealed the panel report in May 2011, claiming that the panel had misinterpreted and misapplied the phrases "increasing rapidly" and "significant cause" contained in Paragraph 16.4 of the Accession Protocol, as they related to the U.S. International Trade Commission determination. China did not pursue its GATT–related arguments in its appeal. In a report circulated on September 5, 2011, the WTO Appellate Body upheld all of the panel findings appealed by China. The Dispute Settlement Understanding requires that, once issued, the Appellate Body report must be unconditionally accepted by the disputing parties. Regarding whether tire imports were " increasing rapidly " within the meaning of Paragraph 16.4 of the Accession Protocol, the AB rejected China's claims the USITC was required to focus on imports in the most recent past and on the rates of increase in imports from China. The AB found instead that the "increasing rapidly" standard requires investigating agencies to examine import trends over a period of time that is sufficiently recent to provide a reasonable indication of current trends, and to determine whether imports are increasing significantly, either in absolute or relative terms, within a short period of time. The AB further found that "a decline in the rates of increase at the end of the period of investigation does not detract from the USITC's conclusion that imports were 'increasing rapidly' particularly when import increases remained significant both in relative and absolute terms." Because of these findings, the AB also rejected China's claim that the panel erred in not requiring that the USITC focus on the rate of increase in imported tires in 2008, and to compare that rate with the rates of increase earlier in the period of investigation. The AB found that contrary to China's claim, "the Panel's analysis demonstrates that the USITC provided a reasoned and adequate explanation for its conclusion that subject imports continued to increase rapidly at the end of the period of investigation." Regarding Paragraph 16.4's causation standard, the AB first considered the meaning of the term " significant cause ," finding that, in the context of the current case, the term "requires that rapidly increasing imports from China make an important contribution in bringing about material injury to the domestic industry" and that any causation determination "be made on the basis of objective criteria, including the volume of imports, the effects of rapidly increasing imports on prices, and the effects of rapidly increasing imports on the domestic industry." China had argued that causal link between increasing imports and serious injury must be "particularly strong, substantial and important" and that investigating authorities must thus "conduct a differentiated, more searching analysis of both the conditions of competition and the declining injury indicators." In China's view, "analysis of the conditions of competition must examine the degree of competitive overlap between imported and domestic products, and the analysis of correlation must identify a coincidence both in the 'year-by-year changes' and in the 'degree of magnitude' between subject imports and injury factors." Absent specific guidance in the Protocol as to methodologies that may be used to determine causation, the AB agreed with the panel that investigating authorities have "a certain degree of discretion" in selecting the methodology to be used for this purpose, provided that the methodology properly establishes a causal link, and that analysis of the conditions of competition and correlation "may prove 'essential'" in order to do so. Using its earlier-determined meaning of the term "significant cause," the AB rejected China's more stringent standard. While it found that the USITC could choose to rely, as it did, on both an analysis of competition conditions and an analysis of correlation and that a "careful analysis of degrees of competitive overlap and a greater coincidence in the magnitude of import increase vis-à-vis decreases in injury factors may provide a more robust basis for a finding of causation," the AB also concluded that investigating authorities "may calibrate their analysis to the particular circumstances of the case at hand, as long as the analysis provides a sufficiently reasoned and adequate explanation" for an affirmative causation determination. Regarding whether other causes of injury should be considered in order to determine whether rapidly increasing imports are in fact a significant cause of material injury, both parties had agreed that some form of non-attribution analysis may be required under Paragraph 16.4 even though it does not expressly require the consideration of other causal factors. The AB agreed that non-attribution analysis was needed, finding that an investigating agency can make a causal determination "only if it properly ensures that effects of other known causes are not improperly attributed to subject imports and do not suggest that subject imports are in fact only a 'remote' or 'minimal' cause, rather than a 'significant' cause of material injury to the domestic industry." The AB thus found that "the significance of the effects of rapidly increasing imports needs to be assessed in the context of other known causal factors," with the extent of the analysis required dependent on "the impact of other causes that are alleged to be relevant and the facts and circumstance of the particular case." Looking at specific aspects of the USITC's affirmative causation determination, the AB found that the panel properly upheld the Commission's assessment of conditions in the overall U.S. tire market. The AB upheld the panel's determination that the USITC had properly found that competition between imported and domestic tires in the replacement market was significant rather than "attenuated," as China had argued. China also maintained that, with regard to the original equipment manufacturer (OEM) market, the panel should have focused on whether competition was significant rather than on increasing trends in Chinese imports to that market, with the United States responding that "it was reasonable for the USITC to rely on China's growing presence in the OEM market to support its finding that competition in the overall US market was significant." China further argued that the Panel "had failed to grasp the significance of the combined effect of attenuated competition in the OEM and replacement markets for its review of the USITC's assessment of the conditions of competition in the overall US market." While the AB found that the Panel "could have provided a more thorough analysis" of the conditions of competition in OEM market, the AB also found that even if there were more limited competition in this market, the resulting degree of competition between domestic and Chinese tires in the larger replacement market "would have sufficed to establish that competition in the overall US market was significant" and that, moreover, the "significant presence" of Chinese tires in two tiers of the replacement market "combined with their limited—but growing presence" in the third tier of that market, as well as in the OEM market, "supports the Panel's endorsement of the USITC's conclusion that there was 'significant competition between the subject imports and domestic tires in the U.S. market.'" Regarding correlation, the AB upheld the Panel's finding that "the USITC's reliance on an overall coincidence between an upward movement in subject imports and a downward movement in injury factors reasonably supports" the USITC's causation determination, finding that the stricter correlation called for by China was not required. The AB also upheld the Panel's rejection of China's argument that the USITC had improperly attributed injury caused by other factors, such as the domestic industry's business strategy, changes in demand, and the competitive significance of tires imported from other countries, to imports from China. The panel and Appellate Body reports were adopted by the WTO Dispute Settlement Body on October 5, 2011. With the reports adopted, the dispute is effectively terminated and China has no further recourse under WTO dispute settlement rules on the matters involved. Protocol on the Accession of the People's Republic of China (Part I, General Provisions) 16. Transitional Product-Specific Safeguard Mechanism 1. In cases where products of Chinese origin are being imported into the territory of any WTO member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products, the WTO member so affected may request consultations with China with a view to seeking a mutually satisfactory solution, including whether the affected WTO member should pursue application of a measure under the Agreement on Safeguards. Any such request shall be notified immediately to the Committee on Safeguards. 2. If, in the course of these bilateral consultations, it is agreed that imports of Chinese origin are such a cause and that action is necessary, China shall take such action as to prevent or remedy the market disruption. Any such action shall be notified immediately to the Committee on Safeguards. 3. If consultations do not lead to an agreement between China and the WTO member concerned within 60 days of the receipt of a request for consultations, the WTO member affected shall be free, in respect of such products, to withdraw concessions or otherwise to limit imports only to the extent necessary to prevent or remedy such market disruption. Any such action shall be notified immediately to the Committee on Safeguards. 4. Market disruption shall exist whenever imports of an article, like or directly competitive with an article produced by the domestic industry, are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury to the domestic industry. In determining if market disruption exists, the affected WTO member shall consider objective factors, including the volume of imports, the effect of imports on prices for like or directly competitive articles, and the effect of such imports on the domestic industry producing like or directly competitive products. 5. Prior to application of a measure pursuant to paragraph 3, the WTO member taking such action shall provide reasonable public notice to all interested parties and provide adequate opportunity for importers, exporters and other interested parties to submit their views and evidence on the appropriateness of the proposed measure and whether it would be in the public interest. The WTO member shall provide written notice of the decision to apply a measure, including the reasons for such measure and its scope and duration. 6. A WTO member shall apply a measure pursuant to this Section only for such period of time as may be necessary to prevent or remedy the market disruption. If a measure is taken as a result of a relative increase in the level of imports, China has the right to suspend the application of substantially equivalent concessions or obligations under the GATT 1994 to the trade of the WTO member applying the measure, if such measure remains in effect more than two years. However, if a measure is taken as a result of an absolute increase in imports, China has a right to suspend the application of substantially equivalent concessions or obligations under the GATT 1994 to the trade of the WTO member applying the measure, if such measure remains in effect more than three years. Any such action by China shall be notified immediately to the Committee on Safeguards. 7. In critical circumstances, where delay would cause damage which it would be difficult to repair, the WTO member so affected may take a provisional safeguard measure pursuant to a preliminary determination that imports have caused or threatened to cause market disruption. In this case, notification of the measures taken to the Committee on Safeguards and a request for bilateral consultations shall be effected immediately thereafter. The duration of the provisional measure shall not exceed 200 days during which the pertinent requirements of paragraphs 1, 2 and 5 shall be met. The duration of any provisional measure shall be counted toward the period provided for under paragraph 6. 8. If a WTO member considers that an action taken under paragraphs 2, 3 or 7 causes or threatens to cause significant diversions of trade into its market, it may request consultations with China and/or the WTO member concerned. Such consultations shall be held within 30 days after the request is notified to the Committee on Safeguards. If such consultations fail to lead to an agreement between China and the WTO member or members concerned within 60 days after the notification, the requesting WTO member shall be free, in respect of such product, to withdraw concessions accorded to or otherwise limit imports from China, to the extent necessary to prevent or remedy such diversions. Such action shall be notified immediately to the Committee on Safeguards. 9. Application of this Section shall be terminated 12 years after the date of accession.

On April 20, 2009, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition with the U.S. International Trade Commission (ITC) requesting an investigation under Section 421 of the Trade Act of 1974, 19 U.S.C. §2451, a trade remedy statute addressing import surges from China, to examine whether Chinese passenger vehicle and light truck tires were causing market disruption to U.S. tire producers. Market disruption will be found to occur under Section 421 whenever imports of a Chinese product that is "like or directly competitive with" a domestic product "are increasing rapidly ... so as to be a significant cause of material injury, or threat of material injury, to the domestic industry." The ITC initiated the investigation (TA-421-7) on April 24, 2009. As a result of its investigation, the ITC in June 2009 voted 4-2 that Chinese tire imports were causing domestic market disruption and recommended that the President impose an added duty on these items for three years at an annually declining rate. The ITC also recommended expedited consideration of trade adjustment assistance (TAA) applications filed by affected firms or workers. On September 11, 2009, President Obama proclaimed increased tariffs on Chinese tires for three years effective September 26, 2009, albeit at lower rates than recommended by the ITC. The proclaimed increase was 35% ad valorem in the first year, 30% in the second, and 25% in the third year. The President also directed the Secretaries of Labor and Commerce to expedite TAA applications and to provide other assistance to affected workers, firms, and communities. While the President was authorized to review the tariffs after six months and to modify, reduce, or terminate them, he did not take any of these actions. No formal requests have been made to extend the tire tariffs, which are scheduled to expire on September 25, 2012. Six petitions had been previously filed under Section 421, with the ITC finding market disruption in four out of six of its investigations. President Bush decided not to provide import relief in these earlier cases. Section 421 was enacted as part of an October 2000 statute that also permitted the President to grant most-favored-nation (MFN) tariff treatment to Chinese products upon China's accession to the World Trade Organization (WTO). Section 421 authorizes the President to impose safeguards—that is, temporary measures such as import surcharges or quotas—on Chinese goods if domestic market disruption is found. The statute implements a China-specific safeguard mechanism in China's WTO Accession Protocol that may be utilized by WTO members through December 2013. The provision is separate from Article XIX of the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on Safeguards, which allow WTO members to respond to injurious import surges but on a stricter basis than under the Protocol. A major difference is that the Protocol allows a safeguard to be applied only to Chinese products while the Safeguards Agreement requires that any safeguard be applied to a product regardless of its source. China filed a WTO complaint against the United States in September 2009, claiming that the Section 421 tariffs violate U.S. GATT obligations to accord Chinese tires MFN tariff treatment and not to exceed negotiated tariff rates, that the United States imposed tariffs under the safeguard mechanism in China's Accession Protocol without first attempting to justify them under GATT and WTO safeguard provisions, and that Section 421 and its application in this case violate U.S. obligations under the Protocol. In a December 2010 report, the WTO panel rejected all of China's claims. China later appealed panel findings related to the Accession Protocol. The WTO Appellate Body upheld the panel, and thus U.S. actions under the Protocol, in a September 2011 report. The panel and Appellate Body reports were adopted by the WTO Dispute Settlement Body on October 5, 2011, ending the WTO dispute.

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On September 29, 1999, President Clinton signed P.L. 106-58 (H.R. 2490),making appropriations for the Department of the Treasury, the Postal Service, theExecutive Office of the President and other independent agencies for FY2000. Subsequently, P.L. 106-113 , approved November 29, required a 0.38% cut in allfunding for FY2000. House and Senate conferees reached agreement September 9, 1999. The House agreed to the conference report September 15. The Senate agreed to the reportSeptember 16. The bill was sent to the President for signature September 21. In theevent the bill was not signed before the close of the fiscal year, the accounts wouldhave been covered in the continuing funding resolution (H.J.Res. 68) passed byCongress September 28. The House, on July 15, passed H.R. 2490, by one vote. On July 19, 1999, the Senate passed H.R. 2490, amended to incorporate the language of S. 1282, as passedthe Senate (July 1). The Senate conferees were named that day, with the Houseconferees named July 21. Action on FY2000 supplemental funding was pending as Congress left for the Memorial Day break. The President, through the Office of Management and Budget (OMB) isrequired to submit to Congress, annually, the Budget of the United StatesGovernment. On February 1, 1999, the budget for FY2000 was submitted. (1) Congress has established a procedure under which it passes a concurrent resolution which establishes the congressional budget for the government and setsforth budgetary levels for several years in the future. (2) The House and SenateAppropriations Committees then allocate the discretionary funding levels (302(b)allocations) to each of the subcommittees. Since passage of the FY2000 budgetresolution, the committees have changed the allocations several times. (3) TheCongressional Budget Office has offered spending and revenue options in the contextof budgetary discipline. (4) Appropriations for the Department of the Treasury, in addition to funding the operations of the department, fund the work of a group of law enforcementorganizations, which include the Bureau of Alcohol, Tobacco, and Firearms, theCustoms Service, the Secret Service, the Financial Crimes Enforcement Network,and the Federal Law Enforcement Training Center. Treasury appropriations alsocover the Internal Revenue Service, the Financial Management Service, and theBureau of Public Debt. For the most part, the U.S. Postal Service has become self-supporting. Federal contributions are limited to payments to the Postal Service Fund to compensate forrevenues forgone (e.g., free postal service for the blind). Appropriations for the Executive Office of the President provide salaries and expenses for the White House Offices, operation of the residences of the Presidentand Vice President, and most other agencies within the Executive Office of thePresident (EOP). Organizations such as the Council of Economic Advisers, theNational Security Council, the Office of Management and Budget, and the Officeof National Drug Control Policy (ONDCP) are funded through these provisions. Specific funding for drug control initiatives is provided for distribution by ONDCP. Among the independent agencies financed through P.L. 106-58 are the Federal Election Commission, the General Services Administration, the National Archivesand Records Administration, the Office of Personnel Management, the Office ofSpecial Counsel, and the U.S. Tax Court. P.L. 106-58 provides funding for federal child care facilities. That provision generated considerable concern among some Members and was a point of contentionas the conference agreement was discussed. The Senate, in passing S. 1282, addeda title to the bill for the purpose of ensuring "the safety and availability of child carecenters in Federal facilities." According to the sponsors of the amendment, This amendment will require all child care services located in federal facilities to meet, at the very least, the same level ofhealth and safety standards required of other child care centers in the samegeographical area. (5) The House bill, as passed, did not contain all of the child care provisions included in the Senate amendment. However, it did contain the same language addressing theissue of improving the affordability of child care for federal employees. Anamendment similar to this year's Senate amendment was offered to the FY1999Treasury bill, adopted in the Senate, and fell in conference. The issue is discussedfurther later in this report. Among other provisions adopted by the Senate, July 1, the following would Convey federal land to the Columbia Hospital forWomen; Amend the Social Security Act to require the Secretary ofHealth and Human Services to provide bonus grants to high performance Statesbased on certain criteria and collect data to evaluate the outcome of welfarereform; Prohibit the use of funds to pay for an abortion or to pay for theadministrative expenses in connection with certain health plans that provide coveragefor abortions; Provide additional funding to reduce methamphetamine usagein High Intensity Drug Trafficking Areas; Increase U.S. Customs Service funding to enable the hiring of500 new inspectors to stop the flow of illegal drugs into the U.S. and to facilitatelegitimate cross-border trade and commerce; and Require the Secretary of the Treasury to develop an Internet sitewhere a taxpayer may generate a receipt for an income tax payment which itemizesthe portion of the payment which is allocable to various government spendingcategories. The Senate rejected the amendment which would have required the inclusion of alcohol abuse by minors in the ongoing national anti-drug media campaign foryouth. The House narrowly passed H.R. 2490 (210-209) on July 15, 1999. The House committee, in an effort to bring total spending down to FY1999's freeze level, hadreduced the subcommittee discretionary funding levels by $249 million. That actioncontributed to many Members withdrawing support of the bill. The programs affected by that reduction are Treasury-wide systems and capital improvements,Internal Revenue Service (IRS) processing, assistance, and management, IRS tax lawenforcement, IRS information systems, and General Services Administration repairsand alterations. Several amendments were offered during consideration of H.R. 2490. Those subject to voice vote were An amendment to prohibit the import of any children'ssleepwear without the labels required by the flammability standards issued by theConsumer Product Safety Commission was agreed to; An amendment to change the language of the provisionrequiring contraceptive coverage in the FEHBP was agreed to,amended; An amendment to provide $3 million for grants to investigatemoney laundering and related financial crimes; and An amendment to establish that no funds may be used toenforce any prohibition on women breastfeeding their children in federal buildingsor on federal property. Those subject to roll call votes were An amendment to strike language limiting funds availabilitythrough the Federal Employees Health Benefits Program (FEHBP)--failed; An amendment to strike language increasing the President'ssalary-- failed; An amendment to amend the amendment offered to change thelanguage of the provision requiring contraceptive coverage in the FEHBP -- agreedto; and An amendment to limit use of the Exchange StabilizationFund-- failed. Several House Members offered amendments and then subsequently withdrew them after receiving assurances from the managers of the bill that the issues wouldeither be addressed in conference or would be pursued with the appropriate executivebranch administrators. Among those were amendments to provide for the release offrozen assets of a foreign state to satisfy all pending court judgements; to require anU.S. Customs Service report on the conduct of strip searches, including data on theethnicity, gender, nationality, and race of the individuals subject to the searches; torequire that any U.S. Customs officer conducting a strip search be of the same genderas the subject of the search; to study the safety of red-dye kerosene fuel available toelderly and low income individuals; and to allow enrollees in the Federal EmployeeHealth Benefits Program the option of choosing dental, optometry, infertility, orprescription drug benefits in lieu of mandated contraceptive coverage. An amendment to prevent Members of Congress from receiving a pay adjustment in January 2000 was not in order, under the rule (H.Res. 246) for H.R.2490, and was not offered on the floor. The act provides increase in the President'ssalary, to $400,000, effective January 20, 2001. Compensation issues are discussedelsewhere in this report. Pursuant to the provisions of P.L. 106-113 (6) ,the Consolidated AppropriationsAct for FY2000, agencies must cut their FY2000 funding by 0.38%. As part of theFY2001 budget submission, expected in early February, the Office of Managementand Budget (OMB) will report on the specific reductions in the accounts. OMB issued a fact sheet (2000-01-10 OMB Fact Sheet, January 10, 2000) in which the Administration stated that the law stipulated that 0.38 percent in savingsneeded to come from each and every Department. However, within each department,it provided latitude to protect high-priority programs as long as the dollar figureamounting to 0.38 percent was achieved provided certain other conditions were met. OMB provided guidance regarding general principles the Agencies should use toidentify cuts: The 0.38 cut must not be imposed across the board, but targeted to reflect areas of higher and lower priority; Reductions need to come from least criticalfunding; Reductions should be considered from funding that Congressenacted above the President's request, Wherever possible, no reductions in force frompersonnel. According to OMB, the law also imposed the condition that no reduction in any single program could exceed 15% of its total. In other words, the law did not permitan entire program to be eliminated in order to count toward the savings necessary fora given department. At least 85% of the funding total for the program had to remainintact. Among those accounts identified as being fully protected are the ATF YouthGun Initiatives and Secret Service Salaries and Expenses. Public Law 106-58, an act making FY2000 appropriations for the Departmentof the Treasury, the U.S. Postal Service, the Executive Office of the President andseveral independent agencies, was signed by President Clinton September 29, 1999. (7) H.R. 2490 was sent to the President for signature September 21, 1999. In the event he had not signed the bill before the close of FY1999, the accounts wereincluded in a continuing funding resolution (H.J.Res. 68) which passed the CongressSeptember 28 and which expires October 21. (8) The House Committee on Appropriations Subcommittee on Treasury, Postal Service, and General Government held eight days of hearings during February andMarch 1999. The subcommittee marked up a bill and sent it to the full committeeon May 14. The House Appropriations full committee marked up the subcommitteeprovisions and reported the bill, H.R. 2490 ( H.Rept. 106-231 ) on July 13, 1999. (9) Pursuant to a rule for consideration (H.Res. 246, H.Rept. 106-234 ), (10) H.R. 2490,amended, passed the House July 15, 1999. (11) On July 1, 1999, the Senate passed S. 1282, the Treasury appropriations bill for FY2000. (12) By unanimous consent, the Senateagreed to hold the bill at the desk untilthe companion measure was received from the House. Several days of hearings were held by the Senate Committee on Appropriations Subcommittee on Treasury, Postal Service, and General Government subcommitteeduring February, March, and April. The subcommittee had scheduled considerationof the Senate version of the appropriations measure on June 22. However, in lieu ofsubcommittee action, the full committee marked up the measure June 24. It wasintroduced as S. 1282, accompanied by S.Rept. 106-87 . (13) On July 19, 1999, the Senate passed H.R. 2490, amended to incorporate the Senate-passed language of S. 1282. (14) Senateconferees were named at that time. TheHouse disagreed with the Senate amendments and insisted on a conference. (15) Amotion to instruct was offered and agreed to. Later in the day, conferees werenamed. (16) Conferees reached agreement September 9, 1999 and ordered the conference report to be filed ( H.Rept. 106-319 ). (17) The Rulefor consideration of H.R. 2490provided that there would be waivers of all points of order against the provisions ofthe bill and its consideration (H.Res. 291, H.Rept. 106-322 ). (18) The House agreed to the conference language, by a vote of 296-126 (Roll Call No. 426). (19) The Senate agreed to the conferencelanguage, by a vote of 54-38 (VoteNo. 277), September 16. (20) For the purposes of legislative history on the FY1999 omnibus funding act, the reader is reminded that P.L. 105-277 (21) was aproduct of using the Transportationappropriation bill ( H.R. 4328 ) as the vehicle for creating the larger bill. The Treasury and General Government appropriation was subject to congressionalaction as H.R. 4104 (105th Congress) prior to being included in theomnibus measure. Table 1. Status of FY2000 Appropriations for the Treasury, Postal Service, Executive Office of the President and GeneralGovernment The Department of the Treasury has both financial and law enforcement functions. The financial functions are carried out by the Financial ManagementService, the Mint, and the Bureau of Public Debt. The law enforcement functions arecarried out by the Customs Service, the Secret Service, the Bureau of Alcohol,Tobacco and Firearms, and the Financial Crimes Enforcement Network, and theFederal Law Enforcement Training Center. The Internal Revenue Service has botha financial function--to determine and audit tax obligations--and a law enforcementfunction--to enforce collection of amounts due. P.L. 106-58 funds the Department of the Treasury at $12,354,616,000. The single largest account within the department's funding is the Internal RevenueService, at $8,248,774,000. For FY1999, Congress appropriated $12,637,225,000 to the Department of the Treasury ( P.L. 105-277 ), including emergency funding. Of this amount,$8,375,165,000 (including emergency Y2K funding), or 66.3 % of the totaldepartmental funding, was allocated to the Internal Revenue Service. The President'sbudget request for FY2000 totals somewhat less--$12,376,130,000 for thedepartment with $8,248,774,000 allocated for the IRS. Of the total departmentalrequest, 66.6% would be assigned to the IRS. As passed by the Senate July 1, 1999, S. 1282 would have funded the department accounts at $12,234,649,000. As passed by the House July 15, 1999, H.R.2490 would have funded the accounts at $12,189,648,000. An amendment agreedto in the House would have earmarked $3 million to be used for grants in combatingmoney laundering. The House Appropriations Subcommittee on Treasury, Postal Service and General Government marked up the FY2000 appropriations measure on May 14. Their mark for the Department of the Treasury was $12,329,592,000. On July 13, theHouse Appropriations Committee reported their bill. As reported, H.R. 2490 wouldfund the Department of Treasury at $12,198,648,000. According to a July 13 pressrelease from the committee, a major amendment to the subcommittee mark wouldreduce funding to the department by $139 million: $4.9 million to Treasury-wideSystems and Capital Improvement; $42.4 million to IRS Processing, Assistance, andManagement; $31.7 million to IRS Tax Law Enforcement; and $60.86 million to IRSInformation Systems. On June 24, the Senate Committee on Appropriations reported their bill. The funding level in the Senate would be $12,213,529,000. Senate floor action wouldhave increased funding, beyond the Senate committee spending levels, for the U.S.Customs Service, the High Intensity Drug Trafficking Areas program for reducingmethamphetamine usage, and for the Bureau of Alcohol, Tobacco, and Firearms'Youth Crime Gun Interdiction Initiative. The Department of the Treasury established the Office of Treasury Inspector General for Tax Administration in January 1999, as required by P.L. 105-206 , theInternal Revenue Service Restructuring and Reform Act of 1998. The IRS Office ofthe Chief Inspector was abolished. To provide the necessary flexibility forestablishing and reorganizing the new office, the House Appropriations Committeeauthorized voluntary separation incentives for the office's employees. The incentivesof up to $25,000 may be offered from October 1, 1999 through January 1, 2003. TheOffice of the Treasury Inspector General for Tax Administration may redeploy or usethe positions vacated through voluntary separations to make other positions availableto more critical locations or more critical occupations. The Chicago Financial Center of the Department of the Treasury's Financial Management Service is being closed. To provide the necessary flexibility to carryout the closure, the House Appropriations Committee authorized voluntary separationincentives for the center's employees. The incentives of up to $25,000 may beoffered from October 1, 1999 through January 31, 2000. The Secretary of theTreasury, prior to obligating any resources for the payments, must submit a strategicplan to the Office of Management and Budget outlining the intended use of thepayments and a proposed organizational chart for the agency once the payments havebeen completed. The total number of funded positions in the agency will be reducedby one full-time equivalent position for each vacancy created by a separationincentive. This provision could be waived if the agency demonstrated that thepositions would better be used to reallocate occupations or reshape the workforce andto produce a more cost-effective result. Bureau of Alcohol, Tobacco, and Firearms (ATF). The Bureau of Alcohol, Tobacco, and Firearms(ATF) is a law enforcement agency that monitors compliance with federal lawsrelated to the manufacture, importation, and distribution of alcohol, tobacco,firearms, and explosives. While these laws prohibit certain illegal activities, theyalso regulate legal activities related to these commodities. ATF also enforces federallaws related to arson. In enforcing federal law, ATF officers often work closely withother federal, state, and local law enforcement officers. ATF's mission is focused onthree goals: 1) reducing crime, 2) collecting revenue, and 3) protecting the public. For FY2000, P.L. 106-58 provides ATF with $605,879,000 in total funding, an amount that includes a direct appropriation of $565,959,000 for the salaries andexpenses account, and an additional appropriation of $40,920,000 from the ViolentCrime Reduction Trust Fund. In conference report language, conferees directed theDepartment of Treasury to allocate another $34,947,000 from the Treasury AssetForfeiture Fund for ATF. The ATF direct appropriation of $565,959,000 is $1,100,000 less than the amount proposed by the House, and $4,386,000 less than the amount proposed by theSenate. Also, the amount is 2% over the agency's FY1999 funding of$552,769,000,000, but 3% below the Administration's FY2000 request of$584,859,000. Over and above this amount, the Administration also requested$15,000,000 for the relocation of ATF headquarters and laboratory facilities, butconferees instructed the agency in report language to find funding for this initiativein the Treasury Asset Forfeiture Fund. For the Youth Crime Gun Interdiction Initiative (YCGII), a program that coordinates federal, state, and local law enforcement agency efforts to eliminateillegal sources of firearms for juveniles and youth, the act provides $51,320,000 intotal funding. This funding will allow ATF to expand this program from 27 to 37cities in FY2000. Of this amount, $39,000,000 is earmarked in ATF's directappropriation. The additional $12,320,000 is earmarked for ATF from the ViolentCrime Reduction Trust Fund. Also, included in this trust fund is an earmark of $13,000,000 for ATF's Gang Resistance Education and Assistance Training grantprogram, and another $3,000,000 for ATF to administer this program. In addition, the conferees earmarked $5,000,000 to expand the Integrated Ballistic Identification System, as earmarked in the House report language. Theconferees also earmarked, as in House report language, $5,000,000 for implementingthe tobacco compliance provision arising from the 1997 balanced budget agreement,which gave ATF the authority to enter and examine commercial enterprises thatre-import U.S. cigarettes in an attempt to bypass taxes and licensing fees. Among ATF's activities, the regulation and enforcement of laws related to firearms commerce and possession appear to be the most controversial. Consistentwith language included in ATF appropriations in previous years, the agency'sappropriations bill language specifies that agency funding cannot be used toconsolidate or centralize the records, or any portion of the records, of the acquisitionand disposition of firearms that are maintained by Federal Firearm Licensees. Inaddition, the agency's appropriations bill language specifies that agency fundingcannot be used to implement regulations modifying the term "curios or relics," orinvestigate relief for individuals disqualified from possessing a firearm or forcorporations disqualified from dealing in firearms. Furthermore, the act's generalprovisions make permanent a provision that allows Federal Firearms Licensees toperform a background check before a firearm is offered as collateral for a loan. Both the House and Senate, meanwhile, have acted on gun control-related legislation. For further information, see CRS Issue Brief IB10014, Gun Control. Customs Service. The U.S. Customs Service, the federal government's oldest regulatory agency, is responsible formonitoring the movement of persons, carriers, merchandise, and commoditiesbetween the United States and other countries. In FY1998, Customs inspected nearly460 million passengers, 121 million private vehicles, 237 million private andcommercial aircraft, 10 million commercial trucks, and 5 million vessel cargocontainers. As part of this process, Customs also assesses trade-related duties, taxes,and fees on imported merchandise, collecting about $22 million in revenue annually. For FY2000, P.L. 106-58 provides the Customs Service with $1,878,052,000 in total appropriated funding. This amount includes funding from four sources. Thefirst three sources make up Customs' core funding of $1,817,052,000, and include:1) a direct appropriation from the General Fund of $1,705,364,000 for salaries andexpenses, 2) an appropriation of $3,000,000 in fee receipts from the HarborMaintenance Fee Account for salaries and expenses, and 3) another directappropriation of $108,688,000 for the Air and Marine Interdiction Programs. Thefourth source is the Violent Crime Reduction Trust Fund from which $61,000,000is provided for Customs. In addition, conferees directed the Department of Treasuryto allocate $64,493,000 from the Treasury Asset Forfeiture Fund for Customs. Core funding for Customs ($1,817,052,000), as provided by the act, is $450,000 less than the amount approved by the House, and $34,617,000 more than the amountpassed by the Senate. By comparison, the Administration's FY2000 request for theCustoms Service of $1,829,783,000 was $219,371,000 less than the previous year'sappropriation. This decrease, however, was largely reflective of supplementalappropriations for FY1999 totaling $276,000,000 to increase counter-drug traffickingactivities. A large part of this funding was for the one-time acquisition of aircraft andnon-intrusive inspection technology. Conferees earmarked in report language a number of budget enhancements for FY2000, which include 1) $35,000,000 to upgrade automated systems that trackimports, 2) $9,000,000 for additional non-intrusive mobile personal inspectiontechnology, 3) $5,011,000 for the forced child labor program, 4) $2,000,000 formoney laundering outbound detection technology, and 5) $1,600,000 for theCybersmuggling Center. The conferees, as did the Senate and House, rejected the Administration's proposal to enact a user fee as a means to generate funding to modernize theAutomated Commercial System (ACS) and continue the development of theAutomated Commercial Environment (ACE). The ACS is used by the CustomsService to track, control, and process all commercial goods imported into the UnitedStates. In recent years, this system has proved inadequate and has suffered from"brownouts" that inhibit international commerce. To upgrade the old system andcontinue development of the second, the act provides $35,000,000 for FY2000. While it has been estimated that it will cost $1,800,000,000 over four years todevelop the ACE system, the conferees requested the Customs Service to provide therevised blueprint, schedule, and budget for ACE not later than the time when theAdministration makes its FY2001 budget submission to Congress. The act provides $4,000,000 in total FY2000 funding for Custom's Cybersmuggling Center, which includes $2,400,000 provided for the center from theViolent Crime Reduction Trust Fund, as recommended by both the Senate and theHouse committees. Custom's Cybersmuggling Center tracks and investigates childpornography trafficking and child exploitation over the Internet. The Senate wouldhave provided an increase of $4,000,000 to expand the Customs Integrity AwarenessProgram to improve screening of new job applicants and to administer polygraphexaminations to candidates for positions that are the most susceptible to corruption;the conferees were silent on this initiative. The conferees addressed several other issues in report language. Regarding operations on the Southwest border, conferees earmarked $25,000,000 from theTreasury Asset Forfeiture Fund for the Southwest border initiative. Conferees alsoinstructed the Customs Service to maintain current levels of staffing in Arizona, andto report to the Appropriations Committees by March 31, 2000, on what resourceswould be necessary to reduce wait times at Southwest border ports of entry to notmore than 20 minutes. Further, within 60 days of enactment of this appropriationsact, conferees required that the Customs Service submit to the AppropriationsCommittees its recommendations for reducing wait times and improving contrabanddetection at Southwest border ports of entry. Responding to allegations that some Customs inspectors inordinately target African-Americans and Hispanic-Americans for personal searches and detention, theconferees directed the Secretary of the Treasury to submit a report to Congress on theCustoms Service's personal search and detention procedures by February 15, 2000. Regarding international ports of entry in general, the conferees required the Customs Service, with the General Services Administration, to assess currentinfrastructure at international ports and provide a report to the appropriationscommittees within 9 months of the enactment of this appropriations act. Confereesalso urged the Customs Service to evaluate the merits of creating new internationalports of entry at airports in 1) Fargo, North Dakota; 2) San Antonio, Texas; and 3)Manchester, New Hampshire. The act provides $725,000 and directs the CustomsService to create a Northern Plains agricultural economics program to analyze issuesrelated to bilateral U.S./Canada trade issues on the northern plains. Finally, conferees expressed their strong dissatisfaction that the Customs Service did not deliver its air and marine fleet modernization plan, which was to besubmitted with the Administration's FY2000 budget. Conferees reiterated that thisplan is to include life span and replacement schedules for Customs craft, associatedoperations and maintenance activities, and cost projections for fleet modernization,and stipulated that they expected prompt completion and delivery of the plan. Internal Revenue Service (IRS). P.L. 106-58 provides funding of $8,248,774,000 to the IRS for FY2000. For FY1999,Congress appropriated $8,375,165,000 (including emergency Y2K funding), to theIRS accounts. The President's budget request for FY2000 would fund$8,248,774,000 to the IRS. Excluding emergency funding from the total FY1999enacted, shows the President's FY2000 request exceeding the regular FY1999funding. The Senate agreed to a funding level of $8,191,135,000. An amendment was adopted by the Senate to require the Secretary of the Treasury to develop an Internetsite where a taxpayer may generate a receipt for an income tax payment whichitemizes the portion of the payment which is allocable to various governmentspending categories. (22) The House Treasury Subcommittee had recommended an appropriation of $8,244,774,000. The bill reported from full committee on July 13 included a majoramendment which would reduce funding to the department by $139 million: $4.9million to Treasury-wide Systems and Capital Improvement; $42.4 million to IRSProcessing, Assistance, and Management; $31.7 million to IRS Tax LawEnforcement; and $60.86 million to IRS Information Systems. As reported andpassed in the House, the bill would have funded the IRS at $8,109,774,000. TheHouse conferees were instructed to restore $50 million in funding for the IRS tocomplete its Y2K compliance effort. The President's budget for FY2000 lists implementation of IRS reforms as a Priority Management Objective. (23) Specifically,the modernization of the IRS'organization and its information technology to better serve taxpayers and improveproductivity are stated as the major goals of the restructuring. In December 1998, theservice let a contract for designing and installing information technologyimprovements. In the spring of 1999, IRS Commissioner Charles Rossotti is due tobegin implementation of system improvements. In the 105th Congress, P.L. 105-206 was enacted to address long standing operational problems in the IRS. (24) On January8, the first report to Congress mandated by the new law was delivered. The report, 1998 IRS National TaxpayerAdvocate's Annual Report to Congress , (25) spelled out action taken by the NationalTaxpayer Advocate, as required by the statute to address IRS issues with taxpayers. Secret Service. The U.S. Secret Service provides for the protection and security of the President, Vice President, andother dignitaries and designated persons. It is also responsible for the protection ofthe White House and other Washington, D.C., buildings, as well as the enforcementof federal laws pertaining to financial crimes and frauds. P.L. 106-58 providesregular funding of the Secret Service at $672,235,000. In addition, the agency is toreceive $4,200,000 under the Violent Crime Reduction Program (Crime ControlTrust Fund). For FY2000, the President had requested $661,312,000 for salaries and expenses for the Secret Service. On July 1, 1999, the Senate agreed to an appropriation of $643,739,000, including $638,816,000 to carry out its presidential candidate and nomineeprotection, protective research, and counterfeiting investigations, and $3,196,000 forthe National Center for Missing and Exploited Children. The bill, as reported to the House from the full committee, would provide an appropriation of $643,739,000. On July 15, 1999, the House agreed to anappropriation of $666,235,000 for protective functions, acquisition, andimprovements. While the U.S. Postal Service (USPS) generates most of the funding it requires through sales of its products and services, it also receives an appropriation from thefederal government. The USPS receives an annual appropriation to its Postal ServiceFund to pay for revenue forgone on free and reduced rate mail (for the blind andvisually impaired and overseas voting). P. L. 105-277 provided FY1999 funding at$71,195,000. Supplemental appropriations for FY1999 provided an additional$29,000,000 for revenue forgone reimbursement. For payment to the Postal ServiceFund for revenue forgone for FY2000, the President is requesting $93,436,000. P.L. 106-58 provides funding at $93,436,000, with $29,000,000 prior to October 1,2000 and the remaining $64,436,000 deferred until October 1, 2000. P.L. 105-277 required that the Postal Service submit, within six months of enactment, a report on its current and future commercial services. Further languagerequired the USPS to report on its packaging service, especially how such servicemeets customer demand nationally, especially in rural areas, before such service isinitiated. In compliance with P.L. 105-277 , the report was submitted by the PostalService to the Appropriations Committee in April 1999. Finally, P.L. 105-277 amended the USPS' international service agreements by making the Secretary of State solely responsible for formulating, coordinating, andoverseeing foreign policy related to international postal and delivery services. USPSofficials, with presidential consent, may establish international rates and/or fees formail and delivery services. Regarding the importing or exporting of mail shipments,the USPS is required to follow the same procedures and laws applicable to similarshipments transmitted by or to private companies. The Treasury, Postal Service, and General Government appropriations bill funds all the offices in the Executive Office of the President (EOP), except the following threeoffices--the Council on Environmental Quality and the Office of Science andTechnology Policy (both funded under Veterans Affairs, Housing and UrbanDevelopment, and Independent Agencies appropriations), and the Office of theUnited States Trade Representative (funded under Commerce, Justice, State, and theJudiciary and Related Agencies appropriations). Moreover, the Federal Drug ControlPrograms account, which comprises almost two-thirds of EOP's appropriation, is notfor use by agencies within EOP, but for transfer to federal and state entities for theirdrug control programs. The Office of National Drug Control Policy (ONDCP),which is located in the EOP, distributes the funds to federal and state entities. The FY2000 appropriations for the offices in the EOP that are funded by the Treasury appropriations act total $645,489,000, which is .9% more than the$639,498,000 requested by the President, and 3.7% less than the $670,112,000appropriated for FY1999. The House initially approved an appropriation of$654,762,000, and the Senate an appropriation of $570,128,000. The smaller amountinitially appropriated by the Senate was due to a decrease in the funding for thespecial forfeiture account in the Federal drug control program. The specific accounts are discussed below. In those cases in which there is no difference between P.L. 106-58 , the FY2000 request, and Senate or House passageonly the appropriation is noted. Compensation of the President. The FY2000 appropriation is $250,000, and includes an allowance of $50,000 for officialexpenses. This is the same amount as appropriated in FY1999. The act includes an increase in the President's salary to $400,000 per annum, .effective with the change in administration in January 2001. Hearings on the issuewere held May 24 by the House Committee on Government Reform Subcommitteeon Government Management, Information, and Technology. (26) An amendment tostrike the provision failed during consideration of H.R. 2490 on the House floor. White House Office. The FY2000 appropriation is $52,444,000 for salaries and expenses in the White House Office,the amount requested by the President, and an increase of .2% over the $52,344,000appropriated in FY1999. The FY2000 appropriation includes $10,313,000 forreimbursements to the White House Communications Agency, a Department ofDefense component which has historically provided non-telecommunications supportservices. The reimbursements are in accordance with P.L. 104-21 . Executive Residence (White House). The FY2000 appropriation is $9,260,000, an increase of 6.5% over the $8,691,000appropriated in FY1999. The FY2000 appropriation includes $810,000 for therepair, alteration, and improvement of the Executive Residence. (Maintenance andrepair costs for the White House are also funded by the National Park Service as partof that agency's responsibility for national monuments. Entertainment costs for statefunctions are funded by the Department of State.) As in previous appropriationsstatutes, reimbursable political events in the Executive Residence are to be paid forin advance by the sponsor, and all such advance payments are to be credited to areimbursable expenses account. The political party of the President is to deposit$25,000 to be available for expenses relating to reimbursable political events duringthe fiscal year. Special Assistance to the President (Office of the Vice President) and Official Residence of the Vice President. TheFY2000 appropriation is $3,617,000 for the Office of Vice President, an increase of3% over the $3,512,000 appropriated in FY1999. The FY2000 appropriationincludes $345,000 for the Official Residence of the Vice President, an increase of3.3% of over the $334,000 appropriated in FY1999. Up to $90,000 could be used forofficial entertainment expenses. Council of Economic Advisers. The FY2000 appropriation is $3,840,000, an increase of 4.7% over the $3,666,000appropriated in FY1999. Office of Policy Development. The FY2000 appropriation is $4,032,000, the same as appropriated in FY1999. National Security Council. The FY2000 appropriation is $6,997,000, an increase of 2.8% over the $6,806,000appropriated in FY1999. Office of Administration. The FY2000 appropriation is $39,198,000, which is 32.6% less than the $58,141,000appropriated in FY1999. (The FY1999 appropriation included $29,791,000 inemergency funding for Y2K conversion. An additional $12,000,000 was transferredto the office from other accounts.) Of the FY2000 funds, $8,806,000 is to beavailable for a capital investment plan which provides for the modernization of theinformation technology infrastructure. Title VI, section 638, calls for the creation ofa Chief Financial Officer in the EOP. The House initially approved an FY2000appropriation of $39,448,000, of which $250,000 was to be used to establish the newposition Office of Management and Budget (OMB). The FY2000 appropriation is $63,495,000, anincrease of 4.7% over the $60,617,000 appropriated in FY1999. To combat crimesagainst intellectual property rights, the Senate Appropriations Committee hasdirected the Director of OMB to submit a plan to establish an inter-agency NationalIntellectual Property Coordination Center, not later than February 15, 2000, unlessthe President determines that such a center is not necessary. (27) The committee alsodirects the Director to prepare an inventory of Federal grant programs for fiscal year1999, as a step in simplifying and consolidating the federal grant process. (28) Office of National Drug Control Policy (ONDCP). The FY2000 appropriation is $52,201,000, anincrease of 21% over the President's request of $43,133,000, and an increase of 6%over the $49,242,000 FY1999 appropriation. The appropriation consists of two lineitems, $22,951,000 for Salaries and Expenses, of which $1,100,000 shall be availablefor policy research and evaluation, and $1,000,000 for the National Alliance forModel State Drug Laws; and $29,250,000 for the Counterdrug TechnologyAssessment Center, consisting of $16,000,000 for counternarcotics research anddevelopment projects, and $13,250,000 for the continued operation of the technologytransfer program. The $16,000,000 for counternarcotics research and developmentprojects shall be available for transfer to other Federal departments or agencies. Thefocus of the increased funding would be the media campaign to reduce and preventdrug use among youth. A proposal to include underage alcohol consumption as atarget in that media campaign was dropped from the bill, as provided by thesubcommittee. The Congressional Budget Office, in offering options forgovernment-wide spending cuts, suggested that additional appropriations for themedia campaign should be eliminated. Their report presumes that the effectivenessof the campaign would be sustained at the level of funding appropriated in FY1999. (29) Appropriations also include funding for two federal drug programs that ONDCP is to transfer to federal and state entities. The FY2000 appropriation for the HighIntensity Drug Trafficking Areas (HIDTA) is $192,000,000, an increase of 3.3% overthe President's requested $185,777,000 ($1,800,000 for auditing services), and anincrease of 3.8% over the $184,977,000 appropriated in FY1999. The FY 2000appropriation for the Special Forfeiture Fund is $216,000,000, which is 4.1% lessthan the $225,300,000 the President requested, and the same as appropriated inFY1999. Unanticipated Needs. The FY2000 appropriation is $1,000,000 for discretionary expenses necessary to enable thePresident to meet unanticipated needs, in furtherance of the national interest, security,or defense which may arise at home or abroad. In FY1999, two additionalappropriations were included under this account that are not included in FY2000. Both appropriations were included under the Omnibus Consolidated and EmergencySupplemental Appropriations Act. One was $30,000,000 (of which $10,000,000 waslater rescinded) for a grant to the Red Cross for reimbursement of disaster relief,recovery expenditures and emergency services ( P.L. 105-277 , 112 Stat. 2681, at2681-576). The second was emergency funding of $2,250,000,000, for Year 2000conversion of federal information technology systems, and related expenses, withallocations specified ( P.L.105-277 , 112 Stat. 2681, at 2681-572). areas throughoutthe United States. Those surveys are conducted, but the pay adjustments have beenlimited through language in the Treasury bill for several years. Federal Election Commission (FEC). The Federal Election Commission (FEC) administers federal campaign finance law,oversees disclosure requirements, limits on contributions and expenditures, and thepresidential election public funding system, and retains civil enforcement authority. For Fiscal Year 2000, Congress appropriated $38,152,000 to fund the FEC,$364,000 less than the Administration's request of $38,516,000. P.L. 106-58 also makes three statutory changes in FEC operations, based on proposals by a recent Price Waterhouse Coopers management study. Aimed atimproving operations, these new provisions give the FEC authority to requireelectronic filing by committees meeting a threshold financial activity level, allow anadministrative fine schedule for minor, unambiguous disclosure violations (withreasonable appeals procedures), and allow candidate report filing on an electioncycle, rather than calendar year, basis. The Administration's request of $38.5 million constituted a 5.5% increase over the $36.5 million appropriated for the agency in FY1999. Of the $38.5 million total,no less than $4.9 million was designated for computer modernization, 10.5% morethan was earmarked for such purposes in the prior year. While the agency has beencriticized as either overly intrusive or insufficiently vigilant in its enforcementcapacities, depending on the source, there has been widespread support for improvingthe automated data processing systems. Through greater availability and use ofelectronic disclosure, computer modernization is seen as a way to alleviate burdenson staff resources and enforcement functions. The Senate adopted its Appropriations Committee's recommendation of $38,175,000 for the FEC, $341,000 less than was requested. Of the total, no lessthan $4.9 million would be designated for computer modernization--the sameamount specified in the Administration's request. The House approved itsAppropriations Committee's recommendation for $38,152,000--$364,000 less thanwas requested, and with the proviso that no less than $4.9 million would bedesignated for computer modernization. The House total reflected a cut of fivefull-time positions from the nine new ones requested. The House appropriationfigure was $23,000 lower than the Senate figure, but both earmarked the same $4.9million for computer modernization. The conference committee accepted, andCongress agreed to, the House-approved appropriation of $38,152,000. The three legislative provisions ultimately enacted had been included first in the House bill, as per its Treasury subcommittee's recommendation. The Senate versiondid not contain these provisions. The conference committee accepted, and Congressagreed to, the provisions earlier approved by the House. Federal Labor Relations Authority (FLRA). P.L. 106-58 provides funding of $23,828,000 forthe FLRA. This amount matches the President's budget request and is 5.5% abovethe $22,586,000 appropriated in FY 1999. This was also the House-passed fundingand is $147,000 more than that passed by the Senate. The agency serves as a neutralparty in the settlement of disputes that arise between unions, employees, and agencieson matters outlined in the federal service labor management relations statute; decidesmajor policy issues; prescribes regulations; and disseminates information appropriateto the needs of agencies, labor organizations, and the public. General Services Administration (GSA). Established in 1949, GSA administers andcoordinates the federal civilian acquisition policy program. The agency also overseesthe management of federal real and surplus property, which includes the constructionand maintenance of federal buildings. Other functions include transportation,telecommunications, and information systems technology management. For FY2000, the President requested $158,316,000 for GSA's operating expenses. The President's request also prescribed $5,345,100,000 (from revenues)in new obligational authority for GSA's Federal Buildings Fund for real propertymanagement and related activities. P.L. 106-58 provides funding for GSA at$151,781,000, more than the Senate had voted and less than the House. Theprinciple difference is in the policy and operations account. On July 13, 1999, the House Committee on Appropriations agreed to a funding level of $146,006,000 for GSA's FY2000 operating expenses. The House, inpassing H.R. 2490, did not change the funding level further. In their June 24 report, the Senate committee recommended that funds in the Federal Buildings Fund be transferred to meet program requirements, subject toadvance approval by the Appropriations Committees. No funds were to be used inFY2001 for courthouse construction not meeting the Administrative Office of theU.S. Court's five-year plan and design standards. Any new proposed constructionplan was required to include a standardized courtroom utilization study. No fundswere to be used to provide cleaning services or security enhancements usuallyprovided through the Federal Buildings Fund to any agency not paying GSA'sassessed costs. Claims against the government of less than $250,000 from directconstruction were to be liquidated from savings in other projects, with priornotification to the Appropriations Committees. Funds made available for newconstruction projects by the Omnibus Consolidated Appropriations Act of 1997(Public Law 104-208) were to remain available prior to September 30, 1999. A totalof $59,203,500 is not to be made available for rental of space and $59,203,500 is notto be made available for building operations from the "Federal Buildings FundLimitations on Availability of Revenue." During floor consideration and adoption of S. 1282 on July 1, 1999, in addition to funding of GSA at $156,297,000, two GSA amendments were agreed to by theSenate. Senate Amendment No. 1192 increased the aggregate amount available inthe Federal Buildings Fund to $5,261,478,000. The Campbell Amendment (No.1218), agreed to by voice vote, reaffirmed aggregate reductions in the FederalBuildings Fund for rental of space and buildings operations. Merit Systems Protection Board (MSPB). P.L. 106-58 provides funding of $27,586,000 forthe MSPB. Additionally, $2,430,000 will be transferred from the Civil ServiceRetirement and Disability trust fund for administrative expenses to adjudicateretirement appeals. This amount matches the President's budget request. Theagency's FY 1999 appropriation was $25,805,000 and emergency funding of $66,000was provided for Y2K conversion. These amounts totaled $25,871,000. The law,not including the trust fund transfer, is 6.9% above the $25,805,000 and 6.6% abovethe $25,871,000. The funding provided by the law was also the House-passedamount and is $164,000 more than that passed by the Senate. The MSPB assistsfederal agencies in running a merit-based civil service system. National Archives and Records Administration (NARA). The custodian of the historically valuable recordsof the federal government since its establishment in 1934, NARA also prescribespolicy and provides both guidance and management assistance concerning the entirelife cycle of federal records. It also administers the presidential libraries system;publishes the laws, regulations, and presidential and other documents; and assists theInformation Security Oversight Office (ISOO), which manages federal securityclassification and declassification policies, and the National Historical Publicationsand Records Commission (NHPRC), which makes grants nationwide to helpnonprofit organizations identify, preserve, and provide access to materials thatdocument American history. P.L. 106-58 provides $223,468,000 in funding for NARA. This funding level is higher than either the House or Senate had originally passed. It represents morefunding for repairs and restoration than either version. The operating expenses arethe same as those passed by the House but higher than the Senate's figure. In the House, the July 15, 1999, passage of H.R. 2490 resulted in a recommendation of $180,398,000 for NARA FY2000 operating expenses. Thisamount is $6,054,000 less than the $186,452,000 requested by the President, and is$44,216,000 less than the $224,614,000 appropriated for FY1999. Operatingexpenses include costs incurred in connection with the administration of NARA(including ISOO), archived federal records and related activities, and the review anddeclassification of documents. The additional $6 million requested for FY2000 forNHPRC operations and programs, which is $4 million less than the amountappropriated for the commission for FY1999, was recommended by the committee,as well. The panel also agreed to the President's recommendation of theestablishment of a records center revolving fund and an appropriation of $22,000,000as initial capitalization of the fund. This revolving fund is available for expenses andequipment necessary to provide for storage and related services for all temporary andprearchival federal records to be or actually stored at federal national and regionalrecords centers by agencies and other instrumentalities of the federal government. In the Senate, the FY2000 funding levels for NARA provided in S. 1282, as amended and reported from committee, remained unchanged during floorconsideration and adoption of the bill on July 1, 1999. As reported on June 24, 1999,the bill recommended $179,738,000 for NARA FY2000 operating expenses. Thisamount was $6,714,000 less than the $186,452,000 requested by the President, andwas $44,876,000 less than the $224,614,000 appropriated for FY1999. The $6million requested for NHPRC FY2000 operations and programs was met by theSenate committee and an additional $250,000 was included, making the total amountrecommended $6,250,000. The additional $250,000 was provided for the FortBuford reconstruction project, deemed "an important Lewis and Clark 'Corps ofDiscovery' site" by the committee. The records center revolving fund and its initial$22 million capitalization as recommended in the President's budget was alsoadopted by the committee. Office of Government Ethics (OGE). The Office of Government Ethics, a small agency within the executive branch, wasestablished by the Ethics in Government Act of 1978. Originally part of the Officeof Personnel Management, OGE became a separate agency on October 1, 1989, aspart of the Office of Government Ethics Reorganization Act of 1988. The Office ofGovernment Ethics exercises leadership in the executive branch to prevent conflictsof interest on the part of government employees, and to resolve those conflicts ofinterest that do occur. In partnership with executive branch agencies anddepartments, OGE fosters high ethical standards for employees and strengthens thepublic's confidence that the Government's business is conducted with impartialityand integrity. P.L. 106-58 provides funding of $9,114,000, the same amount as the FY2000 budget request. This is a 7.3% ($622,000) increase from the $8,492,000appropriated for FY1999. During congressional consideration of the measure, theHouse voted the amount requested by the President. However, when the Senatepassed the measure, it included$9,071,000 for OGE, $43,000 less than the budgetrequest. Office of Personnel Management (OPM). P.L. 106-58 provides a total current appropriationof $14,354,105,000 for OPM. Funding of $90,584,000 is provided for the salariesand expenses account. (This was the House-passed amount and is $1,000,000 lessthan the Senate-passed funding and the President's budget request.) The law alsoprovides an appropriation of $960,000 for the Office of Inspector General (OIG)salaries and expenses and mandatory funding of $5,105,482,000 for the governmentpayment for annuitants of the employees health benefits program (FEHB),$36,207,000 for the government payment for annuitants of the employees lifeinsurance program, and $9,120,872,000 for payment to the civil service retirementand disability fund. Trust fund transfers of $95,486,000 for salaries and expensesand $9,645,000 for OIG salaries and expenses are provided as well. (In FY 1999,$91,236,000 for salaries and expenses and $9,145,000 for OIG salaries and expenseswere transferred from trust funds.) The agency's FY 1999 appropriation was$13,478,212,000 and emergency funding of $2,428,000 was provided for Y2Kconversion. These amounts totaled $13,480,640,000. Not including the trust fundtransfers, the combined discretionary and mandatory funding provided by the law is6.5% above the FY 1999 amount for the agency which is responsible foradministering personnel management functions. Office of Special Counsel (OSC). P.L. 106-58 provides funding of $9,740,000 for the OSC. This amount matches thePresident's budget request. The agency's FY1999 appropriation was $8,720,000 andemergency funding of $100,000 was provided for Y2K conversion. These amountstotaled $8,820,000. The funding level in the act is 11.7% above the $8,720,000 and10.4% above the $8,820,000. The funding provided by the act was also theHouse-passed amount and is $51,000 more than that passed by the Senate. According to the conference report, "the conferees are concerned about the numberof backlogged cases" and "direct OSC to report back within 90 days after enactmentof this Act, on the number of cases pending that have exceeded the statutory timerequirements, including requirements for referral." (30) The OSC investigates federalemployee allegations of prohibited personnel practices and, when appropriate,prosecutes before the Merit Systems Protection Board; provides a channel for whistleblowing by federal employees; and enforces the Hatch Act. P.L. 106-58 permits the use of executive branch agency funds (otherwiseavailable for salaries) to provide child care services for low-income federalemployees (section 643). The Senate, in passing S. 1282, added a title to the bill (Amendment No. 1197) that would have established new requirements for child care facilities operated byfederal agencies, including legislative and judicial branch agencies, for theiremployees. The provision would require that executive facilities meet state or locallicensing standards within six months of the legislation's enactment, and comply with(or have made substantial progress towards complying with) standards set by a stateor nationally recognized accreditation entity within three years of enactment. The Senate bill also would have required regulations, set by the Administrator of General Services, establishing health and safety standards for federal agency childcare programs. Legislative agency facilities would be required to meet a state ornationally recognized accreditation entity's standards within one year of the bill'senactment. If the legislative facility does not maintain accreditation, it must followregulations no less stringent than those of executive agency facilities. Judicialbranch facilities would also be required to meet regulations (issued by theAdministrative Office of the United States Courts) pertaining to licensing andaccreditation that are no less stringent than those of executive branch agencies. Executive branch agencies would be authorized to use agency funds to provide childcare for employees and to improve the affordability of such care for low-incomeemployees. The amendment would also authorize $900,000 in fiscal year 2000, andsuch sums thereafter, for an interagency council of federal agencies to share bestpractices and coordinate policy with regard to child care. A similar amendment wasoffered to the FY1999 Treasury bill, adopted in the Senate, and fell in conference. H.R. 2490, as passed by the House, July 15, 1999, included the provision (also included in S. 1282) allowing executive branch federal agencies (not including theGeneral Accounting Office) to use agency funds to provide child care services, in afacility owned or leased by the agency, for employees of the agency, provided thesefunds are used to improve the affordability of child care for low-income federalemployees. It did not contain the other child care provisions included in the Senatebill. However, on July 19, 1999, the Senate incorporated the provisions of S. 1282 as an amendment (Title VII) to H.R. 2490, and passed this companion measure,numbered H.R. 2490, in lieu of S. 1282. In conference, the conferees agreed to delete Title VII of H.R. 2490. The conference report ( H.Rept. 106-319 ) filed on September 14, 1999, and subsequentlyapproved by the House and Senate, does not contain all of the federal child careprovisions originally proposed in the Senate's bill, S. 1282. Instead, the conferencereport includes only the provisions contained in the original House proposal,permitting the use of agency funds (otherwise available for salaries) to provide childcare services for low-income federal employees. Public Law 106-58, has some significant pay provisions and is gaining a gooddeal of attention by provisions that are absent. Specific rates for all affected paysystems will be promulgated in late December or early January through an ExecutiveOrder. Section 644 provides that, effective noon January 20, 2001, the pay of the President will be increased to $400,000 per annum . It has been $200,000 sinceJanuary 1969. There is a constitutional proscription on increasing or decreasing thepay of a President during the term for which he was elected. Therefore, Mr. Clintonwill not benefit from this increase. The President must pay federal income tax on his salary. There is an official expense allowance of $50,000. That allowance, which has been the same rate since1949, can be used for official purposes only, is not subject to income tax. Any unusedportion reverts to the U.S. Treasury. Under the provisions of the Ethics Reform Act of 1989, (31) Members and otherofficials of Congress, the Vice President, executive branch officials, and federaljudges are to receive an annual adjustment in pay. Adjustments are based on thepercent of change in the private sector wages and salaries element of the EmploymentCost Index (ECI) minus 0.5% They are to go into effect at the same time as, and ata rate no greater than, the rate adjustments for the General Schedule. The rate ofchange in the private sector, December 1997 to December 1998, was 3.9%. Therefore the rate of pay adjustment, effective January 2000, for federal officials willbe 3.4%. The significance of this bill to the pay adjustment for federal officials is that since 1995, with the exception of the adjustment in January 1998, Congress has actedlegislatively to deny themselves and other federal officials the annual adjustment. The legislative vehicle for that denial has been the Treasury appropriations bill. Federal judges' salary adjustments are subject to further legislative activity. While the Ethics Reform Act includes those adjustments in the automaticmechanism, there is further statutory restriction. (32) Congress has required that theyspecifically authorize any such adjustment. Traditionally, that authorization hascome through the Commerce, State, Justice, and Judiciary Appropriations. TheFY2000 appropriations bill for those accounts (H.R. 2670), as it passed the Senate,contains the authorization. It is assumed that the bill, as it comes out of conference,will contain the authorization language. Congress has consistently authorized the payadjustments whenever there has been an increase for other federal officials. General Schedule. Federal employees under the General Schedule (GS) and related pay systems will receive a4.8% pay adjustment effective the first pay period beginning on or after January 1,2000. Section. Under the provisions of 5 U.S.C. 5303, the national GS base payadjustment is to be 3.8%. It is assumed that, since the President did not present analternative plan to Congress, that rate will go into effect. The remaining 1% is to beused for locality-based payments (5 U.S.C. 5304). The explanatory language forSection 646 of the bill, as found in the conference report states ...The conferees have not made the language more specific so that the President may exercise his discretion to distributeany amount allocated for comparability-based locality payments in the mostappropriate fashion among the pay localities established by the President's PayAgent. (33) The President would generally have until the end of November to submit an alternate plan relating to locality-based comparability payments. However, since the statutespecifies the total pay adjustment and, in effect, limits it to a percentage rate lowerthan would be effective under 5 U.S.C. 5304, it may not be necessary for thePresident to submit such plan. Both the House- and Senate-passed versions of the Treasury bill had assumed a federal civilian pay increase of 4.4% in January 2000. The Senate committee reportstated that, in order to stay within its 302(b) allocations, both budget authority andoutlays had to be reduced without harming essential programs. Therefore, thecommittee said that it "was forced to deny all requests for additional funding, tocover the remaining months of the calendar year 1999 statutory annual payadjustment." Employees whose salaries are administratively determined and who donot receive the government-wide adjustments were the only exception to thisacross-the-board reduction. (34) The House-passed,but not the Senate-passed Treasurybill included a statement relating to the Sense of the Congress on the federal civilianpay adjustment. President Clinton had proposed a 4.4% pay adjustment for federalemployees in his FY 2000 budget. This amount was the overall average increase,including locality pay adjustments. Legislation passed the Senate (S. 4 ,106thCongress) providing a 4.8% military pay adjustment. (35) That measure and a FY1999emergency supplemental ( P.L. 106-31 ) contain Sense of the Congress resolutionscalling for parity between the military pay adjustment and that for civilianpersonnel. (36) The House-passed Treasury billincluded this same Sense of theCongress language. Federal Wage System. Blue-collar employees paid under the Federal Wage System have their payadjustments limited by P.L. 106-58 . Section 613 continues the limitation on thoseadjustments to a formula based on the GS adjustments. Pay under this system issupposed to be set subsequent to wage surveys conducted in over 130 wage surveyareas throughout the United States. Those surveys are conducted, but the payadjustments have been limited through language in the Treasury bill for several years. Other. The Senior Executive Service (SES) and other pay systems, such as the Administrative Law Judges, willhave the caps raised on their salaries. There are several systems which are limitedto salary rates on the Executive Schedule. Those increase by 3.4% in January. ThePresident has the responsibility, administratively, to set the specific SES rates. Section 411 details the procedures under which the General ServicesAdministrator is authorized to offer voluntary separation incentives in order toprovide the necessary flexibility in carrying out the closing of the Federal SupplyService distribution centers and other related activities. The authority, carrying withit a maximum payment of $25,000, is effective through April 30, 2001. Section 651 authorizes a voluntary early retirement for federal employees. That authority would be subject to Office of Personnel Management approval andinstruction. In summary and prior to scorekeeping adjustments by the Congressional BudgetOffice (CBO), the Administration has requested a total of $27,997,054,000 foraccounts within this appropriation. The funding enacted for FY2000 under P.L.106-58 totals $27,972,418,000. The House and Senate data for FY1999 enacted are different. The House shows $27,922,712,000 as a grand total in budget authority and the Senate shows$27,915,604,000. Using either figure, the FY2000 levels approved by the HouseSubcommittee and the Senate Committee represent an increase over the FY1999enacted level of $26,978,249,000. The House Treasury AppropriationsSubcommittee recommended a FY2000 funding level of $28,095,811,000. And theSenate Committee on Appropriations reported a funding level of $27,737,971,000. (37) FY2000 enacted mandatory funding is $14,533,811,000, according to House documents, using CBO scorekeeping data. That figure corresponds to the FY2000request for mandatories, compared to $13,656,152,000 enacted for FY1999.. According to the House documents, the FY2000 request for discretionary funding is $13,926,438,000, an increase over $13,465,985,000, FY1999 enacted. The FY2000 enacted is $13,706,000. The House Committee mark for discretionaryfunding was $13,466,056,000 and the Senate would have provided $13,434,138,000in discretionary funding. The Administration is shown to have requested$132,127,000 for the crime trust fund as compared to the FY1999 enacted level of$132,000,000. The FY2000 enacted level is $132,000,000. The House committeerecommended that funding level. The Senate, however, would have increased theamount to $194,000,000 in this account. Table 2. Appropriations for the Treasury, Postal Service, Executive Office of the President, and General Government, FY1995 toFY1999 (in billions of current dollars) a Source for FY1999: U.S. Congress, House, Committee on Appropriations, as of July 13, 1999. a These figures, in current dollars, include CBO adjustments for permanent budgetauthorities, rescissions, supplementals, as well as other elements factored into theCBO scorekeeping process. For a brief presentation on CBO scorekeeping see: U.S.Congressional Budget Office, Maintaining Budgetary Discipline: Spending andRevenue Options (Washington: GOP, 1999). The appendix beginning on p. 281provides the "Scorekeeping Guidelines" as found in the conference report to theBalanced Budget Act of 1997. Also available at http://www.cbo.gov/ . Table 3. Treasury, Postal Service, ExecutiveOffice of the President and General Government Appropriation, FY2000, byTitle (In millions, without CBO scorekeeping) Source: The source for the House data is the House Committee on Appropriations. The Senate data are also from the House Committee, as released to them by theSenate July 14, 1999. The FY2000 enacted data are provided by the HouseCommittee on Appropriations. Table 4. Department of Treasury, Postal Service,Executive Office of the President, and General GovernmentAppropriations (in thousands of dollars) Source: U.S. Congress, House, Committee on Appropriations, as of September 9, 1999. Table 4 Notes : a Treasury Departmental Offices-- FY1999 enacted includes the following emergency funding accounts: Salaries and expenses, $1,500,000 for counterdrugactivities and $1,238,000 for Y2K conversion; and three Automation enhancementfunding points for Y2K conversion, totaling $52,665,000. b Treasury Building Fund-- FY1999 statute requires delay in obligating the $27,000,000 until the close of the fiscal year. c Law Enforcement Training Center-- FY1999 enacted includes $3,548,000 in emergency funding for antiterrorism. d Financial Management Center-- FY1999 enacted includes $6,000,000 in emergency funding for Y2K conversion. e ATF--FY1999 enacted includes three Y2K conversion funding points totaling $11,195,000 and excludes $2,206,000 delayed obligation of appropriated funds. TheY2K funding was subject to a rescission of $4,500,000. Neither congressionalversion includes the budget request for $15,000,000 to fund laboratory facilities andheadquarters. f Customs-- FY1999 enacted includes three emergency funding counterdrug items totaling $276,000,000, Y2K conversion emergency funding at $10,200,000, andexcludes $9,500,000 delayed obligation of appropriated funds. Note that theCommittee print out provides the total shown for FY1999 enacted, however, a tallyof the individual accounts shown results in a total of $2,037,953,000. The Senatereport shows another $1,701,000. g Public Debt--FY1999 enacted includes $1,000,000 in Y2K conversion emergency funding. h IRS--Total for IRS reflects funding adjustments presented in notes for specific accounts within the IRS account. i Processing--FY1999 enacted does not reflect $130,000,000 delayed obligation of appropriated funds. j Information Systems--FY1999 enacted includes $483,000,000 and $22,312,000 in Y2K conversion emergency funding. k U.S. Secret Service--FY1999 enacted includes $80,808,000 in emergency funding for antiterrorism and two emergency funding items totaling $3,695,000 for Y2Kconversion. It does not exclude $5,000,000 delayed obligation of appropriated funds. l USPS--FY1999 does not exclude $71,195 delayed obligation. m The Council on Environmental Quality/Office of Environmental Quality, Office of Science and Technology Policy, and the Office of the United States TradeRepresentative are funded under other appropriations. n Since 1969, the President's salary has been $200,000 per annum . Since 1949, the expense allowance has been $50,000 per annum. . o Off. of Admin.--FY1999 enacted includes three Y2K conversion items of emergency funding totaling $29,791,000. p ONDCP--FY1999 enacted includes counterdrug emergency funding of $1,200,000. P.L. 106-58 creates a new line item which would fund the Counterdrug TechnologyAssessment Center separately, instead of previous practice of including it in thegeneral ONDCP account. q ONDCP Federal Drug Control--Since these funds are not for operations of the Executive Office of the President (EOP), but are to be transferred to federal, state andlocal agencies for anti-drug operations, they are not included in the EOP operationsfunds. The funds are under the control of the ONDCP. FY1999 enacted for theSpecial forfeiture fund includes $2,000,000 in counterdrug emergency funding. r Unanticipated Needs--FY1999 enacted reflects $30,000,000 in emergency funding, as reduced by a $10,000,000 rescission. s FEC--FY1999 enacted includes $243,000 in emergency funding for counterdrug. t GSA total--FY1999 enacted includes $22,503,000 in emergency funding. The FY1999 agency regular appropriation was $593,853,000. u GSA Policy and Operations--The House documents show FY1999 enacted with five Y2K conversion items of emergency funding totaling $48,407,000. The SenateReport shows FY1999 enacted with four Y2K conversion items of emergencyfunding totaling $41,299,000. v NARA total--FY1999 enacted includes $6,662,000 in Y2K conversion emergency funding, but does not exclude a total of $11,861,000 delayed obligations. w NARA Operating expenses--FY1999 enacted includes $6,662,000 in Y2K conversion emergency funding, but does not exclude $7,861,000 delayed obligations. x NARA/NHPRC--FY1999 does not include a $4,000,000 obligation delay. The FY2000 totals do not reflect proposed rescissions of $4,000,000 and $3,800,000 bythe House and Senate respectively. y OSC--FY1999 enacted includes $1,00,000 in Y2K conversion emergency funding. The following definitions are selected from the "Glossary of Budgetary Terms"as found in Manual on the Federal Budget Process , a CRS report (98-720) by RobertKeith in consultation with Alan Schick. Account. A control and reporting unit for budgeting an accounting. Appropriation. A provision of law providing budget authority that permits federal agencies to incur obligations and to make payments of the U.S. Treasury for specifiedpurposes. Annual appropriations are provided in appropriations acts; mostpermanent appropriations are provided in substantive law. Authorization. A provision in law that authorizes appropriations for a program or agency. Budget Authority. Authority provided by law to enter into obligations that normally result in outlays. The main forms of budget authority are appropriations, borrowingauthority, and contract authority. Budget Resolution. A concurrent resolution passed by both Houses of Congress, but not requiring the signature of the President, setting forth the congressional budget forat least the next five fiscal years. The budget resolution sets forth various budgettotals and functional allocations, and may include reconciliation instructions, todesignated House or Senate committees. Continuing Resolution. An act (in the form of a joint resolution) that provides budget authority to agencies or programs whose regular appropriation has not beenenacted after the new fiscal year has started. A continuing resolution usually is atemporary measure that expires on a specified date or is superseded by enactment ofthe regular appropriations act. Some continuing resolutions, however, are in effectfor the remainder of the fiscal year and are the means of enacting regularappropriations. Direct Spending. Budget authority, and the resulting outlays, provided in laws other than annual appropriations acts. Appropriated entitlements are classified as directspending. Direct spending is distinguished by the Budget Enforcement Act fromdiscretionary spending and is subject to the PAGO rules. It is also referred to as"mandatory spending." Discretionary Spending. Budget authority, and the resulting outlays, provided in annual appropriations acts, but not including appropriated entitlements. Federal Funds. All monies collected and spent by the federal government other than those designated as trust funds. Federal funds include general, special, publicenterprise, and intragovernmental funds. Mandatory Spending. See "Direct Spending." Obligation. A binding agreement (such as through a contract or purchase order) that will require payment. Outlays. Payments made (generally through the issuance of checks or disbursement of cash) to liquidate obligations. Outlays during a fiscal year may be for payment ofobligations incurred in prior years or in the same year. PAGO (Pay-as-You-Go) Process. The procedure established by the Budget Enforcement Act to ensure that revenue and direct spending legislation does not addto the deficit or reduce the surplus. PAGO requires that any increase in the deficitor reduction in the surplus due to legislation be offset by other legislation orsequestration. PAGO is enforced by estimating the five-year budgetary effects of allnew revenue and direct spending laws. Reconciliation Process. A process established in the Congressional Budget Act by which Congress changes existing laws to conform tax and spending levels to thelevels set in a budget resolution. Changes recommended by committees pursuant toa reconciliation instruction are incorporated into a reconciliation bill. Revolving Fund. An account or fund in which all income derived from its operations is available to finance the fund's continuing operations without fiscal year limitation. Scorekeeping. Procedures for tracking and reporting on the status of congressional budgetary actions affecting budget authority, receipt, outlays, the surplus or deficit,and the public debt limit. Supplemental Appropriation. Budget authority provided in an appropriations act in addition to regular or continuing appropriations already provided. Supplementalappropriations acts sometimes include items not included in regular appropriationsacts for lack of timely authorization. Trust Funds. Accounts designated by law as trust funds for receipts and expenditures earmarked for specific purposes. User Fees. Fees charged to users of goods or services provided by the federal government. In levying or authorizing these fees, Congress determines whether therevenue should go into the U.S. Treasury or should be available to the agencyproviding the goods or services. CRS Issue Brief IB98024, Federal Employees and the FY1999 Budget , by [author name scrubbed]. CRS Issue Brief IB95035, Federal Regulatory Reform: An Overview , by Roger Garcia. CRS Issue Brief IB10014, Gun Control , by Keith Alan Bea and [author name scrubbed]. CRS Issue Brief IB89148, Item Veto and Expanded Impoundment Proposals , by [author name scrubbed]. CRS Issue Brief IB95083, Postal Service's Mail Monopoly: Is It Time for Change? , by Bernevia McCalip. CRS Issue Brief IB97036, The Year-2000 Problem: Congressional Issues , by Richard Nunno. CRS Info Pack 517G, Government Performance and Results Act: implementing the results . CRS Report 97-635(pdf) , The Balanced Budget Act of 1997: Retirement and Health Insurance Provisions for Postal and Federal Personnel , by Carolyn L. Merck. CRS Report 98-829, Brady Act Firearm Purchase Requirements Summarized , by [author name scrubbed]. CRS Report 98-814 , Budget Reconciliation Legislation: Development and Consideration , by Bill Heniff, Jr. CRS Report RL30021(pdf) , Child Care Issues in the 106th Congress , by [author name scrubbed] andMelinda T. Gish. CRS Report RS20255, Civil Service Retirement Bills in the 106th Congress , byPatrick J. Purcell. CRS Report 97-892, Continuing Appropriations Acts: Brief Overview of Recent Practices , by [author name scrubbed] CRS Report 97-1008, Federal Pay: FY1999 Salary Adjustments , by [author name scrubbed]. CRS Report 98-956, Federal Pay: FY2000 Salary Adjustment, by [author name scrubbed]. CRS Report RS20403, FY2000 Consolidated Appropriations Act: Reference Guide , by [author name scrubbed].. CRS Report RS20257(pdf) , Government Performance and Results Act: Brief History and Implementation Activities During the First Session of the 106thCongress , by [author name scrubbed]. CRS Report 97-382, Government Performance and Results Act: Implications for Congressional Oversight , by [author name scrubbed] and [author name scrubbed]. CRS Report 97-70(pdf) , Government Performance and Results Act, P.L. 103-62 : Implementation Through Fall 1996 and Issues for the 105th Congress , by[author name scrubbed]. CRS Report RS20183, Immigration and Naturalization Service's FY2000 Budget , by [author name scrubbed]. CRS Report 98-4, Implementation of P.L. 105-206 : Personnel Management Flexibility for the Internal Revenue Service , by [author name scrubbed]. CRS Report 98-721 , Introduction to the Federal Budget Process, by [author name scrubbed]. CRS Report 98-720(pdf) , Manual on the Federal Budget Process, by [author name scrubbed]. CRS Report 97-72, Performance-Based Organizations in the Federal Government: A Reinvention Innovation , by [author name scrubbed]. CRS Report 97-974, Reorganization Proposals for U.S. Border Management Agencies , by Frederick Kaiser. CRS Report 98-53, Salaries of Federal Officials , by [author name scrubbed]. CRS Report RL30014, Salaries of Members of Congress: Current Procedures and Recent Adjustments , by [author name scrubbed]. CRS Report 97-1011 , Salaries of Members of Congress: Payable Rates and Effective Dates, 1789-1999 , by [author name scrubbed]. CRS Report RS20114, Salary of the President Compared with That of Other Federal Officials , by [author name scrubbed]. CRS Report RS20115 , Salary of the President: Process for Change , by [author name scrubbed]. CRS Report 98-844, Shutdown of the Federal Government: Causes, Effects, and Process , by [author name scrubbed]. CRS Report 97-216, Treasury-Inflation Protection Securities: A Fact Sheet , by James Bickley. CRS Report 97-134, Treasury-Inflation Protection Securities: Description, Goals, and Policy Issues , by James Bickley. CRS Report 98-202, Treasury, Postal Service, Executive Office of the President, and General Government: Appropriations for FY1999, by [author name scrubbed]and [author name scrubbed]. CRS Report 98-377, Year 2000 Problem: Chronology of Hearings and Legislation in the 104th and 105th Congresses , by Richard Nunno. CRS Report 98-967, Year 2000 Problem: Potential Impacts on National Infrastructures, by Richard Nunno. Syracuse University, Maxwell School of Citizenship and Public Affairs, Government Performance Project, Grading Government , (Syracuse, N.Y.:Syracuse University, February 1999). U.S. Congress, Senate, Committee on Appropriations, Treasury and General Government Appropriation Bill, 2000 , report to accompany s. 1282, 106thCong., 1st sess., S.Rept. 106-5887 (Washington: GPO, 1999). U.S. Congressional Budget Office, Maintaining Budgetary Discipline: Spending and Revenue Options (Washington: GPO, 1999). [Available on CBO Website.] U.S. Department of the Treasury, U.S. Customs Service, U.S. Customs Service Strategic Plan (FY97-02), by Commissioner of Customs George Weiss,(Washington: U.S. Customs Service, August 1, 1997). U.S. General Accounting Office, High Risk Series, IRS Management , GAO report HR 97-8, (Washington: February 1997). -----, Customs Service: Comments on Strategic Plan and Resource Allocation Process, GAO report GGD-98-15, (Washington: October 16, 1998). -----, Major Management Challenges and Program Risks: Department of the Treasury , GAO report OCG-99-14, (Washington: October 21, 1998). U.S. Office of Management and Budget, Progress on Year 2000 Conversion, A Quarterly Report to Congress, (Washington: March 1999). Important information regarding current and past budgets (including budget documents), the federal budget process, and duties and functions are available atthe following web or gopher sites. Congressional Budget Office (CBO). http://www.cbo.gov General Accounting Office (GAO). http://www.gao.gov National Commission on Restructuring the Internal Revenue Service http://www.house.gov/natcommirs/main.htm Office of Government Ethics http://www.usoge.gov Office of Management and Budget (OMB). http://www.whitehouse.Gov/WH/EOP/OMB/html/ombhome.html Office of Management and Budget, Statements of Administration Policy (SAPS) http://www.whitehouse.Gov/WH/EOP/OMB/SAP

P.L. 106-58 (H.R. 2490), signed by the President September 29, 1999, to fund the Department of the Treasury, the Executive Office of the President, several independent agencies and to providepartial funding for the U.S. Postal Service. The act funds the accounts at $27.99 billion, includingmandatories (before scorekeeping by the Congressional Budget Office (CBO)). The consolidatedFY2000 funding measure, P.L. 106-113 , signed November 29, 1999, requires a cut by 0.38% in allaccounts. The administration's budget, to be submitted in early February, will contain a report onthe exact amounts of cuts for each of the accounts. The Senate-passed version of H.R. 2490 would have funded the accounts at $27.77 billion and the House at $27.8 billion. The President's FY2000 budget, submitted February 1, 1999, requesteda funding level of $27.997 billion for the mandatory and discretionary accounts. This is an increaseover the FY1999 level enacted at just under $27 billion in regular appropriations, with additionalemergency funding. CBO scores the total for the FY2000 funding at $28.2 billion. The mandatoriesare $14.5 billion and the discretionary funding are $13.7 billion. In summary, P.L. 106-58 , prior to the across-the-board cut, funds the Department of Treasury at $12,354.6 million, which is $ 282.6 million less than the FY1999 enacted (which includedemergency funding), $21.5 million less than requested, $165 million more than the House passed,and $120 million more than the Senate passed for FY2000. One principle point of difference is thefunding for the Internal Revenue Service (IRS). Both the House and Senate would have substantiallycut funding in several of the IRS accounts (See Table 4 for specifics). Although the total appropriation for the U.S. Postal Service equals the request by the Administration, only $29 million of the $93.4 million is available in FY2000. The remainder willbe delayed until FY2001. Title III of the Treasury appropriation funds the Executive Office of the President and accounts entitled, "Funds Appropriated to the President." Under the act, those accounts total $645.5 million. That funding level is $6 million more than the President's request, $9.3 million less thanHouse-enacted, and $75.4 million more than Senate-enacted. Both the House- and Senate-passedversions would have funded the Office of National Drug Control Policy (ONDCP) at about $10million over the request. The major differences between the chamber action and the act are in theFunds Appropriated to the President, which are funds the ONDCP transfers to other entities for drugcontrol efforts. The independent agencies are funded at $14.9 billion. That is $9.1 million less than requested, $16.6 million more than House-enacted and $2.5 million more than Senate-enacted. Funding for theGeneral Services Administration and the National Archives and Records Administration representthe largest differences. Key Policy Staff Division abbreviations: G&F = Government and Finance; DSP = Domestic Social Policy; RSI=Resources, Science, and Industry.

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The long-running policy debate over the future of nuclear energy is rooted in the technology's inherent characteristics. Initially developed for its unprecedented destructive power during World War II, nuclear energy seemed to hold equal promise after the war as a way of providing limitless energy to all humanity. International diplomacy has focused ever since on finding institutional mechanisms for spreading the perceived benefits of nuclear energy throughout the world while preventing the technology from being used for the proliferation of nuclear weapons. Much of this international effort is focused on key nuclear fuel cycle facilities—plants for enriching uranium in the fissile isotope U-235 and for separating plutonium from irradiated nuclear fuel. Such plants can be used to produce civilian nuclear reactor fuel as well as fissile material for nuclear warheads. Yet even the use of nuclear power solely for peaceful energy production has proven intrinsically controversial. The harnessing of nuclear fission in a reactor creates highly radioactive materials that must be kept from overheating and escaping from the reactor building, as occurred during the accidents at Fukushima, Chernobyl, and, to a lesser extent, Three Mile Island. Spent nuclear fuel that is regularly removed from reactors during refueling must be isolated from the environment for up to 1 million years. Potential technologies to reduce long-lived nuclear waste through recycling usually involve separating plutonium that could be used for nuclear weapons, although technologies designed to reduce proliferation risks are also the subject of worldwide research and development efforts. All nuclear energy technologies, even with recycling, would still leave substantial amounts of radioactive waste to be stored and disposed of. Central storage and disposal sites for nuclear waste have proven difficult to develop throughout the world, as illustrated by long-running controversy over the proposed U.S. waste repository at Yucca Mountain, NV. The March 2011 disaster at Japan's Fukushima Dai-ichi nuclear power plant, which forced the evacuation of areas as far as 30 miles away, has slowed nuclear power expansion plans around the world, particularly in Japan and Western Europe. However, dozens of new reactors are still being planned and built in China, India, Russia, and elsewhere. In these areas, nuclear power's initial promise of generating large amounts of electricity without the need for often-imported fossil fuels, along with the more recent desire to reduce greenhouse gas emissions, remains a compelling motivation. With 98 licensed reactors, the United States has the largest nuclear power industry in the world. But U.S. nuclear power growth has been largely stagnant for the past two decades, as natural gas and renewable energy have captured most of the market for new electric generating capacity. Congress enacted incentives for new nuclear plants in the Energy Policy Act of 2005 ( P.L. 109-58 ), including production tax credits, loan guarantees, and insurance against regulatory delays. Those incentives, combined with rising natural gas prices and concerns about federal restrictions on carbon dioxide emissions, prompted announcements by late 2009 of up to 30 new nuclear power reactors in the United States. However, subsequent declines in natural gas prices and uncertainty about carbon dioxide controls have put most of those projects on hold. Currently, two new reactors in Georgia are under construction. Two identical reactors under construction in South Carolina were cancelled July 31, 2017. An older reactor, Watts Bar 2 in Tennessee, received an NRC operating license on October 22, 2015, after construction had been suspended for two decades. A variety of incentives to renew the growth of nuclear power have been proposed, including a plan by the Trump Administration to provide additional revenue to nuclear and coal power plants in wholesale electricity markets. Existing U.S. nuclear power plants are facing difficult competition from natural gas and renewable energy. Seven U.S. reactors were permanently closed from 2013 through 2018. Three of those units closed because of the need for expensive repairs, and three were operating well but could not compete in their local wholesale electricity markets. The most recent retirement was New Jersey's Oyster Creek plant, which permanently shut down September 17, 2018, to avoid having to construct a cooling tower. All seven units had substantial time remaining on their initial 40-year operating licenses or had received or planned to apply for 20-year license extensions from the Nuclear Regulatory Commission (NRC). The owners of 12 additional reactors have announced that they will permanently shut down by the mid-2020s ( Table 1 ). The actual and planned shutdowns have prompted widespread discussion about the future of other aging U.S. reactors. The extent to which the growth of nuclear power should be encouraged in the United States and around the world will continue to be a major component of the U.S. energy policy debate. Questions for Congress will include the implementation of policies to encourage or discourage nuclear power, post-Fukushima safety standards, development of new nuclear power and fuel cycle technologies, and nuclear waste management strategies. The 98 licensed nuclear power reactors at 59 sites in the United States generate about 20% of the nation's electricity. The oldest of today's operating reactors were licensed in 1969, and the most recent was Watts Bar 2 in 2015. The most recently licensed reactor before that was its twin unit, Watts Bar 1, in 1996. All U.S. reactors were initially licensed to operate for 40 years, but nearly all of them have received or applied for 20-year license renewals by NRC. Under the current mixture of 40- and 60-year licenses, 28 of today's operating reactors would have to shut down by 2030 and the rest by 2049, except for the newly licensed Watts Bar 2. The owners of four reactors have applied to NRC for "subsequent license renewals," which would allow operation for up to 80 years. Another four subsequent license renewal applications have been announced. As noted above, 12 reactors are currently scheduled to retire before their operating licenses or renewals expire. Whether new reactors will be constructed to replace the existing fleet or even to expand nuclear power's market share will depend largely on costs. The cost of building and operating a new nuclear power plant in the United States is generally estimated to be significantly higher than natural gas combined-cycle plants (which use both combustion and steam turbines to generate electricity) and above wind and solar as well. For example, the Energy Information Administration (EIA) estimates that, for plants coming on line in 2022, the average cost of electricity generation from a nuclear power plant would be 9.3 cents per kilowatt-hour (kwh), while advanced combined-cycle gas-fired generation would cost 4.9 cents/kwh and a coal plant with 90% carbon capture and storage would cost 11.9 cents/kwh. EIA estimates that, including tax credits, electricity from onshore wind would cost 4.8 cents/kwh, solar photovoltaics 5.0 cents/kwh, and geothermal 4.2 cents/kwh. Such estimates depend on a wide range of variables, such as future fuel costs, regional solar and wind availability, current and future tax incentives, and environmental regulations. The two new U.S. reactors under construction at the Vogtle nuclear plant site in Georgia, after considerable construction delays and cost overruns, are now scheduled to begin operating in November 2021 and November 2022. As noted above, construction of two new units in South Carolina has been terminated. Licenses to build and operate 10 additional reactors have been issued by NRC. However, applications for 14 other new reactors have been withdrawn or suspended. Aside from the 2 new Vogtle units, the 10 other planned reactors with issued licenses do not have specific schedules for moving toward construction. Throughout the world, 451 reactors are currently in service or operable, and 54 more are under construction. France is the most heavily nuclear-reliant country in the world, with 58 reactors generating 72% of the country's electricity in 2017. Thirty-one countries in 2017 (plus Taiwan) generated at least some of their electricity from nuclear power. After the Fukushima accident, Germany, which had previously generated about 30% of its electricity with nuclear power, closed 8 of the country's 17 power reactors and decided to shut the remainder by 2022. Japan, which had also generated about 30% of its electricity with nuclear power and had planned to raise that level to 50%, now is planning for about 20% by 2030. All Japanese reactors were closed within a year after the tsunami, and only 9 of Japan's 42 operable reactors are currently in commercial service. An additional 17 Japanese reactors have applied for restart, which involves safety upgrades to meet new regulatory requirements. It is not clear how many of Japan's operable reactors will ultimately seek restart approval. France had planned to reduce nuclear power to 50% of the country's total generation by 2025, although that goal has been delayed. Highly radioactive spent nuclear fuel must regularly be removed from operating reactors and stored in adjacent pools of water. After several years of cooling, the spent fuel can be placed in dry casks for storage elsewhere on the plant site. When existing U.S. reactors were built, spent fuel had been expected to be taken away for reprocessing (separation of plutonium and uranium to make new fuel) or permanent disposal. However, reprocessing has not become commercialized in the United States, for economic and nonproliferation reasons, and central waste storage and disposal facilities have proven difficult to site. As a result, the vast majority of U.S. commercial spent fuel remains at the nuclear plants where it was generated—estimated at 79,389 metric tons at the end of 2017 and increasing at the rate of about 2,000 metric tons per year. The Nuclear Waste Policy Act ( P.L. 97-425 , NWPA), as amended in 1987, named Yucca Mountain, NV, as the nation's sole candidate site for a permanent high-level nuclear waste repository. NWPA required the Department of Energy (DOE) to study the site and seek a license from NRC to build a repository there. Citing opposition from the State of Nevada, the Obama Administration decided to halt the Yucca Mountain project, and no funding has been appropriated for it since FY2010. The Trump Administration included funding to restart Yucca Mountain licensing in its FY2018 and FY2019 budget submissions to Congress, but the funding was not included in the enacted appropriations measures for either year. The House had approved the requested funding for FY2018 and $100 million more than the request for FY2019, but the Senate approved no funding either year. The enacted versions did not include the Yucca Mountain funding. The Obama Administration appointed the Blue Ribbon Commission on America's Nuclear Future to develop an alternative nuclear waste policy, and its final report was issued in January 2012. DOE responded in January 2013 with a waste strategy that called for a "consent-based" process to select nuclear waste storage and disposal sites and for a surface storage pilot facility to open by 2021. DOE issued a Draft Consent-Based Siting Process shortly before the end of the Obama Administration. A federal appeals court on August 13, 2013, ordered NRC to continue the Yucca Mountain licensing process with previously appropriated funds. In response, NRC issued the final volumes of the Yucca Mountain Safety Evaluation Report (SER), which provided the NRC staff's determination that the repository would meet all applicable standards. However, the staff said upon completing the SER that NRC should not authorize construction of the repository until all land and water rights requirements were met and a supplement to DOE's environmental impact statement (EIS) was completed. NRC completed the supplemental EIS in May 2016 and made its database of Yucca Mountain licensing documents publicly available, using nearly all the remaining previously appropriated licensing funds. Addresses a major condition for licensing the Yucca Mountain repository by withdrawing the repository site from use under public lands laws and placing it solely under DOE's control. Would also authorize DOE to store spent fuel at an NRC-licensed interim storage facility owned by a nonfederal entity and increase the capacity limit on the Yucca Mountain repository from 70,000 to 110,000 metric tons. Introduced June 26, 2017; referred to Committees on Energy and Commerce, Natural Resources, and Armed Services. Energy and Commerce Committee ordered reported June 28, 2017, by vote of 49-4 ( H.Rept. 115-355 ). Passed House May 10, 2018, by a vote of 340-72. Provides FY2019 funding for nuclear energy programs, along with water development programs and other activities. Under the Administration's FY2019 budget request, DOE would have received $120 million to seek an NRC license for the repository and to develop interim nuclear waste storage capacity. NRC would have received $47.7 million to consider DOE's application. DOE's total of $120 million in nuclear waste funding was to come from two appropriations accounts: $90 million from Nuclear Waste Disposal and $30 million from Defense Nuclear Waste Disposal. (The defense waste appropriations account would pay for defense-related nuclear waste that would be disposed of in Yucca Mountain. In the FY2019 National Defense Authorization Act, the House voted to authorize $30 million for Defense Nuclear Waste Disposal, but the Senate included no such authorization, and the Senate prevailed in conference [ H.R. 5515 ]). In the FY2019 appropriations bill, the House voted to provide $100 million more than requested for Yucca Mountain, but the Senate approved no Yucca Mountain funding. The Senate-passed bill included an authorization for a pilot program in FY2019 to develop an interim nuclear waste storage facility at a voluntary site (§304). The enacted FY2019 appropriations measure included neither the House-passed funding for Yucca Mountain nor the Senate interim storage authorization. Introduced and reported as an original measure by the House Appropriations Committee May 21, 2018 ( H.Rept. 115-697 ). Combined with two other appropriations bills for floor consideration and passed by the House June 6, 2018, by vote of 235-179. Senate companion bill introduced and reported by the Senate Appropriations Committee as an original measure May 24, 2018 ( S. 2975 , S.Rept. 115-258 ). Text of Senate bill substituted for text of House-passed H.R. 5895 and passed by Senate June 25, 2018, by vote of 86-5. Conference report ( H.Rept. 115-929 ) passed by Senate September 12, 2018, by vote of 92-5, and by House September 13, 2018, by vote of 377-20. Signed into law September 21, 2018 ( P.L. 115-244 ). Prohibits DOE from developing a repository only for defense nuclear waste until NRC has issued a final decision on a construction permit for the Yucca Mountain repository. Introduced January 11, 2017, referred to Committee on Energy and Commerce. Requires the Secretary of Energy to obtain the consent of affected state and local governments before making expenditures from the Nuclear Waste Fund for a nuclear waste repository. Both bills introduced January 11, 2017. House bill referred to Committee on Energy and Commerce; Senate bill referred to Committee on Environment and Public Works. Authorizes DOE to enter into contracts with privately owned spent fuel storage facilities. DOE would take title to all spent nuclear fuel from commercial reactors delivered to the private storage facility. Annual interest earned by the Nuclear Waste Fund could be used by DOE without further congressional appropriation to pay for private interim storage. Introduced January 12, 2017; referred to Committee on Energy and Commerce. Provides funding for nuclear waste and other energy programs, as well as for water development projects and various independent agencies. H.R. 3266 was reported as an original measure by the House Committee on Appropriations July 17, 2017 ( H.Rept. 115-230 ). It was combined with four other appropriations bills into H.R. 3219 and passed by the House on July 27, 2017. That measure was then combined with the remaining eight appropriations bills for FY2018 into H.R. 3354 and passed by the House on September 14, 2017. The House-passed omnibus bills included $120 million for DOE Yucca Mountain licensing activities ($90 million under Nuclear Waste Disposal and $30 million under Defense Nuclear Waste Disposal), plus $30 million for licensing activities by NRC. The Senate Appropriations Committee provided no funding for Yucca Mountain in its version of the FY2018 Energy and Water Development Appropriations bill ( S. 1609 ), and instead included an authorization for a pilot program to develop an interim nuclear waste storage facility at a volunteer site (§307). The Senate panel approved the measure on July 20, 2017 ( S.Rept. 115-132 ). Energy and Water Development Appropriations were provided in Division D of the Consolidated Appropriations Act, 2018, signed March 23, 2018 ( P.L. 115-141 ). The nuclear waste provisions in the House and Senate bills were not included. Authorizes DOE to make annual payments to local governments of up to $15 per kilogram of spent nuclear fuel stored at closed nuclear power plants within the governments' jurisdiction. Introduced October 3, 2017; referred to Committee on Energy and Commerce. For communities with closed nuclear power plants that are storing spent nuclear fuel, authorizes payments of $15 for each kilogram of nuclear waste, revives an expired tax credit for first-time homebuyers, and adds eligibility for the existing New Markets tax credit. House bill introduced October 6, 2017; referred to committees on Energy and Commerce and Ways and Means. Senate bill introduced October 2, 2017; referred to Committee on Finance. Authorizes DOE to enter into contracts to store high-level radioactive waste and spent nuclear fuel at a private-sector interim consolidated storage facility. Such storage would be deemed to satisfy DOE's contractual obligations under NWPA to take spent fuel from nuclear plant sites. Introduced November 16, 2017; referred to Committee on Energy and Commerce. Requires spent fuel at nuclear power plants to be moved from spent fuel pools to dry casks after it has sufficiently cooled, pursuant to NRC-approved transfer plans. Emergency planning zones would have to be expanded from 10 to 50 miles in radius around any reactor determined by NRC to be out of compliance with its spent fuel transfer plan. NRC would be authorized to use interest earned by the Nuclear Waste Fund to provide grants to nuclear power plants to transfer spent fuel to dry storage. Senate bill introduced May 25, 2017; referred to Committee on Environment and Public Works. House bill introduced January 29, 2018; referred to Committee on Energy and Commerce. Prohibits the Secretary of Energy from taking any action relating to the licensing, planning, development, or construction of a nuclear waste repository until the Director of the Office of Management and Budget submits to Congress a study on the economic viability and job-creating benefits of alternative uses of the Yucca Mountain site. Introduced April 26, 2018; referred to Committee on Energy and Commerce. CRS Report RL33461, Civilian Nuclear Waste Disposal , by Mark Holt CRS Report R42513, U.S. Spent Nuclear Fuel Storage , by James D. Werner Commercial Spent Nuclear Fuel, Nuclear Waste Technical Review Board, November 2017, http://www.nwtrb.gov/docs/default-source/facts-sheets/commercial_snf.pdf?sfvrsn=12 Commercial Nuclear Waste: Resuming Licensing of the Yucca Mountain Repository Would Require Rebuilding Capacity at DOE and NRC, Among Other Key Steps , GAO-17-340, April 26, 2017, https://www.gao.gov/products/GAO-17-340 Report to the Secretary of Energy , Blue Ribbon Commission on America's Nuclear Future, January 2012, http://cybercemetery.unt.edu/archive/brc/20120620211605/http:/brc.gov Managing Spent Nuclear Fuel: Strategy Alternatives and Policy Implications , RAND Corporation, 2010, http://www.rand.org/pubs/monographs/MG970.html Disposal of High-Level Nuclear Waste , Government Accountability Office, Key Issues website, https://www.gao.gov/key_issues/disposal_of_highlevel_nuclear_waste/issue_summary U.S. nuclear power plants are facing severe financial pressure caused primarily by competition from low-cost natural gas, growing supplies of renewable energy, and stagnant electricity demand. Seven U.S. reactors were permanently closed from 2013 through 2018, and 12 more are planned for closure through the mid-2020s ( Table 1 ). Plans for up to 30 new U.S. reactors announced during the past 10 years have largely been put on hold, with only 2 currently under construction. In light of that situation, Congress is considering whether federal action is needed to keep the existing nuclear fleet operating and to encourage the construction of new reactors. A key element of that debate is the appropriate role of nuclear power, if any, in meeting national energy and environmental goals. Nuclear power supporters generally point to the technology as crucial for providing a secure, domestic source of energy with low greenhouse gas and other emissions. Opponents generally counter that safety and proliferation risks, nuclear waste hazards, and high costs outweigh those benefits. Potential mechanisms for increased federal support of nuclear power include loan guarantees, tax credits, clean energy mandates, emissions credits, and electricity market regulations. Some states have taken action to prevent nuclear plant closures. New York and Illinois provided "zero emission credits" to seven reactors that had been at risk of retirement by 2018. Connecticut enacted legislation in 2017 to make nuclear reactors eligible for a state procurement process for zero-emission electricity sources, upon certification of financial need. New Jersey enacted zero-emission credits for nuclear power in 2018. Energy Secretary Rick Perry submitted a proposed regulation to the Federal Energy Regulatory Commission (FERC) on October 10, 2017, to ensure that coal and nuclear power plants could recover their costs in wholesale power markets. To be eligible for cost recovery, power plants would be required to "have a 90-day fuel supply on site in the event of supply disruptions caused by emergencies, extreme weather, or natural or man-made disasters," a criterion that coal and nuclear plants would typically meet. DOE contended that such plants were crucial in ensuring the resilience of the bulk power system. FERC rejected the proposal on January 8, 2018, but initiated a new proceeding to evaluate bulk power system resilience. President Trump directed Perry on June 1, 2018, to recommend additional actions to prevent "impending retirements of fuel-secure power facilities," such as coal and nuclear power plants. Federal tax credits for electricity production from new nuclear plants were extended by the Bipartisan Budget Act of 2018 ( P.L. 115-123 ), signed into law February 9, 2018. Before the extension, new nuclear plants had been required to begin operation before January 1, 2021, to qualify for the production tax credit, which is limited to 6,000 megawatts of total generating capacity. The extension allows new reactors to use the credit after that date if the capacity limit has not been reached. Along with the extension, the tax credit was modified to allow non-taxpaying partners in a nuclear project, such as public power agencies, to transfer their credits to a project's taxpaying partners. Only two U.S. reactors are currently under construction, at the Vogtle nuclear power plant in Georgia, totaling about 2,300 megawatts of capacity, well within the limit. Construction delays have pushed the planned completion dates of the new Vogtle reactors beyond the 2021 deadline, and the production tax credits are widely considered crucial for their financial viability. Georgia Power, the lead partner in the Vogtle consortium, announced August 8, 2018, that its share of the estimated construction cost of the two new reactors had risen from $7.3 billion to $8.4 billion. That estimate does not include costs covered by Georgia Power's $1.7 billion share of a Westinghouse contract settlement and $188 million in customer refunds. Adding those amounts brings the Georgia Power construction share to about $10.3 billion. With Georgia Power holding a 45.7% share of the project, the total construction cost of the new reactors is estimated to be about $22.5 billion, or $11.25 billion per reactor. The two new reactors at the Vogtle plant received loan guarantees from DOE totaling $8.33 billion, as authorized by Title 17 of the Energy Policy Act of 2005 ( P.L. 109-58 ). Energy Secretary Ernest Moniz announced the issuance of $6.5 billion in loan guarantees on February 19, 2014, to two of the three utility partners in the project, Georgia Power and Oglethorpe Power. The final $1.8 billion loan guarantee for another partner, Municipal Electric Authority of Georgia, was issued June 24, 2015. Energy Secretary Rick Perry announced a conditional commitment for an additional $3.7 billion in loan guarantees to the three partners in the Vogtle project on September 29, 2017. However, the Trump Administration has proposed to rescind DOE's authority to issue further Title 17 loan guarantees in FY2019. The loan guarantee rescission was not included in the FY2019 Energy and Water Development Appropriations Act ( P.L. 115-244 , Division A), and Congress did not approve a similar rescission request for FY2018. No other proposed nuclear plants have received any commitments for DOE loan guarantees. DOE's Light Water Reactor Sustainability Program manages cost-shared research projects "to solve significant highest priority cost and technical problems threatening existing plants." The program includes research on materials used in nuclear plants, modeling of plant aging, and plant upgrades. The Trump Administration had proposed cutting the program's funding by more than half for FY2019, but P.L. 115-244 continued its $47 million annual appropriation. Federal policy on carbon dioxide emissions could also have a significant impact on the expansion of nuclear power and the economic viability of existing reactors. Under the Trump Administration, the Environmental Protection Agency is proposing to repeal the Obama Administration's Clean Power Plan regulations, which require states to reduce carbon dioxide emissions from existing power plants. Nuclear power would be a potential element in state plans for meeting the Clean Power Plan standards. Caps annual fees assessed by NRC on nuclear power plants and other licensees at their FY2015 levels, adjusted for inflation, unless higher fees are necessary to avoid compromising the NRC' safety and security mission. NRC would be required to limit corporate support costs to specified percentages of its total annual budget request, declining to a maximum of 28% in FY2025 and thereafter. Establishes "streamlining" requirements for NRC review of nuclear power plant license applications and establishes deadlines. Introduced March 2, 2017; referred to Committee on Energy and Commerce. Approved by Committee by voice vote July 12, 2018 ( H.Rept. 115-924 ). Includes a provision that caps NRC fees on operating commercial reactors at the FY2015 level, adjusted for inflation, unless higher fees are necessary to avoid compromising the NRC's safety and security mission. NRC would be required to limit its requests for corporate support costs to 28% of its total budget after FY2023. Introduced March 2, 2017; referred to Committee on Environment and Public Works. Approved by committee March 22, 2017 ( S.Rept. 115-86 ). Establishes a commission to "analyze the accessibility, affordability, reliability, resiliency, and sustainability of the energy sources in the United States, including coal, oil, natural gas, wind, solar, nuclear, hydropower, geothermal, and biofuels," among other tasks. Introduced November 3, 2017; referred to Committee on Energy and Commerce. Establishes a tax credit for investments in nuclear energy plants placed in service before January 1, 2024, and that have submitted license extensions to NRC before January 1, 2024, or have certified to DOE that extensions will be submitted by that date. Introduced May 9, 2018; referred to Committee on Ways and Means. Related to Nuclear Powers America Act of 2017 ( H.R. 4614 , Meehan), introduced December 11, 2017, and referred to Committee on Ways and Means. Requires DOE to conduct a study of "current legal, regulatory, policy, and commercial practices of the United States with respect to the civilian nuclear industry of the United States" and "the impacts of such practices on such civilian nuclear industry in the United States and in international markets." Introduced July 12, 2018, referred to committees on Foreign Affairs and Energy and Commerce; ordered reported by Energy and Commerce July 18, 2018, by vote of 33-16. Requires DOE to enter into at least one agreement to purchase power from a commercial nuclear reactor by the end of 2023. The maximum length of federal power purchase agreements would be extended from 10 years to 40 years. Requires DOE to prepare a 10-year strategic plan for the Office of Nuclear Energy. Introduced September 9, 2018; referred to Committee on Energy and Natural Resources. Requires DOE to establish a program to provide financial assistance to units of local government who have experienced, or are predicted to experience, a reduction in tax revenue from "troubled" nuclear power plants. Introduced September 13, 2018; referred to Committee on Energy and Commerce. Hearing by the Senate Committee on Environment and Public Works, March 8, 2017, on S. 512 , described above. Witnesses included representatives from the nuclear industry, the Government Accountability Office, and environmental groups. Video, written statements, and other material can be found at https://www.epw.senate.gov/public/index.cfm/hearings?ID=004FC325-6ED4-433F-8E39-D5735FD2E7AA . Hearing by the House Energy and Commerce Committee Subcommittee on Energy, May 22, 2018, on H.R. 1320 , described above, and draft bills on nuclear energy competitiveness and advanced nuclear technology. Witnesses included DOE officials and representatives of industry and environmental groups. Video, transcript, witness statements, draft bill text, and other materials can be found at https://energycommerce.house.gov/hearings/doe-modernization-legislation-addressing-development-regulation-and-competitiveness-of-advanced-nuclear-energy-technologies/ . CRS Report R44715, Financial Challenges of Operating Nuclear Power Plants in the United States , by Phillip Brown and Mark Holt CRS Insight IN10806, DOE's Grid Resiliency Pricing Rule , by Richard J. Campbell CRS Insight IN10813, Energy Tax Provisions in the Tax Cuts and Jobs Act (H.R. 1) , by Molly F. Sherlock and Joseph S. Hughes CRS Insight IN10750, Rising Costs and Delays Doom New Nuclear Reactors in South Carolina , by Mark Holt The Nuclear Power Dilemma: Declining Profits, Plant Closures, and the Threat of Rising Carbon Emissions, Union of Concerned Scientists, November 2018, https://www.ucsusa.org/sites/default/files/attach/2018/11/Nuclear-Power-Dilemma-full-report.pdf Promising Market and Federal Solutions for Existing Nuclear Power , Center for Climate and Energy Solutions, October 2018, https://www.c2es.org/document/promising-market-and-federal-solutions-for-existing-nuclear-power/ World Nuclear Industry Status Report 201 8 , Mycle Schneider andAntony Froggat, September 4, 2018, https://www.worldnuclearreport.org/ Economic and Market Challenges Facing the U.S. Nuclear Commercial Fleet— Cost and Revenue Study , Idaho National Laboratory, September 2017, https://gain.inl.gov/SiteAssets/Teresa/Market%20Challenges%20for%20Nuclear%20Fleet-ESSAI%20Study%20Sept2017.pdf Keeping the Lights on at America's Nuclear Power Plants , Jeremy Carl and David Fedor, Shultz-Stephenson Task Force on Energy Policy, Hoover Institution Press, 2017 Existing commercial nuclear power plants in the United States are based on light water reactor (LWR) technology, in which ordinary (light) water is used to cool the reactor and to moderate, or slow, the neutrons in the nuclear chain reaction. The federal government developed LWRs for naval propulsion in the 1950s and funded the commercialization of the technology for electricity generation. DOE and its predecessor agencies for decades have also conducted research on "advanced" reactor technologies that use different coolants and moderators, as well as fast neutron reactors that have no moderator. Proponents of advanced reactors contend that they would be safer, more efficient, and less expensive to build and operate than today's conventional LWRs. Some concepts are also intended to produce less long-lived radioactive waste than existing reactors, such as by separating the uranium, plutonium, and other elements in spent nuclear fuel and then using long-lived elements as new fuel for fast reactors. Another characteristic of advanced reactors is that they are generally planned to be far smaller than today's commercial LWRs, which average about 1,000 megawatts (MW) of electric generating capacity. Most proposed advanced reactors would be considered "small modular reactors" (SMRs), which DOE defines as having generating capacity of 300 MW or below. SMRs using LWR technology are also being designed. Supporters of SMRs contend that they would be small enough to be assembled in factories and shipped to reactor sites to reduce construction costs. In addition, SMRs could reduce the financial risks of building a new nuclear power plant, because each module would cost less than today's large reactors and revenues could begin when the first module was complete, rather than after completion of a much larger unit. However, some analysts contend that SMRs would be too small to achieve the economies of scale needed for economic viability. Legislation to stimulate the development of advanced nuclear technology, the Nuclear Energy Innovation Capabilities Act of 2017, was signed by the President on September 28, 2018 ( P.L. 115-248 ). Key provisions authorize the construction of demonstration reactors funded by the private sector at DOE sites, authorize DOE to construct a "versatile" test reactor for advanced nuclear fuels and materials, and authorize grants to help pay for advanced reactor licensing. Other legislation (not included in P.L. 115-248 ) would require NRC to develop a new licensing framework for advanced nuclear technology. Proponents contend that NRC's existing licensing system is too focused on LWR technology and would potentially cause delays in non-LWR applications. DOE's nuclear energy research and development program includes reactor modeling and simulation, experimental processing of spent nuclear fuel, development of advanced reactor concepts, and testing of "accident tolerant fuel" for existing LWRs. The Trump Administration proposed reducing the nuclear R&D budget by 37.2% in FY2019 from the FY2018 funding level—from $1.205 billion to $757 million. Nuclear R&D funding for FY2019 is included in a bill that combines the annual Energy and Water Development Appropriations bill with two other appropriations bills ( H.R. 5895 ), as described above. The House-passed version of the bill would have increased nuclear R&D by 11.7% over the FY2018 level, while the Senate voted to provide nearly flat funding. The enacted FY2019 funding measure ( P.L. 115-244 ) provided $1.35 billion for nuclear energy, 10% above the FY2018 level. The conference report ( H.Rept. 115-929 ) directs DOE to prepare a report on producing high-assay, low enriched uranium (HA-LEU) for advanced reactors and authorizes expenditures of up to $20 million in preparation and testing for HA-LEU production. It also includes $65 million "for research and development to support efforts to develop a versatile fast test reactor." Requires the Department of Energy to support development of nuclear fission and fusion technologies through computer modeling and simulation, and through testing and demonstration at DOE national laboratories and other sites. The Secretary of Energy would determine the need for a reactor-based fast neutron source, as described above. Bills introduced January 11, 2017; referred to House Committee on Science, Space, and Technology and Senate Committee on Energy and Natural Resources. Included as Title IV of the Department of Energy Research and Innovation Act ( H.R. 589 ), passed by the House under suspension of the rules January 24, 2017, and passed by the Senate July 23, 2018, without the nuclear provisions. S. 97 was passed by the Senate committee June 21, 2017 ( S.Rept. 115-115 ), and by the Senate March 7, 2018, by voice vote. Passed House under suspension of the rules September 13, 2018, and signed into law September 28, 2018 ( P.L. 115-248 ). Requires NRC and DOE to enter into a memorandum of understanding to provide technical and licensing support for civilian advanced reactor projects, including advanced reactor modeling and simulation and access to DOE research facilities. NRC would be required to develop a regulatory framework for advanced reactor licensing and include the status of advanced reactor design certification applications in its annual budget requests to Congress. The nuclear industry would not have to pay fees to cover NRC's costs for developing an advanced reactor regulatory infrastructure. Introduced January 20, 2017; referred to committees on Energy and Commerce and Science, Space, and Technology. Passed by House under suspension of the rules January 23, 2017. Referred to Senate Committee on Environment and Public Works. Includes requirements for NRC to create a new licensing framework for advanced reactor technologies. This would include a staged licensing process that would allow applicants to use NRC approval at each stage to help attract private-sector investment to move to the next stage. A DOE cost-sharing program for advanced reactor license applicants would also be authorized. Introduced March 2, 2017; referred to Committee on Environment and Public Works. Approved by committee March 22, 2017 ( S.Rept. 115-86 ). Exempts NRC expenditures on developing a regulatory framework for advanced nuclear reactors from fee recovery requirements, which generally require the nuclear industry to pay for 90% of NRC's costs. Introduced March 2, 2017; referred to Committee on Energy and Commerce. Approved by Committee by voice vote July 12, 2018 ( H.Rept. 115-924 ). Includes authorization of DOE nuclear energy research and development programs, including modeling and simulation. DOE would determine the need for a fast neutron research reactor. Construction and operation of privately funded experimental reactors would be authorized at DOE sites. NRC would be required to develop a new regulatory framework for advanced reactors. Introduced June 28, 2017; placed on the Senate Legislative Calendar. Hearings held September 19, 2017. Requires DOE to enter into agreements to conduct at least four advanced reactor demonstration projects by 2028. The projects could include cost-sharing with private-sector partners to conduct work at DOE sites, such as national laboratories. Senate bill introduced October 3, 2017; referred to Committee on Energy and Natural Resources. Approved by committee May 21, 2018 ( S.Rept. 115-251 ). House bill introduced March 13, 2018; referred to Committee on Science, Space, and Technology. Authorizes DOE to construct a fast neutron research reactor by the end of 2025. Introduced November 13, 2017; referred to Committee on Science, Space, and Technology. Approved by committee November 15, 2017 ( H.Rept. 115-557 ). Passed House by voice vote under suspension of the rules February 13, 2018. Referred to Senate Committee on Energy and Natural Resources. As noted above, the FY2019 Energy and Water Development Appropriations Act ( P.L. 115-244 , Division A) includes $65 million for research to support development of a versatile fast test reactor. Requires DOE to carry out a program to support the availability of high-assay, low enriched uranium (HA-LEU) for use in commercial advanced reactors. HA-LEU would have enrichment above 5% uranium-235, as used by existing commercial reactors, but below the 20% level of highly enriched uranium. Introduced June 19, 2018; referred to Committee on Energy and Commerce. Ordered reported by voice vote July 12, 2018. As noted above, the FY2019 Energy and Water Development Appropriations Act ( P.L. 115-244 , Division A) includes $20 million for HA-LEU preparation and testing. Requires DOE to enter into at least one agreement to purchase power from a commercial nuclear reactor by the end of 2023. The maximum length of federal power purchase agreements would be extended from 10 years to 40 years. Requires DOE to prepare a 10-year strategic plan for the Office of Nuclear Energy. Introduced September 9, 2018; referred to Committee on Energy and Natural Resources. Hearing by the Senate Committee on Environment and Public Works on S. 512 , described above, March 8, 2017. Witnesses included representatives from the nuclear industry, the Government Accountability Office, and environmental groups. Video, written statements, and other material can be found at https://www.epw.senate.gov/public/index.cfm/hearings?ID=004FC325-6ED4-433F-8E39-D5735FD2E7AA . CRS Insight IN10765, Small Modular Nuclear Reactors: Status and Issues , by Mark Holt Examination of Federal Financial Assistance in the Renewable Energy Market: Implications and Opportunities for Commercial Deployment of Small Modular Reactors, Scully Capital and Kutak Rock for the U.S. Department of Energy, October 2018, https://www.energy.gov/ne/downloads/report-examination-federal-financial-assistance-renewable-energy-market Advanced Nuclear 101 , Third Way, December 1, 2015, http://www.thirdway.org/report/advanced-nuclear-101 Gateway for Accelerated Innovation in Nuclear (GAIN) , U.S. Department of Energy website , https://gain.inl.gov/SitePages/Home.aspx . Leading on SMRs , Nuclear Innovation Alliance, October 2017, https://docs.wixstatic.com/ugd/5b05b3_d163208371134cc590a234100429a6fd.pdf Strategies for Advanced Reactor Licensing , Nuclear Innovation Alliance, April 2016, https://docs.wixstatic.com/ugd/5b05b3_71d4011545234838aa27005ab7d757f1.pdf The 2011 Fukushima Dai-ichi nuclear plant disaster in Japan, triggered by a huge earthquake and tsunami, greatly increased concerns about safety in the nuclear policy debate. The accident clearly demonstrated the potential consequences of a total loss of power (or "station blackout") at today's commercial nuclear plants. Even when a reactor shuts down, as did the Fukushima plant after the initial earthquake, residual radioactivity in the reactor core continues to generate "decay heat" that must be removed, typically by electrically driven or controlled cooling systems. When the tsunami knocked out power at the three Fukushima Dai-ichi reactors that had been operating when the earthquake struck, the buildup of heat and pressure from residual radioactivity became so great that it melted the reactors' nuclear fuel and exceeded the limits of their containment structures. The decay heat also caused steam to chemically react with the nuclear fuel cladding in the reactor cores, generating additional heat along with hydrogen that escaped into the upper part of the reactor buildings and exploded. Cooling was also lost in Fukushima's spent fuel storage pools, causing concern that they could overheat, although later examination indicated that they did not. Safety requirements for nuclear power plants are established and enforced in the United States by NRC, an independent regulatory agency. NRC safety regulations address the effects of external events such as earthquakes and floods, equipment failure such as breaks in coolant pipes, and other problems that could lead to radioactive releases into the environment. Critics of nuclear power contend that NRC is often reluctant to impose necessary safety requirements that would be costly or disruptive to the nuclear industry. However, the industry has frequently contended that costly safety proposals are unnecessary and would not significantly increase large existing safety margins. Following the Fukushima disaster, NRC established a task force to identify lessons applicable to U.S. reactors and recommend safety improvements. The task force's report led to NRC's first Fukushima-related regulatory requirements, on March 12, 2012. NRC ordered all reactors to develop strategies to maintain cooling and containment integrity during external events, such as floods and earthquakes, that were more severe than anticipated by the plants' designs ("beyond design basis"). In addition, NRC required that U.S. reactors of similar design to the Fukushima reactors have "reliable hardened vents" to remove excess pressure from their primary containments, and that better instrumentation be installed to monitor the condition of spent fuel pools during accidents. The NRC commissioners on March 19, 2013, required NRC staff to study whether to require the newly mandated containment vents to include filters or other means to reduce the release of radioactive material if the vents have to be used. The idea of requiring filters had drawn praise from nuclear critics but opposition from the industry on cost grounds. NRC voted on August 19, 2015, not to proceed with rulemaking on filtered vents. U.S. nuclear power plants are continuing to implement NRC's post-Fukushima regulations and orders. Prohibits the establishment of anchorage grounds for vessels carrying hazardous or flammable cargo within five miles of a nuclear power plant and other designated facilities. Introduced March 10, 2017; referred to Committee on Transportation and Infrastructure. Requires nuclear reactor owners to consult with affected state, local, and tribal governments before submitting reactor decommissioning (permanent shutdown) plans to NRC. NRC would have a 90-day period to solicit public comments and hold meetings about decommissioning plans after they were submitted. NRC would have to include any change recommended by the host state in a reactor decommissioning plan unless the change violated a law or if the costs of the change outweighed its safety, economic, or environmental benefits. Senate bill introduced February 7, 2018; referred to Committee on Environment and Public Works. House bill introduced February 9, 2018; referred to Committee on Energy and Commerce. Authorizes a DOE research program on the effects of exposure to low-dose radiation. Introduced December 18, 2017; referred to Committee on Science, Space, and Technology. Approved by Committee February 13, 2018 ( H.Rept. 115-554 ). Passed House by voice vote under suspension of the rules February 13, 2018. CRS Report R41694, Fukushima Nuclear Disaster , by Mark Holt, Richard J. Campbell, and Mary Beth D. Nikitin Nuclear Power Accidents, Union of Concerned Scientists, web page, https://www.ucsusa.org/nuclear-power/nuclear-power-accidents#.W2RshNJKiUk What Are the Lessons Learned from Fukushima? , Nuclear Regulatory Commission, web page, reviewed/updated May 8, 2018, http://www.nrc.gov/reactors/operating/ops-experience/japan-dashboard/priorities.html Nuclear Safety: Countries' Regulatory Bodies Have Made Changes in Response to the Fukushima Daiichi Accident , Report to the Chairman, Subcommittee on Transportation and Infrastructure, Committee on Environment and Public Works, U.S. Senate, Government Accountability Office, GAO-14-109, March 2014, http://www.gao.gov/products/GAO-14-109 State-of-the-Art Reactor Consequence Analyses (SOARCA) Report , Nuclear Regulatory Commission, NUREG-1935, November 2012, http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1935 The level of security that must be provided at nuclear power plants has been a high-profile issue since the 9/11 terrorist attacks on the United States in 2001. Since those attacks, NRC issued a series of orders and regulations that substantially increased nuclear plant security requirements, although industry critics contend that those measures are still insufficient. Key measures include an increase in the level of attacks that nuclear plant security forces must be able to repel, requirements for mitigating the effects of large fires and explosions, and a requirement that new reactors be capable of withstanding aircraft crashes without releasing radioactive material. NRC also modified its planning requirements for evacuations and other emergency responses after the 9/11 attacks, and the Fukushima disaster illustrated the importance of emergency response to radioactive releases from any cause. NRC issued wide-ranging revisions to its emergency preparedness regulations on November 1, 2011, dealing with duties of emergency personnel and the inclusion of hostile actions in emergency planning drills. In response to Fukushima, NRC staff recommended that nuclear emergency plans be required to address events affecting multiple reactors and prolonged station blackout. NRC told nuclear power plants on March 12, 2012, to provide specific information and analysis on those issues. The NRC Cyber Security Directorate was established in June 2013 to coordinate rulemaking, guidance, and oversight of cybersecurity at nuclear power plants and other regulated nuclear facilities. As part of the Directorate, NRC's Cyber Assessment Team responds to cybersecurity events at NRC-licensed facilities and coordinates threat assessments with other federal agencies. NRC issued a draft final rule June 7, 2018, on "Enhanced Weapons, Firearms Background Checks, and Security Event Notifications." The draft final rule, which is awaiting Commission approval, would establish procedures for nuclear power plants and other licensed nuclear facilities to apply for NRC authorization to arm their security personnel with "enhanced" weapons, such as semiautomatic assault weapons and machine guns, despite any state laws prohibiting such weapons. NRC is authorized to preempt state laws for this purpose under Atomic Energy Act Section 161A, enacted by the Energy Policy Act of 2005 ( P.L. 109-58 ). The draft final rule would also modify NRC requirements for nuclear power plants and other licensed facilities to report events related to physical security and would add requirements for reporting suspicious activities. Requires the Department of Homeland Security to develop and maintain a medical countermeasures stockpile for nuclear and other types of attacks and disasters, among other provisions. Introduced June 28, 2017; referred to Committees on Homeland Security; Transportation and Infrastructure; and Energy and Commerce. CRS In Focus IF10821, Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Releases , by Mark Holt CRS Report RL34331, Nuclear Power Plant Security and Vulnerabilities , by Mark Holt Nuclear Security, Union of Concerned Scientists, web page, https://www.ucsusa.org/nuclear-power/nuclear-plant-security#.W2RtxtJKiUk Protecting Our Nation , Nuclear Regulatory Commission, NUREG/BR-0314, Rev. 4, August 2015, https://www.nrc.gov/docs/ML1523/ML15232A263.pdf Backgrounder on Nuclear Security , Nuclear Regulatory Commission, web page, last reviewed/updated December 12, 2014, https://www.nrc.gov/reading-rm/doc-collections/fact-sheets/security-enhancements.html Encouraging exports of U.S. civilian nuclear products, services, and technology while making sure they are not used for foreign nuclear weapons programs has long been a fundamental goal of U.S. nuclear energy policy. Section 123 of the Atomic Energy Act requires that any country receiving U.S. nuclear technology, equipment, or materials implement a peaceful nuclear cooperation agreement with the United States. These so-called 123 agreements are intended to ensure that U.S. nuclear cooperation with other countries does not result in the production of weapons materials or otherwise encourage the proliferation of nuclear weapons. Section 123 allows nuclear cooperation agreements to take effect after 90 days of continuous congressional session if they adhere to specified criteria. International controls and inspections are intended to ensure the peaceful use of civilian nuclear facilities and prevent the proliferation of nuclear weapons. However, recent proposals to build nuclear power plants in as many as 18 countries that have not previously used nuclear energy, including several in the Middle East and elsewhere in the less developed world, have prompted concerns that international controls may prove inadequate. Numerous recommendations have been made in the United States and elsewhere to create new incentives for nations to forgo the development of uranium enrichment and spent nuclear fuel reprocessing facilities that could produce weapons materials as well as civilian nuclear fuel. Iran's nuclear energy program is a major example of the tension between peaceful and weapons uses of nuclear technology. Longstanding world concern had focused on the Iranian uranium enrichment program, which Iran contended was solely for peaceful purposes but which the United States and other countries suspected was for producing weapons material. The U.N. Security Council had imposed sanctions and passed several resolutions calling on Iran to suspend its enrichment program and other sensitive nuclear activities. Iran finalized the Joint Comprehensive Plan of Action (JCPOA) on July 14, 2015, with the United States and five major European countries to lift the U.N. sanctions in return for specified Iranian actions to preclude nuclear weapons development. President Trump strongly criticized the JCPOA during the 2016 presidential campaign and announced on May 8, 2018, that the Administration would cease implementing the agreement and reimpose sanctions. Other parties to the JCPOA have pledged to continue abiding by it, however. Recent extensions of U.S. peaceful nuclear cooperation agreements with China and South Korea generated controversy but no congressional action to block them. During negotiations on the U.S.-South Korea nuclear cooperation extension, which entered into force November 25, 2015, South Korea had sought advance U.S. consent for spent fuel reprocessing and uranium enrichment. The United States did not provide such consent, on general nonproliferation grounds and because such consent could affect other ongoing issues on the Korean peninsula. The new agreement does, however, establish a bilateral "high level commission" to further consider those issues. The extension of the U.S.-China peaceful nuclear cooperation agreement includes advance consent for reprocessing and enrichment, which raised some controversy, although both countries are internationally recognized nuclear weapons states. The agreement with China entered into force after the mandatory congressional review period ended on July 31, 2015. Japan's longstanding nuclear cooperation agreement with the United States automatically renewed on July 17, 2018, and will remain in force indefinitely unless terminated by either side. The agreement allows Japan to reprocess spent nuclear fuel from its U.S.-designed reactors, separating plutonium and uranium for use in new fuel. A commercial reprocessing plant at Rokkasho is scheduled to be completed in 2021. Some nuclear nonproliferation groups had urged the United States to use the renewal of the U.S.-Japan nuclear cooperation agreement as an opportunity to urge Japan not to begin its reprocessing program. They noted that Japan already has substantial stockpiles of previously separated plutonium that could potentially be used for weapons as well as reactor fuel. Japan approved a new Strategic Energy Plan July 3, 2018, that includes a pledge to reduce Japanese plutonium inventories, reportedly following pressure from the United States and other countries. Recent discussions between the United States and Saudi Arabia toward drafting a peaceful nuclear cooperation agreement have prompted substantial controversy. The U.S. nuclear industry strongly supports an agreement so that it could supply reactors and other nuclear technology to Saudi Arabia. However, nuclear nonproliferation groups want any nuclear cooperation agreement to include a binding commitment from Saudi Arabia to forswear uranium enrichment and spent fuel reprocessing on its territory. Secretary of State Mike Pompeo testified to the Senate Foreign Relations Committee May 24, 2018, that the United States was insisting that Saudi Arabia accept such a commitment as part of any 123 agreement, despite Saudi arguments that the country has a right to enrich and reprocess under international inspections. It has also been proposed that a U.S.-Saudi 123 Agreement be conditioned on Saudi acceptance of the Additional Protocol, which allows strengthened international safeguards on nuclear activities. Requires that peaceful nuclear cooperation agreements, in order to take effect without congressional approval, include a commitment by the cooperating country to not engage in enrichment or reprocessing in its territory. Other requirements for nuclear cooperation would also be added. Introduced March 21, 2018; referred to Committees on Foreign Affairs and Rules. Requires the President to submit a report to the House Committee on Foreign Affairs and the Senate Committee on Foreign Relations on the national security impact of Saudi Arabia obtaining uranium enrichment capability through a commercial sale. Introduced September 25, 2018; referred to Committee on Foreign Affairs. Hearing by the House Committee on Foreign Affairs, May 8, 2018. Examined President Trump's pending decision on withdrawing from the JCPOA and efforts to modify the agreement. Witnesses included former State Department officials and leaders of foreign policy organizations. Video and testimony can be found at https://foreignaffairs.house.gov/hearing/hearing-confronting-the-iranian-challenge . Hearing by the House Committee on Foreign Affairs, Subcommittee on Middle East and North Africa, March 21, 2018. Examined issues related to U.S. discussions with Saudi Arabia toward reaching a peaceful nuclear cooperation agreement. Witnesses included representatives of nuclear nonproliferation organizations and academic institutions. Video, testimony, and hearing transcript available at https://foreignaffairs.house.gov/hearing/subcommittee-hearing-implications-u-s-saudi-arabia-nuclear-cooperation-agreement-middle-east . Hearing by the House Committee on Foreign Affairs, Subcommittee on the Middle East and North Africa, October 25, 2017. Examined President Trump's decision not to certify Iran as in compliance with the JCPOA. Witnesses represented nuclear nonproliferation and foreign affairs organizations. Video, testimony, and background material can be found at https://foreignaffairs.house.gov/hearing/subcommittee-hearing-presidents-iran-decision-next-steps/ . CRS Report R41910, Nuclear Energy Cooperation with Foreign Countries: Issues for Congress , by Paul K. Kerr, Mary Beth D. Nikitin, and Mark Holt CRS Report RS22937, Nuclear Cooperation with Other Countries: A Primer , by Paul K. Kerr and Mary Beth D. Nikitin CRS Report RL33192, U.S.-China Nuclear Cooperation Agreement , by Mark Holt, Mary Beth D. Nikitin, and Paul K. Kerr CRS Report R44942, U.S. Decision to Cease Implementing the Iran Nuclear Agreement , by Kenneth Katzman, Paul K. Kerr, and Valerie Heitshusen CRS In Focus IF10799, Prospects for Enhanced U.S.-Saudi Nuclear Energy Cooperation , by Christopher M. Blanchard and Paul K. Kerr Nuclear Nonproliferation , Government Accountability Office, Key Issues website, https://www.gao.gov/key_issues/nuclear_nonproliferation/issue_summary Nuclear Cooperation Agreements , Nuclear Energy Institute website , https://www.nei.org/advocacy/compete-globally/nuclear-cooperation-agreements . Abstinence or Tolerance: Managing Nuclear Ambitions in Saudi Arabia , Elliott School of International Affairs, George Washington University, Washington Quarterly , Summer 2018, https://twq.elliott.gwu.edu/sites/g/files/zaxdzs2121/f/downloads/TWQ_Summer2018_MillerVolpe.pdf The Case for a Pause in Reprocessing in East Asia: Economic Aspects , Nuclear Threat Initiative, August 9, 2016, http://www.nti.org/analysis/reports/case-pause-reprocessing-east-asiaeconomic-aspects/

The policy debate over the role of nuclear power in the nation's energy mix is rooted in the technology's fundamental characteristics. Nuclear reactors can produce potentially vast amounts of useful energy with relatively low consumption of natural resources and emissions of greenhouse gases and other pollutants. However, facilities that produce nuclear fuel for civilian power reactors can also produce materials for nuclear weapons. In addition, the process of nuclear fission (splitting of atomic nuclei) to generate power produces radioactive material that can remain hazardous for thousands of years and must be contained. How to manage the weapons proliferation and safety risks of nuclear power, or whether the benefits of nuclear power are worth those risks, are issues that have long been debated in Congress. The 98 licensed nuclear power reactors at 59 sites in the United States generate about 20% of the nation's electricity. Two new reactors are currently under construction. About a dozen more are planned, but with no specific construction dates. Whether they will eventually move forward will depend largely on their economic competitiveness with natural gas and renewable energy sources. Throughout the world, 451 reactors are currently in service or operable, and 54 more are under construction, according to the World Nuclear Association. The March 2011 disaster at the Fukushima Dai-ichi nuclear power plant in Japan increased attention to nuclear safety throughout the world. The U.S. Nuclear Regulatory Commission (NRC), which issues and enforces nuclear safety requirements, established a task force to identify lessons from Fukushima applicable to U.S. reactors. The task force's report led to NRC's first Fukushima-related regulatory requirements on March 12, 2012. Several other countries, such as Germany and Japan, eliminated or reduced their planned future reliance on nuclear power after the accident. Highly radioactive spent nuclear fuel that is regularly removed from nuclear power plants is currently stored at plant sites in the United States. Development of a permanent underground repository at Yucca Mountain, NV, was suspended by the Obama Administration. The Trump Administration requested funding for FY2018 and FY2019 to revive the program, but it was not approved by Congress. The House voted to provide Yucca Mountain funding in both years, but the Senate provided no funding, and it was not included in the final bills. The Obama Administration had appointed the Blue Ribbon Commission on America's Nuclear Future to recommend an alternative approach to the Nuclear Waste Policy Act's focus on Yucca Mountain. In response to the commission's recommendations, the Department of Energy issued a waste strategy in January 2013 that called for the selection of new candidate sites for nuclear waste storage and disposal facilities through a "consent-based" process and for a surface storage pilot facility to open by 2021. However, Congress has not enacted legislation for such a strategy, so Yucca Mountain remains the sole authorized candidate site. The level of security that must be provided at nuclear power plants has been a high-profile issue since the 9/11 terrorist attacks on the United States in 2001. Since those attacks, NRC issued a series of orders and regulations that substantially increased nuclear plant security requirements, although industry critics contend that those measures are still insufficient. Encouraging exports of U.S. civilian nuclear products, services, and technology while making sure they are not used for foreign nuclear weapons programs has long been a fundamental goal of U.S. nuclear energy policy. Recent proposals to build nuclear power plants in several countries in the less developed world, including the Middle East, have prompted concerns that international controls may prove inadequate.

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Broadband deployment is increasingly seen as providing a path towards increased regional economic development and, in the long term, creating jobs. According to the 2010 National Broadband Plan, the lack of adequate broadband infrastructure is most pressing in rural America, where the costs of serving large geographical areas, coupled with low population densities, often reduce economic incentives for telecommunications providers to invest in and maintain broadband service. Historically, the federal government has provided assistance to rural telecommunications providers, helping them obtain capital to invest in rural telecommunications infrastructure and to maintain an adequate return on their investment. The National Broadband Plan estimated that $24 billion of further federal investment is necessary to bring all of rural America up to an adequate level of broadband service. Currently, there are two ongoing federal vehicles which direct money to fund broadband in rural areas: the broadband and telecommunications programs at the Rural Utilities Service (RUS) of the U.S. Department of Agriculture and the Universal Service Fund (USF) programs under the Federal Communications Commission (FCC). While both the RUS and USF programs share some of the same goals (e.g., improving broadband availability and adoption in rural areas), the two programs differ in their funding mechanism, scope, and emphasis. The 113 th Congress may assess how best to shape the evolution of both the RUS and USF broadband programs. The statute that authorizes the RUS broadband loan program will likely be amended by the 2013 farm bill. Meanwhile, the FCC is considering significant reforms of the USF, and Congress is currently maintaining an oversight role with respect to those reforms. In the current climate of budget deficit reduction, Congress is examining the different pieces of federal investment in broadband and determining how they can best fit together in order to reach the goal of most efficiently and effectively deploying broadband in rural America. The RUS has a portfolio of telecommunications and broadband programs offering loans, loan guarantees, grants, and loan/grant combinations. As seen in Table 1 , some programs are relatively recent, while others have been operating for over 60 years. Some are specifically and exclusively designed to support broadband infrastructure deployment (e.g., Rural Broadband Loans, Community Connect grants, Broadband Initiatives Program), while others (e.g., Telecommunications Infrastructure Loans) have historically supported infrastructure for telephone voice service, but have now evolved into support for broadband-capable service provided by traditional telephone borrowers. Additionally, other programs (e.g., Distance Learning and Telemedicine, Delta Health Services grants) support specific broadband-based applications. There are several issues and criticisms that typically surface during congressional consideration (whether oversight, funding, or reauthorization) of the RUS telecommunications and broadband programs. The rural nature of an area or community served by grant and loan projects is a key characteristic of RUS telecommunications programs. One of the primary strategic goals of the USDA is to "assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving." While many rural telecommunications providers already have deployed broadband networks, studies, surveys, and data collections continue to show that broadband access, on average, is less adequate in rural areas than it is in suburban or urban communities. The comparatively lower population density of rural areas is likely the major reason why broadband is less deployed than in more highly populated suburban and urban areas. Particularly for wireline broadband technologies—such as cable modem and DSL —the greater the geographical distances among customers, the larger the cost to serve those customers. Thus, there is often less incentive for companies to invest in broadband in rural areas than, for example, in an urban area where there is more demand (more customers with perhaps higher incomes) and less cost to wire the market area. Given the RUS emphasis on "rural" broadband, the issue becomes: what level of "rurality" is necessary for an area to be eligible for RUS broadband grants or loans? Within the RUS telecommunications portfolio, there is no standard definition of "rural," with programs such as the Rural Broadband Access Loan and Loan Guarantee program defining eligible rural areas as populations less than 20,000 (plus areas not in an urbanized area adjacent to a city of not more than 50,000), while the Telecommunications Infrastructure Loan program defines eligible areas as populations of 5,000 or less (extremely rural areas). Among all the RUS telecommunications programs, the different definitions of eligible service areas (which correspond to definitions of rurality) are presented in Table 1 . Shifting definitions of "rural" have generated controversy. For example, during the first round of BIP awards, a separate category called "remote areas" was created, defined as an unserved rural area at least 50 miles from the limits of a non-rural area. For last mile projects, only remote areas were eligible for BIP grants (as opposed to loans or grant/loan combinations). The remote area category was eliminated in the second round, due to criticism from many Members of Congress who argued that the remote rural definition excluded many areas of the country (primarily in the eastern half of the United States). The definition of "rural" has also generated much controversy over the Rural Broadband Loan and Loan Guarantee program, particularly as Congress continues to refine the program through periodic consideration of the farm bill. Over the life of the broadband loan program, the definition of a rural area eligible for the program has been changed three separate times by Congress. Ultimately, the definition of what constitutes a rural community is always a difficult issue for congressional policymakers in determining how to target rural communities for broadband assistance. On the one hand, the narrower the definition the greater the possibility that deserving communities may be excluded. On the other hand, the broader the definition used, the greater the possibility that communities not typically considered "rural" or "underserved" may be eligible for financial assistance. During the 113 th Congress, the 2013 farm bill—which would amend the statute authorizing the rural broadband loan and loan guarantee program—explicitly addresses the rural definition issue. For example, S. 954 , the Senate-passed version of the farm bill (the Agriculture Reform, Food, and Jobs Act of 2013), would adopt a uniform definition of "rural area" for all USDA rural development programs, including the broadband program. Under the Senate bill, a rural area would be defined as any area that is not a city or town with a population greater than 50,000, and that is not an urbanized area contiguous and adjacent to a city or town with a population over 50,000. Because the current definition of a rural area eligible for broadband loans is towns with populations under 20,000, this new definition would increase the number of larger communities eligible for broadband assistance. Because rural and sparsely populated areas typically offer providers less financial incentive to build broadband networks, it is generally the case that the more rural the area, the fewer the likely number of existing broadband providers. By contrast, urban and suburban areas are more likely to have a greater number of existing broadband providers offering service. One of the ongoing concerns expressed by some Members of Congress is the extent to which RUS grants and loans have been awarded to projects serving areas that already have existing providers offering broadband service. The issue of providing federal funding to areas and communities with existing providers is controversial, and has been previously raised with respect to the RUS Rural Broadband Access Loan and Loan Guarantee Program and the Broadband Initiatives Program. Broadband awards to areas with preexisting service—that is, areas where existing companies already provide some level of broadband—have sparked controversy because award recipients might compete to some extent with other companies already providing broadband service. On the one hand, one could argue that the federal government should not be subsidizing competitors for broadband service, particularly in sparsely populated rural markets which may be able only to support one provider. Furthermore, providing grants and loans for projects serving communities with preexisting broadband service may divert assistance from unserved areas that are most in need. On the other hand, many suburban and urban areas currently receive the benefits of competition among broadband providers—competition which can potentially drive down prices while improving service and performance. It is therefore appropriate, others have argued, that rural areas also receive the benefits of competition, which in some areas may not be possible without federal financial assistance. It is also argued that it may not be economically feasible for applicants to serve sparsely populated unserved communities unless they are permitted to also serve more lucrative areas which may already have existing providers. The existing provider issue was examined during congressional consideration of the 2012 farm bill. The 2008 farm bill (which is the current statute in force) set specific restrictions on the broadband loan eligibility of project areas with existing providers. However, RUS did not issue a rule reflecting those changes until March 2011. Organizations representing the cable industry have argued that existing provider restrictions should be strengthened to focus the loan program more exclusively on unserved areas with no existing providers. By contrast, organizations representing rural telecommunications providers (primarily the traditional rural telephone companies) counter that no changes should be made to the existing provider restrictions, given that RUS has had limited opportunity to award new loans under the new 2008 farm bill rules. In the 2013 farm bill, S. 954 , as passed by the Senate, would change the existing provider restrictions currently in statute. In the House, a hearing held on April 25, 2012, by the House Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, Committee on Agriculture, debated whether or not the rural broadband loan program should be modified to prohibit loans to projects serving areas with incumbent broadband service providers. The ARRA broadband stimulus program—which is no longer offering awards—offered grants, loans, and grant/loan combinations. The Rural Broadband Access Loan and Loan Guarantee Program does not offer grants. Not surprisingly, those seeking federal broadband assistance typically prefer grants, given that loans must be paid back with interest. On the other hand, from a federal budgetary perspective, loans are more attractive than grants, not only because loans are paid back, but because loan programs are subsidized by a much smaller appropriation (called a loan subsidy). Thus, for example, the Rural Broadband Access Loan and Loan Guarantee Program was appropriated a loan subsidy of $6 million in FY2013, which is estimated to support a loan level of approximately $64 million. The Telecommunications Infrastructure Loan program, which has been issuing loans since 1949, is funded at a loan level of $690 million, yet typically requires no loan subsidy or appropriation. The issue of loans versus grants became part of the debate over the farm bill and the reauthorization of the Rural Broadband Access Loan and Loan Guarantee Program. Senate-passed S. 954 would add a new grant program to the rural broadband program, and would raise the authorization level from $25 million to $50 million per year. The Senate bill does not specify how much of the authorization would be targeted to grants versus loans. Given that financing loans costs the federal government significantly less than financing grants, the proportion of grants to loans would likely be of interest to the Appropriations Committees, which remain under pressure to reduce overall federal discretionary spending. In recent years, the Appropriations Committees in the House and Senate have approved lower levels for the RUS broadband loan program than the authorization level. Since its creation in 1934 the Federal Communications Commission (FCC, or Commission) has been tasked with "mak[ing] available, so far as possible, to all the people of the United States ... a rapid, efficient, Nation-wide, and world-wide wire and radio communications service with adequate facilities at reasonable charges." This mandate led to the development of what has come to be known as the universal service concept. The universal service concept, as originally designed, called for the establishment of policies to ensure that telecommunications services are available to all Americans, including those in rural, insular, and high cost areas, by ensuring that rates remain affordable. During the 20 th century, government and industry efforts to expand telephone service led to the development of a complex system of cross subsidies to expand the network and address universal service goals. For example, profits from more densely populated, lower cost urbanized areas helped to subsidize wiring and operation costs for the less populous, higher cost rural areas. With the advent of competition and the breakup of the Bell System, the complex system of cross subsidies that evolved to support universal service goals was no longer tenable. The Telecommunications Act of 1996 ( P.L. 104-104 ; 47 U.S.C., 1996 act) codified the long-standing commitment by U.S. policymakers to ensure universal service in the provision of telecommunications services (§254), and the FCC established a universal service fund (USF or Fund) to meet the objectives and principles contained in the act. The 1996 act enumerated specific universal service principles including that "access to advanced telecommunications and information services should be provided to all regions of the Nation" (§254 [b] [2]) and "consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas" (§254 [b] [3]). The concept of universal service was also expanded to include, among other principles, that elementary and secondary schools and classrooms, libraries, and rural health care providers have access to telecommunications services for specific purposes at discounted rates (§254[b][6] and 254[h]). One of the major policy debates surrounding universal service in the last decade was whether access to advanced telecommunications services (i.e., broadband) should be incorporated into universal service objectives. With the growing importance and acceptance of broadband and Internet access, gaps in access to such services, particularly in rural areas, generated concern. A growing number of policymakers felt that the USF should play a role in helping to alleviate this availability gap. They pointed to the provisions, cited above, contained in the Universal Service section of the 1996 act to support their position. However, with the exception of funding for schools and libraries and rural health care providers, the USF was not designed to directly support broadband. Provisions contained in the American Recovery and Reinvestment Act of 2009 (ARRA) called for the FCC to develop, and submit to Congress, a national broadband plan (NBP) to ensure that every American has "access to broadband capability." This plan, Connecting America: The National Broadband Plan , submitted to Congress on March 16, 2010, called for the USF to play a major role in achieving this goal. The federal Universal Service Fund (USF or Fund) was established in 1997 to meet the specific objectives and principles contained in the 1996 act. The USF is administered by the Universal Service Administrative Company (USAC), an independent not-for-profit organization, under the direction of the FCC. The FCC, through the USF, provides universal service support through a number of direct mechanisms that target both providers of and subscribers to telecommunications services. The USF was designed to provide subsidies for voice telecommunications services for eligible high-cost (typically rural or insular) telecommunications carriers (High Cost Program) and economically needy individuals (Low Income Program); access for telecommunications services and broadband access for schools and libraries (Schools and Libraries Program); and access to telecommunications, advanced telecommunications, and information services for public and non-profit rural health care providers (Rural Health Care Program). The USF disbursed $8.7 billion in 2012 with all 50 states, the District of Columbia, and all territories receiving some benefit. The FCC, in an October 2011 decision, adopted an order (USF Order, or Order) that calls for the USF to be transformed, in stages, over a multi-year period, from a mechanism to support voice telephone service to one that supports the deployment, adoption, and utilization of both fixed and mobile broadband. More specifically, the High Cost Program is to be phased out and a new fund, the Connect America Fund (CAF), which includes the targeted Mobility Fund and new Remote Areas Fund, is to be created to replace it; and the Low Income, Schools and Libraries, and Rural Health Care programs are to be modified and given wider responsibilities. High-cost support, provided through the High Cost Program, is an example of provider-targeted support. Under the High Cost Program, eligible telecommunications carriers, usually those serving rural, insular, and other high-cost areas, are able to obtain funds to help offset the higher-than-average costs of providing telephone service. This mechanism, which has always been the largest USF program based on disbursements, has been particularly important to rural America, where the lack of subscriber density leads to significantly higher costs. The goal of the USF Order is to restructure and transition the High Cost Program from one that primarily supports voice communications to one that supports a broadband platform that enables multiple applications, including voice. Although some carriers that received high-cost funding over the years have used high-cost funds to deploy broadband capable infrastructure, there was no requirement that recipients of high-cost funding provide any households in their service areas with broadband. The Order requires that the High Cost Program be phased out and replaced in stages, to directly support high-capacity broadband networks (fixed and mobile) through a newly created Connect America Fund which includes the targeted components Mobility Fund and Remote Areas Fund. The "identical support rule" is phased out. For the first time universal service support provided to carriers serving high-cost areas (which is defined to include all current high-cost support mechanisms as well as the Connect America Fund) is subject to a budget; the budget is frozen at 2011 levels at $4.5 billion (plus administrative costs) per year for the next six years (2012-2017), subject to FCC review. The Order created the Connect America Fund to support the provision of affordable voice and broadband services, both fixed and mobile, of at least 4 Mbps actual download speed and 1 Mbps actual upload speed. The CAF will eventually replace all the existing support mechanisms in the High Cost Program for eligible carriers. The path to this transition differs depending on whether a provider is a price cap carrier (i.e., a company whose interstate rates are subject to the price cap form of regulation) or a rate-of-return carrier (a company whose interstate rates are subject to rate-of-return regulation). Price Cap Carriers . Price cap incumbent local exchange carriers, which tend to be the large and mid-sized carriers, will transition to the CAF in two phases. Under Phase I, which commenced on January 1, 2012, legacy high-cost funding is frozen at December 31, 2011, levels (estimated at no more than $ 1.8 billion annually) for price cap carriers and is required to be used to achieve universal availability of both voice and broadband. Frozen high-cost support will equal the amount of support each carrier received in 2011 in a given study area (i.e., the defined geographic service area of an incumbent local exchange carrier's telephone operations). An additional $300 million in "incremental support" to stimulate broadband deployment in unserved areas is also established. This Phase I incremental support is available to those price-cap carriers that choose to deploy fixed broadband to areas not currently served, or targeted to be served, by a fixed broadband provider within their service territory. Access to Phase I incremental support is dependent on meeting specific criteria and build-out requirements, and is offered to jump-start the deployment of broadband to unserved areas within price-cap carrier service areas. Any price-cap carrier electing to receive Phase I incremental support will receive $775 in incremental support for each unserved location it provides broadband with actual speeds of at least 4 Mbps actual download speed and 1 Mbps of actual upload speed. Once the funds are accepted, carriers must meet deployment schedules to no fewer than two-thirds of the required locations within two years and complete all deployments within three years. Of the $300 million made available for Phase I incremental support, only $115 million was taken with $185 million remaining unclaimed. A second round of Phase I support will be offered in 2013. The FCC, in May 2013, released a Report and Order detailing the rules for the second round of Phase I incremental support. Provisions call for a disbursement of $485 million ($300 million plus the unclaimed $185 million from the previous round of incremental support) and expands eligibility to cover areas that are underserved as well as unserved. Support for unserved areas remains at $775 per location and support for underserved areas is set at $550 per location. The FCC anticipates that this will be the last "incremental support" round before the transition to Phase II Price Cap annual support and any unused funds will be given to the Phase II Fund. Under CAF Phase II Price Cap annual funds (estimated at no more than $1.8 billion annually) will be distributed through an FCC-developed cost model and through competitive bidding (e.g., reverse auctions) for a period ending year-end 2017. CAF support will be available only in areas where a federal subsidy is needed to ensure the build-out and continued operation of broadband networks. By the end of the third year, carriers that accept support must offer broadband speeds of at least 4 Mbps download speed and 1Mbps of upload speed. In addition, usage capacity must be reasonably comparable to urban residential terrestrial fixed broadband to at least 85% of their high-cost locations and to all supported locations by the end of the fifth year (2017). The incumbent carrier is given the right of first refusal, until the end-of- 2017, to receive the model-derived support, after which a shift to competitive bidding will be implemented. If an incumbent carrier declines Phase II funding the FCC will implement a competitive bidding process. CAF Phase II price cap is not expected to be implemented until sometime in 2014. Rate-of-Return Carriers . Rate-of-return carriers, which tend to be smaller carriers that solely provide service in rural areas, will continue to receive support, with some modifications, from current support mechanisms pending full transition to the CAF (through 2017). During this transition, rate-of-return carriers' legacy high-cost support is frozen at December 31, 2011, levels (estimated at no more than $2 billion annually). Unlike in the case of price-cap carriers, no additional "incremental support" is provided specifically targeted for broadband deployment in unserved areas. Modifications are made to the operations of the High Cost Program, as they impact rate-of-return carriers, during this transition period to improve "the efficiency and effectiveness" of USF support. For example, the Order phases out support over three years in study areas that overlap completely with an unsubsidized fixed, terrestrial broadband/voice competitor, and gradually phases down over three years (commencing July 1, 2012) per-line support to a cap of $250/per month ($3,000 annually). Rate-of-return carriers that continue to receive legacy support or begin accepting CAF support are given more flexibility than price-cap carriers when deploying broadband. Rate-of-return carriers are required to offer actual broadband service of at least 4 Mbps download speed and 1 Mbps of upload speed, with usage capacity reasonably comparable to urban residential terrestrial fixed broadband, but only upon their customers ' reasonable request and within a reasonable amount of time . Furthermore, rate-of-return carriers are not, at this time, subject to specific build-out requirements or increased speed requirements and will not necessarily be required to build out and serve the most expensive locations within their service territories. Many of the details and mechanics of how the transition of rate-of-return carriers from legacy high-cost support to the CAF have yet to be determined. These details will be announced pending the completion of an extensive Further Notice of Proposed Rulemaking issued as part of the USF Order. The CAF Mobility Fund (MF) is a new fund created within the Connect America Fund to provide targeted funding to wireless providers, to support the deployment of 4G (fourth generation) wireless networks. Recipients of funds will be subject to public interest obligations. Phase I provides $300 million in one-time support to provide wireless broadband in unserved areas (excluding areas already targeted for support) and was awarded through a reverse auction. The auction (auction 901), which was held on September 27, 2012, resulted in awards to 33 bidders with new deployment in 31 states and one territory covering 83,000 road miles. Winners will be required to deploy 4G service within three years, or 3G service within two years and make their networks available to others for roaming. The FCC is currently in the process of authorizing winning applications. A separate and complementary one-time Tribal Mobility Fund Phase I was also established to award up to $50 million in additional funds to Tribal Lands. The Tribal Mobility Fund Phase I auction (number 902) is anticipated to be held in October 2013 and will be used to support deployment of mobile voice and broadband to tribal areas lacking 3G or better service. Phase II of the Mobility Fund will provide up to $500 million per year in ongoing support to expand and sustain mobile voice and broadband services in areas where service would not be available absent federal support. Funding of $100 million per year, within the $500 million budget, will be set aside for ongoing support for Tribal Lands. The FCC sought further comment on specifics relating to the implementation of the Phase II of the Mobility Fund with comment and reply comment dates now closed. It is anticipated that the auction will be held in the third quarter of 2013 with support to commence in 2014. The Order creates a new CAF Remote Areas Fund to provide support in the most remote high-cost areas representing less than 1% of households. The budget for this Fund is set at a minimum of $100 million per year. While open to all technologies, it is anticipated that alternative technology platforms, such as satellite and unlicensed wireless services, will be among the major providers participating in this Fund. The FCC sought additional comment related to its implementation with operation anticipated in 2014. The identical support rule requires that competitive eligible telecommunications carriers (CETCs), typically (but not exclusively) wireless carriers, be given the same per-line level of high-cost support as incumbent local telecommunications carriers, typically wireline carriers, serving the same area. This rule, although not designed specifically to support mobility, in 2010 distributed an estimated $1.2 billion of high-cost support, largely to wireless carriers providing mobile services in areas that may already have such services. New support mechanisms, adopted in the USF Order (CAF Mobility Fund), are designed specifically for mobility to better target unserved areas and, according to the FCC, make the identical support rule no longer necessary or in the public interest. Therefore, effective January 1, 2012, the rule was eliminated. For those carriers currently receiving such support, funding levels are frozen at year-end 2011 levels (or an amount equal to $3,000 times the number of lines reported as of year-end 2011, whichever is lower) for six months and then phased out. This phase-out will occur, with some limited exceptions, in 20% yearly intervals over a five-year period commencing on July 1, 2012; all identical cost support will be eliminated as of July 1, 2016. Wireless carriers will have access to support from the Mobility Fund as well as this phased-down legacy support. The phase-down of identical support funding will stop if the Mobility Fund Phase II and Mobility Fund Phase II for Tribal Lands are not operational by June 30, 2014. The Order establishes a waiver process to be used by any carrier that can clearly demonstrate that, absent exemption from some or all of the reforms, its funding level would put consumers at risk of losing voice service, where there is no terrestrial alternative and in cases where it can be demonstrated that "consumers ... face a significant risk of losing access to a broadband-capable network that provides both voice as well broadband, at reasonably comparable rates, in areas where there are no alternative providers of voice or broadband." Consideration will also be given to whether specific reforms would result in default on existing loans and/or insolvency. This process entails the provision of detailed financial and market-specific data submitted for a rigorous case-by-case review. Waivers are not anticipated to be granted routinely. The Order also provides for prioritized review of waiver requests filed by providers serving Tribal Lands and insular areas (e.g., Alaska, island territories), and requires that review of such petitions be completed within 45 days. In the mid-1980s, FCC universal service policies were expanded to target low-income subscribers. Two income-based programs, Lifeline and Link Up, were established to assist economically needy individuals. The Link Up program, established in 1987, assists eligible low-income subscribers to pay the costs associated with the initiation of telephone service, and the Lifeline program, established in 1984, assists eligible low-income subscribers to pay the recurring monthly service charges incurred by telephone subscribers. Discounts are eligible for one connection, either wired or wireless, per household. The expansion of the USF to directly target low-income individuals is of particular significance to those in rural areas. According to the United States Department of Agriculture (USDA), the nonmetro poverty rate was 17.0 % in 2011 and has remained consistently higher than the metro poverty rate over time. An FCC-conducted broadband consumer survey found that 36% of non-adopters of broadband cited a financial reason as the main reason they do not have broadband service at home. To address this barrier, the FCC adopted an order on January 31, 2012, to modify the goals and operations of the Low Income Program. The Link Up program is eliminated on non-Tribal Lands, but the role of the Lifeline Program is expanded to increase broadband adoption levels for low-income households; a $9.25 flat per-line monthly reimbursement rate is established on an interim basis; and safeguards to combat waste, fraud, and abuse are also established. Actions pertinent to broadband include those which modernize the Lifeline Program as a vehicle to ensure the availability of broadband for all low-income Americans. This is to be achieved by allowing Lifeline support for bundled service plans that combine voice and broadband and establishing a Broadband Adoption Pilot Program to explore how to best use the Lifeline Program to increase broadband adoption among Lifeline eligible subscribers. In a December 19, 2012, decision the FCC selected 14 projects to participate in the Lifeline pilot program. The projects cover rural, suburban, and urban areas in 21 states and Puerto Rico. The FCC authorized approximately $13.8 million in funding, which comes from savings resulting from Low Income Program reforms. The Pilot Program will run for 18 months, beginning on February 1, 2013. Under universal service provisions contained in the 1996 act, elementary and secondary schools and classrooms, and libraries, are designated as beneficiaries of universal service discounts. Universal service principles detailed in Section 254(b)(6) state that "Elementary and secondary schools and classrooms ... and libraries should have access to advanced telecommunications services." The act further requires in Section 254(h)(1)(B) that services within the definition of universal service be provided to elementary and secondary schools and libraries for education purposes at discounts, that is at "rates less than the amounts charged for similar services to other parties." The FCC established the Schools and Libraries Division within the Universal Service Administrative Company (USAC) to administer the schools and libraries or "E (education)-Rate" program to comply with these provisions. The E-Rate Program supports connectivity, and funding is available under four categories of services: telecommunications and dedicated services; internal connections (e.g., wiring, routers, and servers); Internet access; and basic maintenance of internal connections, with the first category receiving funding priority. The applicant is responsible for providing additional resources such as end-user equipment (e.g., computers, telephones), software, and training. Under this program, which became effective January 1, 1998, eligible schools and libraries receive discounts ranging from 20% to 90% for eligible services depending on the poverty level of the school's (or school district's) population and its location in a high-cost telecommunications area (urban/rural status). Eligible schools, school districts, and libraries may apply on an individual or a consortium basis. The FCC established a yearly ceiling, or cap, of $2.25 billion, adjusted for inflation prospectively, beginning with funding year 2010, for this program. Since its inception this program has been over-subscribed, leaving requests by otherwise qualified applicants unfulfilled. Areas that do not have ready access to broadband are likely to depend on anchor institutions, such as schools and libraries, to meet growing broadband needs. The FCC has acknowledged the importance of anchor institutions in achieving broadband access goals, and has taken steps to upgrade the E-Rate Program by, among other actions, permitting schools to allow community use of E-Rate funded services outside of school hours; supporting eligible services to the residential portion of schools that serve students in special circumstances (e.g., schools on tribal lands); and committing $9 million to a pilot program, "Learning On-The-Go," to support off-campus connectivity in 20 schools and libraries, for K-12 students and library patrons, for portable (wireless) learning devices outside of regular school or library hours. Section 254(h) of the 1996 act requires that public and non-profit rural health care providers have access to telecommunications services necessary for the provision of health care services at rates comparable to those paid for similar services in urban areas. Subsection 254(h)(1) further specifies that "to the extent technically feasible and economically reasonable," health care providers should have access to advanced telecommunications and information services. The FCC established the Rural Health Care Division (RHCD) within the USAC to administer the universal support program to comply with these provisions. Under FCC-established rules only public or non-profit health care providers are eligible to receive funding. Eligible health care providers, with the exception of those requesting only access to the Internet, must also be located in a rural area. Like the Schools and Libraries program, this support program went into effect on January 1, 1998, and a funding ceiling, or cap, was established, in this case at $400 million annually. The primary use of the funding is to provide reduced rates for telecommunications and information services (e.g., transmission of data, images, or interactive video) necessary for the provision of health care to either qualified individual health care providers or consortia. Health care providers can use funding to save on service they already have, to upgrade current services, or to install new services. Equipment charges are not eligible for support. The telecommunications program was established in 1997 to ensure that rural health care providers pay no more than their urban counterparts for their telecommunications needs when providing health care services. The Internet access program, which was established in 2003, provides a 50% discount on the cost of monthly Internet access in states that are entirely rural and a 25% discount for all other rural health care providers. Only the monthly charge for access is eligible for support. These two programs are collectively known as the "Primary Program." The FCC, in 2007, established a "Rural Health Care Pilot Program" to help public and non-profit health care providers build state- and region-wide broadband networks dedicated to the provision of health care services. The Pilot Program funds up to 85% of the eligible costs of broadband infrastructure deployment of telehealth networks that connect rural and urban health care providers within a state or region. The Pilot is closed to new projects and participants will transition to the newly created Healthcare Connect Fund. The Healthcare Connect Fund, which was created by the FCC in a December 12, 2012, order, was established to expand access to broadband, particularly in rural areas, for eligible public or not-for-profit health care providers. The Healthcare Connect Fund, will absorb the Internet Access Program (which is currently part of the Primary Program), and replace the Rural Health Care Pilot Program with a permanent program. The Healthcare Connect Fund will encourage consortia between smaller rural health care providers and urban medical centers, but consortia must remain majority rural. The Fund will provide a 65% discount on broadband services, equipment, and connections with health care providers required to contribute the balance (35%). Upfront payments for the Healthcare Connect Fund is $150 million annually. It is anticipated that the FCC will begin accepting applications in late summer 2013. The FCC also established, as part of the Healthcare Connect Fund, a Skilled Nursing Facilities Pilot Program to assess how to support broadband connections for skilled nursing facilities. The pilot, which is scheduled for a 2014 implementation, will give preference to facilities in rural areas and will receive funding of up to $50 million total over a three-year period. Table 2 , below, provides a summary of the restructured USF program. The decision by the FCC to incorporate broadband and mobility mandates into the universal service concept, and the subsequent restructuring of the USF to accommodate this decision, will have a major impact on consumers and providers of telecommunications and broadband services. As the United States moves towards this transition, numerous policy issues and concerns have surfaced. Included among the issues confronting policy makers are how to define success; who should pay to support this mandate; how the nation should address the rural/rural divide; and how the nation should ensure that these changes do not negatively impact the financial health of, in particular, small, rural carriers that are significantly dependent on USF subsidies. The commitment made under USF reform to ensure universal availability of advanced broadband, at rates that are reasonably comparable in all regions of the nation, is a major undertaking. How policy makers determine if that goal has been successfully met, however, will depend, to a large part, on how success is defined. Most consider the universal service mandate to provide voice service to have been met, but the United States has never reached a 100% penetration rate. According to the FCC, as of July 2011 (the most recent published data available), the telephone subscribership penetration rate in the United States was 95.6%, and rates vary based on characteristics such as location, age, and income. For example, penetration rates among states ranged from a low of 91.4% to a high of 98.5%; households headed by a person under 25 years of age had a penetration rate of 93.8% compared with at least 95.9% for those headed by a person over 55; penetration rates for households in income categories below $20,000 were at, or below, 94.7%, while the rate in households in income categories over $75,000 was at least 98.9%. When it comes to broadband deployment, is anything under 100% an acceptable goal and, if so, what would the appropriate rate be? Even if at some point in time broadband is made available in all areas of the country, the question of access versus adoption needs to be considered. According to the FCC's NBP, broadband is available in 95% of the nation but adoption rates are about 65%. This significant gap is explained by three factors: cost, digital literacy barriers, and a perceived lack of relevance. The USF Order has attempted to address this issue through reforms including those to the Low Income Program, but the details of how this will be addressed are yet to be fully resolved. Additional issues that policymakers may wish to monitor include those related to performance metrics such as speed, capacity, and latency. Although the USF Order provides requirements for such metrics, these needs will continue to evolve. Just as voice access standards evolved from, for example, party line to single line service, society's expectations with regard to broadband will also evolve. Policymakers will face the task of assessing what the standard for access will be in terms of performance metrics. What may be considered an acceptable level of service today may be considered inadequate for future needs. The 1996 act requires that every telecommunications carrier that provides interstate telecommunications services be responsible for universal service support (§254[d]) and that such charges be made explicit (§254[e]). Therefore, the USF receives no federal monies but is funded by mandatory contributions from telecommunications carriers providing interstate service. These contributions are based on a percentage of the interstate and international telecommunications end-user revenues of telecommunications carriers and are called the contribution factor. This contribution factor has grown significantly since its inception from approximately 5.5% in 1998 to an all-time high of 17.9% in the first quarter of 2012; the factor for the first quarter of 2013 is 16.1 %. Increases in demand for, and expansion of services covered by, the USF, as well as technological change and decreases in the interstate and international revenue base, have all contributed to this upward trend. The FCC's decision to include broadband and mobility in the universal service definition has further highlighted the need to address how the funding mechanism should be modified to support such a mandate. At issue is the uncertainty and costs associated with mandating nationwide deployment of broadband as a universal service policy goal, and the impact that such a mandate will have on an already strained funding mechanism. Some have expressed concern that given the pressures currently facing the USF, and their impact on the contribution factor, a restructuring of the funding mechanism should have been addressed prior to, or at least simultaneously with, the expansion of the USF definition. Questions regarding who should contribute, how the mechanism to assess such contributions should be designed, and whether the contribution base should be expanded, are among the issues to be considered. The FCC, on April 27, 2012, adopted a further notice of proposed rulemaking seeking comment on comprehensive reforms to address the USF funding issue. Rural America is subject to a "rural-rural divide" when it comes to the presence of broadband infrastructure. Some parts of rural America have sophisticated high-level broadband access while other parts have little to no broadband access. Disparity in access to broadband among rural areas is known as the "rural-rural divide." Price-cap companies, which are largely classified as non-rural carriers, serve both urban and rural areas and in their rural service areas face issues, such as remoteness and lack of density resulting in high costs, more commonly associated with rural carriers. According to the FCC, more than 83% of the approximately 18 million Americans that lack access to residential fixed broadband at or above the FCC's broadband speed benchmark live in areas served by price-cap carriers. In other rural areas, often served by rate-of-return carriers, broadband is being deployed, often with the support of a combination of RUS loans and USF support. To address this disparity the FCC, in its USF Order, established a $300 million incremental support component in the Phase I CAF Fund for areas lacking broadband infrastructure, solely for the use of price-cap carriers. Concern has been expressed that providing for a CAF Phase I Fund for broadband deployment, solely for the use of price-cap carriers, disadvantages rural areas lacking broadband infrastructure that are served by the smaller, rural rate-of-return carriers. Some question why access to such funding should be limited to price-cap carriers when other areas of the nation are facing the same, or even more challenging, conditions to bring broadband to areas lacking access. If the ultimate goal is to bring broadband to all unserved areas, they ask, why should this funding be based on carrier classification rather than need? They also point to the fact that $185 million of the $300 million total for 2012 went unclaimed to further support their position that this support should be opened to all providers. Smaller, rural, rate-of-return carriers are particularly dependent on USF subsidies, and have expressed concern that the reforms that the USF Order will implement could place them under financial hardship. Many RUS telecommunications and broadband borrowers (loan recipients) receive high cost USF subsidies. In many cases, the subsidy received from USF helps provide the revenue necessary to keep the loan viable. The Telecommunications Infrastructure Loan program is highly dependent on high-cost USF revenues, with 99% (476 out of 480 borrowers) receiving interstate high-cost USF support. This is not surprising, given that the RUS Telecommunications Loans are available only to the most rural and high-cost areas (towns with populations less than 5,000). Regarding broadband loans, 60% of BIP (stimulus) borrowers draw from state or interstate USF support mechanisms, while 10% of farm bill (Rural Broadband Access Loan and Loan Guarantee Program) broadband borrowers receive interstate high-cost USF support. Thus, to the extent that USF may be reformed, this could have an impact on the viability of RUS telecommunications and broadband loans, and ultimately the overall financial health of the carrier. Although the FCC included a waiver process in its USF Order for those carriers that felt they would be subject to significant economic stress, due to the reforms, many smaller carriers assert that the waiver process is too burdensome and difficult and that the requirements for qualifying for relief are too restrictive. The RUS broadband programs and the FCC's Universal Service Fund (USF) share a common goal: increasing broadband infrastructure deployment and applications in rural areas. However, the way that each program addresses these goals is markedly different. RUS grants and loans are used as up-front capital to invest in broadband infrastructure, whereas the USF provides ongoing subsidies to keep the operation of telecommunications—and most recently broadband networks in high-cost areas—economically viable for providers. These subsidies, in turn, enable providers to invest in upgrading their telephone networks to make them broadband-capable. Aside from the Distance Learning and Telemedicine (DLT) program, RUS telecommunications programs address broadband infrastructure deployment, which is intended to increase the availability of broadband in rural America. The USF, while also addressing broadband availability (through the High Cost Program and the Connect America Fund), also addresses end-user broadband adoption through the Low Income Program. Regarding the health and education applications, the principal difference between RUS programs (Distance Learning and Telemedicine) and the USF programs (Schools and Libraries Program, Rural Health Care Program) is that RUS funds end-user equipment, while USF funds connectivity. DLT grants serve as initial capital assets for equipment, instructional programming, technical assistance, or instruction for using eligible equipment (e.g., video conferencing equipment, computers) that operate via telecommunications to rural end-users of telemedicine and distance learning. DLT does not fund the telecommunications that connects that equipment. By contrast, the USF Schools and Libraries Program supports the conduit or pipeline for communications using telecommunications services and/or the Internet, and includes four categories of service: telecommunications services, Internet access, internal connections, and basic maintenance of internal connections. Similarly, the Rural Health Care Program provides discounts for rural non-profit health care providers by providing connectivity. Finally, the RUS programs are funded through annual appropriations and are subject to the annual congressional budget process. By contrast, USF is not funded through annual appropriations, but is funded by mandatory contributions from telecommunications carriers that provide interstate service. Congress is seeking ways to best leverage federal programs to ensure that the goals of the National Broadband Plan—including universal broadband service by 2020—are met to the greatest extent possible. With the September 30, 2010, conclusion of the American Recovery and Reinvestment Act ( P.L. 111-5 ) broadband grant and loan awards, the RUS broadband programs and the USF programs remain the only ongoing federal vehicles to provide financial assistance for rural broadband deployment. With both programs currently at a pivotal point, an issue for the 113 th Congress is how best to shape those programs as they go forward. The statute authorizing the Rural Broadband Loan and Loan Guarantee—Section 601 of the Rural Electrification Act of 1936—was significantly modified in the 2008 farm bill, and is being addressed once more in the 2013 farm bill. Typically a new farm bill is developed every five years, principally by the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry. The Appropriations Committees in the House and Senate both have a major role to play as well, as each considers annual appropriations for the RUS broadband programs through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. Meanwhile, the USF is undergoing a major and unprecedented transition through a series of reforms being implemented by the FCC. Congress has largely adopted an oversight role and a "wait and see" posture with respect to the FCC's USF reforms. While numerous Members have written letters to the FCC urging various modifications in the reform package, there was no comprehensive legislation introduced into the 112 th Congress that addressed the FCC's USF reforms. The House Energy and Commerce Committee, the Senate Commerce, Science, and Transportation Committee, and the House Committee on Natural Resources continue to assess the impact of the reforms, and the FCC's progress in their implementation. To the extent that various constituencies and interest groups (whether it be small rate-of-return carriers, large price-cap carriers, competitive providers, state utility regulators, or broadband providers and consumers) feel they are disadvantaged by the reforms, and to the extent that programmatic inefficiencies or waste, fraud, and abuse come to light (as they have in the past through GAO reports, for example), Congress always has the prerogative in the future of formulating and considering legislation that could modify those reforms by amending the 1934 Communications Act. Given that the RUS and USF broadband programs share the goal of deploying broadband to rural America, Congress may also wish to assess how these two programs can best fit together. Are they effectively targeted towards providing broadband to the most unserved areas of the nation, while at the same time minimizing adverse impacts on private incumbent providers? Are they the most cost-effective way for Congress to fund rural broadband development? To what extent are the two programs complementary and to what extent do the two programs overlap? And finally, how will changes made to the USF program affect the viability of broadband loans made under the RUS programs?

Since the initial deployment of broadband in the late 1990s, Congress has viewed broadband infrastructure deployment as a means towards improving regional economic development, and in the long term, to create jobs. According to the National Broadband Plan, the lack of adequate broadband infrastructure is most pressing in rural America, where the costs of serving large geographical areas, coupled with low population densities, often reduce economic incentives for telecommunications providers to invest in and maintain broadband infrastructure and service. Historically, the federal government has provided financial assistance to give telecommunications providers the capital to invest in rural telecommunications infrastructure and to maintain an adequate return on their investment. Currently, there are two ongoing federal vehicles which direct money to fund broadband in rural areas: the broadband and telecommunications programs at the Rural Utilities Service (RUS) of the U.S. Department of Agriculture, and the Universal Service Fund (USF) programs under the Federal Communications Commission (FCC). While both the RUS and USF programs share some of the same goals (e.g., improving broadband availability and adoption in rural areas), the two programs are different with respect to their funding mechanism, scope, and emphasis. For example, RUS grants and loans are used as up-front capital to invest in broadband infrastructure, while the USF provides ongoing subsidies to keep the operation of telecommunications and broadband networks in high cost areas economically viable for providers. Another key difference is that the RUS programs are funded through annual appropriations, while USF is funded through mandatory contributions from telecommunications carriers that provide interstate service, and is not subject to the annual congressional budget process. Both programs are at a pivotal point in the 113th Congress. The statute authorizing the Rural Broadband Loan and Loan Guarantee program was significantly modified in the 2008 farm bill, and is being addressed once more in the 2013 farm bill. Meanwhile, the USF is undergoing a major and unprecedented transition through a series of reforms being developed by the FCC, and Congress has adopted an oversight role with respect to those reforms. In shaping and monitoring the future evolution of these programs, Congress is assessing how best to leverage these programs to ensure that the goals of the National Broadband Plan—including universal broadband service by 2020—are met to the greatest extent possible.

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In the U.S. Department of Justice's National Drug Threat Assessment 2009 , Mexican drug trafficking organizations (DTOs) were identified as the greatest organized crime and drug trafficking threat to the United States worldwide. With increased U.S. efforts to interdict narcotic smugglers in the Caribbean and Florida in the late 1980s and 1990s, the Colombian drug cartels began subcontracting with Mexican DTOs to smuggle cocaine into the United States across the Southwest border. By the late 1990s, Mexican DTOs had pushed aside the Colombians and gained greater control and market share of cocaine trafficking into the United States. Today, Mexico is a major supplier to U.S. markets of heroin, methamphetamine, and marijuana and the major transit country for cocaine smuggled into the United States. The Department of State estimates that as much as 90% of the cocaine entering the United States now transits through Mexico. Since taking office in December 2006, Mexican President Felipe Calderón has made combating drug cartels and drug violence a top priority of his administration. President Calderón has deployed some Mexican army contingents and federal police to cartel-controlled areas throughout Mexico to reestablish government control. In response, drug cartel enforcers reportedly are buying semiautomatic versions of AK-47 and AR-15 style assault rifles, and other military-style firearms, including .50 caliber sniper rifles in the United States. With those rifles and other armaments, the cartels are achieving parity in terms of firepower with the Mexican army and law enforcement. President Calderón has called upon the United States to increase its efforts to suppress the flow of U.S. firearms into Mexico. According to the U.S. Department of Justice, drug-related murders in Mexico doubled from 2006 to 2007, and more than doubled again in 2008 to 6,200 murders. Of the murders in 2008, nearly 10% involved law enforcement officers or military personnel killed in the line of duty. More than 23,000 firearms were recovered by Mexican authorities and submitted for tracing to the U.S. Department of Justice (DOJ), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) from FY2004 through FY2008. Although only a fraction of recovered firearms are submitted for tracing, approximately 87% of traced firearms were determined to have originated in the United States. Law enforcement authorities in both nations are confronting the Southwest border paradigm: drugs and illegal migrants flow north, guns and money flow south. The Mexican government estimates that 2,000 firearms are smuggled across the Southwest border daily. Although firearms trafficking is not the only reason violent crime is increasing in Mexico, reducing the flow of illegal firearms from the United States to Mexico would arguably reduce crime rates in Mexico and improve public safety. Mexican gun laws are generally much stricter than U.S. gun laws. The Department of State's Bureau of Consular Affairs "Tips for Travelers to Mexico" warns U.S. gun owners not to take firearms to Mexico unless they have a permit from the Mexican Embassy, as several dozen U.S. citizens have been incarcerated in Mexico on weapons-related charges, including some who inadvertently carried a U.S.-licensed weapon into Mexico. In its publication, Guide To The Interstate Transportation of Firearms , the National Rifle Association (NRA) also warns that firearms are "severely restricted" in Mexico, but offers information on how firearms can be taken legally to Mexico for sporting purposes. In many ways, the gun trafficking issue between Mexico and the United States is analogous to the "crime gun" trafficking issue that has arisen among states within the United States. Some states have more liberal gun laws, and others, stricter gun laws. Oftentimes, the latter view the former as the source of many crime guns and, hence, gun-related crimes. It is noteworthy that the cross-border flow of illegal firearms has also been an issue for Canada, because Canadian gun laws are also generally much stricter than U.S. gun laws. Indeed, both Mexico and Canada, in addition to a minority of U.S. states, require the registration of most privately held firearms, but there is no U.S. federal registry of firearms. Illegal gun trafficking from the United States to Mexico reportedly ranges from frequent small-scale smuggling of one or two handguns per border crossing to less frequent, larger-scale conspiracies to smuggle large shipments of military armaments. The Department of Homeland Security's Customs and Border Protection (CBP) and the Immigration and Customs Enforcement (ICE) and one of its predecessor agencies, the U.S. Customs Service, have interdicted large weapons shipments on occasion. It has been reported that firearms are frequently diverted from legal commercial channels to illegal channels in the United States and then smuggled into Mexico. Although cross-border firearms trafficking is illegal and a high-risk endeavor, the reward is great, with profit margins that in the past have typically ranged between 300% and 500%. Four federal statutes govern U.S. commerce of firearms domestically and internationally. Many states supplement these federal statutes and have firearms laws of their own that are more strict. For example, some states require permits to obtain firearms and impose a waiting period for firearm transfers. Domestic commerce and importations into the United States are generally regulated under the National Firearms Act of 1934 (NFA) and the Gun Control Act of 1968 (GCA). The exportation of firearms from the United States is regulated by the Arms Export Control Act of 1976 and, to a lesser extent, the Export Administration Regulations (EAR). Federal firearms laws are primarily enforced by the ATF. In addition, the U.S. government is a signatory to an inter-American, anti-gun trafficking convention. The NFA was enacted to make it difficult to obtain certain types of firearms perceived to be especially lethal, most notably machine guns and short-barreled shotguns. This act also regulates firearms, other than pistols or revolvers, that can be concealed on a person (e.g., pen, cane, and belt buckle guns), and destructive devices (grenades, mines, bazookas, rockets, and missiles). Under the NFA, all aspects of the manufacture and distribution of such weapons are taxed. The statute also compels manufacturers and buyers alike to disclose, through registration with the Attorney General, the production and distribution of covered firearms and destructive devices. For the most part, the NFA is administered by the ATF. Under the GCA, as amended, the stated purpose of federal firearms regulation is to assist federal, state, and local law enforcement in the ongoing effort to reduce crime and violence, while not placing undue or unnecessary burdens on law-abiding citizens in regard to the lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity. The GCA requires all persons manufacturing, importing, or selling firearms as a business to be federally licensed; prohibits the interstate mail-order sale of all firearms; prohibits interstate transfer of handguns between non-licensed persons; sets forth categories of persons to whom firearms or ammunition may not be sold (such as persons under a specified age or with criminal records); requires the Attorney General to authorize the importation of sporting firearms; requires that dealers maintain records of all commercial gun sales; and establishes special penalties for the use of a firearm in the perpetration of a federal drug trafficking offense or crime of violence. As amended by the Brady Handgun Violence Prevention Act in 1993, the GCA requires background checks to be completed for all non-licensed persons seeking to obtain firearms from federal firearms licensees. While the GCA is generally administered by the ATF, Brady background checks are administered by the Federal Bureau of Investigation (FBI). Under the GCA, background checks are not required for private, intrastate transactions between non-licensed persons who are not "engaged in the business" as a firearms dealer. Such transactions and other matters such as possession, registration, and the issuance of licenses to firearm owners may be covered by state laws or local ordinances, however. Regarding possession under federal law, the GCA prohibits certain categories of persons from possessing or purchasing firearms or ammunition. Those categories generally cover: (1) persons convicted in any court of a crime punishable by imprisonment for a term exceeding one year; (2) fugitives from justice; (3) users or addicts of drugs; (4) persons adjudicated as a mental defectives or committed to mental institutions; (5) illegal immigrants and nonimmigrants; (6) persons dishonorably discharged from the U.S. Armed Forces; (7) persons who have renounced their U.S. citizenship; (8) persons restrained under a court-order from harassing, stalking, or threatening an intimate partner or child of such intimate partner; and (9) persons convicted of misdemeanor domestic violence. The GCA does not distinguish between citizens and legal permanent residents (legal immigrants); both are eligible to receive, possess, and transfer firearms and ammunition as long as they are not in one of the categories of prohibited persons. As shown above, among prohibited categories are illegal immigrants and nonimmigrants (with exceptions for the latter). Illegal immigrants are those noncitizens (aliens) who have either entered the United States without inspection or have violated the terms of their nonimmigrant visas or entry by overstaying or accepting unauthorized employment. Illegal immigrants are prohibited from possessing firearms with no exceptions. Nonimmigrants are admitted for temporary stays—sometimes for several years. In general, nonimmigrants are not eligible to purchase and take possession of firearms or ammunition in the United States. There are limited exceptions, however, for certain nonimmigrants who have resided in a state for 90 days that they intend to make their home, in which case they may purchase handguns in their state of residence, or purchase long guns (rifles or shotguns) in any state; and establish that they are either official representatives of a foreign government who are accredited to the United States government or the nonimmigrant's government mission to an international organization that is headquartered in the United States and possession of a firearm is necessary to their official capacity; officials of foreign governments or distinguished visitors who have been designated by the State Department and possession of a firearm is necessary to their official capacity; foreign law enforcement officers of a friendly foreign government entering the United States on law enforcement business; or visitors admitted to the United States for lawful hunting or sporting purposes or are in possession of a valid hunting license or permit lawfully issued in the United States. Section 38 of the Arms Export Control Act (AECA) authorizes the President to control the export and import of "defense articles" and "defense services;" to designate articles and services that are to be considered as such; and to issue regulations governing the import and export of these items. The United States Munitions List (USML) includes items that are designated by the President as defense articles and defense services. Weapons on the USML include non-automatic and semi-automatic firearms to caliber .50 inclusive (12.7mm); fully automatic firearms to .50 inclusive (12.7mm); firearms or other weapons having special military application regardless of caliber; combat shotguns; silencers and similar items for such weapons; riflescopes manufactured to military specifications; barrels, cylinders, receivers or complete breech mechanisms for such weapons; and components and parts for the above-listed articles. The U.S. Department of State implements controls over the export and temporary import of items on the USML under the International Traffic in Arms Regulations. The exportation of items that are not contained on the USML may either be subject to the exclusive control of other federal agencies or to export controls administered by Department of Commerce. The AECA imposes strict criminal and civil penalties for those persons who violate its provisions. The Department of Commerce (DOC), through its Bureau of Industry and Security (BIS), implements controls on the export of goods subject to DOC jurisdiction in the EAR. DOC export controls were originally authorized in the Export Administration Act of 1979, but upon the expiration of the act in 2001, DOC export controls have been maintained under an executive order issued under the International Emergency Economic Powers Act (IEEPA). IEEPA grants the President broad authorities to control exports from the U.S. as well as to regulate other international economic transactions by persons subject to U.S. jurisdiction, provided that he first declare a national emergency due to "an unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." Firearms are controlled in the Commerce Control List (CCL) under Category 0, "Nuclear Materials, Facilities and Equipment and Miscellaneous Items," and are listed under Subgroup A, "Systems, Equipment and Components." The following items are covered: •    (0A984) Shotgun, barrel length 18 inches (45.72 cm) inches or over; buckshot shotgun shells, except equipment used exclusively to treat or tranquilize animals, and except arms designed solely for signal, flare, or saluting use; and parts, n.e.s. [not elsewhere specified]; •    (0A985) Discharge type arms (for example, stun guns, shock batons, electric cattle prods, immobilization guns and projectiles) except equipment used exclusively to treat or tranquilize animals, and except arms designed, solely for signal, flare, or saluting use; and parts, n.e.s.; •    (0A986) Shotgun shells, except buckshot shotgun shells, and parts, n.e.s.; and •    (0A987) Optical sighting devices for firearms (including shotguns controlled by 0A984), and parts, n.e.s. In general, these items are regulated for crime control reasons, implementation of certain U.N. embargoes, and the Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials (CIFTA, a Spanish acronym ; discussed below), and in some cases, anti-terrorism purposes. The EAR provides information as to the specific licensing requirements for each item, including requirements for exports to particular countries. License exceptions are not available for these items. Like the AECA, the EAR imposes strict criminal and civil penalties on those persons who violate its provisions. BIS maintains a licensing system for the export of shotguns and related items to all Member countries of the Organization of American States (OAS), including Mexico and Canada, an action based on the OAS Model Regulations for the Control of the International Movement of Firearms, Their Parts, and Components and Munitions (OAS Model Regulations), which were developed to aid OAS Member countries in implementing CIFTA. Although the Senate has not ratified the Treaty, the United States maintains the above-described export regulations, which are aimed at furthering the goals of CIFTA. On November 13, 1997, the OAS adopted the Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials (CIFTA). CIFTA is a multilateral treaty designed to prevent, combat, and eradicate illegal transnational trafficking in firearms, ammunition, and explosives. Under CIFTA, a state would be committed to establishing as criminal offenses the illicit manufacturing and trafficking of firearms; setting up and maintaining a system of licenses and authorizations for export, import, and transit of firearms; marking firearms at the time of manufacture, and when they are imported; sharing information needed by law enforcement when investigating arms trafficking offenses; strengthening controls at export points; and ensuring that law enforcement personnel receive adequate training. CIFTA was signed by the United States and 28 other OAS member states on November 14, 1997, and it went into effect on July 1, 1998. As of February 5, 2009, twenty-nine OAS Member states have ratified the Convention, while four other OAS Member states (including the United States) are signatories but have yet to ratify the treaty. President Clinton transmitted the Convention to the Senate on June 9, 1998, with his recommendation "that the Senate give early and favorable consideration to the Convention, and that it give its advice and consent to ratification." The Senate has not voted on the treaty. According to DOJ, ATF is the lead federal agency responsible for stopping the illegal flow of firearms, or gun trafficking, from the United States to Mexico, given the bureau's statutory mission and authority. ATF has developed a nationwide strategy to reduce firearms trafficking and violent crime by preventing convicted felons, drug traffickers, and juvenile gang members from acquiring firearms from gun traffickers. These criminals often acquire firearms from a person who otherwise is not prohibited to possess a firearms through straw purchases or by buying a firearm from a corrupt dealer who sells firearms off-the-books in an attempt to escape federal regulation. Although there is no statutory definition for "gun trafficking" in the GCA, it essentially entails the movement or diversion of firearms from legal to illegal markets. Unlike other forms of contraband, almost all illegal firearms used criminally in the United States were diverted at some point from legal channels of commerce. ATF works to reduce firearms-related crime with two approaches, industry regulation and criminal investigation. ATF regulates the U.S. firearms industry by inspecting federal firearms licensees (FFLs), or licensed gun dealers, to monitor their compliance with the GCA and NFA, and to prevent the diversion of firearms from legal to illegal channels of commerce. Despite its crime-fighting mission, ATF's business relationships with the firearms industry and larger gun-owning community have been a perennial source of tension, which from time-to-time has been the subject of congressional oversight. Nevertheless, under current law, ATF Special Agents (SAs) and Industry Operations Investigators (IOIs) are authorized to inspect or examine the inventory and records of an FFL without search warrants under three scenarios: in the course of a reasonable inquiry during the course of a criminal investigation of a person or persons other than the FFL; to ensure compliance with the record keeping requirements of the GCA—not more than once during any twelve-month period, or at any time with respect to records relating to a firearm involved in a criminal investigation that is traced to the licensee; or when such an inspection or examination is required for determining the disposition of one or more firearms in the course of a criminal investigation. By inspecting the firearms transfer records that FFLs are required by law to maintain, ATF SAs and IOIs are able to trace crime guns from their domestic manufacturer or importer to the first retail dealer that sold those firearms to persons in the general public, generating vital leads in homicide and other criminal investigations. In addition, by inspecting those records, ATF investigators sometimes discover evidence of corrupt FFLs dealing in firearms "off the books," straw purchases, and other patterns of illegal behavior. In July 2004, the DOJ Office of Inspector General (OIG) reported on ATF inspections of FFLs. Among other things, the OIG reported that ATF inspected the operations of 4.5% of the 104,000 FFLs in FY2002. Since then, according to ATF, 10,106 firearms compliance inspections were conducted in FY2007, covering about 9.3% of the nearly 109,000 FFLs in that fiscal year; and 11,169 firearms compliance inspections were conducted in FY2008, covering nearly 10% of the 111,600 FFLs in that fiscal year. In its FY2010 budget submission to Congress, ATF has reported that there are about 113,000 FFLs nationwide, but nearly half of them (53,472) are licensed collectors. Those collectors are not authorized to be "engaged in the business" of dealing firearms, but they are authorized to engage in limited interstate firearms transfers of "curios and relics" without engaging the services of an FFL to facilitate such transfers and related background checks. A "straw purchase" occurs when a person, who is otherwise eligible to purchase a firearm, purchases a firearm from a federally licensed dealer for another person, who is either prohibited from possessing a firearm or does not want a paper trail linking him to the purchased firearm. Routine, small-scale smuggling of guns across the border often involves a series of straw purchases, during which guns are purchased from FFLs in border states and then sold to a middle man, who then smuggles the guns across the border. Repeated trips across the border of one to three guns, referred to in border parlance as the ant ( hormiga ) run, is a common way firearms are smuggled into Mexico. In the United States, straw purchases are illegal under the GCA. When a person buys a firearm from an FFL, the buyer and the FFL are required to fill out ATF Form 4473. The FFL is required to verify the purchaser's name, address, date of birth, and other information by examining a state-issued piece of identification, most often a driver's license. If the purchaser or dealer falsifies any information on the Form 4473, it is a federal offense punishable by no more than 10 years' imprisonment and/or a fine. It is also illegal for the gun trafficker who sponsored the straw purchase, because it is a federal offense for any person to aid, abet, counsel, command, or solicit a criminal act; or engage in a conspiracy to defraud the United States. It is also illegal to smuggle firearms out of the United States. In 1986, as part of the Firearms Owners' Protection Act, Congress amended the GCA to require FFLs to report to the Attorney General (AG) whenever they transferred more than one handgun to any nonlicensee within five consecutive business days. In 1993, as part of the Brady Handgun Violence Prevention Act, Congress amended the GCA to require that FFLs also forward this information to the state police or to the local law enforcement agency that has jurisdiction in the area where the transfer occurred. However, except for information pertaining to persons prohibited from possessing firearms, federal law prohibits state or local law enforcement agencies from disclosing those records to any person or entity, and requires those records be destroyed within 20 days of receipt so that such records cannot be used as a registry of firearms or firearms owners. At the end of every six-month period, the state or local law enforcement agency is required to certify to the AG that the record nondisclosure and destruction requirements were complied with. These provisions were enacted because when multiple handguns are purchased in states with less strict firearm laws and then sold in states with stricter firearm laws, this is often an indicator of interstate firearms trafficking, that is the diversion of firearms from legal to illegal markets. Private, intrastate firearm transfers are legal in some states at gun shows and flea markets. A person who is not "engaged in the business" of dealing firearms may transfer firearms to another person as long as he does not do so knowingly to a prohibited person, and as long as he does not knowingly transfer a handgun to a person who is not a resident of the state in which the transfer occurs. It is notable that firearms acquired through private transfers, particularly multiple private transfers, are much more difficult to trace. Consequently, there is likely to be a premium for such firearms in illegal markets on both sides of the border, as there would also be for some stolen firearms, because there are no paper trails for these firearms. Southwest border states in which private transfers at gun shows are legal include Texas, New Mexico, Arizona, and California, although gun shows and all private firearm transfers are more strictly regulated in California. Certain semiautomatic firearms that are often, but not always, based on military designs are very popular with Mexican drug traffickers. Depending on their configuration, some of these firearms formerly qualified by definition as "semiautomatic assault weapons" under an expired provision of federal law. In 1994, Congress banned for 10 years the possession, transfer, or further domestic manufacture of semiautomatic assault weapons (SAWs) and large capacity ammunition feeding devices (LCAFDs) that hold more than 10 rounds that were not legally owned or available prior to the date of enactment (September 13, 1994). The SAW-LCAFD ban expired on September 13, 2004. The SAW ban statute classified a semiautomatic rifle as an assault weapon if it was able to accept a detachable magazine and included two or more of the following five characteristics: (1) a folding or telescoping stock, (2) a pistol grip, (3) a bayonet mount, (4) a muzzle flash suppressor or threaded barrel capable of accepting such a suppressor, or (5) a grenade launcher. There were similar definitions for pistols and shotguns that were classified as semiautomatic assault weapons. Semiautomatic assault weapons that were legally owned prior to the ban were not restricted and remained available for transfer under applicable federal and state laws. Opponents of the ban argue that the statutorily defined characteristics of a semiautomatic assault weapon were largely cosmetic, and that these weapons were potentially no more lethal than other semiautomatic firearms that were designed to accept a detachable magazine and were equal or superior in terms of ballistics and other performance characteristics. Proponents of the ban argue that semiautomatic military-style firearms, particularly those capable of accepting large capacity ammunition feeding devices, have no place in the civilian gun stock. During and following World War II, assault rifles were developed to provide a lighter infantry weapon that could fire more rounds, more rapidly. To increase capacity of fire, detachable, self-feeding magazines were developed. These rifles were usually designed to be fired in fully automatic mode, meaning that once the trigger is pulled, the weapon continues to fire rapidly until all the rounds in the magazine are expended, or the trigger is released. Often these rifles were also designed with a "select fire" feature that allowed them to be fired in short bursts (e.g., three rounds per pull of the trigger), or in semiautomatic mode (i.e., one round per pull of the trigger), as well as in fully automatic mode. Semiautomatic firearms by comparison, including semiautomatic assault weapons, fire one round per pull of the trigger. Following the 1994 Semiautomatic Assault Weapons Ban, manufacturers changed the design of many firearms so that post-ban models did not include the requisite number of characteristics that would have qualified those firearms as "semiautomatic assault weapons." These measures arguably undercut the ban, as post-ban models included the two hallmarks of an "assault rifle," the detachable magazine and pistol grip. In the United States, fully automatic machine guns are strictly regulated under the NFA, which levies taxes on all aspects of the manufacture, importation, and distribution of such firearms. It is a felony to receive, possess, or transfer an unregistered NFA firearm. Such offenses are punishable by a fine of up to $250,000, imprisonment for up to 10 years, and forfeiture of the firearm and any vessel, vehicle, or aircraft used to conceal or convey the firearm. It is a federal offense to convert a semiautomatic firearm to "full-auto" without proper authorization from the Attorney General. Parts kits to convert semiautomatic weapons to fully automatic are available on the U.S. civilian gun market, but these kits are considered machine guns in most instances and are also strictly regulated. In other instances, however, the individual parts in these kits may not be regulated. ATF has increased its efforts in recent years to suppress illegal gun trafficking across the Southwest border. As part of these efforts, ATF inspects FFLs to monitor their compliance with U.S. gun laws, and to prevent the diversion of firearms from legal to illegal channels of commerce. ATF reports that there are around 6,700 FFLs in the United States operating in the Southwest border region of Texas, New Mexico, Arizona, and California. ATF also reports that Mexican DTOs are increasingly sending enforcers across the border to hire surrogates (straw purchasers) who buy several "military-style" firearms at a time from FFLs. The DTOs also reportedly favor pistols chambered to accommodate comparatively large cartridges and magazines that are capable of piercing through armor vests typically worn by law enforcement officers. Less frequently, but no less troubling to law enforcement, the DTOs have also sought .50 caliber sniper rifles. During FY2006 and FY2007, ATF dedicated approximately 100 special agents and 25 industry operations investigators to a Southwest border initiative known as "Project Gunrunner" to disrupt the illegal flow of guns from the United States into Mexico. In FY2007, ATF agents investigated 187 firearms trafficking cases and recommended 465 defendants for prosecution. By the end of FY2008, ATF had deployed 146 special agents and 68 industry operations investigators to the Southwest border to bolster that initiative at a conservatively estimated cost of $32.2 million. For FY2009, the Administration's budget request for ATF included a single increase of $948,000 to fund 12 industry operations investigator positions to bolster efforts already underway as part of Gunrunner. In the American Recovery and Reinvestment Act of 2009, Congress has provided ATF with $10 million to ramp up Gunrunner and $30 million to assist local law enforcement with counter-narcotics efforts. In the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), Congress has provided ATF with a FY2009 budget of $1.054 billion, including another $5 million for Gunrunner. In addition, in the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ), Congress appropriated $14 million for ATF. This amount includes (1) $4 million to upgrade and share ballistic imaging technology with the Government of Mexico, and (2) $6 million for other ongoing efforts focused on stemming illegal gun trafficking to Mexico under Project Gunrunner. The ATF FY2010 budget request includes $18 million and 92 permanent positions (including 34 agents) to support Project Gunrunner. The House-passed FY2010 Commerce, Justice, Science, and Related Agencies (CJS) appropriations bill ( H.R. 2847 ) would provide ATF with $1.106 billion, including the requested $18 million increase for Gunrunner. According to House report language, such an increase would bring total funding for Southwest border firearms trafficking to $59.9 million, but this amount includes one-time, stimulus funding of $10 million provided in the American Recovery and Reinvestment Act of 2009 for FY2008. The Senate-reported CJS appropriations bill (also H.R. 2847 ) would provide ATF with $1.121 billion for ATF, including the requested amount for Gunrunner. According to Senate report language, the Senate committee recommendation would bring total funding for Southwest border firearms trafficking to $61 million. ATF also maintains a foreign attaché in Mexico City to administer an Electronic Trace Submission System (ETSS), also known as the eTrace program, for Mexican law enforcement authorities. Although several sets of trace data have been released by ATF, the Government Accountability Office (GAO) has provided the most comprehensive analysis of ATF trace data. Nevertheless, trace data reported to CRS by ATF is also discussed below, as each set of trace data provides distinct insights into Southwest border firearms trafficking. From FY2005 through FY2007, ATF traced just over 11,700 firearms recovered by Mexican authorities. Although only a fraction of recovered firearms were submitted for tracing, approximately 90% of those firearms were found to have originated in the United States. Of those traced firearms, nearly 75% were reported to be handguns and 25% long guns. At that time there was no public information about the number of those handguns and long guns that were possibly "semiautomatic assault weapons." However, 25 machine guns were reportedly confiscated, of which six were traced back to U.S. military inventories. In addition, reports indicate that in at least 10 instances, Mexican authorities recovered U.S. manufactured 66 millimeter anti-tank weapons from Mexican DTOs. Caution should be exercised when drawing conclusions from ATF crime gun trace data. Although it is valid to say that 90% of traced firearms originated in the United States, it would be invalid to conclude that 90% of all guns used in crime in Mexico originated in the United States. Crime gun trace data are useful measurements of crime gun trends; however, the issues of consistent, random, and unbiased data collection have not been adequately addressed through comprehensive tracing and other controls. Hence, it is often not possible to test for statistical significance. Nevertheless, even though a statistically valid percent estimate of US-sourced firearms cannot be made based on trace data, criminal investigations have documented that there is great demand for certain firearms that are available in normal (non-military) commercial channels in the United States and that those firearms have been illegally trafficked to Mexico in large numbers. In January 2008, ATF announced that e-Trace technology would be deployed to nine additional U.S. consulates in Mexico (Merida, Juarez, Monterrey, Nogales, Hermosillo, Guadalajara, Tijuana, Matamoros, and Nueva Laredo). The number of traces performed by ATF for Mexican authorities for FY2008 increased markedly from previous years. During FY2008, ATF reportedly traced 7,743 firearms recovered by Mexican authorities and, of those firearms, 63.5% were made in the United States; 29.5% were made outside of the United States, but subsequently imported; and 7% were made outside of the United States and there was no indication that they had been imported into the United States before turning up in Mexico. Some of those traces were instrumental in developing investigative leads in homicide and gun trafficking cases. As described below, however, GAO has reported a different number of total traces for FY2008 (7,200), and for more years, FY2004 through FY2008, than was previously reported by ATF to CRS. In June 2009, GAO released a report on firearms trafficking and U.S. efforts to combat the flow of illegal firearms to Mexico that included an analysis of ATF trace data for FY2004 through FY2008. GAO reported that 23,159 firearms were submitted by Mexican authorities to the ATF for tracing during those years. Of those firearms, 20,060 or 86.6% were successfully traced back to the United States. For the last three years (FY2006 through FY2008), over 90% of firearms recovered in Mexico and traced by ATF were found to have come from the United States. Of those firearms, 68% were manufactured in the United States and 19% were manufactured abroad and imported into the United States. About 70% of traced firearms were found to have come from Texas (39%), California (20%), and Arizona (10%). It is notable, however, that only a fraction of the firearms recovered by Mexican authorities have been traced. In FY2008, for example, information on about 7,200 of the nearly 30,000 firearms recovered by the Mexican Attorney General's office were submitted to ATF for tracing, because of bureaucratic obstacles and lack of resources. Notwithstanding such limitations, about 25% of firearms recovered in Mexico in FY2008 and traced back to the United States were semiautomatic variants of the AK-47 and AR-15 rifles according to GAO. From FY2004 through FY2008, 70 machine guns were submitted for tracing, or .30% of the total number of firearms submissions (23,159), and one of these machine guns was traced back to the Mexican government. While GAO did not report how many of these machine guns were traced back to the U.S. military inventories, it was reported that over these years 160 firearms of all types, or .70% of the total, had been traced back to those inventories. Nevertheless, according to U.S. officials interviewed by GAO, "there have not been any indications of significant trafficking in firearms from U.S. military personnel or U.S. military arsenals." GAO recommended that the U.S. Attorney General direct the ATF Director to regularly update ATF's reporting on aggregate firearms trafficking data and trends, and that the U.S. Attorney General and Secretary of Homeland Security ensure the systematic gathering and reporting of data related to results of efforts to combat firearms trafficking, including related firearms seizures, investigations and prosecutions. In the 110 th Congress, the House passed H.R. 6028 , the Mérida Initiative to Combat Illicit Narcotics and Reduce Organized Crime Authorization Act of 2008 on June 10, 2008. This bill would have authorized a total of $73.5 million over three years, FY2008-FY2010, to increase the number of ATF positions dedicated to Project Gunrunner ($45 million) and assign ATF agents to Mexico ($28.5 million). The Senate, however, took no action on this bill. Senator Jeff Bingaman introduced the Southwest Border Violence Reduction Act of 2008 ( S. 2867 ), a bill that also included authorizations for increased ATF resources. Representatives Henry Cuellar and Ciro Rodriguez introduced similar bills ( H.R. 5863 and H.R. 5869 ). In the 111 th Congress, Senator Bingaman and Representative Rodriguez have reintroduced their Southwest Border Violence Reduction bills ( S. 205 / H.R. 495 ). Representative Rodriguez has also introduced the Border Reinforcement and Violence Reduction Act of 2009 ( H.R. 1448 ), a bill that would authorize the appropriations of $15 million for each year, FY2010 and FY2011, for Project Gunrunner. In addition, Representative Sheila Jackson Lee introduced the Border Security, Cooperation, and Act Now Drug Prevention Act ( H.R. 1900 ), a bill that would authorize the Attorney General to deploy additional federal agents, including ATF agents, to states in the event that a governor should declare an "international border security emergency." Currently, U.S. firearm laws govern the possession and transfer of firearms and create penalties for the violation of such laws. However, as will be illustrated below, because there are no laws that specifically punish firearms trafficking or conspiracy to traffic firearms, law enforcement and prosecutors must work with existing federal statutes to tackle illegal gun trafficking. The following are examples from the Southwest border region that are demonstrative of the kinds of gun trafficking cases being prosecuted, and the federal statutes that are often implicated in such cases. These particular examples come from the Southern District of Texas, though other U.S. Attorney Offices such as the U.S. Attorney's Office for the District of Arizona and the Southern District of California handle similar cases that involve firearms trafficking. Overall, from these cases, we can see that evidence from long investigations generally leads to the conclusion that persons are engaged in firearms trafficking. In these instances, defendants are often prosecuted and convicted under provisions of statutes like the GCA that make it unlawful for certain persons to be in possession of firearms; govern the transaction process of obtaining firearms (e.g., straw purchases); and contain penalties for the use of a firearm in a crime of violence or drug trafficking crime, or penalties for knowingly or fraudulently smuggling goods that would be contrary to U.S. law and regulation. In February 2008, the U.S. Attorney's Office for the Southern District of Texas (USAO-SDTex) released information that four men had been arrested by ATF agents in connection with a 10-month long investigation that fell under ATF's Project Gunrunner. Collectively, the defendants were charged with 26 counts of being in violation of federal firearms statutes. From the GCA, the statutes at issue in the indictment included 18 U.S.C. §§ 924(c)(1)(B)(i)-(ii), which imposes not more than 30 years' imprisonment if the firearm possessed by the person—who is convicted under the firearm statute—is a short-barreled rifle, short-barreled shotgun, machine gun, destructive device, or that such a firearm has a silencer or muffler; 18 U.S.C. § 922(o), which makes it unlawful for any person to transfer or be in possession of a machine gun; and 18 U.S.C. § 922(g)(1), which makes it unlawful for any person, who has been convicted in any court of a crime punishable by more than one year of imprisonment, "to ship or transport in interstate or foreign commerce, or possess in or affecting commerce, any firearm or ammunition; or to receive any firearm or ammunition which has been shipped or transported in interstate or foreign commerce." These offenses are punishable by a fine and/or not more than 10 years' imprisonment. Statutes from the NFA that were at issue in this case included (1) 26 U.S.C. § 5861(d), which makes it unlawful for any person to receive or possess a firearm that is not registered to him in the National Firearms Registration and Transfer Record; and (2) 26 U.S.C. § 5861(e), which makes it unlawful to transfer a firearm in violation of the requirements of the National Firearms Act. These offenses are punishable by a fine of not more than $10,000 and/or imprisonment of not more than 10 years. In October 2008, the USAO-SDTex announced that one defendant, who had already pleaded guilty to charges against him, was sentenced to prison for trafficking in firearms. The defendant pleaded guilty to conspiracy to make false statements in firearms transactions. This defendant paid four other persons to make firearms purchases on his behalf (a.k.a., "straw purchases"). While the judge concluded that the defendant was the organizer in this case and engaged in trafficking firearms to Mexico, this lead defendant was prosecuted under two provisions, which together made up the charge against him. They were: (1) 18 U.S.C. § 371, which makes it an offense to engage in a conspiracy to commit any offense or defraud the United States, and (2)18 U.S.C. § 924(a)(1)(A), which makes it unlawful for a person to "knowingly make any false statement or representation with respect to the information required ... to be kept in the records of a person licensed under this chapter." Each of these offenses carries a penalty of not more than five years' imprisonment and/or a fine. In this case, the defendant, who organized these transactions, was sentenced to 46 months in prison to be followed by a three year term of supervised release. The four other co-defendants, who made the purchases on behalf of the lead defendant, were each prosecuted and sentenced under 18 U.S.C. § 924(a)(1)(A) for making false statements on the forms that are required to be filled out in connection with a firearms purchase. The sentences of these four co-defendants range from probation and home confinement to time in federal prison. In December 2008, the USAO-SDTex along with the ATF announced that one individual, as a result of an investigation through Project Gunrunner, pleaded guilty to eight counts of various federal firearms statutes. According to the USAO's release, the individual had purchased more than 500 firearms over the last several years and smuggled them into Mexico for resale. The ATF's investigation revealed that the individual would purchase specific firearms for customers in Mexico by placing orders with numerous firearm dealers throughout Texas, and listing himself as the "actual buyer." Additionally, the individual would file a Texas tax exemption form indicating the firearms were for resale in order to avoid payment of sales taxes on his purchase. This individual would then smuggle the firearms, via a compartment in the motor home he used, to make deliveries to various locations in central Mexico. The firearms statutes implicated in this case of firearms trafficking to Mexico were: (1) 18 U.S.C. § 924(a)(1)(A) and 18 U.S.C. § 924(a)(2), each of which provides a fine and/or not more than 5 or 10 years' imprisonment, respectively, to those who knowingly make a false statement or representation with respect to information required or in connection with the sale of a firearm from a licensed dealer; (2) 18 U.S.C. § 554, which carries a penalty of not more than 10 years in prison and/or a fine if a person "fraudulently or knowingly exports ... or attempts to export ... from the United States any merchandise, article, or object contrary to any law or regulation of the United States, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise ... prior to [its] exportation knowing [it] to be intended for exportation contrary to any law or regulation of the United States"; (3) 18 U.S.C. § 924(b), which imposes a fine and/or imprisonment for not more than 10 years on any person who "ships, transports, or receives a firearm or ammunition in interstate or foreign commerce" and who either has "intent to commit therewith an offense punishable by imprisonment for a term exceeding one year," or has "knowledge or reasonable cause to believe that an offense punishable by imprisonment for a term exceeding one year is to be committed therewith"; and (4) 18 U.S.C. § 924(a)(1)(D), which imposes a fine and/or imprisonment of not more than five years for any other willful violation of the provisions (in this case 18 U.S.C. § 922(a)(1)(A)-dealing in firearms without a license). All of these provisions carry a maximum fine of $250,000 and a maximum of three years of supervised release following completion of the sentence imposed. It is important to first note the subtle difference between trafficking and smuggling as it relates to firearms. Generally, trafficking occurs when a commercial item is diverted out of the lawful chain of commerce into illegal markets for unlawful purposes whereas smuggling, arguably a subset of trafficking, occurs when an item, legal or illegal, is imported or exported in violation of the law. It is worth noting that under current law there is a specific provision in the GCA that makes it illegal for any person to smuggle firearms into the United States, intending to engage in or promote conduct that violates state or federal drug laws, or that constitutes a crime of violence. Doing so is punishable by not more than 10 years' imprisonment and/or fine. However, there is no corresponding provision that specifically prohibits smuggling firearms out of the United States for the purposes of drug trafficking and related violent crime, even though laws like the AECA and EAR regulate the exportation of firearms. Instead, those caught smuggling firearms out of the United States are typically charged under a general smuggling provision as seen in the case that occurred in Victoria, Texas. Persons intending to smuggle trafficked firearms across the border often carry only a small number of firearms at a time under the guise that those firearms are their personal property. Moreover, if those persons are not otherwise prohibited from possessing a firearm, it may be extremely difficult to establish a criminal offense until they actually cross the border. Consequently, one of the challenges for investigators and prosecutors is that trafficking often involves a smaller quantity of guns so traffickers can avoid detection of their illicit activities or, if caught with a small quantity of guns, have a more believable claim that the guns in their possession are personal firearms. These circumstances arguably underscore the need for the ATF to follow up trafficking leads as expeditiously as possible in order to prevent wider trafficking schemes from expanding and proliferating. The examples highlighted from the U.S. Attorney's Office illustrate that because there are no laws specifically devoted to targeting wider firearms trafficking schemes, investigators and prosecutors work with criminal provisions in the GCA and NFA to charge gun traffickers with multiple violations. In many cases, gun traffickers are prosecuted under various provisions of these statutes; such provisions include prohibitions against dealing firearms without a federal license, or federally licensed dealers dealing off the books. It is also unlawful for any person "to sell or otherwise dispose" of a firearm to another they "know or have reasonable cause to believe" is a person who is prohibited from possessing firearms under federal law. Likewise, there are provisions that make it unlawful to make false statements on the forms necessary to complete a firearms transaction with an FFL. Thus, persons who engage in straw purchases could be prosecuted if they are found to be lying on the ATF Form or transferring a firearm to a person whom they know or have reasonable cause to believe is prohibited from possessing a firearm under federal law. There is not, however, a provision that makes it specifically unlawful for a person, who, knowing they are a person prohibited from possessing firearms, to direct another person to buy a firearm for them, for example. In sum, the existing statutory scheme does not include firearm specific federal provisions that would cover the wider criminal conspiracies often involved in gun trafficking schemes that include multiple straw purchases and other federal violations. Such provisions would arguably assist law enforcement by allowing them to cast a wider net to investigate and prosecute those who are engaged early on in gun trafficking schemes. The recent GAO report on firearms trafficking discusses some of the federal firearms laws that may present challenges to U.S. efforts to combat arms trafficking to Mexico. The report identifies three key challenges related to (1) restrictions on collecting and reporting information on firearms purchases, (2) a lack of required background checks for private firearms sales, and (3) limitations on reporting requirements for multiple sales. Currently, the ATF relies heavily on its firearms tracing program to identify individuals involved in firearms trafficking schemes and to detect trafficking patterns. Arguably, however, ATF's ability to trace firearms is limited, because the U.S. government is prohibited by law from maintaining a national registry of firearms. According to the GAO report, key law enforcement officials have stated that "restrictions on establishing a federal firearms registry can lengthen the time and resources required by ATF to complete a crime gun trace and can limit the success of some traces." Furthermore, the report mentioned that secondary, or used, firearms are commonly trafficked to Mexico. Officials noted that, "while ATF may be able to trace a firearm to the first retail purchaser, it generally has no knowledge of any secondhand firearms purchases from gun shows or pawnshops ... without conducting further investigation" because federal law currently "permits the private transfer of certain firearms from one unlicensed individual to another [also described as "secondary transactions"] in places such as at gun shows, without requiring any record ... be maintained by the unlicensed individuals, an FFL, or other law enforcement authority." Related to private transactions, the GAO report highlighted that the lack of required background checks for private firearms sales may also be problematic in efforts to combat gun trafficking. Pursuant to the Brady Handgun Violence Prevention Act, background checks are mandatory for all nonlicensed persons seeking to obtain firearms from FFLs, subject to certain exceptions. The private sales of firearms from one individual to another, including private sales at gun shows, are not subject to the background check requirement, and consequently do not require the seller to determine whether the purchaser is a felon or other prohibited person, such as an illegal alien. Last, the GAO report pointed out that federal law requires FFLs to report multiple sales to the Attorney General whenever they transfer more than one handgun to any nonlicensee within 5 consecutive business days (See above section " Multiple Handgun Sales Reports "). ATF officials noted that this federal reporting requirement "has provided critical leads for some investigations of arms trafficking" and "helps expedite the time required by ATF to complete a crime gun trace." A similar reporting requirement, if enacted, for multiple long gun sales—particularly for rifles and shotguns capable of accepting large capacity ammunition feeding devices —would arguably provide ATF and other federal law enforcement with early warning of potential firearms trafficking schemes as 27% of firearms recovered in Mexico and traced from FY2004 to FY2008 were long guns. Absent is information regarding how many of those long guns were part of a multiple sales purchase. Although the GAO report underscored these three areas of federal law as potential hindrances to law enforcement's ability to combat firearms trafficking, Congress has passed laws on several occasions that prohibit the establishment of a registry of firearms or firearms owners (see footnote 123 ) and past legislative proposals to more strictly regulate private, intrastate firearm transfers at gun shows have been considered on the House and Senate floors, but have not been enacted (see footnote 125 ). With regard to multiple long gun reporting requirements, past legislative proposals of this nature and current law are limited to handguns. Notwithstanding Congress' reluctance historically to adopt such proposals, the next section analyzes three anti-firearms trafficking measures introduced in the 110 th Congress. Although no anti-gun trafficking measures have been introduced during the 111 th Congress thus far, a few were introduced during the 110 th Congress. These proposals would have strengthened provisions of the GCA, arguably, by repealing certain limitations on the release of ATF firearm trace data; requiring comprehensive crime gun tracing nationally; establishing new recordkeeping requirements on second-hand firearms sold or traded back to FFLs, with a focus on identifying stolen firearms; increasing penalties for licensed and non-licensed persons for violating certain provision of the GCA; and establishing a federal one-handgun-per-month limit for transfers between FFLs and non-licensed persons. In January 2007, Senator Charles Schumer introduced S. 77 , the Anti-Gun Trafficking Penalties Enhancement Act of 2007. This proposal would have repealed ATF appropriations limitations that restrict the disclosure of information stored in the Firearms Trace System database or multiple handgun sales reports; required federal, state, and local law enforcement agencies that recovered a firearm that was determined to have been stolen or used in a crime to report this information to ATF, so that it could be included in the Firearms Trace System database; amended the Attorney General's (AG) authority to conduct unannounced inspections of FFLs, so that he could conduct such inspections "at any time that" he "may reasonably require"; made certain offenses under the GCA predicate offenses under the Racketeer Influenced and Corrupt Organizations Act, including (1) disposal of a firearm to a prohibited person, (2) possession of a firearm or ammunition by a prohibited person, (3) knowingly handling firearms or ammunition for an employer who is known to be a prohibited person, and (4) shipping or receiving firearms while under felony indictment; and increased the maximum term of imprisonment for those violations from not more than 10 years to not more than 20 years. Representative Carolyn McCarthy also introduced a similar proposal— H.R. 1895 . This bill included all the provisions in S. 77 , except for the provision that would have granted the AG additional inspection authority and the provision that would have increased the maximum penalty for certain violations. In December 2007, Representative Peter King introduced H.R. 4818 , the Detectives Nemorin and Andrews Anti-Gun Trafficking Act of 2008. This proposal would have amended the GCA by creating a new subsection at 18 U.S.C § 924—Penalties. This amendment would have created a new separate "gun trafficking" crime punishable by a fine and/or imprisonment of not more than 20 years for committing a certain offense under the GCA under one of two conditions. The first set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was transported, received or possessed by that person and stolen or had the importer's or manufacturer's serial number removed. The second set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was offered by sale, transfer, or barter, to another who is either prohibited by federal or state law from possessing a firearm, not 18 years of age, is in a school zone, or is not a resident of the state in which he has attempted to acquire the firearms. If someone committed an offense already punishable by the GCA, each of which carries its own penalty, under either of these conditions, such a person could be prosecuted under this separate gun trafficking crime and face a fine and/or imprisonment of not more than 20 years. This bill was silent as to whether the sentences for the proposed "gun trafficking" crime and the individual predicate GCA offenses, if a person was prosecuted under both provisions, would have been served consecutively or concurrently. It appears that such matter would have likely been influenced by the U.S. Sentencing Commission guidelines. This bill also included numerous other provisions oriented toward gun trafficking. Among other things, the bill would have: (1) increased funding for Project Safe Neighborhoods; (2) required the AG to give a biennial report to Congress on firearms tracing and prosecutions; (3) required the FBI to give ATF access to its stolen gun files maintained in its National Crime Information Center; (4) required the AG to establish a "national instant stolen gun check system"; and (5) made it unlawful to transport, possess, or receive a firearm that had the importer's or manufacturer's serial number removed, obliterated, or altered, regardless of one's awareness of this fact. In 2008, Senator Frank Lautenberg introduced S. 3634 , the End Gun Trafficking Act. This bill would have prohibited FFLs from selling or otherwise disposing of a handgun to a non-licensee, if the FFL knew or had reasonable cause to believe that the non-licensee had purchased a handgun in the previous 30-day period. With some exceptions, this bill would have also prohibited any unlicensed person from purchasing more than one handgun during any 30-day period. A violation of these prohibitions would have been punishably by a fine and/or imprisonment of not more than 10 years. S. 3634 also would have repealed the multiple handgun sales report requirement and would have authorized the AG to issue rules and regulations to ensure that the National Instant Criminal Background Check System (NICS) would be able to identify whether a prospective transferee had received a handgun from a FFL within the previous 30 days. Finally, this bill would have repealed the annual appropriations limitations for FY2004-FY2008 that prohibited the expenditure of any appropriated funding to maintain NICS records on approved transfers for more than 24 hours, and allow records to be kept for not less than 180 days. In congressional testimony, U.S. authorities have asserted a moral obligation on the part of the United States to address gun trafficking on the Southwest border. Yet, as described above, much of the information about Southwest border gun trafficking remains incomplete. Questions that may arise include the following: Southwest Border Gun Trafficking. Have federal authorities conducted any recent military, small arms trafficking investigations between the United States and Mexico? If so, can details of those investigations be provided? Have any of those investigations involved heavy machine guns, grenades, bazookas, or anti-tank weapons? What is known about the scope of such small arms trafficking in Central America and Mexico? Are gun shows a major source of such armaments? ATF Trace Data and Trafficking. What do the trace data show concerning gun trafficking from the United States to Mexico? Can these data measure the scope of illegal gun trafficking between the two countries? Of the firearms recovered in Mexico and traced back to the United States during FYs 2005-2008, how many of these traces were later used in straw purchase investigations in the United States? How often have firearms been traced back to gun shows and corrupt federal firearms licensees? Of those traced firearms, is it known how many of those firearms would meet the definition of "semiautomatic assault weapon" under prior federal law? What do the data tell us about illegal, military small arms trafficking? Do the current "Tiahrt" restrictions on trace data encumber the ATF from assisting Mexican and U.S. law enforcement authorities in fighting drug-related violent crime? Inter-American Gun Trafficking Convention. For what reasons has the ratification of this convention not been acted upon by the Senate? Will its ratification be a priority for the 111 th Congress? Gun Trafficking Statute. Is the existing federal statutory scheme adequate to target and prosecute the ongoing gun trafficking that is occurring on the Southwest Border? Considering the scale and proliferation of gun trafficking, is there a need to create a more complex statute that specifically targets the conduct that often occurs in gun trafficking?

According to the Department of Justice, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the lead federal agency responsible for stopping the illegal flow of firearms, or gun trafficking, from the United States to Mexico. ATF has developed a nationwide strategy to reduce firearms trafficking and violent crime by seeking to prevent convicted felons, drug traffickers, and juvenile gang members from acquiring firearms from gun traffickers. These criminals often acquire firearms from persons who are otherwise not prohibited from possessing firearms, or by buying firearms from corrupt federal firearms licensees (FFLs) who sell firearms off-the-books in an attempt to escape federal regulation. ATF also reports that Mexican drug trafficking organizations (DTOs) are increasingly sending enforcers across the border to hire surrogates (straw purchasers) who buy several "military-style" firearms at a time from FFLs. The DTOs also reportedly favor pistols chambered to accommodate comparatively large cartridges that are capable of piercing through armor vests usually worn by law enforcement officers, and magazines capable of holding more than 10 rounds of ammunition. Less frequently, but no less troubling to law enforcement, the DTOs have also sought .50 caliber sniper rifles that are capable of penetrating bullet-proof glass and lightly armored vehicles. ATF reports that there are around 6,700 FFLs in the United States operating in the Southwest border region of Texas, New Mexico, Arizona, and California. By inspecting the firearms transfer records that FFLs are required by law to maintain, ATF investigators are often able to trace crime guns from their domestic manufacturer or importer to the first retail dealer that sold those firearms to persons in the general public, generating vital leads in criminal investigations. In addition, by inspecting those records, ATF investigators sometimes discover evidence of illegal, off-the-books transfers, straw purchases, and other patterns of suspicious behavior. During FY2006 and FY2007, ATF dedicated approximately 100 special agents (SAs) and 25 industry operations investigators (IOIs) to a Southwest border initiative known as "Project Gunrunner" to disrupt the illegal flow of guns from the United States into Mexico. By the end of FY2008, ATF had deployed 146 SAs and 68 IOIs to the Southwest border to bolster that initiative at a conservatively estimated cost of $32.2 million. The Omnibus Appropriations Act of 2009 included an increase of at least $5 million for Project Gunrunner, and the FY2009 Supplemental Appropriations Act includes an additional $14 million for this initiative. Both the House-passed and Senate-reported FY2010 Commerce, Justice, Science, and Related Agencies appropriations bill (H.R. 2847) would provide ATF with an $18 million increase for Project Gunrunner, an amount equal to the President's request. U.S. firearms laws currently govern the possession and transfer of firearms and provide penalties for the violation of such laws. "Gun trafficking," although not defined by statute, essentially includes the movement or diversion of firearms from legal to illegal markets. This report includes legal analyses of three ATF-investigated, Southwest border gun trafficking cases to illustrate the federal statutes that are typically violated as part of wider gun trafficking schemes. The report also examines anti-gun trafficking proposals introduced in the 110th Congress. So far, no similar proposals have been introduced in the 111th Congress. The report concludes with possible policy questions for Congress regarding the magnitude of Southwest border gun trafficking, the use and significance of ATF crime gun trace data, the possible ratification of an Inter-American Gun Trafficking Convention (CIFTA), and the adequacy of the federal statutes designed to deter and reduce illegal gun trafficking.

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PFCs are federally authorized fees which were established in 1990 to help pay for capital development at commercial service airports. PFCs are currently capped at $4.50 per flight segment with a maximum of two PFCs charged on a one-way trip or four PFCs on a round trip, for a maximum of $18 total. About $2.8 billion in PFCs was collected by airlines on behalf of airports in 2013. Certain categories of passengers and flights are exempt from paying PFCs. For example, passengers flying on frequent-flier award coupons are exempt from paying a PFC. The intent of the PFC program is to further airport development that (1) preserves or enhances airports’ safety, security, or capacity; (2) reduces noise generated by airport activities; or (3) enhances airline competition. PFCs give airports a source of funding for airport development over which they have greater local control because airlines have more limited say regarding how PFCs are used than they may have regarding the use of airport terminal rents or landing fees. This way, if an airport wants to build additional gates to attract new competition, an incumbent airline cannot block the project by refusing to fund it. PFCs can be applied to FAA approved eligible projects, and can be used as a match for AIP grants or to finance the debt on approved projects. Airports must apply to the FAA for authority to collect PFCs for use on approved projects, and if approved by FAA, airlines are required to collect PFCs and remit them to appropriate airport recipients. Each airport’s application must list specific eligible projects that PFCs will fund and the total amount to be collected. Once PFC applications are approved, airlines must add any approved PFC to the base fare (along with other federal taxes and fees) at the point of sale on the ticket by an airline, a travel agent, or Global Distribution Systems (GDS). Airlines must remit PFCs to airports on a monthly basis. Airlines are able to keep the “float”— that is, interest accumulated on the fees between the time they are collected and remitted—as well as 11 cents per PFC collected for administration costs. Airlines that annually collect at least 50,000 PFCs are required to have annual independent audits of their PFC collections, and airports can request and receive the results of audits. FAA has the authority, though not an obligation, to review the audits. (See fig. 1). From 1990 through August 2014, FAA approved airports’ requests to collect a total of around $89 billion in PFCs. This amount includes future approved collections—with about a third of collecting airports approved to collect PFCs to at least 2024 or later. Of the $89 billion, about 34 percent has been committed for “landside” projects such as terminals; 34 percent for interest on debt used to pay for projects either in development or completed; 18 percent for “airside” projects such as runways and taxiways; 7 percent for airport access such as roads and rail connecting to airports; 4 percent for noise reduction; and 4 percent for the construction of Denver International Airport. (See fig. 2). Most airports that are eligible to collect PFCs do so at the maximum rate $4.50 per flight segment. As of October 1, 2014, according to FAA data, 358 out of 538 eligible airports were collecting PFCs, and 351 of the 390 approved airports chose to collect at the maximum rate. In all, 98 of the top 100 airports have been approved to collect PFCs, with approximately 90 percent of all PFCs (by amount) collected by large and medium hubs. Airports that impose a PFC may become ineligible to receive up to 50 percent (if collecting PFCs at the $1, $2, or $3 level) or 75 percent (if collecting PFCs at the $4 or $4.50 level) of the formula AIP grants that they would otherwise receive. The vast majority of the funding reduction (87.5 percent) is then made available to smaller airports through AIP discretionary grants through the Small Airport Fund, with the remainder available to any airport under FAA’s AIP discretionary grant program. The President’s 2015 Budget proposes an increase of the PFC cap to $8.00, while the airport trade associations have proposed an increase in the PFC cap to $8.50 but also periodically adjusted for inflation thereafter. Some airports have advocated for a complete lifting of any cap on PFCs, and while one airport trade association previously advocated for alternative collection methods to collecting the PFC on the ticket as a way to increase the PFC cap; the association is no longer doing so. As part of the last FAA reauthorization process, legislation was introduced that would have allowed up to six airports to impose an unlimited PFC collected directly from passengers by the airport, if the fee were not collected on the ticket; however, this proposal was not part of the final Act. In addition to PFCs, there are federal taxes and fees that support aviation activity, including the 7.5 percent ticket tax and a $4.00 per-flight segment fee for domestic flights and an international arrival and departure tax of $17.50 per segment for international flights which are deposited into the AATF, as well as security and customs and border protection taxes, among others which are distributed to their respective agencies. All these taxes and fees are part of the ticket purchase transaction and together make up to 13.7 percent of the total cost of a ticket on average, with PFCs representing about 2.9 percent of the total ticket cost. In Fiscal Year 2013, aviation taxes contributed almost $12.9 billion to the AATF, with roughly $11.7 billion (91 percent) from passenger-related taxes and the rest from fuel-based or cargo taxes. To estimate the potential amount of funding available to airports, as well as associated effects on passenger demand and ticket tax revenues from increasing the PFC cap, we developed an economic demand model. The general approach of this analysis was to model airport collections and passenger traffic under various PFC cap levels. We modeled three different increases in the PFC cap amount each starting in 2016. Those three scenarios are: PFC cap of $6.47 (which is the 2016 equivalent of $4.50 indexed to the Consumer Price Index (CPI) starting in 2000 when the cap was first instituted); PFC cap of $8 based on the President’s 2015 budget proposal; and PFC cap of $8.50 that would be indexed to inflation based on the airports’ trade associations’ legislative proposal. Assuming that the PFC increase is fully passed on to consumers and not absorbed through a reduced lower base (before tax) fares, the higher cost of air travel could reduce passenger demand according to economic principles. Economic principles and past experience dictate that any increase in the price of a ticket—even if very small—will have an effect on some consumers’ decisions on whether to take a trip or not. For example, an increase in the price by a few dollars may not affect the decision of a business flyer going for an important business meeting but could affect the decision of a family of four going on vacation. An increase in the price will also have different effects depending on the type of air travel, for example, on short-haul and long-haul flights, and the availability of substitutes such as driving or taking a train instead of flying. Thus, the extent to which people decide whether to fly depends on the extent of consumer sensitivity to changes in the cost of air travel and is referred to as the “elasticity of demand”—the more elastic the demand, the more passenger air traffic is reduced by increases in price. For our base model analysis, we assumed a demand price elasticity of -0.8. In addition, to show the potential funding available to airports, we assumed that airports would adopt the maximum possible PFC cap at the start of 2016, but in reality, adoption of higher PFC levels would likely be a gradual process undertaken by individual airports according to their financial needs. Accordingly, model results in this report should be considered upper bound estimates of the funds available to airports that were approved to collect PFCs as of July 31, 2014. A full description of the model, data sources, and key assumptions appears in appendix II. Increasing the PFC cap under the three different scenarios that we modeled would significantly increase the potential amount of PFC collections in comparison to what could be available without an increase in the PFC cap. (See table 1). As with any modeling exercise, these projections depend on assumptions about participants’ behavior, in this case the behavior of consumers, airlines, and airports. The results presented above reflect three key assumptions about these behaviors. Elasticity of demand. There is uncertainty associated with demand analysis, because the estimated reductions in air travel are highly dependent on the assumptions about consumers’ sensitivities to changes in price. As noted above, to account for this uncertainty, we used an elasticity rate of -0.8, meaning that a 1 percent increase in price would result in a 0.8 percent reduction in the quantity of air travel. This rate is based on the assumption that PFC increase will affect all routes across the nation and will affect all routes equally. If PFC increases occur at fewer airports, demand would be more elastic because consumers could substitute their routing to some extent and the elasticity rate might be greater. As a result, we modeled three different elasticity rates drawn from economic literature to test the sensitivity of our results to these rates and found that for small price increases, small differences in the elasticity rate have very little impact. We discussed the selection of this elasticity rate with experts who have published on aviation economics, and they generally agreed with the selection. The model results from all three elasticity rates are shown in appendix II (table 5). PFC pass-through. We assumed that the entire PFC increase would be fully passed on to consumers and not absorbed by the airlines by adjusting of their base fares downward. Airline statements and experts with whom we spoke largely support our assumption that airlines would attempt to pass the PFC increase on to consumers. However, consumers’ response may vary from market to market and may not happen all at once, as airlines adjust capacity to respond to higher fares. For example, in the immediate period when airlines have fixed capacity, airlines’ may have to absorb all or some of this increase in order to maximize their revenues.as airlines adjust their capacity, they may gradually pass on the PFC increase to passengers. In addition, funding airport projects through PFCs instead of through airline rates and charges could reduce airline costs in the long run. If such conditions occur, airlines may adjust their airfares downward so that an increase in the fee is not fully passed onto consumers. The more the airlines absorb, the less the increase in the cost of travel for passengers and the lower the adverse effect on passenger demand. We consider the effect of different pass- through rates in appendix II. In the following years, Airport adoption. We assumed that airports that currently impose a PFC would raise it to the maximum allowed amount in the first year. While it is unrealistic to assume that all airports would immediately raise their PFC level in the first year, based on near universal adoption of the current maximum by nearly all of the largest airports, it is not unrealistic to expect that most airports would be at the maximum by 2024. Following the introduction of the PFC in 1991 and the increase in the level in 2000, airports quickly moved to the higher PFC level as indicated in figure 3 below. If fewer airports increase their PFC level that would proportionally reduce PFC collections and the associated changes to the AATF and allow some consumers to avoid the PFC making the consumer response more elastic as noted above. The results of using a scenario with a reduced PFC adoption rate by airports are shown in appendix II (table 6). Increasing the PFC cap under the three different scenarios that we modeled could marginally slow the growth of AATF revenues compared to what it could have been without the PFC increase. About 91 percent of AATF revenues in 2013 were derived from taxes and fees on passengers. Under all our cap scenarios, AATF revenues from passengers would likely continue to grow overall based on current projections of passenger growth; however, passenger growth could be slower with a PFC cap increase if it results in a higher total cost of air travel and thus reduces passenger demand. As a consequence of fewer anticipated passengers flying, the tax base on which these taxes are levied would be reduced compared to the tax base with no PFC increase. If the PFC increase is not passed on to consumers but absorbed by airlines through their adjustment of base fares downward, it would still reduce the trust fund’s revenues from the ad valorem tax that is levied as 7.5 percent on the base fare. Similarly, when airlines introduced ancillary fees for such services as checked baggage, there is some evidence that airlines adjusted their base fares downward to lessen the effect on passenger demand but not by as much as the amount of the fees. Because ancillary fees are not taxed, both reduced passenger demand and reduced base fares resulting from the introduction of fees would have reduced trust fund revenues. We did not include ancillary fees as part of our base fare calculation due to the lack of comprehensive ancillary fee but including ancillary fees would result in higher air-travel costs data;thereby making any PFC increase a smaller percentage of the total price and therefore resulting in a smaller loss of passenger demand. Under an $8 PFC cap and the entire PFC increase passed on to consumers, AATF revenues could be lower by $161 million to $186 million annually, as compared to what they could be without a PFC increase, assuming a demand elasticity of -0.8. This potential loss in AATF passenger revenues is small relative to total AATF passenger revenues—for example, between -0.58 and -1.68 percent of the total in 2024 depending on the size of the cap increase. The extent to which the AATF is affected will depend on the extent of the reduction in passenger traffic (elasticity assumption) as well as the extent to which the increase is passed on to consumers under each scenario (pass through rate). (See table 2.) Because passenger traffic is highly concentrated at larger airports, that is, large and medium hub airports, PFC collections are similarly concentrated. Thus, larger airports could benefit most from an increase in the PFC. A hub level analysis of a PFC cap increase shows that large hub airports could receive nearly three-quarters of all PFCs, while large and medium hubs together could account for nearly 90 percent of total PFCs, similar to what they do now. For example, under an $8 PFC, large hub airports could receive additional PFC revenues of $1.74 to $2.08 billion annually and medium hubs could receive additional PFC revenues of $372 to $435 million annually from 2016 to 2024. Small and non-hub airports could receive up to $212 million and $82 million in additional annual PFC revenues respectively from 2016 to 2024. (See table 3.) While an increase in PFCs could largely flow to the larger airports, smaller airports could also benefit from increased PFC collections, especially under the President’s proposed budget for 2015. As previously noted, under current rules, large and medium hubs’ apportionment of AIP formula funds may be reduced, which in fiscal year 2014, resulted in a redistribution of approximately $553 million. The majority of this funding (87.5 percent) goes to the Small Airport Fund for redistribution among small airports. The remaining 12.5 percent became available as AIP discretionary funds, which FAA uses to award grants to eligible projects regardless of airport size. Under the President’s 2015 budget proposal, all AIP formula grants for large hub airports, which FAA estimates to be $80 million in fiscal year 2015, would be eliminated in return for an $8 PFC. In addition, the President’s 2015 budget proposal calls for a decrease in the total amount of AIP funds, a decrease that under current law would result in automatic changes in how AIP grants are allocated. Increasing PFCs also could affect the dynamics of how airports and airlines can influence airport investment decisions. Airports rely on several funding mechanisms in order to pay for airport development projects. These include PFCs, non-aeronautical revenues (e.g., parking and concession revenue), AIP grants, rates and charges agreements with airlines, and state and local funds. Generally, PFCs offer airports relative independence over investment decisions at their airports. While airports must notify and consult with the airlines on how they spend PFCs, as long as FAA approves, airlines cannot block these decisions. Airlines can choose to serve other airports, however, so airports have an incentive to listen to airline concerns. Airport representatives said that one of the reasons airports want an increased PFC cap is because airports have already committed a significant portion of their current PFCs to past and current projects and have relatively fewer PFC-approved funds available with the $4.50 cap in place. According to FAA, $30 billion in PFCs was approved from1992 to September 2014 to pay interest on debt, with some airports scheduled to service debt for as long as 2058. Some airports have indicated that an increased PFC would allow them to reduce their debt costs, which could limit revenues available to those airports to secure new debt financing. Conversely, airline representatives told us that in their view, airports have many sources of revenue available and ready access to debt markets, so there is no need to increase the PFC cap. All else being equal, lower PFCs can provide airlines with more influence over airport infrastructure decisions and higher PFCs can provide airports more control over local capital-funding decisions, including the ability to decide how to apply PFC revenues to support capital projects and thus how those revenues might influence airline rates and charges. In order to evaluate the current PFC collection method, we used the following factors that we identified as key considerations for evaluating passenger fee collection methods in our February 2013 report: passenger experience, costs to administer, legal issues, customer transparency, and technology readiness. Industry experts and representatives from airports, airlines, trade associations, and consumer groups universally said that the current method of PFC collection has the least impact on passenger experience, because the PFC is paid as part of the total ticket price and at the time of purchase. Airlines and travel agencies use computerized reservation networks that facilitate payments for fares and required taxes and fees (including the PFC) as part of one transaction. Passengers therefore do not need to determine which taxes and fees they must pay in accordance with their itinerary, as this is done automatically through the ticketing process. In addition, passengers are only required to pay one time, a method that saves passengers time, provides transparency, and reduces confusion. Including taxes and fees as part of the ticket purchase is also the standard globally for collecting government and airport fees, such as the PFC. Both airport and airline representatives that we spoke with agreed that the administrative and infrastructure costs of the current collection method system are relatively low, as the method is integrated into existing infrastructure and business processes. As we mentioned previously, airlines currently keep 11 cents per PFC to cover their costs—which include costs for transactions such as credit card fees, legal and audit fees, and maintenance and upgrades of information systems—as well as the “float” (interest accumulated on the fees between the time they are collected and remitted). Airline representatives told us that they do not regularly track their administrative costs associated with collecting PFCs and therefore could not immediately say whether the administrative fee covers these costs. The administrative fee was last raised from 8 to 11 cents per PFC in 2004. The statute that authorizes the PFC program provides an exemption to the Anti-Head Tax Act which generally prohibits states, local governments, and airport authorities from levying or collecting any tax, fee, head charge, or other charge, directly or indirectly on individuals traveling by air. The statute authorizing PFCs also authorizes the Secretary of Transportation to require airlines to collect the fee and remit it to airports.an airline, we did not identify any legal issues associated with the current collection method as part of this work. Representatives from consumer groups that we spoke with said that the current collection system provides transparency to the customer in terms of total travel costs. Current DOT policy requires that fares be advertised with PFCs and other taxes and fees, and included at the time of purchase. However, one airline representative with whom we spoke told us that there could be greater transparency for customers in terms of other factors, such as how fees are used for airport projects. Some airports provide information about their PFC-funded projects through their websites, signage at the airport, and community outreach, and all airports are required to distribute a notice locally to the public, with general information about PFC projects, amounts, and timing, in advance of submitting an application to impose or use PFCs. FAA does not publish information on specific PFC-funded projects at airports on its website but does provide aggregated information for the entire PFC program on PFC approval amounts and project categories, such as landside, airside, and noise reduction, and subcategories. According to FAA, airports’ PFC applications and the FAA’s decisions are public documents that airports may release to the public. In addition, the FAA provides information on applications and decisions upon request if they are not under deliberation. FAA does not require airports to track each fee paid to a specific project at an airport, only to an approved application which may be for many projects. Thus, a passenger may not have readily accessible information about the use and intended purpose of their fee payment at the time of payment but could obtain some additional information if desired. The current collection method has been in place since the inception of the PFC program in 1992 and relies on widely used and accepted ticketing technologies for both online and in-person transactions. Technology company representatives whom we interviewed generally indicated that PFC collection is not constrained by current technology. However, implementing new fee rules could be problematic. For example, according to media reports, instituting the TSA security fee increase in July 2014, which uses the same ticketing technologies as PFCs, resulted in inaccurate collections while the programming code was being updated. According to an airline industry representative, that problem was subsequently fixed. Airport officials with whom we spoke generally told us that the PFC collection process by airlines is not adequately transparent to them, and therefore, they cannot be sure they are receiving all of PFC collections they are due. While airports receive monthly remittances, quarterly reports, and in some cases, annual audit reports from airlines, airport officials told us it can be very difficult for airports to ensure the accuracy of the remittances because they cannot be reconciled to passenger enplanements at the airport. Passengers flying on frequent flyer coupons as well as flight segments beyond the first two, Essential Air Service flights, and some Alaska and Hawaii flights are exempt from paying PFCs. In addition, airlines and airports have different fee-collection and remittance systems, and airline code shares mean that the airline collecting and remitting PFCs may not be the airline transporting the passenger. Furthermore, airport officials told us that the timing of collections and remittances can hinder their efforts to track and verify the accuracy of PFC remittances. Airlines receive PFCs with ticket payments, while airports receive remittances on a monthly basis. Passengers, however, may fly on a later date well outside the monthly window. To help ensure that airports receive the full amount of the collections they are due, FAA requires that all airlines that annually collect at least 50,000 PFCs have an annual independent audit of their PFC accounts and processes. Airports can request a copy of the independent auditor’s report, but airlines are not required to provide audit reports absent a request. In addition, FAA may periodically audit or review the collection and remittance of airline PFC collections under the FAA’s federal oversight responsibility. To assist airlines, FAA has developed audit guidance for airlines’ auditors to follow in conducting their audits. This guidance is comprehensive and includes testing procedures to ensure that airline systems are properly recording PFC collections. While adherence to the guidance is voluntary, FAA has determined that using the guidance will provide sufficient assurance that the airline has met its PFC regulatory requirements and that additional reports, a government audit, or other investigations will not normally be needed. FAA’s guidance expressly underscores the importance of the assurance that using the guidelines provides, stating that it is reflected in FAA’s approach to resolving alleged collection and remittance discrepancies raised by airports to estimate local PFC collections. In cases where the airlines’ auditors did not use the guidance, any allegation of a discrepancy by airports could trigger additional FAA activities, including additional reporting or an audit by the Department of Transportation’s Office of Inspector General. FAA officials told us they do not know to what extent airlines’ auditors use the audit guidance and only review the audit reports if questions are raised by airports about possible discrepancies. FAA officials also told us that they generally do not receive airline audits and do not know how many airlines’ auditors follow the audit guidelines. FAA officials also do not know how many airports are receiving the audit reports, but explained that disputes over the accuracy of collections have been rare and have been generally limited to collections by smaller airlines or those in bankruptcy. However, as noted above, it would be very difficult for an airport to know if its PFC remittances were not accurate, and in some cases, airports are not receiving audit reports and may not be aware they can be requested. Moreover, although airports have the right to review audits, our interviews with a limited number of airport officials raise questions about the extent to which airports are aware of their rights to review the audits. Three of the five airport managers whom we interviewed told us that they have received unsolicited copies of audits in the past, whereas two other airport managers had not received copies. Absent a request, there is no requirement for airlines to give airports or FAA the audits, even if there is a qualified or adverse audit opinion. FAA officials told us that while airports’ rights to review the audits are set forth in FAA guidance that is available to all airports, they could consider additional steps to ensure that all airports understand their right to request copies of the airline’s audits as well as FAA’s reliance on airports to identify discrepancies. Doing so would be consistent with Standards for Internal Control in the Federal Government, which call for agencies to ensure that there are effective means of communicating with, and obtaining information from, external stakeholders’ that may have a significant impact on the agencies achieving its goals. Given that FAA relies on airports to alert it to potential inaccuracies in PFC collections and those airports have difficulty determining the accuracy of PFC collections for the reasons discussed earlier in this report, it is important that airports are aware of their right to request copies of airline PFC audit reports and to ask for additional follow-up by FAA, such as an audit by the Department of Transportation’s Office of Inspector General if the audits or other information indicate discrepancies. By taking actions to better educate airports about the importance of obtaining and reviewing airline PFC audits, such as through notifications or posting this on the FAA’s website, FAA would better position airports to understand their rights including the potential for requesting further investigations, as needed. Thus, both FAA and airports could be better informed about the accuracy of PFC remittances. Standards for Internal Control in the Federal Government call for agencies to design their internal controls to assure that ongoing monitoring occurs in the course of normal operations. However, as previously discussed, FAA does not know the extent to which airlines use its audit guidance or generally review the airlines’ audit reports. Thus, FAA is not well positioned to provide a reasonable assurance to Congress, the airports, or airline passengers who pay the PFCs about the reliability of those audits or the PFCs collected. Determining the extent to which airlines’ independent auditors use FAA’s guidance could provide FAA with additional assurance about the reliability of those audits. Moreover, if the guidance is not being extensively used, then taking additional actions to assess the soundness of existing airline audits and the associated costs of airlines following the guidance would better position FAA to determine if it should make its guidance mandatory. Similar to PFCs, TSA imposes a security fee on passengers which is collected by the airlines; however, unlike PFCs, security fee revenues are remitted directly to one entity—the TSA.way trip on passengers on each ticket. TSA conducts direct audits of its fee collections through which it has found remittance discrepancies. This process suggests that, without adequate assurance that airlines are following FAA’s audit guidance, some PFCs may not be collected or, if collected, not accurately remitted to airports. TSA has a compliance office that performs its own on-site audits of approximately 20 airlines annually. TSA officials stated that they regularly identify additional funds that should TSA charges $5.60 per one- have been collected and remitted to TSA, though these unremitted funds are relatively small when compared to overall collections. According to TSA officials, the agency identified and collected $2 million in unremitted funds in fiscal year 2013 from its audits compared to its $2-billion annual fee collections. TSA’s audit findings have been upheld in court when challenged by an airline. For example, a TSA audit of Alaska Airlines found that the airline owed an additional $1 million in security fee remittances for flights between 2002 and 2006, which Alaska Airlines unsuccessfully challenged. TSA officials stated that the agency used to require that all airlines that collect the security fee from at least 50,000 passengers provide an annual audit to TSA. However, this audit requirement was waived on January 23, 2003, because according to the federal registry announcement, TSA initiated its own audits of air carriers, and according to TSA, air carriers have demonstrated a high level of compliance with TSA’s collection and remittance rules and thus find it unnecessary for air carriers to expend resources for independent audits. Stakeholders we interviewed identified three general alternatives to the current method of PFC collection, alternatives that could be used in combination or independently. An alternative collection method that has been used at a few airports internationally is the use of a self-service kiosk or payment counter to pay for airport fees. Departing passengers pay the fee at the airport using a kiosk or payment counter as part of the check-in process. Connecting passengers could pay the fee at a facility within the terminal between departure gates. Payment could be verified prior to departure at check-in, security, or the boarding gate. We identified few airports around the world that currently use this method. Those that do include Blackpool Airport in the United Kingdom, which required passengers to purchase an airport- development fee ticket at a kiosk or retail outlet at the airport. In addition, Ireland West Airport Knock in the Republic of Ireland requires passengers to pay a development fee that can be done at a dedicated desk at the airport. Both of these are relatively small regional airports and Blackpool Airport closed on October 15, 2014. Other airports have instituted kiosk and payment counters but later abandoned the method in favor of imposing the fee on the ticket at time of purchase. For example, Vancouver International Airport, Calgary International Airport, and Montréal–Pierre Elliott Trudeau International Airport (all in Canada) initially used payment counters to collect airport-improvement fund fees from passengers following airport privatization in Canada in the 1990s. However, the payment counter approach was abandoned, and the fee was added back onto the ticket after payments at the airport became cumbersome and inconvenient for passengers, according to a Canadian airport trade association representative. There is some evidence, however, that in-airport kiosks and payment counters can work. Airlines use self-service kiosks and counters for their airline check-in processing and ancillary fee purchases, such as for checked baggage. Some airports, such as McCarran International Airport in Las Vegas, have implemented common use self-service kiosks in which passengers can check in to any airline that operates at the airport and make ancillary fee purchases. Such kiosks could also be configured to collect PFCs. Another alternative collection method that the Airports Council International-North America (ACI-NA), an airport trade association, identified more than 10 years ago is online payments in which a passenger would pay the PFC fee through a dedicated website at the time of ticket purchase or at some point before check-in. Individual airports or a group of airports would directly operate or contract with a third party provider to manage a website to collect required fees directly from the passenger who would pay via credit card or debit card. Passengers could also be automatically directed to the website to pay PFCs after paying for a ticket online, a process that would require airline and travel agent cooperation. Passengers could go directly to the website at any time before check-in to pay the fee. In all these cases, airports would have to establish or contract with a clearinghouse that would collect and distribute PFCs or perform that function. Payments could be verified at the airport at a check-in counter, security checkpoint, or the boarding gate. We did not identify any airports currently using this method, but clearinghouses collect and distribute other aviation taxes and fees on tickets purchased online through GDSs. Another alternative collection method technology company representatives identified are mobile payments. Passengers would pay the PFC at the airport using a mobile technology—such as a smartphone or tablet, or a credit, debit or prepaid card—with payment functionality embedded or added through an application. Departing passengers could scan their mobile device or card at kiosks, payment counters, or other payment stations. Connecting passengers could also use this method to pay at kiosks or payment counters and stations as they move through the airport to their next departure gate. Like the other alternative collection methods, airports could individually or as a group develop and implement information systems and infrastructure to collect and distribute PFCs on their own or contract through a third party. Airports could also use an existing clearinghouse such as those used by airlines which could collect and distribute PFCs to airports. We did not identify any airports using this method, but technology company representatives told us that they are being used in other sectors such as retail. In addition, technology company representatives with whom we spoke said that airport kiosks used for check-in could be modified or configured to accept additional forms of payment, including near-field communication (NFC)-enabled Many airlines devices, chip-and-PIN or magnetic strip, or mobile wallets.also have mobile applications for check-in and boarding processes, which could be modified to transmit payment of PFCs. Airlines also use handheld devices to collect ancillary fee payments for additional services like carry-on luggage, and in-flight meals and beverages. NFC payment through mobile phones has been implemented by MasterCard, mobile phone providers such as Verizon, and retailers such as Office Max® and Toys “R” Us®. Some transit systems have also begun to pilot NFC payments for passenger travel, such as the Metropolitan Transit Authority in New York City and the Washington Metropolitan Area Transit Authority in Washington, D.C. We evaluated these alternative methods relative to the current ticket- based PFC collection method using the same factors that we identified as key considerations for evaluating alternative passenger-fee collection methods—passenger experience, costs to administer, legal issues, customer transparency, and technology readiness. Stakeholders including airports and airlines and their respective domestic and international associations, and industry experts that we interviewed said that the current collection method is better than the identified alternatives. Stakeholders told us that the technology to support alternative PFC collection methods is ready to be implemented, though it would require additional steps and costs and changes to business processes. All three alternative-collection methods introduce additional steps to the ticketing and boarding process, which could potentially diminish the passenger experience. Payment at kiosks or payment counters introduces an additional requirement at check-in, which could increase check-in time for passengers. Technology company representatives told us that it can take between 2 and 4 minutes for a passenger to interact with a standard airport kiosk. Additionally, a technology company representative told us that only about 50 percent of eligible passengers at one large airport use check-in kiosks, and unfamiliar passengers may need additional time or assistance to complete transactions. Connecting passengers could be required to pay the fee between flights, a step that could lead to missed connections or flight delays. Online payments introduce an additional step to online ticket purchases and potentially additional costs. Customers who are not aware of the required PFC purchase could be confused or suspicious of additional websites. Technology company representatives suggested that additional steps for online payment may cause consumers to abandon their purchase. Required mobile payments could present challenges for customers who do not use enabling devices. While 91 percent of individuals in the United States currently use mobile phones, only 50 percent of cell phone owners download applications, according to a 2013 This would require the airport to create enforcement nationwide survey.and backup collection systems to ensure that it is collecting all required PFCs. Airport and airline trade association representatives whom we spoke to reported that the industry is focused on reducing customer check-in times, and expressed concern that PFC payments at airports could delay these efforts. The International Air Transport Association is developing international standards for mobile check-in to streamline the passenger experience with a goal of moving the passenger from curb to gate in 10 minutes. Other airlines are increasing the use of mobile applications and automatic check-in. For example, Air New Zealand terminals in Auckland, Wellington, and Christchurch in New Zealand allow passengers to drop off their checked baggage and proceed directly to security and then to the gate, where passengers can also scan their boarding pass for domestic flights. JetBlue has introduced automatic check-in processes for select passengers, where boarding passes are emailed 24 hours before flight, and Air France introduced an NFC-enabled boarding pass and check-in process pilot in Toulouse, France. Airports would incur greater administrative and infrastructure costs if they implemented an alternative PFC collection method. A technology company representative told us that electronic payment kiosks can cost from $10,000 for a computer screen and magnetic credit card reader to $60,000 for a payment kiosk that incorporates additional methods of fee collection and higher-end design standards and elements. Technology company representatives also told us that electronic kiosks require network connections and infrastructure in order to send payment to banks through payment networks. Kiosks would require additional terminal space, increasing the need for terminal modifications at a time when pre- departure areas of terminals are shrinking. However, as we discuss later, existing airport kiosks could be reconfigured to allow for PFC collections. Technology company representatives told us that online payments would require website development and information service infrastructure and that all methods could require additional staff to verify collections and provide oversight to payments. An airport representative expressed concern that in order to collect PFCs from all eligible passengers when using alternative collection methods, airport operators would need to establish new systems. For example, in an airport which establishes a mobile payment system, customers that do not own NFC-enabled mobile phones would need to pay using a credit card or other means. Passengers who could not pay using a credit card would require a cash transaction. This process could increase financial security risk and associated costs related to securing and accounting for cash transactions. Mobile payments present additional difficulties, as NFC standards have not been created. The two dominant forms of mobile phones—Subscriber Identity Module and Global System for Mobile Communications—have different readers, and a kiosk or mobile payment station utilizing NFC- based payment would require two separate scanners. In addition, an industry survey has shown that only 12 percent of mobile phone owners and in the United States have utilized their phones as payment devicessome stakeholders we interviewed cited lack of awareness, difficulty and unfamiliarity of use, as well as security and privacy concerns, as barriers to mobile payment adoption. Alternative collection methods would thus require additional steps and costs and changes to business processes. (See fig. 4). All alternative methods would require legal modifications to enable airports to collect the PFC directly. As discussed above, the Anti-Head Tax Act prohibits local and state governments, and airport authorities from collecting user fees or taxes on travelers. The Anti-Head Tax Act was enacted in response to significant public concern and objection to local and state governments that imposed a tax on enplaning or departing passengers. Any alternative collection method implemented by an airport would require an exemption to the Anti-Head Tax Act or express statutory authority in order to collect fees. Furthermore, current DOT regulations require airlines to disclose the total price of airfare, including all taxes and fees; and would need to be revised if airports directly collect the fee from passengers. Also, airlines cannot be required to publicly disclose proprietary business information, including individual airfare transactions and passenger itineraries, which airports would need to determine whether a particular passenger is required to pay a PFC and to ensure that the total PFC imposed does not exceed the statutory maximum (currently $18). All alternative collection methods could decrease transparency to the customer because individuals may not be aware of the need to pay the PFC until after the ticket has been purchased. In addition, since payment of the PFC is not verified until check-in or departure, passengers may not be prepared to pay an unexpected fee. In this way, customers may not know the full cost of travel at the time of ticket purchase, which raises questions about transparency. An industry expert and representatives from consumer groups that we spoke to noted the importance of informing customers of all mandatory fees and taxes at the time of ticket purchase to ensure that customers are aware of the full cost of their travel. Similarly, we have recommended that the Department of Transportation (DOT) require airlines to consistently disclose optional fees at the time of purchase. Rulemaking that proposes to require airlines and ticket agents to disclose optional fees at the time of purchase. GAO, Commercial Aviation: Consumers Could Benefit from Better Information about Airline-Imposed Fees and Refundability of Government-Imposed Taxes and Fees, GAO-10-785 (Washington D.C.: July 14, 2010). Stakeholders such as technology company representatives told us that all the alternative collection methods discussed above are feasible, have been implemented for other applications by airports or retailers, and could be adapted for use in the airport environment. For example, kiosks could be adapted to collect PFCs. Technology company representatives we spoke to said that existing common-use self-service and airline kiosks could be modified, if not already enabled, to have a magnetic stripe card reader and an NFC reader. Technology company representatives also stated that airlines have online websites and mobile applications for passenger ticketing, check-in, and ancillary fees payments that could automatically link a passenger to an airport or third-party website to pay the fee as well as handheld devices that are used to accept ancillary fee payments that could also be used at the gate to collect PFCs. However, some means of verifying payment would still be needed before boarding the flight. Retailers in the United States have accepted online payments for decades and have begun to integrate mobile payments into their business practices. Some merchants have established “tap and pay” NFC terminals alongside traditional magnetic stripe readers, allowing customers to use credit cards as well as NFC-enabled mobile devices. As part of any consideration of an increase in the PFC cap, it is paramount that FAA and airports have confidence that airlines are accurately collecting and remitting existing PFCs. Ensuring the accuracy of PFC collections and remittances to airports depends on audits conducted by airlines’ auditors and oversight by FAA and airports to identify possible inaccuracies. However, while FAA has promulgated comprehensive audit guidance for airlines’ auditors’ use, it is voluntary and FAA does not know to what extent airlines’ auditors’ use the guidance, if at all. Thus, FAA is not well positioned to provide reasonable assurance to Congress, airports, or passengers who pay PFCs on the reliability of those audits and the PFCs collected. Further, some airports may not be aware that they can request and review airline audits and ask for an investigation if they suspect PFC remittances are inaccurate. As a result, FAA does not have sufficient assurance that PFC collections and remittances to airports meet its own regulatory requirements. To ensure the accuracy of Passenger Facility Charge collections and remittances to airports, we recommend that the Secretary of Transportation should require the FAA to take the following two actions: Review the extent to which airlines’ auditors use FAA’s audit guidance and, if found to be minimal, evaluate whether airlines’ auditors should be required to use the FAA’s audit guidance by considering the soundness of existing airline audits and the associated costs of airlines’ having to follow the guidance. Better educate airports that collect PFCs, such as through notifications or the FAA’s website, about airports’ rights to review airline audits and ask for additional investigation if the audits reveal issues or inaccuracies are suspected. We provided a draft of this report to DOT, ACI-NA, AAAE, and Airlines for America (A4A) for their review and comment. In an email received on November 24, 2014, the Deputy Director of Audit Relations at DOT provided us with the Department’s comments. Specifically, in response to our recommendations, DOT partly concurred with the first recommendation to review the extent to which airlines’ auditors use the FAA’s audit guidance. DOT noted that responses by the airlines will be voluntary, as FAA’s PFC oversight authority may not be sufficient to compel responses. However, based on the responses FAA does receive, if airlines’ auditors’ usage is found to be minimal, FAA stated that it will evaluate whether the auditors should be required to use the guidance pursuant to regulation or policy. GAO believes that this will fully address the intent of our recommendation. DOT fully concurred with the second recommendation to better educate airports about their rights to review airline audits and noted that it planned to better educate airports by including notification on its website. GAO believes that this will fully address the intent of our recommendation. DOT also provided technical comments that we incorporated as appropriate. In an email received on November 19, 2014, an Executive Vice President at ACI-NA provided us with the association’s comments, principally noting that the model estimations of future collections under various PFC caps could be misconstrued by some readers to be the actual amounts that airports will be collecting rather than the PFC-funding capacity of airports. They also noted that they believe -0.65 is a more appropriate elasticity rate than the -0.8 that we used in our base model. We disagree for two reasons. First, our report clearly notes that depending on the assumptions applied, the model could provide different results and indicates that the base model reflects the funding capacity of airports under each cap scenario and not the likely outcome. Second, we believe -0.8 is a more appropriate elasticity rate based on our economic literature review of air traffic demand elasticity rates and discussions with experts who have published on aviation economics. Nonetheless, we also modeled -.65 and found very little difference in the model results, as demonstrated in appendix II. ACI-NA and AAAE provided technical comments that we incorporated as appropriate. A4A reviewed the draft and did not have any comments. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of Transportation and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Contact information and major contributors to this report are listed in appendix III. The objectives of this report were to examine (1) what are the potential effects of raising the PFC cap on airport and federal aviation revenues? (2) how well does the current PFC collection process work? and (3) what is known about alternative PFC collection methods and how well they might work? To assess potential impacts of increasing the PFC cap, we developed an economic demand model, including a series of scenarios that vary the amount of the cap and various assumptions. The development of this model is discussed in detail in appendix II. To determine how well the current PFC-collection process works and alternative fee-collection methods, we updated GAO’s report Alternative Methods for Collecting Airport Passenger Facility Charges issued in February 2013 in response to a congressional mandate. In summary, we identified three basic alternative methods to the current airline-ticket- based method of PFC collections. These methods are not mutually exclusive and could be used by either individual airports or a group or airports—methods such as kiosk/payment counter; online payment; and mobile payments. We evaluated these alternative methods relative to the current ticket-based collection method using factors that we identified as key considerations for evaluating alternative passenger-fee- collection methods—the factors: passenger experience, customer transparency, administrative costs, technology readiness, and legal effects. For this study, we conducted additional work by interviewing 17 aviation stakeholders and we interviewed or collected responses from officials representing airports and airlines that we had interviewed in our February 2013 report to obtain any additional views on the current collection method. We selected the airlines based on airline size measured by the number of departures and passengers and type of carrier (legacy, low cost, and regional carrier). We selected the airports based on airport size, amount of PFC charged, and percentage of originating versus connecting passenger traffic. Our interviews with these airlines and airports provided qualitative information that is non-generalizable to all airlines and airports. Given that work, we examined issues regarding the verification of airline PFC collection and remittance amounts with airlines and airports and their trade associations and consumer groups. We reviewed the FAA’s Passenger Facility Charges Audit Guide for Air Carriers to identify audit requirements and recommended internal controls audit procedures for airline collection, handling, remittance, and reporting of PFCs. We reviewed an airline’s independently conducted audit of PFC collections for an airport. We reviewed applicable statutes and regulations regarding FAA’s role and authority to audit airline PFC collections and remittances and discussed with the agency its efforts to revise the PFC FAA Order 5500.1, which provides guidance and procedures for FAA’s airports’ offices to administer the PFC program. We also interviewed Transportation Security Administration officials to discuss the agency’s procedures and processes for audits of its security fee collections. For this study, we also conducted additional work looking at alternative collection methods by conducting a review of literature on changes that have occurred since February 2013 that could support alternative collection methods. We spoke with technology company representatives, including those companies that have implemented kiosks for passenger check-in and customs and border protection processing at airports, to obtain their views on the applicability of using kiosks to collect payments at airports. We interviewed officials from technology companies that develop emerging technology systems and devices to obtain their views on the applicability of using online and mobile payment systems to collect payments. We interviewed FAA, principal airport and airline trade associations and airline-passenger consumer representatives, and interviewed or collected responses to our follow-up questions from five airports and four airlines to obtain their views on the use of alternative methods to collect PFCs. As we did for our February 2013 report, we evaluated these alternative methods relative to the current ticket-based collection method using factors that we identified as key considerations for evaluating alternative passenger-fee-collection methods—passenger experience, customer transparency, administrative costs, technology readiness, and legal effects. For a list of interviewees and airports and airlines from which we collected responses to our follow-up questions, see table 4. The model described in this appendix is designed to estimate the potential impact of increases in the PFC cap on funds available for airport investment and federal aviation revenues between 2016 and 2024. This model presents results for three PFC-cap level scenarios in addition to a baseline scenario representing no change in the current PFC cap. The first scenario is a $6.47 cap, which is the 2016 equivalent of the $4.50 cap indexed to the Consumer Price Index starting in 2000 when the cap was first instituted. The second scenario is taken from the President’s budget proposal for 2015, which sets the cap at $8. A hub level analysis of this scenario was also conducted to illustrate the distributional effects of the PFC increase. The third scenario is the airport trade associations’ proposal of $8.50 annually adjusted for inflation using the CPI. The following sections describe the 1) model’s structure and data sources; 2) key assumptions; and 3) sensitivity analysis. The general approach of the model was to use passenger enplanement forecasts from 2016 through 2024 to project changes in PFC revenue under the four scenarios outlined above for the 362 airports that had approval to collect PFCs as of July 31, 2014. Passenger enplanement data for these airports were taken from FAA’s Terminal Area Forecast (TAF) enplanement projections. Enplanements were separated into international enplanements (i.e., enplanements originating in the U.S. with a foreign destination) and domestic enplanements (i.e., enplanements originating in the U.S. with a U.S. destination). We used projections from FAA Aerospace forecasts, which indicate that international enplanements will gradually rise from 12 percent of total enplanements in 2014 to 14 percent in 2024. The remaining enplanements were considered to be domestic. Due to several exemptions to PFC collection, including for segments beyond the first two and nonfare (e.g., frequent flyer) passengers, a PFC is not collected for all enplanements at airports that charge a PFC. Thus, we reduced international enplanements by 4 percent and domestic enplanements by 10 percent for each year in order estimate the total number of chargeable enplanements. The 4 percent exemption rate for international enplanements is based on the percentage of passengers using frequent flyer miles to purchase international tickets. The 10 percent exemption rate for domestic enplanements is a 5-year average calculated using data from 369 airports that collected PFCs between 2009 and 2013. To calculate the domestic exemption rate, PFC revenues from international enplanements (estimated assuming the 4 percent international exemption rate) were first subtracted from total PFC collections to get domestic PFC collections. These domestic PFC collections were then divided by the average PFC level for that calendar year in order to estimate how many enplanements were charged a PFC. This estimate was compared to the total enplanements from the TAF data, and the gap between the two was considered to be the number of domestic TAF enplanements that were not charged a PFC (10 percent on aggregate). The model assumes that all increases in PFC are passed onto the consumers and not absorbed by the airlines. When these PFC increases are passed onto the consumers, it increases their air travel costs. Our model thus takes into account these effects of raising the total cost of air travel on passenger demand and the resulting secondary impacts on PFC and trust fund revenues. Generally an increase in the cost of air travel will convince some number of passengers to seek other travel arrangements or to not travel at all. In order to model this potential decrease in passenger demand, we calculated the increase in the PFC level as a percentage of both international roundtrip and domestic average gross fares per enplanement. Data on average gross fares were collected and summarized from Department of Transportation Origin and Destination survey data for average annual fares from calendar year 2013. Fares were adjusted for inflation annually from 2014 onwards using the CPI. In order to calculate the fare per enplanement, we divided the domestic fare by the average number of flights per ticket (1.37), which is derived from U.S. DOT’s non-directional data from calendar year 2013. International trips are assumed to have only one flight per ticket because other domestic flights that may be part of the ticket are captured in the domestic category. We also use roundtrip fares for international enplanements as that is the relevant cost of travel to which PFCs should be compared since incoming international flights do not have to pay a PFC. The increase in the PFC was added to the domestic ticket price per enplanement and international roundtrip ticket price to calculate the percentage change resulting from the change in the PFC cap. To translate the increase in ticket price into an impact on passenger demand, an elasticity rate was applied. The elasticity rate is a ratio representing the percentage change in quantity to a percentage change in price. Air travel elasticity thus shows the percentage change in trips demanded by customers as result of percentage change in air fare. Applying the elasticity rate provides an estimate of the reduction in passenger demand for enplanements due to the increase in price per enplanement, which is used to calculate net chargeable enplanements. The net enplanements are then used to estimate PFC revenues. PFC revenues are estimated by multiplying these demand- adjusted enplanements by the maximum allowable PFC under each scenario less an 11-cent administrative fee kept by the airlines. PFC revenues thus reflect the collections that the airports would expect to receive if all 362 airports adopted the maximum rate starting in 2016. It is important to note that adoption of the maximum rate is likely to be a gradual process, and thus actual collections are likely to be lower than these estimates, especially in earlier years. The reduction in enplanements due to higher ticket costs also affects trust fund revenues as it reduces the passenger tax base that contributes to the trust fund. Our model results show the projected change in trust fund revenues from passengers under the various cap scenarios relative to the baseline. Negative estimated changes in trust fund revenue would likely represent a marginal slowing of growth in trust fund revenues from passengers rather than an absolute decline. The impact on the trust fund is calculated by multiplying the change in domestic enplanements due to demand effects by the $4 segment tax and the change in international enplanements by the $17.50 international arrival and departure tax. We also calculate the loss from the ad valorem tax based on the fewer number of trips that are taken as a result of the higher PFC. As indicated above, elasticity rates are a measure of the demand response of passengers to changes in price, and thus, they can have an impact on passenger demand projections. The higher the demand elasticity, the more sensitive the demand is to a change in price, and hence the higher the reduction in enplanements due to a PFC increase. The elasticity rate we chose for our base model analysis was -0.8, which was drawn from a 2007 study conducted by InterVISTAS consulting for IATA and is based on a universal price increase at a national level. We also examined different elasticity rates of -0.65 and -1.122 to see how it affected our results. The -0.65 elasticity is drawn from a November 2014 study of demand elasticity also conducted by InterVISTAS Consulting Inc. for ACI-NA. The -1.122 elasticity comes from a study completed by D.W. Gillen et al. in 2003. Edward Huang and Adib Kanafani, Taxing for Takeoff: Estimating Airport Tax Incidence through Natural Experiments (January 2010). and their industry’s trade association generally oppose PFC increases at a national policy level. However, if funding airport projects through PFCs instead of through airline rates and charges would reduce airline costs, then it would increase the ability and likelihood of airlines absorbing some of the PFC increase by lowering fares instead of making consumers pay for it. The more the airlines absorb, the less the increase in travel costs and the lower the adverse effect on passenger demand. However, under any PFC increase and pass-through scenario, trust fund revenues from passengers will be reduced relative to the baseline because even if airlines lower fares enough to absorb the entire PFC increase, the lower fares will result in less revenue from the 7.5% excise tax on fares. We assumed that airports that were approved to impose a PFC as of July 31, 2014, would raise their PFC to the maximum allowed amount in the first year and that airports that do not currently have approval to collect a PFC would not obtain approval to impose one. Interviews with FAA and airport representatives indicate that the number of airports charging PFCs is not expected to change significantly in the future. While it is unrealistic to assume that all airports that are currently collecting a PFC would immediately raise their PFC in the first year, based on near universal adoption of the current maximum by nearly all of the largest airports, it is not unrealistic to expect that airports would be at or near the maximum by 2024. Following the introduction of the PFC in 1991 and the increase in 2000, airports quickly moved to the higher PFC level as indicated in figure 3 in the report. However, the extent to which airports continually have projects that fall under the PFC-eligibility criteria and gain FAA approval will also influence the adoption of higher PFCs by airports over time. Small airports in particular may not have as many PFC-eligible projects to justify moving to a higher PFC. If a significant number of airports that currently collect a PFC do not move to the maximum under a new cap, it would offer passengers more alternatives as passengers could avoid paying the higher PFC by substituting a nearby airport that does not charge at the higher rate. This would result in a higher overall rate of demand elasticity. Thus the final effect would depend on the specific pattern of airports that do or do not adopt a higher PFC. In order to test the sensitivity of the results to changes in the key assumptions about elasticity and pass-through, changes to PFC and trust fund revenue from passengers were modeled using a -0.65 and a -1.122 elasticity rate, and a 50 percent pass-through rate. The results are presented below in table 5. Under these alternative elasticity scenarios and the $8 cap, estimated changes to PFC revenues vary by less than 1.5 percent from the standard scenario estimated using a -0.8 elasticity. Similarly, under a scenario that uses an $8 PFC cap, an elasticity rate of - 0.8, and a 50 percent pass-through rate, estimated changes to PFC revenues varied by less than 2 percent relative to the standard scenario. Changes in trust fund revenues from passengers showed greater sensitivity to changes in elasticity rate and pass-through in percentage terms as these are the only variables in the calculations of these changes. To test the sensitivity of our results to key assumptions about airport adoption, we developed an alternative adoption scenario based on airport adoption behavior after the previous increase in the PFC cap in 2000. For the results located in Table 6, we assume that 50% of airports charge the maximum rate of $8 from 2016 to 2018, 75% of airports from 2019 to 2021 and 90% of airports from 2022 to 2024. The results show that additional revenue from the increase in the cap varies proportionally to the percentage of airports that adopt the higher cap. The impact on trust fund revenues from passengers is lower relative to the standard scenario because fewer passengers are affected by the PFC cap increase if fewer airports adopt it. Gerald L. Dillingham, Ph.D, 202-512-2834, or [email protected]. In addition to the contact named above, the following individuals made important contributions to this report: Paul Aussendorf, Assistant Director; Namita Bhatia Sabharwal; Benjamin Emmel; Bert Japikse; Delwen Jones; Maureen Luna-Long; Josh Ormond; Madhav Panwar; and Reed Van Beveren.

About $2.8 billion in Passenger Facility Charges (PFCs) were collected in 2013. PFCs are federally authorized fees paid by passengers at the time of ticket purchase to help pay for capital development at commercial service airports and have been capped at $4.50 per flight segment since 2000. Airports are seeking an increase in the PFC cap to $8.50. Airlines, which collect PFCs at the time of purchase and remit the fees to airports, oppose an increase because it could potentially reduce passenger demand. Some airports have suggested that alternative PFC collection methods could allow the PFC cap to be raised without adversely impacting demand. GAO was asked to examine these issues. This report discusses (1) the potential effects of PFC cap increases, (2) how well the current PFC collection process works, and (3) alternative PFC collection methods. GAO developed a model to assess the potential effects of PFC cap increases on funds for airport investment and the aviation system. GAO interviewed 26 stakeholders, including airports and airlines representing a range of sizes, as well as consumer groups, to discuss PFC collection methods. Increasing the Passenger Facility Charges (PFC) cap would significantly increase PFC collections available to airports under the three scenarios GAO modeled but could also marginally slow passenger growth and therefore the growth in revenues to the Airport and Airway Trust Fund (AATF). GAO modeled the potential economic effects of increased PFC caps for fiscal years 2016 through 2024 as shown in the table below. Under all three scenarios, AATF revenues, which totaled $12.9 billion in 2013 and fund Federal Aviation Administration (FAA) activities, would likely continue to grow overall based on current projections of passenger growth; however, the modeled cap increases could reduce total AATF revenues by roughly 1 percent because of reduced passenger demand. These projected effects depend on key assumptions regarding consumers' sensitivity to a PFC cap increase, whether airlines would pass on the full increase to consumers, and the rate at which airports would adopt the increased PFC cap. Stakeholders said that the current PFC collection method generally works well, but airport officials said that transparency over PFC collections could be enhanced. Stakeholders universally said that the current method is preferred because the PFC is paid at the time of purchase. Airlines are required to have audits of their PFC collections and FAA provides audit guidance to help provide assurance that collections are accurate. However, the guidance is voluntary and FAA does not know if airlines' auditors use it. FAA relies on airports to alert them of discrepancies but some airports may not be aware they can review audits. FAA could take additional steps beyond what is stated in the guidance to inform airports about their rights, and thus provide reasonable assurance to Congress, airports, and airline passengers about the reliability of those audits and PFCs remitted to airports. Stakeholders GAO interviewed generally said that alternative methods to collect PFCs, such as airport kiosks or online or mobile payments, are technologically feasible but they would impose additional steps for passengers, costs for airports, and changes in business processes. Therefore, stakeholders said that that the current collection method is better than the identified alternatives. GAO recommends that FAA review the extent to which airline independent audits of PFC collections follow FAA guidance and take additional steps to educate airports about their right to review these audits. The Department of Transportation (DOT) agreed to review the extent to which airline audits use FAA guidance, but noted they may not be able to require airlines to respond; and agreed to take additional steps to educate airports about their rights. DOT also provided technical comments which GAO incorporated as appropriate.

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Beginning with the 1948 Hook Commission, few military subjects have generated as much interest or commentary as the military retirement system. The number of reports, analyses and studies aimed at modifying or reforming the system have been voluminous. This has been especially true during periods when the system has been viewed as excessively expensive or when personnel costs have been highlighted for reduction in the defense budget. As Congress addresses the deficit, the escalating cost of military retirement is an area of concern. Positions on the issue of military retirement reform can range from intense criticism to intense support among the community of defense manpower analysts, politicians, veterans support organizations, and military personnel. Those who are critical generally find fault with the 20-year "cliff" vesting, the generous retirement benefits to youthful beneficiaries, the overall cost of the system, the lack of force management flexibility, and the inefficiency of the system. Those who defend the current 20-year retirement system argue that it is compensation for a career of arduous, and frequently hazardous, service and sacrifice for the nation and that it is relatively consistent with retirement systems for other high-risk occupations. Others view the retirement annuity as a "retainer" since retired military personnel can be recalled to active duty at any time. The military retirement system is a noncontributory, defined benefit system that is viewed as a significant incentive in retaining a career military force. The system provides inflation-protected monthly compensation and other benefits after an active or reserve military career, disability retirement for those physically unfit to continue to serve, special retirement programs such as the Temporary Early Retirement Authority (TERA), and survivor benefits for the eligible survivors of deceased retirees. These retirement variations are all separate but interrelated. Retired pay is subject to federal income tax. Active duty personnel become eligible for retirement by completing 20 years of service, regardless of age, but may, under certain conditions, remain on active duty for up to 40 years. Retirement eligibility for reserve component personnel is based on "points" and equivalent years of service but reservists do not generally begin to receive their retired pay until age 60. Those who are retired due to physical disability will receive retired pay regardless of their length of service. Disability retirement offers a choice between two retirement options: one based on years of service and one on the severity of the disability. Servicemembers who voluntarily separate prior to completing the minimum 20 years of service will generally receive no retirement benefits. The military retirement system shares some similarities with private sector retirement systems, but it exists for very different purposes. According to the Department of Defense, military retirement is intended to support: "The provision of a socially acceptable level of payments to members and former members of the Armed Forces during their old age. The provision of a retirement system that will enable the Armed Forces to remain generally competitive with private-sector employers and the Federal Civil Service. The provision of a pool of experienced military manpower that can be called upon in time of war or national emergency to augment the active-duty forces of the United States, and the establishment of a mechanism whereby persons in this pool can move into and out of active duty smoothly. The provision of a socially acceptable means of keeping the military forces of the United States young and vigorous, thereby insuring promotion opportunities for younger members." Military retirees are subject to an involuntary recall to active duty and therefore remain subject to the Uniform Code of Military Justice to enforce the recall authority. In contrast to many private sector plans, the military retirement system also does not provide for the gradual vesting of benefits, it is an "all-or-nothing" proposition based on serving a minimum of 20 years. At the conclusion of FY2010, there were approximately 2,271,000 beneficiaries of the military retirement system at an annual cost to the federal government of $50.842 billion. Table 1 reflects the various categories of beneficiaries and the cost associated with each program: In addition to retired pay, military retirees are also entitled to commissary and exchange access, medical care through TRICARE, and access to Morale, Welfare and Recreation facilities and programs, and certain other benefits. There are currently three different methods of calculating retired pay for active component personnel: Final Basic Pay, High-Three, and Redux. Eligibility is based on the date the person first became a member of the armed forces. Servicemembers who entered military service prior to September 8, 1980 will retire under the Final Basic Pay system. This is the most expensive of the three systems currently in use because retired pay is based on the final amount of monthly basic pay, which is typically the highest level of pay the member has received. This amount is multiplied by 2.5% for each full year of service (plus 1/12 th for each complete month less than a full year) and then multiplied again by the number of years of service. The product of 2.5% and years of service is referred to as the Computation Base. As a result, a servicemember who completes exactly 20 years of service will retire with 50% of their final monthly base pay, a member with 30 years of service will retire with 75% of their final base pay and a member with 40 years of service will retire with 100% of their final base pay. An active duty member who entered the service prior to September 8, 1980 will have at least 31 years of service by the end of 2011. As a result, servicemembers eligible for the Final Pay system are quickly aging out of the system. DOD estimates that fewer than 15,000 remain on active duty and an additional 35,000 remain in the reserve components. Most of them should retire by 2016 and the Final Pay system, the most expensive of the three retirement systems, will begin to phase out. The annual Cost of Living Adjustment (COLA) for those retiring under the Final Basic Pay system is indexed to the annual Consumer Price Index (CPI), which is similar to the COLA calculation for Social Security recipients. Servicemembers who entered service between September 8, 1980 and July 31, 1986 will retire under the High-3 system. High-3 is very similar to the Final Basic Pay system except the final monthly pay factor is replaced by the average basic pay for the highest 36 months of the individual's career. Therefore, the retired pay formula under High-3 is 2.5% times years of service, times the High-3 average. The annual COLA for those retiring under the High-3 system is also indexed to the annual CPI. Servicemembers who entered service on or after August 1, 1986, currently have a choice of two retirement systems: retire under the High-3 system, or the Redux system, which now includes a $30,000 Career Status Bonus. The retirement choice must be made within 180 days of completing 15 years of service. Redux uses a different multiplier and a different COLA formula than the High-3 system. It was designed for the dual purpose of rewarding longer service and reducing the cost of the military retirement system. Under Redux, a member retiring at 20 years of service will only receive 40% of their High-3. However, remaining on active duty beyond 20 years will earn an additional 3.5% per year up to the 30-year point when the retirement benefit would equal 75% of their High-3—identical to a 30-year retiree under High-3. Beyond 30 years, the member earns an additional 2.5% per year up to a maximum retirement of 100% of the High-3 for 40 years of service, similar to the accrual under the High-3 system. The COLA for Redux retirees is the CPI minus 1% each year until the retiree reaches age 62. At that time, there are two adjustments to the retired pay: (1) For those between 20 and 30 years of service at retirement, the multiplier adjusts to what it would have been under the High-3 system, and (2) The CPI variable adjusts to a full CPI level as a one-time, one year adjustment. At this point (age 62), the Redux and High-3 retirement pays are equal. However, the CPI then reverts back to the previous formula of CPI minus 1% after age 62 and there are no further adjustments. At no point in time does the accrual under Redux exceed that under the High-3 system. Additionally, the COLA adjustment under Redux is substantially less than under the High-3 system. Thus, very few individuals elect the Redux option. Members who make the irrevocable decision to select the Redux retirement system within 180 days of completing 15 years of service receive a $30,000 Career Status Bonus (CSB) if they agree, in writing, to complete a 20-year military career. Of course, the member may remain beyond 20 years but they are only obligated to 20 years. The bonus may be paid in lump sum or in 2, 3, 4, or 5 installments. Those who elect multiple payments can use the bonus as a tax deferred contribution to their Thrift Savings Account, but it is taxable if paid directly to the servicemember, either as a lump sum or in installments. If, for any reason, the member does not complete 20 years of service, the member must repay a prorated share of the bonus. When enacted in 1999, there was no provision for automatically increasing the CSB to adjust for inflation. As a result, the $30,000 bonus is only worth approximately $22,000 today, certainly not a strong incentive when compared to the High-3. If the CSB had been indexed to the CPI, it would be worth approximately $38,500 today. Although there has been a military retirement system since 1861, the Army and Air Force Vitalization and Retirement Equalization Act of 1948 established the general framework for today's military retirement system. It featured vesting at 20 years of service, computed retired pay at the standard 2.5% per year of service, and applied to all of the services. In the six decades since then, there have only been three significant modifications or reforms of the system, mostly focused on the cost of the system. In 1980, the Final Pay methodology was changed to the High-3 calculation. Six years later, a major reform initiative, focused on saving $2.9 billion, resulted in the "1986 Act" or Redux plan. Redux reduced the retirement benefit at 20 years from 50% to 40% but kept it the same at 30 years of service (75%) to encourage longer careers. It also reduced the annual Cost-of-Living (COLA) increase by 1% per year until age 62. By 2000, Congress was convinced that Redux had a negative impact on retention and allowed servicemembers to choose either High-3 or Redux, while adding a $30,000 Career Status Bonus to the Redux plan to incentivize participation. This section will review the legislative history of the past three retirement reforms which may lend perspective for policy makers reviewing the more recent reform proposals. During the 1970s, military pay raises frequently lagged behind the private sector increases as measured by the Employment Cost Index. This "pay gap" resulted in problems in recruiting, retention, and readiness. To restore reasonable comparability with the civilian sector, Congress, in the Department of Defense Authorization Act for FY1981, approved an 11.7% military pay raise and followed that with a 14.3% pay raise in the Department of Defense Authorization Act for FY1982. To offset a portion of the added cost of this pay raise and to partially reduce the high cost of the military retirement system under the "Final Pay" methodology, the FY1981 Defense Authorization Act also approved the first major modification of the military retirement system since 1948. As explained in the Senate Report on the FY1981 Authorization Act: The committee recommends this change because of the high and increasing costs of military retired pay and because of the need to increase pay for military personnel while they serve on active duty and instead of after their active duty careers are finished. The act reduced retirement cost by establishing a second retired pay computation base for members who entered the military on or after September 8, 1980 (the date of enactment of the Defense Authorization Act). Servicemembers would still calculate their retirement at 2.5% per year for the number of years served but Final Pay would be replaced by the "High-3," the average of the highest three years or 36 months of basic pay. The savings over the Final Pay plan were estimated at 13% by DOD. Those who entered the military before September 8, 1980 were grandfathered from the High-3 system and continued to calculate their retired pay based on their Final Pay. The number still eligible for Final Pay continues to drop and nearly all of those eligible should be retired by 2016. At the time, conversion to the High-3 system constituted the most significant legislative change to the military retirement system since the end of World War II. The FY1986 Defense Authorization Act required the Secretary of Defense to develop and submit to Congress two alternative options for reforming the nondisability retirement system with a goal of saving $2.9 billion in the military accrual account. It specified that any recommended changes could not impact on those currently serving or already retired, that the changes should encourage members to remain on active duty beyond 20 years, and enable the military to manage its career force better. The models developed by DOD met the required savings target of $2.9 billion but predicted a potential major retention problem—a 8 to 12 % reduction in retention for the 10 to 20 year portion of the force and a 16 to 37% reduction in the 21 to 30 year cohort. As a result, when the report was submitted to Congress by Secretary of Defense Casper Weinberger, he noted in the forwarding memo that DOD did not support adoption of either option: Although the Department of Defense has prepared the draft legislation as required by the Congress, I want to make it absolutely clear that such action is not to be construed as support for either of the options for change. To the contrary, the Department of Defense is steadfastly opposed to the significant degradation in future combat readiness that would result from the changes required to achieve the mandated reduction. I am particularly concerned about the potential loss of mid-level leadership and technical know-how so vital to the defense mission. This position was reinforced during a House Armed Services Committee hearing on February 27, 1986 when Chapman B. Cox, the Assistant Secretary of Defense for Force Management and Personnel stated: we opposed both of these alternatives. We believe that the deep cut in retirement benefits associated with either alternative will severely hamper our ability to retain the high quality personnel we need, and would therefore pose an unacceptable risk to our future combat readiness. If the $2.9 billion could not be restored, DOD indicated that significant personnel cuts would be required immediately. Again according to Assistant Secretary Cox: if we do not have an adjustment by May 1, it would require a reduction of approximately 330,000 active force and about 176,000 reserve members in order to meet the budget decrement that presently exists. Congress reviewed the alternatives presented by DOD and developed a hybrid version that became the Military Retirement Reform Act of 1986, now colloquially referred to as Redux. Redux, originally intended to be a single retirement system for all active duty personnel, retains the 20-year cliff vesting but reduces the Computation Base to 40% at 20 years of service (a multiplier of 2% per year). To incentivize longer careers, it increases the multiplier to 3.5% per year between years 20 and 30 and would thus equal 75% of High-3 at 30 years of service. Since the 75% cap on retired pay was lifted, Redux increases the multiplier by 2.5% per year between years 30 and 40. As a result, compared to the High-3 method, Redux pays less for 20 to 29 years of service but the same as High-3 for 30 years of service and beyond. Redux also cuts retirement costs by increasing retired pay annually by the CPI minus 1%. However, at age 62 there is a one-time adjustment in retired pay. The Computation Base is adjusted to be what it would have been under High-3 (e.g. the Computation Base for a retiree with 20 years of service would increase from 40% to 50%) and the COLA is adjusted to reflect full COLA increases since the date of retirement. Thus, at age 62, the Redux and High-3 retirement pays are equal. However, after age 62, the COLA calculation reverts to the CPI minus 1% for the Redux retiree. With continuation of 20-year vesting, the first Redux eligible retiree was slated to retire on August 1, 2006. As discussed below, however, Congress modified the military retirement system again in 1999. A more detailed assessment of Redux retirement is available in CRS Report 87-702, The Military Retirement Reform Act of 1986: Issues and Implications , by [author name scrubbed] (out of print; available from the author of this report). By 1999, seven years before the first servicemember would retire under Redux system, the Cold War drawdown was complete, the economy was healthy, the airlines were hiring military pilots faster than the military could train them, and service budgets had been significantly reduced. According to some measures, military pay was lagging significantly behind that of their civilian peers, the personnel tempo was stressing the services and military families, and military retirement had lost some of its effectiveness as a retention tool. Some advocates argued that servicemembers of the all-volunteer force were beginning to "vote with their feet." In Congressional testimony, the Chairman of the Joint Chiefs of Staff and the Service Chiefs portrayed a situation of deferred maintenance on military equipment, readiness concerns, and personnel shortages as a main consequence of the services not meeting their recruiting or retention goals. According to General Henry H. Shelton, Chairman of the Joint Chiefs of Staff at the time: reforming military retirement (the Redux system) and military pay remains the Joint Chiefs' highest priority.... The Chief of Naval Operations, Admiral Jay L. Johnson, was concerned that the retention situation was continuing to deteriorate in the Navy: in retention, we are running 8 to 10 percent below requirements, first-, second-, and third-termers. We are also seeing a significant increase in the number of short term extensions being executed, which means our sailors are taking a wait-and-see attitude before making career commitments. For the Air Force, the problem was aging aircraft and pilots separating to pursue civilian opportunities with the airlines. According to General Michael E. Ryan, Air Force Chief of Staff: Today in the Air Force we are over 800 pilots short of our requirement.... Last year for every two pilots we trained, three separated. While the Services pointed to Redux retirement as the primary cause of the retention problem, it must also be noted that the military drawdown had just reduced the total active force from 2,043,705 in 1990 to 1,385,703 in 1999, a reduction of 32%. Military morale was low and fewer personnel may have viewed the military as a viable career opportunity. In response to these concerns, the FY2000 NDAA expanded existing benefits and provided some new ones to stimulate both recruiting and retention. These included (1) a 4.8% military pay raise which was 0.5% above the Employment Cost Index (ECI); (2) a commitment to increase basic pay each year through 2006 by 0.5% more than the ECI; (3) a special subsistence allowance for military families eligible for food stamps; (4) voluntary enrollment of military personnel in the Thrift Savings Plan (TSP) for tax-deferred savings; and (5) a 13% increase in the Montgomery G.I Bill education benefit. A $30,000 bonus was added to the Redux retirement program at the 15 th year of service and, most significantly from the perspective of retirement, service members were allowed to choose between Redux and the High-3 programs. The Congressional Budget Office estimated that this enhanced package of benefits would cost $18 billion more than the Administration's request over 10 years. With enactment of the FY2000 NDAA, servicemembers, for the first time, were given an opportunity to choose their retirement system. Those who selected Redux made an irrevocable decision within 180 days of their 15 th year of service. They had to agree, in writing, to complete 20 years of service on active duty with no service commitment beyond that point. The Career Status Bonus (CSB) could be taken in cash (taxable) or in annual installment payments into the Thrift Savings Plan (nontaxable). If the servicemember failed to complete 20 years of active duty, a pro-rated share of the bonus would be recouped. Those who did not opt for Redux retained the High-3 retirement. To aid in deciding whether to select the High-3 or Redux with the Career Status Bonus, DOD offered a calculator that allows an individual to enter their personal situation and do a comparison of the options. The calculator is available at http://www.dod/militarypay/retirement . DOD does not officially recommend either the High-3 or Redux/CSB, DOD does not routinely compile data, by Service, on the numbers of servicemembers who opt for Redux/CSB at the 15 th year of service, colloquially referred to as the "Take Rate." However, data has been maintained by the Navy and the Marine Corps for the years 2003 through 2010 for both officers and enlisted personnel and this data has been provided to CRS. Analysis of the trend (shown in Figure 1 ) demonstrates a significant decline in the number of CSB "Takers." From a combined high of 41% in 2003, the Navy and Marine Corps aggregate average has steadily decreased and was reported as only 16% in 2010. At least for the Navy and Marine Corps, the Redux/CSB option has declined, somewhat precipitously, in popularity. If the experience of the Army and Air Force are similar, High-3 is the dominant retirement program in the military with Redux/CSB increasingly viewed as a less valuable option. There have been two major administration military retirement reform proposals in the past five years. They are examined below. The DACMC was chartered by the Secretary of Defense on March 14, 2005 to "identify approaches to balance military pay and benefits in sustaining recruitment and retention of high-quality people, as well as a cost-effective and ready military force." This effort was chaired by Admiral D.L. Pilling, U.S. Navy (Retired) with six committee members and a support staff. Their report was published in April 2006. The committee reviewed and analyzed a wide spectrum of military compensation issues: retirement, basic pay, special and incentive pays, military healthcare, quality of life, and reserve component compensation. A chapter of the 150-page report focused on retirement reform and included several examples of a modernized, reformed retirement system. The committee noted three common criticisms of the current retirement system: (1) it is perceived to be inefficient because it defers too much compensation; (2) it appears to be inflexible because it does not facilitate force management; and (3) it is inequitable because most servicemembers never qualify (or vest) for the retirement benefit. Committee members also noted that military skills today are more transferable, life expectations are longer, and a generous retirement may be more expensive than increased retention incentives to ensure continuation on active duty. These observations resulted in the committee recommending: (1) military careers of longer duration; (2) earlier vesting in the retirement system; and (3) a TSP-type program with government matching funds. To achieve the proper (more cost effective) mix of current and deferred compensation, the committee recommended a three-tiered retirement system characterized by (1) a retirement annuity beginning at age 60; (2) the early vesting (at 10 years) of a TSP account with a government match in the 5% range; and (3) compensation incentives in the form of "gate pay," separation pay or transition pay to produce required retention. The first two tiers would be consistent across all services while the third tier would allow for the flexibility to address service-specific management issues. To demonstrate the potential of these recommendations, the committee modeled seven career scenarios against the current system. These variants all resulted in a smaller first-term force, a more robust mid-career force, and a reduced cost of the retirement system. As required by Title 37 of the U.S. Code, the President convened the 10 th Quadrennial Review of Military Compensation in late 2005. The QRMC was tasked with conducting "a complete review of the principles and concepts of the compensation system for members of the uniformed services." The memo convening the QRMC noted five areas of interest and specified that "the implications of changing expectations of present and potential members of the uniformed services relating to retirement" be addressed. The 10 th QRMC was headed by Brigadier General Jan D. (Denny) Eakle, U.S. Air Force (Retired) and was composed of a senior advisory board and two working groups—one for compensation and another for health professionals. The Compensation Working Group that reviewed retirement options included 26 members, representing all the Services, the Office of the Secretary of Defense, and the Joint Staff. The report of the 10 th QRMC was published in two volumes in February and July , 2008 respectively. The QRMC modeled each component of the DACMC's recommendations—early vesting, age eligibility for retired pay, the defined contribution and defined benefit components, gate pay and separation pay—against actual servicemember preferences using data and survey results from a 17-year cohort of military personnel. This methodology resulted in minor modifications to the DACMC's proposal but appears to have resulted in a more refined proposal. The QRMC proposal would use the same formula for the defined benefit portion of the retirement and vest this benefit at 10 years but would introduce a penalty for retiring with 20 or fewer years of service. Those who retire at or before 20 Years of Service (YOS) would begin receiving retired pay at age 60 while those retiring with more than 20 YOS would begin receiving retired pay at age 57 with the option of reducing the age by forfeiting 5% for each year less than age 57. The defined contribution portion would still vest at 10 YOS and could be withdrawn without penalty at age 60. The government match, however, would be variable or tiered based on YOS with a maximum match of 5% for those with more than 5 YOS. While all servicemembers would have the same defined benefit and defined contribution components, the services would have more influence over the gate pay and separation pay elements of this retirement proposal. Rather than establishing gate pay at 10, 15, 20, 25, and 30 year increments, the QRMC would allow the individual services to determine these milestones based on service needs in particular skills. So, for example, the gates for Army infantrymen might be X, Y, and Z, while the gates for Air Force pilots might be A, B, and C. Similar to this approach, separation pay would be enhanced by adding a multiplier to the formula (Base pay x YOS) but the multiplier would again be established by each service based on its manpower needs. For example, the separation pay multiplier in an "overstrength" career field might be X, but Y in an understrength field. The 10 th QRMC went beyond previous efforts by recommending: 1. The same retirement system for both the active and reserve component. The logic was that this would be consistent with the reserve realignment from a strategic to an operational reserve role. 2. A five-year demonstration project with a limited population sample to further test and refine the retirement proposal. A number of other government agencies have used demonstration projects extensively when preparing to modify compensation systems. For example, the recently terminated National Security Personnel System (NSPS) tested a number of pay plans in different DOD organizations over a number of years. If adopted following the demonstration project, the currently serving force would be grandfathered. Table 2 compares the basic aspects of the current retirement system with those recommended by both the DACMC and the 10 th QRMC. The ongoing economic recession, persistently high unemployment, and the growing national deficit resulted in a number of studies and reports during 2010 and 2011 that focused on reducing the cost of government, including defense. Some of these reports made recommendations concerning the military retirement system. The six most prominent reports (the Quadrennial Defense Review Independent Panel, the Sustainable Defense Task Force, the Defense Business Board, the Debt Reduction Task Force, the National Commission on Fiscal Responsibility and Reform and the President's Plan for Economic Growth and Deficit Reduction) are discussed and reviewed below and incorporated into Table 3 at the end of this section for comparison. The Quadrennial Defense Review (QDR) was established by Congress in the 1990s and directed the Secretary of Defense to "conduct a comprehensive examination of the national defense strategy, force structure, force modernization plans, infrastructure, budget plans and other elements of the defense program." The review is required every four years and must encompass the next 20 years. The first QDR was published in 1997. By 2006, some in Congress felt that the QDR effort had become overly bureaucratic, resulting in a repetitive overview of global threats, explanations and justifications of established decisions, and a general strategic discussion rather than the free-ranging and unconstrained effort that was originally intended. The Senate report on the FY2007 National Defense Authorization Act (NDAA) recommended a "red team" assessment of the DOD QDR with a separate report being submitted to Congress. The "red team" became the "independent panel" as this legislative initiative evolved. The Independent Panel that reviewed and assessed the 2010 QDR noted that escalating personnel entitlements in the DOD budget foreshadowed a "train wreck" in the areas of personnel, acquisition, and force structure. To address the personnel issues, the Panel recommended establishing a National Commission on Military Personnel similar to the 1970 Gates Commission. This commission would make recommendations to "modernize the military personnel system, including compensation reform; adjust military career progression to allow for longer and more flexible military careers; rebalance the missions of active, guard and reserve, and mobilization forces; reduce overhead and staff duplication; and reform active, reserve, and retired military health care and retirement benefits." The Sustainable Defense Task Force was formed based upon a request from four Members of Congress to the Project on Defense Alternatives to "explore possible defense budget contributions to deficit reduction that would not compromise the essential security of the U.S." There were 14 individuals on the task force and their formal report was published on June 11, 2010. The task force provided 19 options that were estimated to save $960 billion between 2011 and 2020. Three of the 19 proposals discussed personnel costs. 1. Reform military compensation by considering the totality of pay—base pay, the housing allowance, the subsistence allowance, and the tax advantage of these two allowances—when deciding upon future pay raises. Along with gradually reducing the recent growth of the Army and Marine Corps, this option is projected to save $55 billion between 2011 and 2020. 2. Reform DOD's healthcare system by implementing the recommendations of the 10 th QRMC for a savings of $60 billion from 2011 to 2020. 3. Reduce recruiting expenditures as wartime demand falls and endstrength begins to come down to save $50 billion over the next 10 years. A general comment made by the task force was that "we cannot seek to economize on pay and benefits, while also over-using our military personnel." The Defense Business Board (DBB) is a Department of Defense (DOD) organization reporting directly to the Secretary of Defense. The board includes a maximum of 25 members and is responsible for providing independent advice and recommendations to improve effectiveness and service delivery based on best business practices. Board members are appointed annually by the Secretary of Defense. In 2010 the board was tasked with identifying alternatives to reduce DOD's overhead based on Secretary Gates' announced goal of reducing the defense budget by $100 billion over 10 years. Arnold Punaro was selected to chair this task force of DBB members. The task force submitted its findings in July, 2010. While it made no specific recommendations concerning military retirement, the task force noted that, "numerous studies in recent years conclude that DOD must reform the current military retirement system." The task force concluded that, "This is a long-term problem that requires discipline and a firm focus on a plan to address the issue over the next 20 years." A year later, on July 21, 2011, a task group within the Defense Business Board publically released a follow-on briefing on "Modernizing the Military Retirement System." The military retirement system proposed by this task group would eliminate the defined benefit entirely and replace it with a defined contribution plan. The Thrift Savings Plan was noted as the most viable option for a defined contribution program, but TSP would now include automatic enrollment, member contributions, and an annual government contribution. The DOD match would vary depending on circumstances (combat versus noncombat assignments, hardship tours, critical skills, etc.) and the plan would be transportable into the private sector and back into the military. Fully disabled (100%) members would be exempt and would retire under the current disability procedures. The DBB plan would vest after 3 to 5 years instead of the current 20 years and the plan would be payable at age 60 to 65 (or the Social Security age). There would also be a right of survivorship transferability upon death. There would be no impact on the current military retiree population. The plan offered two implementation possibilities. The first would grandfather the current force, but new entrants would automatically be enrolled in the defined contribution plan. The second option would transition both currently serving personnel and new entrants but would allow currently serving members to retain a portion of their defined benefit based on their years of service at the transition point. A more detailed analysis of this proposal is not possible at this time, as only very broad outlines of the proposal were published in the briefing. A full report was expected in August 2011, but the report has still not been released. The Debt Reduction Task Force was established on January 25, 2010 by the Bipartisan Policy Center to "develop a long-term plan to reduce the debt and place our nation on a sustainable fiscal path." The task force's final report was issued in November, 2010. The task force was headed by co-chairs Pete Domenici, the former chairman of the Senate Budget Committee, and Dr. Alice Rivlin, former vice chair of the Federal Reserve and the former Director of the Office of Management and Budget. There were 19 members on the task force. The task force's recommendation for military retirement was modeled on the Federal Employees Retirement System (FERS) and the recommendations of the 10 th Quadrennial Review of Military Compensation (QRMC). Currently serving servicemembers with less than 15 years of service (YOS) would immediately be integrated into the new retirement plan; only those with more than 15 YOS would be grandfathered under the current retirement system. The reformed system would retain a defined benefit equal to 2.5% times years of service but the pay base would be High-5 rather than High-3. Retirement pay would begin at age 57 for those with at least 20 years of service and the plan would vest after 10 years. The task force estimated that from 2020 to 2040, this new system would to save $131 billion. In recognition of the nation's fiscal challenges, the National Commission on Fiscal Responsibility and Reform was established by Presidential Executive Order on February 18, 2010. The commission was tasked with "identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run" by proposing recommendations designed to balance the budget by 2015. The commission was required to complete its work and issue a final report by December 1, 2010. The commission was headed by former Senator Alan Simpson and former White House Chief of Staff Erskine Bowles. There were 18 members, most of whom were serving Representatives and Senators from both political parties. The commission's charter required 14 of the 18 members to report out any recommendation. The commission made only two recommendations concerning military retirement: 1. "Create a federal workforce entitlement task force to re-evaluate ... military retirement programs and recommend savings." 2. Defer Cost of Living Adjustments (COLA) until age 62 and then provide a one-time catch-up. This report, released by the White House on September 19, 2011, is intended to pay for the American Jobs Act and to realize more than $3 trillion in net deficit reduction over the next 10 years. The recommendations combine program reductions and eliminations with tax increases to achieve the $3 trillion total. For military retirement, the report recommends a commission being established and tasked to develop reform recommendations. DOD would make a proposal to the commission which can then add or delete provisions as it deems appropriate. It would then be forwarded to the President who can also make changes but must decide whether to forward the recommendations to Congress. If forwarded, Congress must approve or disapprove without any modifications. This procedure is similar to that followed by the 2005 Base Realignment and Closure Commission. The report specifically notes that any recommendations enacted would apply to new entrants only and that military personnel currently serving would be grandfathered. Table 3 summarizes the primary findings of the various cost reduction panels in 2010 and 2011. Those who advocate reform of the military retirement system generally offer several criticisms of the current system. Most of the new, more recent reform proposals have focused on the cost of the military retirement system and specific cost-cutting initiatives. The Defense Business Board stated that the cost of military retirement was "unsustainable" while the Debt Reduction Task Force reform recommendation was projected to save $131 billion between 2020 and 2040. Other reform proposals identified no specific savings target but a number of the participants in these reform studies argued that military retirement is overly generous. The current DOD retirement system is funded by an accrual accounting system that requires DOD to pay annually into the Military Retirement Fund an amount sufficient to finance future retirement payouts. This annual amount paid into the Fund will earn interest until the funds are distributed to pay future retirees through the General Fund of the Treasury. As noted in Table 1 , in FY2010 there was a total of $50.842 billion paid to 2,271,000 military retirees and survivors from the Military Retirement Fund within the U.S. Treasury. The actual FY2009 cost to DOD was $17.5 billion (or approximately 2.5% of the annual DOD budget ) due to accrual accounting. By comparison, in FY2010 there was a total of $69.2 billion paid to 2,479,276 Civil Service retirees and survivors. Two of the most significant determinants of the cost of future military retirement are the basic pay received while on active duty and the annual Cost of Living Allowance (COLA) which is received after retirement. Basic pay is a primary factor in all of the formulas for determining retired pay. As basic pay increases, the cost of future retirement also increases. Over the past 10 years, basic pay has increased by nearly 37% in part to offset inflation and in part to increase the attractiveness of military service during continued combat operations in Iraq and Afghanistan. These increases will be reflected in higher retired pay in the future. The military retired pay COLA has been inflation-protected since 1986 and indexed to increases in the CPI, a system similar to the inflation protection provided to Social Security recipients. Since 2002, COLA has increased by nearly 21.7% for those retired under the Final Pay and High-3 systems (1% less annually for those retired under the Redux system). Another aspect of the cost issue is the fact that military retirees begin receiving their monthly retirement annuity immediately, regardless of age. The average enlisted member is 42 years old and has 22 ½ years of service at retirement while the average officer is almost 45 years old and has nearly 24 years of service. In contrast, other public and private sector retirement plans typically do not begin providing an annuity until age 55, 60, or 65, although the age is often lower for those in 'high risk" public sector jobs such as firefighting and law enforcement. Most servicemembers retire with a spouse and several children at a time when their children are usually in high school or beginning college. So even though "retired" and receiving retired pay, a second public or private-sector career is usually essential. For example, a retired E-7 who retired at 20 years of service on January 1, 2010 under the High-3 option will receive $1,921 a month or $23,052 a year. Retirement reform initiatives have noted that the 20-year vesting rule is "inequitable" because it provides benefits in an "all or nothing" manner; those who complete 20 or more years are fully vested in a retirement annuity while those who separate voluntarily or involuntarily before 20 years of service usually receive no retirement benefit. Current and previous studies have recommended different vesting formulas from 5 years (to be consistent with many private-sector pension plans) to 10 or 15 years. Others have recommended some type of transition or separation pay as either a deferred annuity or as a lump sum payment. However, the 20-year vesting rule has been maintained. Some observers also note that a 20-year retirement encourages relatively short military careers during a time of lengthening life spans and longer careers in the private sector. These observers disagree with the military's emphasis on youth and vigor. To gain perspective on whether a 20-year career and immediate receipt of retired pay is appropriate, it may be useful to compare it with other "hazardous" or "arduous" occupations. One possible comparison is with federal law enforcement professionals, fire fighters, air traffic controllers, and nuclear waste management personnel. These federal employees become eligible for an immediate annuity after 25 years of service which compares favorably with the military eligibility requirement of 20 YOS. As a result, most of these special category federal employees are also under the age of 55 at retirement. Table 4 compares the FERS retirement requirements with the requirements for these special category personnel and the current military retirement system. Another aspect of the "youth and vigor" argument involves the health concerns as the military population ages. The military has emphasized youth, vigor and physical fitness since before WWII. However, today's force is somewhat older because its all-volunteer and more heavily reliant on the reserve component. In 2010, 62% of the active duty force was 25 years old or older and 37% was 30 or above. Statistics from ten years of U.S. combat operations in Iraq and Afghanistan confirm that older servicemembers are more vulnerable to injuries and more likely to face long recoveries. According to many experts, youth and vigor remain important, so retirement eligibility at 20 YOS may still be the most appropriate approach. Comparability concerns generally focus on the fact that the military retirement system remains primarily a defined benefit program but with the opportunity to voluntarily participate in a tax-deferred savings plan. This is unlike many private-sector employers who have reduced or eliminated their reliance on defined benefit programs and have focused almost exclusively on 401(K)-type programs, along with some level of employer matching contributions, for their employees. These 401(K) plans, however, were never meant to be the primary option for private retirement benefits, sometimes have high fees and produce unpredictable returns, especially in the recent economic downturns. The FERS civil service retirement, introduced in 1984, includes both a defined benefit and a defined contribution component to include matching funds up to 5% through the TSP. Military participants in the TSP have a very limited opportunity to take advantage of matching funds; there is a provision that allows a military Service Secretary to authorize matching contributions for members who reenlist in a critical skill for at least six years. The National Defense Authorization Act of 2000, while modifying the Redux retirement system to include the $30,000 Career Status Bonus, also extended participation in the TSP to military personnel. Members can contribute from 1% to 9% of their basic pay, before taxes, and up to 100% of any special incentive pays or bonuses, up to Internal Revenue Service annual limits. For those deployed to combat operations, the contribution limit is $49,000 per year. Contributions and earnings are taxed upon withdrawal. Participation in TSP is optional and there is no provision for automatic enrollment. Even without a matching option, the TSP has proven to be very popular investment opportunity with servicemembers—over 600,000 active and reserve component members had enrolled by 2009. Participation by officers is higher than enlisted members and participation by the active component is greater than the reserve component possibly because reserve component members may have better investment opportunities with their civilian employers. These trends are reflected in Table 5 . TSP participation by junior officer and enlisted personnel, who have lower incomes and may be less focused on retirement, is lower than more senior personnel who are committed to a military career and retirement. These trends are reflected in the data in Table 6 and Table 7 . Congress recently required DOD to assess the cost of a new proposal to provide matching TSP contributions to all military personnel. Using a 4% match (rather than the 5% allowed under FERS) and assuming 100% enrollment with all personnel contributing a minimum of 5%, DOD estimated the annual cost at $2.8 billion. In the current fiscal environment, this may be prohibitively expensive unless there were other major modifications to military retirement that reduced cost. Manning the force with the right number of personnel with the right skills and the right seniority is the primary goal of the various pays, incentives, and bonuses, which include the retention incentive associated with the military retirement system. Critics of the current retirement system have argued that it lacks the flexibility to 1. Provide benefits to those who serve less than 20 years, either voluntarily or involuntarily. 2. Provide incentives that vary by position, skill or job description. To address these perceived shortcomings, previous studies have recommended potential solutions ranging from retired or severance pay for involuntary separation, to deferred annuities that would not begin until age 60, to 10-year vesting, to separation pay incentives for those in "over strength" skills. It should be noted that Congress did provide Temporary Early Retirement Authority (TERA) as a flexible management tool during the military drawdown of the early to mid-1990s. Servicemembers with 15 to 20 years of service could apply for early retirement with their retired pay being reduced by 1% for every year of service less than 20 years. This program allowed for the targeted retirement of those at specific grades and with specific skills. The authority was originally limited to1992 through 1995 but was later extended to 1999. Early retirement was a popular drawdown incentive that permitted servicemembers to receive a retirement annuity for less than 20 years of service and retain the other military benefits associated with retirement. Congress could determine that the current military retirement system, primarily the High-3, is the most appropriate method of meeting the retention requirements of an all-volunteer force and retain the current system. Using the work of the DACMC and the QRMC to establish the foundation of a reformed retirement system, other options could be added or deleted to reduce costs or provide additional incentives. The resulting hybrid system could provide enhanced flexibility for force managers to retain personnel in critical skill areas, unconstrained by the current 20-year "all or nothing" system. It could also introduce a contributory element, the Thrift Savings Plan, which has already proven popular with military personnel. With the framework established, Congress could authorize DOD to conduct a multiyear demonstration project prior to implementing the new system force-wide. If the demonstration is successful, it could be implemented for all new entrants and offered to currently serving members who otherwise are limited to Redux or the High-3. Congress could establish a National Commission on Military Personnel—one of the recommendations made by the Quadrennial Defense Review Independent Panel. The Panel found that the complementary relationship between pay, bonuses, allowances, incentives, retirement, healthcare, and deferred and in-kind benefits resulted in a cost to DOD that was unsustainable for the future and required a separate review process. Specifically, the Panel recommended the following areas to be addressed by the Commission: Compensation reform "Continuum-of-service" issues such as promotion, professional development, career length and retirement age The active-reserve force mix Active, reserve, and retired healthcare and retiree benefits Reduction of the numbers and composition of headquarters and staffs The Panel felt that a Commission could complete this effort in a year. Alternatively, as recommended in The President's Plan for Economic Growth and Deficit Reduction, Congress could set up a commission to develop recommendations for reforming the current system. The commission would receive input from DOD, alter this proposal as appropriate and forward to the President for approval and release. The President, if concurring with the Commission's recommendations, would then forward it to Congress. Congress would be required to approve or disapprove without modification.

Few military subjects have generated as much interest or commentary as the military retirement system and efforts to reform the system have been many. Heightened concern over the national debt crisis, the economic recession, and stubbornly high unemployment has resulted in renewed congressional interest in the cost and effectiveness of the system. This report reviews various reform proposals and presents several potential options for Congress, ranging from maintaining the current system to a national commission to review military compensation, benefits, and retirement. The military retirement system is a noncontributory, defined benefit plan which guarantees a specific monthly payment after 20 or more years of service. Vesting occurs at 20 years of service, regardless of age, and is therefore an "all or nothing" proposition. Retirement age varies, but most military retirees are young enough to pursue private-sector careers following their military service. Most observers note that ,while effective as a retention tool, military retirement is also very expensive—in FY2010 there were 2,271,000 retirees and survivors receiving a total of $50.842 billion from the federal government. However, because of the way the government accounts for military retirement, the direct cost to the Department of Defense (DOD) is significantly less. In FY2009, DOD paid $17.5 billion to the Military Retirement Fund to fund the future retirement of the military cohort who entered the military during 2009. Critics of the military retirement system frequently cite several points in addition to cost: (1) It is inefficient because it defers too much compensation until the completion of a military career; (2) It is inflexible because it does not facilitate force management or encourage longer careers; and (3) It is inequitable because most servicemembers never qualify or vest. The military retirement system has evolved over time (see "Major Legislative Reforms of Military Retirement"). Today, active component servicemembers choose between two retirement systems at their 15th year of service (either High-3 or Redux), reservists are restricted to one system (a modified version of High-3), and disability retirees also have the opportunity to choose between two systems (High-3 or Disability retirement). Many observers have agreed that a reformed retirement system could enhance retention, provide an improved force management tool, and provide an equitable retirement regardless of component or special situation. A review of past legislative proposals finds that they have been controversial, unpopular with DOD and servicemembers, and generally focused on reducing the cost of military retirement. The Redux option, in particular, has become a less attractive option and fewer and fewer servicemembers are selecting it. The cost factor, combined with the recent emphasis on reducing costs in DOD and the overall federal deficit, resulted in a number of studies, commissions and reports in 2010. However, these efforts did not result in comprehensive policy changes. In addition to the most recent commission and think tank reports, two other efforts within the past five years included detailed recommendations for retirement reform. The 2005 Defense Advisory Committee on Military Compensation (DACMC) established a framework for a comprehensive restructuring of military retirement. This was followed in 2008 by the 10th Quadrennial Review of Military Compensation (QRMC) that further modeled, refined, and amplified on the work of the DACMC. Both efforts supported applying a reformed military retirement system to new entrants only; currently serving and already retired members would be grandfathered.

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From the mid-1970s to the mid-1990s, economic and trade relations between the United States and the Socialist Republic of Vietnam (Vietnam) remained virtually frozen, in part a legacy of the Vietnam War. On May 2, 1975, after North Vietnam defeated U.S. ally the Republic of Vietnam (South Vietnam), President Gerald R. Ford extended President Richard M. Nixon's 1964 trade embargo on North Vietnam to cov er the reunified nation. Under the Ford embargo, bilateral trade and financial transactions were prohibited. Economic and trade relations between the two nations began to thaw during the Clinton Administration, building on joint efforts during the Reagan and George H. W. Bush Administrations to resolve a sensitive issue in the United States—recovering the remains of U.S. military personnel declared "missing in action" (MIA) during the Vietnam War. The shift in U.S. policy also was spurred by Vietnam's withdrawal from Cambodia. President Bill Clinton ordered an end to the U.S. trade embargo on Vietnam on February 3, 1994. On July 11, 1995, the United States and Vietnam restored diplomatic relations. Two years later, President Bill Clinton appointed the first U.S. ambassador to Vietnam since the end of the Vietnam War. Bilateral relations also improved in part due to Vietnam's 1986 decision to shift from a Soviet-style central planned economy to a form of market socialism. The new economic policy, known as Doi Moi ("change and newness"), ushered in a period of nearly 30 years of rapid growth in Vietnam. Since 2000, Vietnam's real GDP growth has averaged over 6% per year, second only to China. Much of that growth has been generated by foreign investment in Vietnam's manufacturing sector, particularly its clothing industry. The United States and Vietnam signed a bilateral trade agreement (BTA) on July 13, 2000, which went into force on December 10, 2001. As part of the BTA, the United States extended to Vietnam conditional most favored nation (MFN) trade status, now known as normal trade relations (NTR). Economic and trade relations further improved when the United States granted Vietnam permanent normal trade relations (PNTR) status on December 29, 2006, as part of Vietnam's accession to the World Trade Organization (WTO). Over the last five fiscal years, Congress has appropriated over $10 million each year to support Vietnam's economic reforms. In addition, the two nations have set up a ministerial-level Trade and Investment Agreement (TIFA) Council to discuss issues related to the implementation of the Bilateral Investment Treaty (BIT) and WTO agreements, as well as trade and investment policies in general. U.S. and Vietnamese official trade data are comparatively close and reflect a similar pattern in the growth of bilateral trade (see Figure 1 ). For the first few years following the end of the U.S. embargo in 1994, trade between the two nations grew slowly, principally because of Vietnam's lack of NTR. However, following the granting of conditional NTR in December 2001, trade flows between the United States and Vietnam grew quickly. Merchandise trade nearly doubled between 2001 and 2002, regardless of which nation's figures one uses. Bilateral trade rose again in 2007, following the United States granting PNTR status to Vietnam. U.S. imports from Vietnam slid 4.7% in 2009 because of the U.S. economic recession, but have rebounded sharply since 2010. Both nations are parties to the Trans-Pacific Partnership (TPP), a regional trade agreement awaiting approval of implementing legislation by the respective legislatures of both nations. For its part, Vietnam also has indicated a desire to foster closer trade relations by applying for acceptance into the U.S. Generalized System of Preferences (GSP) program and negotiating a bilateral investment treaty (BIT), but both those initiatives have receded in light of the TPP agreement. The United States also has expressed an interest in closer economic relations, including the possible elimination of restrictions on arms sales to Vietnam, but has previously told the Vietnamese government that it needs to make certain changes in the legal, regulatory, and operating environment of its economy to conclude either the BIT agreement or to qualify for the GSP program. The growth in bilateral trade also has created sources of trade friction. A rapid increase in Vietnam's clothing exports to the United States led to the implementation of a controversial monitoring program from 2007 to 2009. The growth in Vietnam's catfish exports (known as basa , swai , and tra ) also has generated tensions between the two nations. Other economic issues have had an indirect effect on bilateral relations, such as the United States' designation of Vietnam as a "non-market economy," and allegations of inadequate intellectual property rights (IPR) protection in Vietnam. In 2008, the Bush Administration notified Congress of its intention to enter into negotiations with the four members of the Trans-Pacific Strategic Economic Partnership Agreement—Brunei, Chile, New Zealand, and Singapore—to form a larger and more ambitious trade agreement. The U.S. announcement of interest in joining the renamed Trans-Pacific Partnership was quickly followed by similar expressions of interest by Australia, Malaysia, Peru, and Vietnam. The nine countries formally agreed to accept Mexico and Canada into the ongoing negotiations on June 18 and 19, 2012, respectively. Japan was accepted into the negotiations on April 21, 2013. The 12 nations signed the agreement on February 4, 2016. Vietnam's membership in the TPP could complicate the congressional support for the trade agreement. Whereas the other parties involved in the negotiations are generally viewed as having comparatively open trade policies, Vietnam remains a mixed economy with considerable government intervention. Backers of Vietnam's participation in the negotiations maintain that it would further open a sizeable market to U.S. exports and investments, and could accelerate economic reforms in Vietnam. Opponents cite Vietnam's human rights record, including with respect to workers' rights, and alleged unfair government support for certain industries as reasons for not entering into a trade agreement with Vietnam. According to U.S. trade statistics, Vietnam is the fifth-largest U.S. trading partner (after Canada, Mexico, Japan, and Singapore, respectively) among the 12 TPP nations. According to a CRS interview with key Vietnamese analysts, Vietnam initially pressed for the following provisions in the TPP agreement: Designation as a market economy prior to 2019; Liberalization of trade in services (including certification and licensing); Relaxation of U.S. "yarn forward" rules on clothing trade (see " Textiles and Apparel " below); Prohibition on discrimination against state-owned enterprises; and Special consideration for developing economies. Vietnam was also interested in greater market access for its agricultural and aquacultural exports, particularly in the United States. The United States, in turn, pressed Vietnam to undertake the necessary economic and regulatory reforms necessary to fulfill its obligations under the proposed TPP agreement. The United States stated that it was particularly concerned about Vietnam's ability to achieve the necessary TPP standards for such topics as sanitary and phytosanitary (SPS) measures, workers' rights, IPR enforcement, and state-owned enterprises (SOEs). Another complicating factor during the negotiations was Vietnam's negotiations with 15 other nations to form another regional trade agreement, the Regional Comprehensive Economic Partnership (RCEP), that does not include the United States. RCEP negotiations formally began in November 2012, and are scheduled to be concluded by the end of 2016. It is uncertain how RCEP would affect Vietnam's interest and commitment to TPP, if both regional trade agreements are finalized. When the TPP negotiations were concluded in October 2015, Vietnam's government-run media lauded the agreement for the increased trade and foreign investment it will bring to the nation. Those press accounts stressed that the TPP would provide duty-free market access to the United States for Vietnam's clothing, footwear, and textile exporters, as well as attract foreign investors from Japan and the United States to set up more manufacturing facilities in Vietnam. The government-run press downplayed concerns about potential adverse effects on Vietnam's agricultural sector, possibly higher pharmaceutical prices, and required changes in Vietnam's labor laws and regulations. The TPP agreement was also viewed as another step in the normalization of relations with the United States. The final text of the TPP agreement contains a number of provisions of particular importance to trade relations between the United States and Vietnam. The market access provisions provide for the gradual elimination of tariffs on most goods, but both nations secured safeguard measures for selected goods of domestic importance. The agreement's textile and apparel provisions utilize the "yarn forward" approach preferred by the U.S. government, but also allow for an extensive "short supply list" that will likely qualify a significant amount of Vietnamese exports to enter the United States for the TPP's preferential tariff rates. On workers' rights, the two nations signed a separate "United States-Vietnam Plan for the Enhancement of Trade and Labour Relations" in which Vietnam commits to comply with International Labour Organization (ILO) standards and requires that the Vietnamese government "ensure that its laws and regulations permit workers, without distinction, employed by an enterprise form a grassroots labour union of their own choosing without prior authorization." Both governments also open up much of government procurement to foreign suppliers, but with limits on certain goods and services considered of national security interest. On intellectual property (IP) rights, the TPP agreement commits both nations to protect and enforce IP rights, including agreed upon "geographical indicators," and obligates Vietnam to recognize IP rights for biologics. The agreement's chapter on State-Owned Enterprises (SOEs) forbids, with some specific exceptions, all TPP members from providing "non-commercial assistance" to its SOEs, and forbids its SOEs from discriminating against foreign firms. In general, chapter 2 of the TPP agreement commits each nation to afford national treatment and customs duty-free entry to the goods and services of the other member nations, unless otherwise provided in the agreement. Each nation has included a tariff elimination schedule for the phased out reduction in tariffs, which can span up to 20 years. The United States stipulated that it would establish tariff rate quotas (TRQs) for sugar (including imports from Vietnam), certain dairy products, and beef from Japan. The United States also reserved the right to impose agricultural safeguard measures for certain dairy products, but none of them applied to Vietnamese goods. Vietnam established TRQs for used engines, unmanufactured tobacco, and tobacco refuse. The United States and Vietnam also exchanged letters with regard to U.S. inspection requirements for " Siluriformes , including pangasius , tra , and basa "—which are catfish-like fish—pursuant of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ) and the Agricultural Act of 2014 ( P.L. 113-79 ). Vietnam has asserted that these laws constitute a form of protectionism for U.S. catfish producers (see " Catfish " below). The letters recognize the importance of pangasius , tra , and basa to Vietnamese farmers, and commit the two countries to consult with each other following the release of final U.S. regulations governing the inspection of Siluriformes . The United States also promises to consider a "transitional period for the implementation of the final rule," and "subject to the availability of appropriated funds, work with Viet Nam and other interested parties, to identify and provide technical assistance" for compliance with the final rule. As indicated above, the U.S. and Vietnamese governments entered into the TPP negotiations with conflicting objectives. Similarly, the U.S. textile and apparel sectors were split on the treatment of their products in the TPP. In the negotiations, the U.S. Trade Representative supported a "yarn-forward" rule of origin, as had been done in previous U.S. trade agreements; the Vietnamese negotiators and U.S. apparel companies argued for a less restrictive "cut and sew" rule of origin. The TPP agreement has a separate chapter (Chapter 4) on textiles and apparel that adopts a "yarn-forward" rule of origin approach, but also provides for an extensive list of fibers, yarns, and fabrics deemed to be in "short supply." These materials that can be sourced outside of the TPP member nations and still qualify for duty-free treatment. The short supply list includes 187 items that some observers think is sufficiently extensive and could allow a significant share of Vietnamese apparel to qualify for duty-free treatment. Other analysts, however, are less certain that Vietnam's clothing and textile industry will significantly benefit from the TPP provisions. In particular, the "yarn-forward" rule of origin will present a challenge to Vietnamese apparel manufacturers who currently source the majority of their fabrics and textiles from China, a non-TPP nation. Vietnam's domestic textile industry currently lacks the capacity and expertise to supply the apparel industry with the necessary materials, but investors from China, South Korea, and Taiwan reportedly are building weaving and dyeing factories in Vietnam to comply with the "yarn forward" rule of the TPP. Some Japanese and U.S. companies are also setting up textile and apparel manufacturing facilities in Vietnam to take advantage of the TPP's benefits. The U.S. government, a number of non-governmental organizations (NGOs), and human rights advocacy groups have been critical of Vietnam's restrictions on workers' rights. While they generally recognize that Vietnam has made improvements in its labor laws since the start of the century, they see ongoing problems with local government enforcement and business compliance. The State Department's 2014 human rights report on Vietnam singled out problems with suppression of independent labor unions, failure to enforce laws governing the right to organize, forced or compulsory labor, child labor, and unacceptable working conditions. Workers in Vietnam have the legal right to collective bargaining. At present, all labor unions in Vietnam must be a member of the Vietnam General Confederation of Labor (VGCL). The VGCL is supposed to organize a union within six months of the establishment of any new business, regardless of its ownership—state, foreign, or private. Vietnamese workers are not legally allowed to form unions independent from the VGCL, and efforts to organize independent unions in Vietnam reportedly have been thwarted by government suppression, including the arrest and imprisonment of union leaders. In addition, workers are prohibited from forming industry-wide or trade unions that represent workers in different enterprises. Some analysts have argued that restrictions of the right of association in Vietnam have impeded the improvement of labor rights. Other observers, however, counter that since the launch of doi moi , there has been progress on worker rights despite the restrictions on their independent right to organize. These observers point out that hundreds of unaffiliated (and therefore unofficial) "labor associations" have sprouted without significant repression, that the VGCL has evolved into a more aggressive advocate for workers, and in many recent cases, Vietnamese workers have gone on strike reportedly because they felt that they were not well-represented by the official union. In 2009, Human Rights Watch raised concern about the ability of Vietnamese workers to call an official strike, especially at state-owned enterprises (SOEs). According to the State Department's most recent human rights report for Vietnam, none of the 262 reported strikes between January and November 2015 "followed the authorized conciliation and arbitration process" required by Vietnam's labor laws, and were therefore, technically illegal. Vietnamese workers did experience a few improvements in 2014 and 2015. In April 2014, the VGCL formed the Committee of Labor Relations to improve relations between local unions and their workers, improve relations between workers and managers, and avoid labor disputes. In addition, the chairman of VGCL is allegedly pushing for a higher minimum wage than the one being proposed by the Vietnamese government. Also, a week-long strike in Ho Chi Minh City in April 2015 reportedly pressured the Vietnamese government to amend a new social insurance law that would have limited lump sum payments to workers when they leave their jobs. Between 2005 and 2008, the reported number of factory worker strikes in Vietnam increased from 147 to 762. Virtually all these strikes were illegal, or wildcat strikes, organized by workers without the support or assistance of the local union. The reported number of strikes declined in 2009 to 216, but then quickly rose to 981 in 2011. After the rise in wildcat strikes, the Vietnamese government appeared tacitly to accept that enforcement of its labor laws have been problematic. Vietnam's official news agencies— Thanhnien News , Vietnam Net, and Voice of Vietnam News—ran a series of reports in 2008 and 2009 describing problems with Vietnam's protection of workers' rights, the flaws of the VGCL, and efforts to improve working conditions in Vietnam. The humanitarian aid agency of the Australian Council of Trade Unions, which has worked closely with the VGCL on workers' education, wrote in a letter to Human Rights Watch, "Our experience in workers' education in Vietnam also leads us to believe that the government, far from trying to lower workers' conditions or repress workers, is sensitive to the needs of women and men workers." Since then, the Vietnamese government has worked with various international organizations to improve its labor laws, regulations and enforcement. Vietnam's Ministry of Labour, Invalids, and Social Affairs (MOLISA) and the VGCL worked with the International Labor Organization (ILO) to finalize a new Labour Code and Trade Union Law. In June 2012, Vietnam's National Assembly approved the new law, which took effect on May 1, 2013. The ILO and MOLISA are also working with Spain's Agency for International Development Cooperation on a program to eliminate child labor in Vietnam. In addition, the United Nations provided $2 million for a program to help the VGCL improve its grassroots relations. Vietnamese workers continue to face constraints on their right of association, their ability to form unions of their choice, and their ability to address grievances over their working conditions. Labor organizers, such as Do Thi Minh Hanh, Doan Huy Chuong, and Nguyen Hoang Quoc Hung, have been arrested and jailed for attempting to organize independent labor unions. In January 2015, the Vietnamese government reportedly issued new guidelines that establish procedures for settling wildcat strikes, but are seen as cumbersome and potentially costly for the striking workers. Workers in some foreign-owned factories (particularly Taiwanese and South Korean-owned clothing factories) face "authoritarian" factory managers who reportedly violate Vietnamese laws on working hours and conditions, and hire under-aged workers. Chapter 19 of the TPP requires all parties to the agreement make sure their laws and regulations are in compliance with the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998), including: freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labor, a prohibition on the worst forms of child labor and other labor protections for children and minors; the elimination of discrimination in respect of employment and occupation; and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health. In addition, all TPP members have promised to "encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour issues" and promote public awareness of their respective labor laws. The TPP agreement also creates a Labour Council consisting of "senior governmental representatives" that will meet every two years to discuss labor issues and review compliance with the TPP's labor provisions. Five years after the TPP enters into force, the Labour Council will review the implementation of Chapter 19 and make recommendations to the TPP Commission. The United States-Vietnam Plan for the Enhancement of Trade and Labour Relations (the Plan) obligates the Vietnamese government to enact legal reforms to ensure that it is incompliance with Chapter 19 of the TPP agreement, as well as implement a number of specific reforms. These include amending existing laws, decrees or resolutions such that: "workers, without distinction, employed by an enterprise" may form a grassroots labor union of their own choosing without prior authorization; the grassroots labor unions may be formed across enterprises "and at levels above the enterprise"; the grassroots labor unions can register with its choice of either the VGCL or a "competent government body"; "A grassroots labour union registered with the competent government body shall have the right autonomously to elect its representatives, adopt its constitution and rules, organize its administration, including managing its finances and assets, bargain collectively, and organize and lead strikes and other collective actions related to the occupational and socio-economic interests of the workers at its enterprise"; "A grassroots labour union registered with the competent government body shall have no lesser rights in law and practice with regard to the labour rights as stated in the lLO Declaration than a grassroots labour union under the VGCL"; Vietnam's laws do not mandate that "A labour union registered with the competent government body to operate according to the Statutes of Viet Nam General Confederation of Labour"; all labor union officials are elected by that labor union's membership, and union can employ persons to assist with its activities; and Vietnam's laws allow for rights-based strikes, consistent with ILO guidance. The Plan requires Vietnam change its labor laws and establish the necessary institutional changes prior to the date the TPP agreement enters into force between the United States and Vietnam. The Plan also establishes a process whereby the two nations review Vietnam's implementation of the TPP's labor provisions and those contained in the Plan. If, after a five-year transition period, the United States determines that Vietnam is not complying with its obligations, the United States "may withhold or suspend any tariff reductions that are scheduled to come into effect thereafter." In addition, the Vietnamese government will develop and implement a strategy for targeting inspection and other enforcement activities to sectors where forced labor or child labor has been identified, and "allow independent experts legally operating in Viet Nam to carry out research studies in sectors where forced labour or child labour has been identified and to publicly release their findings, source data and methodology." The Plan also establishes a Senior Officials Committee (SOC): composed of senior officials from the Office of the U.S. Trade Representative and the Department of Labor for the United States and from the Ministry of Industry and Trade and the Ministry of Labor, Invalids, and Social Affairs for Viet Nam to monitor, assess and facilitate rapid response to any concerns about compliance with and implementation of the legal and institutional reforms under this Plan. The SOC is to meet every year for 10 years, and conduct a joint review during the third, fifth, and tenth year after the TPP agreement comes into force. Critics of the Plan point to several perceived shortcomings of its provisions. A Minority Staff Report of the House Ways and Means Committee asserts that the Plan does not contain sufficient mechanisms to ensure Vietnam's compliance with its obligations with respect to workers' rights. Other critics note that the Plan does not contain provisions pertaining to the identification or definition of the "competent government body" with which the independent grassroots labor unions are to register, or assurances that the "competent government body" will not attempt to exert inappropriate pressure on the labor unions. Chapter 15 of the TPP agreement requires all parties to provide national treatment and utilize nondiscriminatory practices in the provision of goods and services procured by government entities, unless otherwise provided in the TPP agreement. Both the United States and Vietnam stipulated exceptions for the procurement of certain types of goods and services. The United States, for example, used a "negative list" approach, excluding certain types of agricultural, nuclear, shipbuilding, and defense-related goods and services from its government procurement obligations. Vietnam, by contrast, used a mixture of a "negative list" and a "positive list," excluding some goods and services (for example, construction services for the Ministry of Transport) and enumerating which goods and services are included for other government entities. Chapter 18 of the TPP Agreement obligates the member nations to abide by several international intellectual property rights agreements and provide national treatment to the intellectual property of other nations. The Agreement also states, "The obligations of this Chapter do not and should not prevent a Party from taking measures to protect public health," and permit the nations to "promote access to medicines for all." The chapter also provides for the recognition of "geographical indications" (i.e., goods identified with a specific location, such as "Tennessee Whiskey" or "Phu Quoc Fish Sauce). Trademarks are protected, and renewable "for a term of no less than 10 years." Copyrights are granted for 70 years after the death of the author or performer. Data exclusivity for biologics is protected for 5-8 years following the first date of marketing approval. In a separate letter exchange, the United States and Vietnam agreed that Article 9.6 of Chapter II of the "Agreement of the United States of America and Socialist Republic of Vietnam on Trade Relations" will apply to "any new pharmaceutical product that is or contains a biologic." Article 9.6 provides no less than five years protection for pharmaceutical or agrochemical products. Chapter 17 of the TPP Agreement requires that the state-owned enterprises (SOEs) and designated monopolies for each nation afford national treatment to foreign companies in their commercial activities. The chapter also prohibits the provision to or by state-owned enterprises of "non-commercial assistance." Non-commercial assistance includes debt or liability forgiveness; loans or loan guarantees "on terms more favourable than those commercially available to that enterprise"; "equity capital inconsistent with the usual investment practice"; and "goods or services other than general infrastructure on terms more favourable than those commercially available to that enterprise." Each nation is permitted to exempt the SOEs and designated monopolies of sub-central levels of government from certain provisions in the agreement. The United States identified the following entities as SOEs or designated monopolies, and provided for the exemption from certain provisions in the agreement: the Federal National Mortgage Association; the Federal Home Loan Mortgage Corporation; the Government National Mortgage Association; and the Federal Financing Bank. Vietnam included all its SOEs and designated monopolies as being included in the exemption provisions. Congress has to pass implementing legislation to amend any U.S. law inconsistent with the terms of the TPP agreement in order for the TPP to enter into force in the United States. Unlike the ratification of international treaties, the implementing legislation for trade agreements must be approved by both the House of Representative and the Senate. Vietnam's National Assembly reportedly will consider the TPP agreement in July 2016. Congressional consideration of TPP implementation legislation is likely to be influenced by Vietnam's participation in the trade agreement. TPP supporters see several potential economic and strategic benefits of Vietnam's membership. U.S. companies exporting certain goods—such as beef, dairy products, poultry, cotton and cotton cloth, and telecommunications products—anticipate greater access to Vietnam's consumer markets. U.S. retailers expect to be able to import lower cost/higher quality consumer goods from Vietnam, in some cases replacing imports currently coming from China. The conclusion of a trade agreement between the two nations may also signal the further normalization of bilateral relations, and foster greater cooperation on various geopolitical issues, such as regional security and environmental protection. According to several assessments of the estimated impact of the trade agreement, including those done by the Vietnamese government, Vietnam is likely to be among the greatest economic beneficiaries of the TPP. The Vietnamese government anticipates the TPP agreement will not only bring a short-term boost in merchandise trade, but also substantial inward foreign direct investment. Some U.S. observers contend that could translate into a loss in U.S manufacturing jobs and a rising trade deficit with Vietnam. In addition, the increase in Vietnam's exports may also benefit China, which is a leading provider of raw materials, parts, and components used by Vietnam's leading export sectors. Some Members of Congress and analysts have also expressed concern about the trade agreement's implications for human rights in Vietnam, and more specifically, workers' rights. Some of these analysts are skeptical that the Vietnamese government will abide by the terms of the United States-Vietnam Plan for the Enhancement of Trade and Labour Relations (the Plan), and that Vietnamese workers will not be allowed to form independent trade unions or be afforded fair treatment during labor disputes. Others critics maintain that accepting Vietnam as a TPP member would reduce U.S. leverage on Vietnam regarding human rights in general. Other analysts, however, think that the Plan is sufficiently strong to enhance workers' rights in Vietnam, and that the resulting influx of U.S. investment will foster a general improvement in working conditions in Vietnam. Catfish have been and continue to be a regular source of trade friction between the United States and Vietnam. Vietnam is a major exporter of frozen fish fillets using certain varieties of fish—known as basa , swai , and tra in Vietnamese—that are commonly referred to as catfish in the global fish market. Since 1999, Vietnamese exports of basa , swai , and tra frozen fish fillets have secured a growing share of the U.S. market, despite the objections of the U.S. catfish industry and the actions of the U.S. government. In 2015, the United States imported over $320 million of bas a , swai , and tra from Vietnam. Over the last 13 years, the United States has taken several actions that have had an impact on the import of Vietnamese basa , swai , and tra . In 2002, Congress passed legislation that prohibited the labeling of basa , swai , and tra as "catfish" in the United States. In August 2003, the U.S. government imposed antidumping duties on "certain frozen fish fillets from Vietnam," including basa , swai , and tra . In June 2009, the ITC determined to keep the duties in place "for the foreseeable future." According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the number of companies exporting catfish to the United States declined from 30 to 3 following the imposition of antidumping duties. Despite the reported decline in exporters, U.S. imports of basa , swai , and tra from Vietnam continued to rise. The ongoing tensions around catfish trade were heightened by the passage of the 2008 Farm Bill ( P.L. 110-246 ) by the 110 th Congress in June 2008 . The 2008 Farm Bill transferred catfish inspection (including basa , swai , and tra ) from the Food and Drug Administration (FDA) to the U.S. Department of Agriculture (USDA). The transfer was confirmed in the Agriculture Act of 2014 ( P.L. 113-79 ). As discussed in more detail below, the new inspection regime took effect on March 1, 2016. In the eyes of the Vietnamese government, the U.S. response to the growth of Vietnam's basa , swai , and tra exports constitutes a case of trade protectionism designed to shelter U.S. catfish producers from legitimate competition. Vietnam also points to U.S. anti-dumping measures on Vietnamese shrimp and plastic bags as an indication of U.S. protectionism (see " Non-Market Economy Designation "). Supporters of U.S. trade policies against Vietnam's exports of basa , swai , and tra say the measures are designed to defend U.S. consumers and businesses from the unsafe products and unfair business practices of Vietnam. The legal status of Vietnam's basa , swai , and tra exports to the United States was brought into question by the provisions of Section 11016 of the 2008 Farm Bill ( P.L. 110-246 ) in June 2008. The section, entitled "Inspection and Grading," established a voluntary fee-based grading program for "catfish (as defined by the Secretary)." The law also stipulated specific aspects of the examination and inspection of catfish, including the conditions under which the fish were raised and transported. By these provisions, the 2008 Farm Bill effectively transferred the regulation of imported catfish from the FDA to the USDA, which is generally viewed as maintaining stricter inspection standards than the FDA. The possibility that the Secretary of Agriculture could have redefined catfish to include basa , swai , and tra , thereby making them subject to the stricter USDA inspection standards, brought forth objections from Vietnam's Ambassador to the United States, its Minister of Agriculture and Rural Development, and Vietnam's catfish industry (including VASEP). Then-Ambassador to the United States Le Cong Phung sent a letter to nearly 140 Members of Congress, suggesting that a reclassification of basa and tra as catfish would call into question the U.S. commitment to the WTO and endanger the jobs of more than 1 million Vietnamese farmers and workers. In addition, an opinion article in the Wall Street Journal referred to the possible reclassification of basa , swai , and tra as catfish as "protectionism at its worst." Supporters of the provisions of the 2008 Farm Bill state that it provides greater protection to U.S. consumers. The issuance of new catfish inspection regulations proved to be an extended process spanning more than five years. The Secretary of Agriculture sent draft regulations to the Office of Management and Budget (OMB) in November 2009; the final regulations were published in December 2015. Draft regulations for catfish food safety inspection were delivered to the Office of Management and Budget (OMB) by the USDA in November 2009. On February 24, 2011, the USDA published in the Federal Register its proposed rule for mandatory inspection of catfish and catfish products. The USDA was "proposing to apply the requirements for the inspection of imported meat products (21 U.S.C. 620) to the inspection of imported catfish products…." The proposed rule, however, left some of the key issues related to Vietnamese imports unresolved, including the definition of catfish. The USDA requested public comments on the proposed rule, to be delivered on or before June 24, 2011. The catfish controversy reemerged after the passage of the Agricultural Act of 2014 ( P.L. 113-79 ). Section 12106 amended Section 1(w) of the Federal Meat Inspection Act (21 U.S.C. 601(w)) to require "all fish of the order Siluriformes" be inspected by the USDA, confirming the change made in the 2008 Farm Bill, and effectively including basa , swai , and tra under the definition of catfish, and superseding the 2002 law. In addition, the Agricultural Act of 2014 requires that the FDA and the USDA coordinate their inspection activities to avoid duplication of efforts. Based on the provisions of P.L. 110-246 and P.L. 113-79 , the USDA submitted the final version of the catfish inspection regulations to OMB on June 2, 2014. OMB officially had 90 calendar days—or until September 1, 2014—to complete its review of the final rule. The USDA's Food and Safety Inspection Service (FSIS) published the final regulation in the Federal Register on December 2, 2015, more than six years after draft regulations were first delivered to OMB. The new regulations took effect on March 1, 2016, but provide a transition period lasting until September 1, 2017, before full implementation takes place. The new regulations require all imported catfish and catfish products (defined as all fish of the order Siluriformes) come from a facility that complies with USDA sanitation standards. To qualify for import into the United States, foreign countries would have to demonstrate that their laws, regulatory administration, evaluation system, and standards are equivalent to U.S. standards administered by the FSIS. In addition, the FSIS will review the inspection systems of other nations to determine their equivalency with U.S. standards; these reviews may include periodic onsite visits to overseas catfish facilities. Prior to March 1, 2016, foreign countries wishing to export catfish to the United States had to provide to FSIS a list of establishments (with the establishment name and number) "that currently export and will continue to export Siluriformes fish and fish products to the United States." The foreign countries were also required to provide: documentation showing that they currently have laws or other legal measures in place that provide authority to regulate the growing and processing of fish for human food and to assure compliance with the Food and Drug Administration's (FDA) regulatory requirements in 21 CFR part 123, Fish and Fishery Products. During the transition period that will last until September 1, 2017, FSIS will inspect all U.S. establishments that slaughter, or slaughter and process and distribute catfish or products containing catfish, as well as conduct species and residue sampling on imported catfish shipments at U.S. import establishments on a random basis. During the same period, foreign countries wishing to export catfish to the United States must submit "adequate documentation showing the equivalence of their Siluriformes inspection systems with that of the United States." If the FSIS requests additional equivalency documentation, the foreign country will have 90 days to submit the additional information. To demonstrate the equivalence of their inspection standards, foreign governments must provide information regarding the inspection program's administration, the relevant laws and regulations, copies of inspection documents and forms, and procedures to maintain inspection standards. As a possible preparation for heightened U.S. inspection requirements, starting in 2010, Vietnam's Ministry of Agriculture and Rural Development (MOARD) tightened export hygiene standards for basa , swai , and tra . Effective April 12, 2010, all basa and tra exported from Vietnam needed certificates for hygiene and food safety issued by the National Agro-Forestry-Fisheries Quality Assurance Department. In addition, MOARD and the Ministry of Industry and Trade contracted U.S.-based Mazzetta Company to train Vietnamese fish breeders how to comply with U.S. standards. In 2011, then Prime Minister Dung reportedly approved a 10-year, $2 billion "master plan" for the development of Vietnam's fish farming industry that will promote infrastructure and technological development, disease control, and environmental improvement. Following the publication of the new catfish regulations, a spokesperson for Vietnam's Ministry of Foreign Affairs reportedly expressed disappointment, stating the new regulations are unnecessary, could constitute a non-tariff trade barrier, reduce Vietnamese exports, and harm the lives of Vietnamese farmers. Vietnamese officials also reportedly indicated that the 18-month transition period is much shorter than the customary five years granted to developing nations, and suggested that the new regulations may violate the WTO sanitary and phytosanitary agreement. Following U.S. Secretary of Agriculture Tom Vilsack's two day visit to Vietnam in April to discuss the new catfish inspection requirements, a "top Vietnamese trade official" reportedly insisted that the United States revoke the new catfish inspection regulations, or potentially face a formal WTO challenge. Dao Tran Nhan, the Commercial Counselor for Vietnam's U.S. embassy, told a reporter, "The use of unjustifiable and discriminatory phytosanitary accusations is a disappointing tactic that may need to be addressed by WTO litigation." In 2014, 10 nations, including Vietnam, reportedly informed the Office of the U.S. Trade Representative that the then-proposed catfish regulations could hamper TPP negotiations and were a violation of U.S. WTO obligations. On March 14, 2016, Vietnam submitted to the WTO's Committee on Sanitary and Phytosanitary Measures comments on the U.S. catfish regulations, stating, "Therefore, at this important session of the SPS Committee, Viet Nam reiterates our deep concerns that the new catfish inspection regulation of the United States is likely in violation of the WTO SPS Agreement." None of the nations, however, have filed a WTO case. While the USDA prepared the new catfish rule, the ITC issued on June 15, 2009, a final determination in its five-year (sunset) review of the existing antidumping duties on "certain frozen fish fillets from Vietnam." In a unanimous decision, the six ITC commissioners voted to continue the antidumping duties "for the foreseeable future." The Vietnamese government and the Vietnam Fishery Association expressed their opposition to the ITC's decision. Vietnam's deputy minister of trade and industry, Nguyen Thanh Bien, was quoted as saying, "in this economic context, this decision shows the heavy protectionism of the U.S. judicial and executive agencies." In April 2014, the Department of Commerce lowered the antidumping duties on Vietnam's catfish exports to the United States. Restrictions on the sales of military equipment and arms are one of the few U.S. trade restrictions with Vietnam that remains in place since the end of the Vietnam War in 1975. In 1975, U.S. military sales to all of Vietnam were banned as part of the larger ban on bilateral trade. In 1984, the U.S. government included Vietnam on the International Traffic in Arms Regulations (ITAR) list of countries that were denied licenses to acquire defense articles and defense services. The restrictions on arms sales remained in effect after President Clinton lifted the general trade embargo in February 1994. To the Vietnamese government, the continuing restrictions on trade in military equipment and arms are a barrier to the normalization of diplomatic relations and constrain closer bilateral ties. In April 2007, the Department of State amended ITAR to permit "on a case-by-case basis licenses, other approvals, exports or imports of non-lethal defense articles and defense services destined for or originating in Vietnam." Vietnam was subsequently permitted to participate in the Foreign Military Financing (FMF) program, administered by the State Department. Vietnam was able to purchase spare parts for Huey helicopters and M113 Armored Personnel Carriers captured during the Vietnam War. Until 2013, the Obama Administration generally tied arms sales to human rights conditions. In 2010, then U.S. Ambassador to Vietnam Michael Michalak said: We would very much like to expand our military to military relationship to include the sale of arms, but until we are more comfortable with the human rights situation in Vietnam, that's just not going to be possible. Since 2013, another factor has inserted itself into the U.S. debate over arms sales to Vietnam: rising U.S. concerns about China's increased assertiveness over disputed islands and waters in the South China Sea have led the Obama Administration to see Vietnam as a partner on maritime security issues. As a result, on October 2, 2014, the State Department announced that the United States would "allow the future transfer of maritime security-related defense articles to Vietnam." The announcement came alongside the official meeting of Secretary of State John Kerry and Foreign Minister Pham Binh Minh in Washington. The State Department and the Defense Department reportedly await details from their Vietnamese counterparts in terms of the types of maritime security-related defense articles the nation would like. In November 2015, the White House announced that it would provide $19.6 million in maritime assistance to Vietnam in FY2015 and would seek to provide $20.5 million in FY2016. The Administration says that it hopes to use the funds to help Vietnam "bolster its maritime Intelligence, Surveillance, and Reconnaissance (ISR)" and boost "command and control within Vietnam's maritime agencies." In a February 2016 hearing before the Senate Armed Services Committee, Admiral Harry Harris Jr., the head of U.S. Pacific Command, said: I believe that we should improve our relationship with Vietnam. I think it's a great strategic opportunity for us, and I think the Vietnamese people would welcome the opportunity to work closer with us as their security partner of choice. Since the partial lifting of the arms sales embargo, the Vietnamese government, and some U.S. observers, have called for a complete end to the arms sales restrictions. During a joint presentation in Washington with U.S. Ambassador to Vietnam Ted Osius, Vietnam's Ambassador to the United States Pham Quang Vinh said the end of the arms embargo would show that relations were fully normalized. Ambassador Osius proceeded to state that human rights remain a difficult issue in bilateral relations, and that more progress on human rights is needed for the relationship to reach its fullest potential. Speaking in Hanoi in August 2015, Secretary of State Kerry stated that additional relaxation of the arms sales restrictions would be "tied to further progress" on human rights. There are reports that the United States and Vietnam are discussing whether to end the restrictions on bilateral arms sales before or during President Obama's scheduled trip to Vietnam in May 2016. The sale of arms to Vietnam may be a source of some controversy for Congress. While some Members support the provision of lethal assistance, others object in part because of Vietnam's alleged human rights record. For now, the provision of maritime security-related defense articles appears acceptable because of the tensions in the South China Sea. Until Vietnam indicates in more detail the types of military assistance it seeks, the issue is likely to remain on a back burner. Some sources indicate that Vietnam may request advanced radar equipment, which may test the limits of partial lifting of the restrictions on arms sales for both the Obama Administration and Congress. Vietnamese leaders would like the United States to change Vietnam's official designation under U.S. law from "nonmarket economy" to "market economy." Under U.S. trade law (19 U.S.C. 1677), the term "nonmarket economy country" means "any foreign country that the administering authority determines does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise." "Nonmarket economy" status is particularly significant for antidumping (AD) and countervailing duty (CVD) cases heard by the U.S. International Trade Administration. In making such a determination, the administrating authority of the executive branch is to consider such criteria as the extent of state ownership of the means of production, and government control of prices and wages. However, the General Agreement on Tariffs and Trade (GATT) implicitly defines a "non-market economy" for purposes of trade as "a country which has a complete or substantially complete monopoly of its trade and where all domestic prices are fixed by the State." For over 20 years, Vietnam has been transitioning from a centrally planned economy to a market economy. Under its doi moi policy, Vietnam has allowed the development and growth of private enterprise and competitive market allocation of most goods and services. Although most prices have been deregulated, the Vietnamese government still retains some formal and informal mechanisms to direct or manage the economy. For the United States, one of the main concerns about Vietnam's economy is the continued importance of state-owned enterprises (SOEs) in the nation's industrial sector. Between 1995 and 2013, the portion of Vietnam's real industrial output produced by SOEs declined from 50.3% to 16.3%. However, SOEs continue to dominate key sectors of Vietnam's economy, such as mining and energy. In addition, according to a study by the Vietnam Report Company, 46% of the 500 largest enterprises in Vietnam are SOEs. The five largest enterprises—Vietnam Oil and Gas Group, Vietnam National Petroleum Corporation, Vietnam Electricity, Vietnam Post and Telecommunications Group, and Vietnam National Coal and Mineral Industries Group—are all SOEs. Many of Vietnam's SOEs have been converted into quasi-private corporations through a process known as "equitization," in which some shares are sold to the public on Vietnam's stock exchange, but most of the shares remain owned by the Vietnamese government. Twenty years ago, there were about 12,000 SOEs in Vietnam. By the end of 2011, the number of SOEs had been reduced to 1,309 by either restructuring or equitization. Attempts to sell shares in 25 SOEs in early 2014 via initial public offerings (IPOs) resulted in over 70% of the offered shares remaining unsold. The Vietnamese government reports that it equitized 143 SOEs in 2014, and plans on equitizing about 280 in 2015. To some analysts, however, the retention of a controlling interest in the shares of the companies provides the Vietnamese government with the means to continue to manage the operations of the equitized SOEs. The doi moi process has led to the gradual deregulation of most prices and wages in Vietnam. However, the Vietnamese government maintains controls over key prices, including certain major industrial products (such as cement, coal, electricity, oil, and steel) and basic consumer products (such as meat, rice, and vegetables). In December 2010, then-Prime Minister Dung tightened controls on various products to reduce inflationary pressure, which was spiking at the time. Those price controls were loosened in early 2012, but temporarily reinstated at the end of 2013 because of the approaching lunar new year holiday. On wage control, Vietnamese government workers are paid according to a fixed pay scale, and all workers are subject to a national minimum wage law. Workers for private enterprises, foreign-owned ventures, and SOEs receive wages based largely on market conditions. Vietnam's recent inflation has given rise to upward pressure on wages. The Prime Minister's anti-inflation policy is supposed also to curb wage increases. The Vietnamese government asserts that most of the prices and wages in Vietnam are market-determined, especially the prices of goods exported to the United States. In addition, Vietnamese exports face strong competitive pressure from other Asian nations, such as Bangladesh, China, Malaysia, and Thailand. As such, the Vietnamese government maintains that it should be considered a market economy, particularly in anti-dumping and counterveiling duty cases. The Vietnamese government maintains that its economy is as much a market economy as many other nations around the world, and actively has sought formal recognition as a market economy from its major trading partners. A number of trading partners—including ASEAN, Australia, India, Japan, and New Zealand—have designated Vietnam a market economy for purposes of international trade. Under the terms of its WTO accession agreement with the United States, Vietnam is to remain a non-market economy for up to 12 years after its accession (i.e., 2019) or until it meets U.S. criteria for a "market economy" designation. Designation as a market economy has both symbolic and practical value for Vietnam. The Vietnamese government views market economy designation as part of the normalization of trade relations with the United States. In addition, Vietnam's designation as a nonmarket economy generally makes it more likely that AD and CVD cases will result in adverse rulings against Vietnamese companies. In theory, the 114 th Congress could consider legislation weighing in on the designation of Vietnam as a market or nonmarket economy by amending or superseding existing U.S. law. In May 2008, Vietnam formally requested to be added to the U.S. Generalized System of Preferences (GSP) program as a "beneficiary developing country" (BDC). The U.S. GSP program authorizes the President to grant duty-free treatment for any eligible product from any beneficiary country. On June 20, 2008, the office of the U.S. Trade Representative (USTR) announced that it was initiating a formal review of Vietnam's eligibility for GSP benefits and would accept public comments on the application until August 4, 2008. Since then, there has been no formal announcement from USTR regarding the status of Vietnam's GSP application. U.S. officials have indicated that they told the Vietnamese government that its labor standards must improve in order to qualify for the GSP program. Vietnam has already been accepted into several other GSP programs, including those of Canada, the European Union (EU), and Japan. Vietnam continues to inquire about the status of its GSP application, but reportedly sees inclusion in the proposed TPP as a preferable alternative. According to sources in Vietnam's Ministry of Foreign Affairs (MOFA), the Vietnamese government sees its acceptance into the GSP program as another step in the normalization of bilateral relations. Vietnam's interest in qualifying for the U.S. GSP program waned as the TPP negotiations neared completion, presumably because the conclusion of the trade agreement would provide better trade conditions than afforded under GSP. If the TPP agreement is not implemented in the near future, the Vietnamese government's interest in the GSP program may revive. Also, if Vietnam complies with the bilateral labor agreement accompanying the TPP agreement, it is uncertain if Vietnam's labor standards will be sufficient to qualify for the GSP program. Under Title V of the Trade Act of 1974, Congress has no direct role in the determination of whether Vietnam is to be accepted into the U.S. GSP program; the act delegates that authority to the President of the United States. The President is required to notify Congress of his intention. There are, however, several ways by which Members of Congress could indicate their preferences on this issue. In addition to hearings and communications to the Administration from Members, Congress could authorize or instruct the President to designate—or not to designate—Vietnam as a beneficiary developing country (BDC), either as part of the legislation to reinstate the GSP program or in separate legislation. Alternatively, Congress could pass legislation stipulating additional eligibility criteria for the President to consider when deciding to confer BDC status to Vietnam. Each chamber of Congress could also pass a resolution calling on the President to approve or deny Vietnam's application for inclusion in the U.S. GSP program. In the 113 th Congress, the Fostering Rights through Economic Engagement in Vietnam Act ( H.R. 1682 ) would have denied Vietnam's acceptance into the GSP program unless the President certified to Congress that Vietnam has met certain human rights conditions. During their June 2008 meeting, President Bush and Prime Minister Dung announced the launch of talks to establish a bilateral investment treaty (BIT). BITs are designed to improve the climate for foreign investors by establishing dispute settlement procedures and protecting foreign investors from performance requirements, restrictions on transferring funds, and arbitrary expropriation. The United States currently is a party to 40 BITs in force; Vietnam has signed over 50 BITs. The first round of BIT negotiations was held in Washington, DC, on December 15-18, 2008. The Vietnamese delegation included representatives from the Ministry of Planning and Investment, the Ministry of Industry and Trade, the Ministry of Finance, the Ministry of Justice, and the State Bank of Vietnam. The U.S. delegation included representatives of the U.S. Trade Representative's Office, the Department of State, the Department of Commerce, and the Department of the Treasury. Since then, two more rounds of talks have been held—one on June 1-2, 2009, in Hanoi, and another on November 17-19, 2009, in Washington, DC. A proposed fourth round of talks that was to be held in early 2010 did not happen. According to the State Department, bilateral BIT talks have not been held since the two nations joined the TPP negotiations, presumably because the TPP agreement would encompass those issues that would be addressed in the BIT. If implementation of the TPP agreement appear to be running into problems, Vietnam may seek to restart the BIT talks. The existing 2001 Bilateral Trade Agreement (BTA) between the United States and Vietnam included provisions in Chapter 4 governing investment and the future negotiation of a bilateral investment treaty. Article 2 commits both nations to providing national and MFN (NTR) treatment to investments. Article 4 provides for a dispute settlement system for bilateral investments. Article 5 requires both nations to ensure that the laws, regulations, and administrative procedures governing investments are promptly published and publicly available. Article 11 pertains to compliance with the provisions of WTO Agreement on Trade-Related Investment Measures (TRIMs). Article 13 states that both nations "will endeavor to negotiate a bilateral investment treaty in good faith within a reasonable period of time." If the United States and Vietnam successfully complete the negotiations of a BIT during the 114 th Congress, the treaty would be subject to Senate ratification. Action on the part of Congress as a whole may be required if the terms of the BIT require changes in U.S. law. The preceding issues are topics where there has been or continues to be direct bilateral interaction. In addition, there are several economic issues that influence relations between the United States and Vietnam indirectly. Of these, the most prominent issues for the 114 th Congress likely include clothing imports from Vietnam and IPR protection. Vietnam's clothing exporters to the United States were among the greatest beneficiaries of the U.S. decision to grant Vietnam conditional NTR status in December 2001 (see Figure 2 ). Vietnam has become a major source of U.S. clothing imports, second only to China. Up until 2002, U.S. imports of clothing from Vietnam were small both in value (below $50 million) and as a share of total imports from Vietnam (below 10%). Following the U.S. extension of conditional NTR to Vietnam, U.S. clothing imports from Vietnam shot up in value and share. As a share of total bilateral imports, clothing peaked in 2003 at 51.4%. The value of U.S. clothing imports from Vietnam continued to rise every year until 2009, with the largest year-on-year increases occurring in 2003 and 2007—the first full years after the U.S. granted Vietnam conditional and permanent NTR status, respectively. Following a slight decline in 2009, the value of clothing imports from Vietnam once again began to rise. U.S. clothing imports from Vietnam in 2015 totaled more than $10.5 billion. However, since its peak in 2003, the share of clothing in total U.S. imports from Vietnam has declined. In 2015, 27.6% of U.S. imports from Vietnam were clothing. The two spikes in clothing imports gave rise to efforts to restrict clothing trade with Vietnam, first in the form of a separate bilateral textile agreement and later in the form of a unilateral monitoring program that expired in January 2009. In both cases, Vietnam initially protested U.S. efforts to restrict clothing trade, but in the end complied with the U.S. policies. Several Members of Congress, and in particular Members with significant clothing and textile manufacturing in their districts or states (such as Georgia, North Carolina, and South Carolina) voiced concern that a "surge" in Vietnamese clothing exports to the United States could cause damage to U.S. textile companies and workers. However, major U.S. apparel retailers and importers maintained that these two programs would restrict trade from Vietnam, causing harm to U.S. companies and consumers. There continues to be congressional and commercial interest in the growth of clothing imports from Vietnam. According to some observers, industrial concerns that the TPP agreement could create another possible sharp increase in Vietnamese clothing imports was a major factor in USTR support for "yarn forward" provisions in the proposed trade agreement. Some major U.S. retailers and importers, however, supported rule of origin provisions in TPP that would allow more Vietnamese clothing imports to qualify for preferential treatment. The U.S. government remains critical of Vietnam's record on intellectual property rights (IPR) protection. Vietnam was included in the "Watch List" in the U.S. Trade Representative's 201 6 Special 301 Report , an annual review of the global state of IPR protection and enforcement. Vietnam remained on the Watch List because of its continuing problems with online piracy and the sales of counterfeit goods. The report states: Online piracy and sales of counterfeit goods over the Internet continue to be common.… Counterfeit goods—including counterfeits of high-quality—also remain widely available in physical markets, and, while still limited, domestic manufacturing of counterfeit goods is emerging as an issue. In addition, book piracy, software piracy, and cable and satellite signal theft persist. Enforcement continues to be a challenge for Vietnam. The perceived continuing problems with Vietnam's IPR protection may have played a role in the TPP negotiations, as well as in any consideration of Vietnam's GSP application. The preceding sections of the report have focused on current and past issues in U.S.-Vietnam trade relations. The final section of the report attempts to identify potential sources of future trade friction by examining trends in bilateral trade figures. The focus will be on three aspects of recent trade relations—merchandise trade, trade in services, and foreign direct investment (FDI). Over two decades has passed since trade relations between the United States and Vietnam have opened. As previously mentioned, the rapid growth in Vietnam's export of two types of products—clothing and catfish—quickly made them sources of trade tension between the two nations. However, other commodities that contribute more to U.S.-Vietnam trade flows could also become touch points for trouble in bilateral trade relations. According to U.S. trade statistics, the top U.S. imports from Vietnam in 2015, besides clothing, were (in order): electrical machinery; footwear; and furniture and bedding (see Table 1 ). The top U.S. exports to Vietnam included (in order) aircraft; electrical machinery; cotton; machinery and mechanical appliances; and oil seeds. The juxtaposition of these two lists reveals product categories that may warrant watching, as well as a connection between some of the top trade commodities. Particularly noticeable in 2015 was the jump of electrical machinery as the leading import from Vietnam; in 2014, it was the 3 rd largest import after the two apparel categories. Similarly, footwear rose from being the 4 th largest import in 2014 to the 3 rd largest import in 2015. There is also a discernable interplay between Vietnam's top exports to the United States and the top U.S. exports to Vietnam. Vietnam imports substantial amounts of cotton from the United States, which is then used to manufacture clothing to be exported to the United States. Similarly, Vietnam imports wood from the United States that may end up in the furniture that is imported by the United States from Vietnam. There is also a significant amount of cross-trade in electrical machinery as parts and components are shipped back and forth across the Pacific Ocean. Electrical machinery is among the top five exports for both countries to each other. The implication is that efforts to curtail the growth of certain top exports of Vietnam to the United States could result in a decline in U.S. exports to Vietnam and possible job losses in the United States. Vietnam's electrical machinery exports to the United States has grown dramatically since 2001, from less than $1 million to just under $1 billion in 2011 and then increasing to more than $8.3 billion in 2015. Electrical machinery constituted nearly 22% of total U.S. imports from Vietnam in 2015. According to interviews with foreign investors in Vietnam, there is great potential for growth in this sector because of Vietnam's relatively inexpensive, skilled workers. Vietnamese economic officials have indicated that expanding the nation's production of higher-valued consumer electronics and other electrical devices is a priority for the nation's transition to a middle-income economy. While most of the focus has been on clothing imports from Vietnam, footwear constituted nearly 12% of total U.S. imports from Vietnam in 2015. Vietnam was the second-largest source of footwear imports for the United States in 2015 (after China), more than three times the size of imports from Indonesia (the next largest source). Over a decade ago, the U.S. footwear industry reached a general agreement on its trade policy position in trade agreements. Under this agreement, the membership of the American Apparel and Footwear Association (AAFA) and the Rubber and Plastics Footwear Manufacturers Association (RPFMA) supported the elimination of nearly all footwear tariffs immediately in future trade agreements, except for tariffs on certain types of rubber/fabric and plastic/protective footwear that were determined to be manufactured in the United States. Pursuant to this agreement, the two associations are supporting the TPP. Since 2004, Vietnam has risen from being the 62 nd -largest source for furniture and bedding imports for the United States to being the 4 th -largest source—surpassing past leaders such as Italy, Malaysia, and Taiwan. Furniture and bedding provided over 10% of total U.S. imports from Vietnam in 2015. The United States perceives a trade advantage in several of the services sectors, especially financial services. In the latest U.S. National Trade Estimate (NTE), the Office of the U.S. Trade Representative indicated that as part of the implementation of the 2001 BTA, Vietnam has committed to greater liberalization of a broad array of its services sectors, including financial services, telecommunications, express delivery, distribution services, and certain professions. It is likely that the United States will press Vietnam for more access during talks over the TPP, as well as during the BIT negotiations. In 2014, Vietnam licensed 1,843 foreign direct investment (FDI) projects worth $21.9 billion. The leading source of FDI in 2014 was South Korea, with 588 projects worth $7.7 billion. The United States was the 10 th -largest source of FDI in 2014 with 43 projects worth $310 million. The accumulated value of FDI in Vietnam for the period 1989-2014 is $252.7 billion. South Korea was the leading investor during this period, followed by Japan and Singapore. The United States was the 7 th - largest investor, with 725 projects worth $11.0 billion. Growing U.S. interest in investment opportunities in Vietnam could have an impact on the TPP and BIT negotiations. In addition, as more U.S. companies invest in Vietnam, there is the possibility of more business-to-business disagreements between U.S. and Vietnamese companies, and more constituent pressure on Congress to address perceived shortcomings in Vietnam's treatment of foreign-owned enterprises. The table below provides the official merchandise trade data for the United States and Vietnam.

The year 2015 was a memorable year in U.S.-Vietnam relations, marking the 40th anniversary of the end of the Vietnam War, the 20th anniversary of the reestablishment of diplomatic relations, the first U.S. visit by a Chairman of the Vietnamese Communist Party (VCP) (in July), and the conclusion of the Trans-Pacific Partnership (TPP) trade negotiations (in October). This year also will be marked with historical events, including the 15th anniversary of the United States granting Vietnam permanent normal trade relations (PNTR), the February signing of the TPP, and President Obama's first official visit to Vietnam in May. According to U.S. trade statistics, bilateral trade has grown from about $220 million in 1994 to $45.1 billion in 2015, transforming Vietnam into the 13th-largest source for U.S. imports and 37th-largest destination for U.S. exports. Vietnam is the second-largest source of U.S. clothing imports (after China), and a major source for electrical machinery, footwear, and furniture. Much of this rapid growth in bilateral trade can be attributed to U.S. extension of normal trade relations (NTR) status to Vietnam in 2001. Another major contributing factor is over 20 years of rapid economic growth in Vietnam, ushered in by a 1986 shift to a more market-oriented economic system. Vietnam's incentive to join the TPP largely is contingent on greater market access in the United States, particularly for agricultural goods, aquacultural goods, clothing, and footwear. For the United States, Vietnam offers a significant market for U.S. exports, but some parties are concerned about Vietnam's protection of workers' rights, protection of intellectual property rights, and potential unfair competition from state-owned or state-controlled enterprises. Vietnam is also a party to negotiations to the Regional Comprehensive Economic Partnership (RCEP), a pan-Asian regional trade association that currently does not include the United States. It is uncertain how RCEP would affect Vietnam's interest and commitment to TPP, if both regional trade agreements are finalized. Congress would have to consider implementing legislation for the United States to comply with the TPP. The growth in bilateral trade has not been without accompanying issues and problems. Vietnam would like the United States officially to recognize it as a market economy and to further relax U.S. restrictions on arms sales to Vietnam. In addition, the two nations have disagreed over U.S. treatment of the import of catfish-like fish known as basa, swai, or tra, from Vietnam. In 2008, the 110th Congress passed legislation that transferred the regulation of catfish from the Food and Drug Administration to the U.S. Department of Agriculture (USDA), which many analysts contend maintain stricter inspection standards than the FDA. The Vietnamese government strongly protested the law as a protectionist measure. The Agricultural Act of 2014 (P.L. 113-79) confirmed the transfer of inspection to the USDA, and explicitly included basa, swai, and tra as catfish. In November 2015, the USDA released final regulations for the import of catfish that went into effect in March 2016. While Vietnam continues to object to the regulatory change, it is making efforts to comply with the new U.S. inspection regime. The 114th Congress may play an important role in one or more of these issues, as have past Congresses. The Human Rights Act of 2016 (S. 2632) opposes the "further easing of the prohibition on the sale of lethal military equipment to the Government of Vietnam" unless certain human rights conditions improve. The House report accompanying the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (H.R. 1890), cites a perceived lack of a "mechanism to ensure compliance by TPP parties" to international standards for labor laws and practices, and in particular Vietnam. Vietnam's compliance with a bilateral trade and labor relations side agreement to the TPP may factor in congressional consideration of the larger TPP agreement. This report will be updated as circumstances require.

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Most of the funding for the activities of the Department of Housing and Urban Development (HUD) comes from discretionary appropriations provided each year in the annual appropriations acts enacted by Congress. HUD's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs. These include several programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three rental assistance programs—Public Housing, Section 8 Vouchers, and Section 8 project-based rental assistance—account for the majority of the Department's non-emergency funding (almost 74% in FY2009). Two flexible block grant programs, HOME and Community Development Block Grants (CDBG), help communities finance a variety of housing and community development activities designed to serve low-income families. Other, more specialized, grant programs help communities meet the needs of homeless persons, including those with AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to lower-income home buyers, many with below-average credit records, and to developers of multifamily rental buildings containing relatively affordable units. FHA collects fees from insured borrowers, which are used to sustain the insurance fund and offset its administrative costs. Surplus FHA funds have been used to offset the cost of the HUD budget. In recent years, the HUD budget has also received significant amounts of emergency supplemental funding. Almost $20 billion was provided through HUD's budget for recovery assistance to communities affected by Hurricane Katrina and the other 2005 hurricanes. Most recently, the economic stimulus legislation ( P.L. 111-5 ) provided over $13 billion to HUD's programs. Table 1 presents total enacted appropriations for HUD over the past five years, including emergency appropriations. HUD's annual funding, or budget authority, is made up of several components, including regular annual appropriations, emergency appropriations, rescissions, and offsets. HUD's programs and activities are funded almost entirely through regular annual appropriations , also referred to as discretionary appropriations. As a result, the amount provided in the annual appropriations acts each year generally determines how much funding will be obligated and eventually spent for each of HUD's programs and activities. In some years, Congress will also provide emergency appropriations , generally in response to disasters, through one or more of HUD's programs. These funds are generally provided outside of the regular appropriations acts—often in emergency supplemental spending bills—and are generally provided in addition to regular program level funding. Congressional appropriators are generally subject to limits in the amount of new, non-emergency, discretionary appropriations they can provide in a year. One way to stay within these limits is to provide less in regular annual appropriations. Another way is to find offsets for spending. A portion of the cost of HUD's regular annual appropriations acts is generally offset in two ways. The first is through rescissions or cancellations of unobligated or recaptured balances from previous years' funding. The second is through offsetting receipts and collections , generally derived from fees paid by HUD partners or clients. The interaction between new appropriations and offsets provided through rescissions, receipts, and collections, determines HUD's total budget authority. Budget authority is also the "cost" of the HUD budget, as estimated by the Congressional Budget Office in its scorekeeping process. The total amount of budget authority provided to HUD each year, while important for federal budgeting purposes, is not necessarily the best measure of the amount of funding that is being provided for HUD's programs and activities. For example, if Congress has increased appropriations for HUD's programs and activities at the same time that offsetting receipts are increasing by a greater amount, then HUD's total budget authority may appear to be declining. Conversely, if Congress has reduced appropriations for HUD's programs and activities at the same time that offsetting receipts are declining by a greater amount, then HUD's budget authority may appear to be increasing. If Congress wished to maintain level budget authority for HUD programs, Congress would increase appropriations if offsets are declining (or, provide less appropriations if offsets are increasing). As shown by the line in Figure 1 , net non-emergency budget authority for HUD increased 41% between FY2002 and FY2009, from over $29 billion to over $40 billion. However, the increase in net new non-emergency budget authority masks several important trends. From FY2002 to FY2009, regular annual appropriations, which is the amount available to fund HUD's programs and activities, grew by 20%. During the same period, the amount available in offsetting receipts and collections, which Congress uses to reduce the cost of providing new appropriations, declined by more than 75% (see Figure 1 ). As a result, the increase in total non-emergency budget authority for HUD from FY2002 to FY2009 is not fully attributable to increases in appropriations for HUD's programs and activities; rather, part of the increase in total budget authority is attributable to decreases in the amount available in offsetting receipts. For example, in FY2007, Congress provided $39 billion in regular appropriations for HUD's programs and activities. As shown by the line in Figure 1 , since $3 billion was available from offsets and rescissions, HUD's net non-emergency budget authority was only $36 billion. If less had been available in offsets, the cost to Congress of providing $39 billion in regular appropriations (net new budget authority) would have been higher. The increase in regular (non-emergency) appropriations shown in Figure 1 (from just over $35 billion in FY2002 to over $42 billion in FY2009) is largely attributable to the growth in appropriations for the project-based and tenant-based Section 8 programs. From FY2002 to FY2009, non-emergency appropriations for the Section 8 programs grew by 50%; non-emergency appropriations for all other programs and activities during that period grew by only about 4%. As can be seen in Figure 2 , appropriations for the Section 8 program have grown from about 46% of HUD's regular appropriations in FY2002 to about 54% of HUD's regular appropriations in FY2009. Congress has increased funding for these programs in part because it has funded new Section 8 vouchers, in some cases to serve new families, and in some cases to provide assistance to families whose project-based rental assistance has expired or whose public housing has been demolished or sold. In other cases, it has required new appropriations to continue to serve the same families in the project-based rental assistance program, as previous funding for long-term rental assistance contracts has run out. The decline in offsetting receipts over this period is largely attributable to declines in excess receipts in the Federal Housing Administration's (FHA) mortgage insurance programs (discussed later in this report). As shown in Figure 3 , from the peak (in FY2004) to the lowest point (in FY2008), the amount of offsetting receipts available from the FHA mortgage insurance program declined by 92%. While the amount of FHA offsetting receipts increased in FY2009, they are expected to decline below the FY2008 level in FY2010, although, as discussed later in this report, that decline may be partially offset by an expected increase in receipts from the Government National Mortgage Association (GNMA) account. Table 2 presents President Obama's FY2010 budget request for HUD and the congressional response, compared to the prior year's enacted budget authority. Four totals are given in Table 2 : "budget authority provided" and "available budget authority," both including and excluding emergency appropriations. Total budget authority provided includes current year appropriations, plus advance appropriations provided in the current fiscal year for use in the next fiscal year; total available budget authority includes current year appropriations, plus advance appropriations provided in the prior fiscal year for use in the current fiscal year. Congress is scored by CBO for the amount of available budget authority in an appropriations bill; however, the Appropriations Committees' documents often discuss the amount of budget authority provided. President Obama's first HUD budget requested a 7.7 % increase in regular annual appropriations for HUD programs. However, that increase would require a 9.5% increase in net new budget authority, because of a decline in the amount requested for rescission. The House-passed version of H.R. 3288 would have provided a more than 11% increase in regular annual appropriations for HUD programs, 3% more than the President's request. That increase would have required a more than 13% increase in net new budget authority, also attributable to a decline in rescissions. The Senate-passed version of H.R. 3288 proposed less than the House-passed bill, but more than the President's request. It would have resulted in an 8.5% increase in regular annual appropriations for HUD programs, which would have required a more than 10% increase in net new budget authority. The final FY2010 funding bill split the difference between the House and Senate versions, providing more than the Senate bill, but less than the House bill. Specifically, it provided a 9% increase in regular annual appropriations for HUD programs, which required an 11% increase in net new budget authority. These overall funding levels are about 1% higher than President Obama requested. The FY2010 budget was the first of the Obama Administration. While it was completed on a short time-frame, it contained several new initiatives that reflect the Obama Administration's priorities. Specifically, as stated in the budget documents, the budget request reflected five goals: 1. address the nation's housing and economic crisis; 2. restore federal leadership on promoting affordable rental housing; 3. invest strategically in rural and metropolitan communities; 4. drive energy efficient housing and inclusive, sustainable growth; and 5. transform the way that HUD does business. While these goals are reflected throughout the budget request, several new initiatives were proposed, and are summarized below. HUD has been criticized for many years for its information technology systems, as well as for the amount of research it has produced. According to HUD's FY2010 Congressional Budget Justifications, the Department's operations face serious challenges arising from internal resource and structural constraints, while the scope of housing and urban development problems facing the nation is great. President Obama's Transformation Initiative requested the authority to transfer up to 1% of funding provided for most HUD accounts to fund activities related to the development of Research, Evaluation and Performance Metrics; Program Demonstrations; Technical Assistance and Capacity Building; and Next-Generation Information Technology. HUD estimated that, at the requested levels, the transfer authority would make $433.5 million available to the Transformation Initiative in FY2010. In addition, the budget requested $20 million in new appropriations to fund specific activities designed to address fraud, including fraud in the FHA mortgage insurance programs (discussed later in this report). The House-passed version of H.R. 3288 included the $20 million requested for combating mortgage fraud and a more limited form of transfer authority than requested by the President. Specifically, the House bill approved the transfer of up to 1% of funding from most accounts, but did not permit the Secretary to transfer funding from the Section 8 tenant-based rental assistance or public housing Operating Fund accounts. The Committee Report contended that the funds in these accounts are "utilized immediately to assist families and cannot be transferred into a slower-spending account." The report also directed how the Department should spend the funds. It would have required that the funds be spent first to purchase a new information technology system for FHA and the Section 8 voucher program. It would also have required that the funds be spent to study sustainable building practices on Native American lands, study home equity conversion mortgages, provide technical assistance on regional housing and transformation planning, and study cities in transition. Like the House version, the Senate-passed version of H.R. 3288 would have funded the President's Transformation Initiative by including $20 million for combating mortgage fraud and permitting a limited form of transfer authority. The Senate version would have permitted the transfer of up to 1% of funding from most accounts, but not the Section 8 tenant-based or project-based rental assistance accounts, the public housing Operating Fund account, or the Homeless Assistance Grants account. The bill included language directing the Department to prioritize the funding of a new system for the FHA and Section 8 voucher programs, and studies of Native American housing needs, the Moving to Work (MTW) demonstration program, and the conversion of public housing to project-based vouchers. The final FY2010 funding bill, P.L. 111-117 , provides $20 million for combating mortgage fraud, as requested by the President, and also authorizes the requested transfer authority for most accounts. It does not authorize a 1% transfer from the Section 8 tenant project-based rental assistance account, the public housing Operating Fund account, or the Homeless Assistance Grants account, but does authorize the transfer of up to $100 million from the Section 8 tenant-based rental assistance account and up to $15 million from the Operating Fund. The act follows the Senate recommendation by setting aside at least $80 million, but not more than $180 million, of the transfer funding for new technology systems for the Section 8 voucher program and the FHA. It also follows the Senate bill by directing the Secretary to complete an assessment of the housing needs of Native Americans and an evaluation of the MTW demonstration program. The Energy Innovation Fund is an Obama Administration proposal to "catalyze private sector investment in the energy efficiency of the Nation's housing stock." According to HUD's FY2010 Congressional Budget Justifications, the $100 million fund would provide up to $50 million for a "Local Initiatives Fund," which would provide funding for "a mix of incentive grants, demand-side subsidies, and supply-side leveraging to support the expansion or start-up" of 10 or more local energy retrofit funds. Another $25 million would be available to develop a new pilot energy efficient mortgage program in FHA's single family mortgage insurance program. The final $25 million would be available to develop a Multifamily Energy Pilot to fund energy efficiency improvements in certain HUD-insured multifamily rehabilitation projects. The House-passed version of H.R. 3288 included $50 million for the President's Energy Innovation Fund, half the amount requested. The bill proposed no funding for the Local Initiatives Fund, but proposed funding the Multifamily Energy Pilot and the energy efficient mortgage program at the requested levels. The Senate-passed version included funding for all three components of the President's Energy Innovation Fund, but at a lower level than requested. Specifically, the bill included $20 million each for the energy efficient mortgage and multifamily energy pilot program and $35 million for the Local Initiatives Fund. P.L. 111-117 provided $50 million for the Energy Innovation Fund, and, like the House bill, allocated half for the single-family energy efficient mortgage program and half for the Multifamily Energy Pilot. It did not fund the Local Initiatives Fund. The Choice Neighborhoods Initiative is a new Obama Administration proposal. It is modeled after the HOPE VI program, which provides competitive grants to public housing authorities to revitalize severely distressed public housing. The Choice Neighborhood Initiative would broaden the scope of HOPE VI, by offering competitive grants to revitalize severely distressed neighborhoods, not limited to public housing. In addition to PHAs, local governments, nonprofits, and for-profit developers would be eligible to compete for funds primarily aimed at the transformation, rehabilitation, and replacement of HUD public and assisted housing that cannot be funded through current annual formula or contract payments. According to HUD's Congressional Budget Justifications, in addition to addressing the HUD assisted housing, the program is aimed at "supporting affordable housing and community development activities in surrounding communities and improving the lives of area residents by creating job opportunities, improving schools and providing work and rent incentives that promote family self-sufficiency." The President's FY2010 budget proposed no new funding for HOPE VI, but requested $250 million for the new Choice Neighborhoods Initiative. The House-passed version of H.R. 3288 did not include funding for the President's Choice Neighborhoods Initiative. In H.Rept. 111-218 , the Committee stated that it "is not the appropriate body to authorize a new initiative of this scale, especially when the Financial Services Committee has worked diligently over the past several years to reauthorize HOPE VI." Instead, the House bill proposed funding the HOPE VI program at $250 million. The Senate-passed version of H.R. 3288 proposed funding the President's Choice Neighborhoods Initiative at the requested level, and did not include new funding for the HOPE VI program. In S.Rept. 111-69 , the Committee expressed support for the idea of broadening the impact of community revitalization efforts, but noted that distressed public housing is still in need of revitalization. Therefore, the bill directed HUD to target at least $165 million of the $250 million provided for Choice Neighborhoods to projects where Public Housing Authorities (PHAs) are the lead entities. P.L. 111-117 provided funding for the HOPE VI program as well as a Choice Neighborhoods demonstration. Specifically, the bill appropriates $200 million to the HOPE VI account, but sets aside up to $65 million for a Choice Neighborhoods demonstration, subject to requirements spelled out in the statute. The Combating Abusive and Fraudulent Mortgage Practices Initiative would be an agency-wide initiative to help detect and prevent mortgage fraud and abuse. According to HUD's Congressional Budget Justifications, the initiative would focus on combating fraud related to mortgage modifications, ensuring smooth implementation of the Real Estate Settlement Procedures Act (RESPA) rule and the Secure Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act), and preventing fraud in the Federal Housing Administration's (FHA) single-family programs. FHA's share of the mortgage market has increased from less than 2% in 2006 to 30% at the end of 2008. HUD's Congressional Budget Justifications point to this increase in FHA's market share, the larger number of lenders participating in FHA, and a recent increase in FHA's single-family loan limit as increasing the opportunities for fraud in FHA's single family programs. The initiative would provide increased funding and resources for a number of programs and offices within HUD to help identify and prevent mortgage fraud. Specifically, the initiative would include $20 million under the Transformation Initiative to provide technology, training, and technical assistance to help detect fraud; a combined $13 million funding increase for two fair housing programs, the Fair Housing Initiatives Program and the Fair Housing Assistance Program; and $4 million to hire more staff in the Office of Fair Housing and Equal Opportunity, the Office of Housing, and the Office of the General Counsel. As noted earlier, both the House-passed and Senate-passed versions of H.R. 3288 , as well as the final version of the FY2010 funding bill ( P.L. 111-117 ), included the $20 million requested for combating mortgage fraud through the Transformation Initiative. Both versions of H.R. 3288 and the final statute also included increased funding for HUD's Fair Housing programs and increased funding for hiring staff, as requested by the President. The Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) established a Housing Trust Fund that would provide a permanent, dedicated source of funding for affordable housing activities outside of the annual appropriations process. P.L. 110-289 identified contributions from Fannie Mae and Freddie Mac as the dedicated funding source. However, Fannie Mae's and Freddie Mac's contributions to the Housing Trust Fund were indefinitely suspended in November 2008 by their conservator, the Federal Housing Finance Agency, due to Fannie's and Freddie's financial difficulties. The suspension of Fannie's and Freddie's contributions left the Housing Trust Fund without a source of funding. While P.L. 110-289 authorized funding other than the contributions from Fannie Mae and Freddie Mac to be appropriated or transferred to the Housing Trust Fund, no funding has yet been directed to the Housing Trust Fund. The President's budget proposed $1 billion in mandatory funding for the Housing Trust Fund, but did not identify a source for those funds. Neither the House-passed nor the Senate-passed version of H.R. 3288 mentioned the Housing Trust Fund. Like the House and Senate bills, P.L. 111-117 did not reference the Trust Fund. Although no funding for the Housing Trust Fund was in included in the regular FY2010 HUD appropriations, proposals to fund the Housing Trust Fund have been included in other legislation introduced in the 111 th Congress. For details on these funding proposals, see CRS Report R40781, The Housing Trust Fund: Background and Issues , by [author name scrubbed]. The Section 8 tenant-based rental assistance account funds the Section 8 voucher program and is the largest account in the HUD budget. The Section 8 voucher program provides portable rental subsidies that low-income families use to reduce their housing costs in the private market. HUD currently funds more than two million Section 8 vouchers, which are administered at the local level by quasi-governmental Public Housing Authorities (PHAs). This account—the largest in HUD's budget—funds the cost of those vouchers and the cost of administering the program. Given its size, this account is often the focus of the most intense debate in the HUD funding deliberations. Table 3 provides a breakdown of funding for the account. It is followed by a discussion of key funding issues within the account. The budget authority for the tenant-based rental assistance account is made up of two components: current year appropriations and advance appropriations. Current year appropriations are provided in a fiscal year for use in that fiscal year. Advance appropriations are provided in a fiscal year for use in the subsequent fiscal year. For budget scoring purposes, the Appropriations Committee is charged for an advance appropriation in the year it becomes available for use. Since FY2001, funding for the Section 8 program has included an advance appropriation, and for most years, the advance appropriation was the same amount every year. As a result, the amount of funding that was provided in a given year (the current year appropriation, plus the advance for the next year) was equal to the amount of budget authority available to the program for that fiscal year (the current year appropriation, plus the advance from the previous year). In FY2009, the advance appropriation provided by Congress to become available in FY2010 was less than the amount of the advance appropriation that became available in FY2009 (which had been provided in FY2008). As a result, the amount of budget authority provided in FY2009 ($16.817 billion) was less than the amount of budget authority available to the program in FY2009 ($16.975 billion). Congress was "scored" by CBO for the amount of budget authority available in the fiscal year, rather than the amount provided by the bill. However, it is the amount provided by the bill that determines the relevant program level. The public housing authorities (PHAs) that administer the voucher program are funded, and therefore manage their programs, on a calendar year basis rather than a fiscal year basis. Since the current year appropriation plus the advance for the subsequent year are used by the program in the calendar year, it is the amount provided in a fiscal year that is actually used by the program for the calendar year (which is, effectively, the program year). Figure 4 illustrates this concept. Further, in FY2009, Congress enacted a $750 million rescission from the advance appropriation, which served to reduce the amount available to the program in the calendar year. In his FY2010 budget, the President requested that the same amount be provided in advance appropriations as was provided in the previous year, so the amount available and the amount provided would be the same. The President also did not request any rescissions of unobligated balances from the tenant-based rental assistance account. Both the House-passed and Senate-passed bills, as well as the final FY2010 funding law ( P.L. 111-117 ), followed the President's request on advance appropriations and rescissions in the tenant-based rental assistance account. These complicated distinctions between funding types and periods of availability are directly relevant to the amount of funding available to PHAs in a given year to fund the renewal of the vouchers they are administering. The advance appropriation is used for renewals, and renewals account for the majority of funding in the account. As noted earlier, since the program is administered on a calendar year basis, the calendar year is the relevant period in which to measure funding for voucher renewals. Table 4 provides a comparison of renewal funding for the calendar year, based on the amount of appropriations enacted in FY2009 and the amount requested for FY2010. The FY2009 appropriations law provided just over $11 billion in new appropriations for renewals, as well as an advance of $4 billion. However, the bill also enacted a rescission of $750 million. Altogether, it resulted in $14.284 billion available for renewals in CY2009. All but $100 million of the renewal funds were allocated to PHAs using a formula established in the law. Specifically, a PHA's initial allocation was based on the number of vouchers it had leased, and the cost of those vouchers in FY2008, adjusted for inflation and a few other factors. Then, each PHA's allocation was prorated, or reduced, by an amount that corresponded with HUD's estimate of a portion of their outstanding unspent funds, referred to as Net Restricted Assets (NRA). The aggregate NRA offset equaled the amount rescinded ($750 million). PHAs were expected to then supplement their allocations of new funding with their unused NRA. This meant at least $15 billion should have been available to PHAs for renewals ($14.284 billion in new funding plus $750 million in NRA). The remaining $100 million was set aside as a reserve that HUD could use to adjust the allocations of agencies that (1) faced an increase in renewal costs due to portability or unforeseen circumstances, (2) faced an increase in leasing between the end of the fiscal year and the start of the calendar year, and (3) had unused project-based vouchers and special vouchers for veterans. As directed by Congress, HUD based the CY2009 allocations on the utilization and cost data submitted by PHAs for FY2008. HUD used this same data to estimate PHAs' NRA. In some cases, HUD's estimates of costs (plus inflation), utilization, and NRA did not accurately represent PHAs CY2009 costs, utilization, and NRA balances. In some cases, the inaccurate estimates resulted from inaccurately reported data; in some cases, the difference resulted from significant changes in the cost and leasing conditions of agencies between the end of FY2008 and the start of CY2009. Regardless of the reason, some PHAs found that their CY2009 funding was insufficient to cover the costs of all the vouchers they are currently using to serve families. HUD estimated that as many as 15% of PHAs administering the voucher programs faced such shortfalls. The Department worked with agencies to determine which were facing shortfalls, which could be assisted with the FY2009 $100 million renewal set-aside and $30 million of the administrative fee set-aside, and advised agencies as to how they could cut costs to stay within their budgets. If a PHA does not have sufficient funding to renew all of its vouchers, the PHA may have to stop issuing vouchers, and, in some cases, families may lose assistance. HUD asked agencies that were facing shortfalls to contact the Department before terminating assistance to families. During Senate floor consideration of H.R. 3288 , Senator Murray, the chairperson of the Transportation-HUD Subcommittee, offered an amendment to allow HUD to use up to $200 million of advance appropriations provided in FY2009 for use in FY2010 to supplement the budgets of those PHAs whose budget shortfalls leave them at risk of terminating assistance to families. The amendment was approved under unanimous consent. The language adopted in the Senate during floor consideration was included in the second continuing resolution ( P.L. 111-88 ). As a result, HUD was permitted to use $200 million of the advance appropriation provided in FY2009 for use in FY2010 to adjust PHAs' CY2009 budgets. For FY2010, the President requested $16.189 billion for voucher renewals, with no proposed rescissions. The President's budget request included an allocation formula similar to the FY2009 formula, but based on CY2009 data. It included language seeking permission to make adjustments to the data submitted by PHAs, in an attempt to avoid the problems encountered in FY2009. It also requested new authority for the Secretary to offset agency budgets for NRA balances, and the authority to reallocate those offsets to "high performing" PHAs, based on need. Similar to FY2010, it proposed a set-aside of $150 million for an adjustment reserve. HUD's Congressional Budget Justifications indicated that the amount requested would be sufficient to fund all vouchers currently in use. At an average cost of $7,455, the amount requested would be sufficient to fund 2.17 million vouchers. The House-passed version of H.R. 3288 included about $200 million more for renewals than the President's requested level and proposed to allocate the funds differently than requested by the President. It proposed funding agencies based on their FY 2009 data, and did not include the reallocation authority requested by the President. H.Rept. 111-218 stated that the new authorities requested were "not appropriate for the Committee on Appropriations to implement, but are the purview of the Financial Services Committee." The bill did include a $150 million adjustment pool, as requested by the President, to be used to increase the allocations of agencies facing unforeseen circumstances, portability, or increased leasing. The Senate-passed version of H.R. 3288 included $150 million more for renewals than the President's request, but $50 million less than the House bill. Like the House bill, the Senate bill directed that the funds be allocated based on FY2009 data, and did not include the reallocation authority requested by the President. The Senate bill also included a $150 million adjustment pool. The final FY2010 funding bill, P.L. 111-117 , funds renewals at the Senate proposed level, with $150 million set aside for an adjustment pool. As proposed in both the House and Senate bills, the final FY2010 bill directs HUD to allocate funding based on FY2009 data, as opposed to calendar year data as requested in the President's budget, and does not provide the reallocation authority requested by the President. The law also permits the Secretary to transfer up to $100 million from the voucher renewal fund to the Transformation Initiative in order to fund upgrades to the Voucher Management (data) System (VMS). In most communities, the demand for vouchers exceeds the supply. In some years, Congress has created new vouchers, called incremental vouchers, to serve additional families. In some cases, when new vouchers are created, they are allocated to PHAs via formula. In other cases, they are awarded competitively. Sometimes they are available to the entire population of eligible families; in other cases, they are targeted to specific populations. In FY2009, Congress provided funding for new vouchers for disabled veterans through the Veterans Affairs Supportive Housing (VASH) program, families involved in the child welfare system through the Family Unification Program (FUP), and non-elderly disabled families. In his FY2010 budget, the President did not request funding for new incremental vouchers. The House-passed version of H.R. 3288 proposed $75 million for new incremental vouchers for disabled veterans through the VASH program. The Senate-passed version of H.R. 3288 proposed $75 million for VASH vouchers and $20 million for FUP vouchers. The final FY2010 funding law, P.L. 111-117 , provided $75 million for VASH vouchers and $15 million for FUP vouchers. The public housing program provides publicly owned and subsidized rental units for very low-income families. It was created in 1937 and is the oldest HUD housing assistance program, and arguably, its most well-known program. Although no new public housing developments have been built for many years, Congress continues to provide funds to the more than 3,100 public housing authorities (PHAs) that own and maintain the existing stock of more than 1.2 million units. Through the Operating Fund, HUD provides funds to PHAs to help fill the gap between tenants' contributions toward rent and the cost of ongoing maintenance, utilities, and administration of public housing. Through the Capital Fund, HUD provides funding to PHAs for large capital projects and modernization needs. HOPE VI is a competitive grant program that provides funds to help demolish and/or redevelop severely distressed public housing developments, with a focus on building mixed-income communities. PHAs receive operating funding on the basis of a formula that is meant to make up the difference between what it costs to maintain public housing and what PHAs receive in tenant rents. Each year, HUD estimates PHA budgets on the basis of this formula. HUD then compares the amount of funding PHAs are eligible to receive in aggregate to the amount of funding provided by Congress. If the amount provided by Congress is less than PHAs' aggregate budget eligibility, HUD applies an across-the-board reduction to PHAs' allocations. The percentage of eligible funding provided to PHAs after applying the across-the-board reduction is referred to as the proration level. The proration level in any given year is often the largest source of controversy in the debates over public housing funding. In FY2009, Congress provided $4.455 billion for the Public Housing Operating Fund, which was sufficient to fund an estimated 90% of PHA budget eligibility. In FY2010, President Obama requested just under $4.600 billion, which HUD's Congressional Budget Justifications estimate would result in a proration level of 100%. Several of the PHA industry groups have contended that HUD's estimates are incorrect and that to reach 100% proration, the Operating Fund would need $5.050 billion in FY2010. Both the House-passed and Senate-passed bills would have increased funding above the President's requested level, but not to the level requested by advocates. P.L. 111-117 appropriated the funding level proposed by both the House and Senate. The public housing program has a requirement that certain non-exempted residents participate in eight hours per month of community service or economic self-sufficiency activities. An amendment added during House floor consideration of H.R. 3288 would have prohibited PHAs from using funding provided in the bill to implement or enforce the community service requirement. If enacted, this provision would have effectively suspended the requirement. An opposing amendment was added during Senate floor consideration of H.R. 3288 , stating that nothing in the bill was to be construed as limiting the community service/economic self-sufficiency requirement. The final FY2010 funding bill did not include any provisions related to the community service requirement. For more information, see CRS Report RS21591, Community Service Requirement for Residents of Public Housing , by [author name scrubbed]. President Obama's FY2010 budget requested $2.244 billion for the Capital Fund. Of that amount, $2.199 billion would be available for formula grants. The amount requested is roughly equal to the estimated $2 billion in new capital needs that accrue every year in public housing. In addition to new needs, there is an estimated backlog of roughly $20 billion in unmet capital needs. These estimates of need, however, are more than 10 years old, and the public housing stock has changed significantly during that time, due to demolition and disposition of many units. HUD's Congressional Budget Justifications note that HUD began a Capital Needs Assessment in order to estimate the current capital needs of public housing, but suspended the study at the request of Congress. The Department is currently re-evaluating the study's methodology. President Obama's FY2010 budget requested $142 million (6%) less than was provided through the regular annual appropriations in FY2009, not counting the additional $4 billion in emergency supplemental capital grants that were also provided in FY2009 through the economic stimulus law ( P.L. 111-5 ). HUD's Congressional Budget Justifications note that because the President requested "full funding" for the Operating Fund, PHAs will have less need to use their capital funding to supplement their operating funding. As a result, the up to 10% of capital funding that PHAs are permitted to use for operating needs will be available for capital needs in FY2010. Also, the Justifications note that PHAs will already have a significant amount of capital funding to spend in FY2010 as a result of the $4 billion in emergency supplemental funding provided by P.L. 111-5 . Both the House- and Senate-passed versions of H.R. 3288 proposed funding the Capital Fund at $2.5 billion, which is above the President's request, and above the FY2009 level. The final FY2010 funding law, P.L. 111-117 , funded the capital fund at the level recommended by the House and Senate. Among other set-asides, the final FY2010 funding bill included a set-aside of up to $40 million to be awarded competitively to PHAs to fund early childhood centers or other services for residents. This set-aside was proposed in the Senate-passed version of H.R. 3288 . In each of his budget requests from FY2003-FY2009, President Bush requested no new funding for the HOPE VI public housing revitalization program. In response, each year, Congress continued to fund the program. Up until FY2003, the program was generally funded at just under $600 million; in recent years its funding level has generally been around $100 million. The Bush Administration criticized the program for a slow expenditure of grant funds. They also noted that PHAs are able to use their capital grants to leverage resources in much the same way HOPE VI grants are used to leverage additional resources, making HOPE VI less necessary. Some low-income housing advocates were also critical of the HOPE VI program, arguing it tore down more public housing than it replaced, and frequently permanently displaced needy public housing residents. Proponents of HOPE VI frequently cite the program's transformative effects on severely distressed communities and PHA groups have argued that HOPE VI is a necessary supplement to regular capital funding. As noted earlier in this report, President Obama's FY2010 budget requested no new funding for HOPE VI. Instead, the budget requested $250 million for a new Choice Neighborhoods Initiative, modeled after the HOPE VI program, but open to entities besides PHAs, including local governments, nonprofits, and for-profit developers. The House-passed version of H.R. 3288 and the Senate-passed version of H.R. 3288 took different positions on the Choice Neighborhoods Initiative and HOPE VI. The House bill proposed to continue to fund HOPE VI, whereas the Senate bill proposed to fund the new initiative, but with a set-aside of over half of the funding for PHA-led projects. The final FY2010 funding law, P.L. 111-117 , included $200 million for HOPE VI, but of that amount, $65 million was set aside to fund a demonstration of the Choice Neighborhoods Initiative. The project-based rental assistance account provides funding to administer and renew existing project-based Section 8 rental assistance contracts between HUD and private landlords. Under those contracts, HUD provides subsidies for units owned by private landlords that allow eligible low-income families to live in the units but pay only 30% of their incomes toward rent. No new contracts have been entered into under this program since the early 1980s. When the program was active, Congress funded the contracts for 20-40 year periods, so the monthly payments for landlords came from old appropriations. However, once those contracts expire, if they are renewed, they require new annual appropriations. In July 2007, HUD stopped making monthly payments to project-based Section 8 property owners and suspended renewals of expiring contracts. At the time, HUD stated that they lacked sufficient funding to meet the needs of their existing contracts. Department officials stated that the problem arose because HUD's legal counsel had determined that HUD could no longer obligate partial funding when it entered into a 12-month contract renewal with a property owner, which had been the Department's past practice. The FY2007 funding level had not been sufficient to fund all contract renewals for their full 12 month terms. By late summer, the Office of Management and Budget (OMB) and HUD worked together to identify sufficient funding to resume payments to landlords for the remainder of FY2007 (including retroactive payments) and HUD modified its contracts with property owners to indicate that funding might not be set aside for the full length of the contract. This practice of short-funding contracts was the subject of much concern, particularly that property owners would lose confidence in the program, making them potentially less likely to continue to participate. The FY2008 funding level was not sufficient to fund all project-based contracts at their full 12-month term. At the time the FY2008 funding bill was enacted, it was estimated that an additional $2 billion would be needed, on top of the regular appropriation, to make up for the shortfall. In FY2009, the economic stimulus act ( P.L. 111-5 ) provided the $2 billion necessary to make up for the shortfall, and the regular FY2009 appropriations act included sufficient funding ($7 billion in regular FY2009 appropriations; $400 million in an advance for FY2010) to fund all contracts for a full 12 months. As shown in Table 6 , President Obama's FY2010 budget requested $8.1 billion in FY2010 funding for project-based contract renewals ($7.7 billion in new appropriations and $400 million from the prior year advance), and asks that Congress provide an addition $400 million in advance appropriations for FY2011. HUD's Congressional Budget Justifications contend that the amount requested will be sufficient to fully fund all contract renewals for 12 months. The Senate-passed bill proposed funding renewals at the President's requested level. The House bill included over $600 million more than the President's request. The final FY2010 funding law, P.L. 111-117 , provided just under $8.6 billion for renewals, which included an advance appropriation of just under $400 million for use in FY2011. Formerly known together as Housing for Special Populations, the Section 202 Supportive Housing for the Elderly program (12 U.S.C. §1701q) and the Section 811 Supportive Housing for Persons with Disabilities program (42 U.S.C. §8013) provide capital grants and ongoing project rental assistance contracts (PRAC) to developers of new subsidized housing for these populations. In addition, the Section 811 program provides vouchers for tenants with disabilities to use in the private housing market, referred to as "mainstream vouchers." The Housing for the Elderly appropriation includes funds for the Service Coordinator program and the Assisted Living Conversion program. (For more information about Section 202, see CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by [author name scrubbed], and for more information about Section 811, see CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities , by [author name scrubbed]). For FY2010, the President proposed to fund Section 202 and its associated programs and Section 811 at the same levels as FY2009—$765 million and $250 million, respectively. Although funding levels for Section 202 and Section 811 would not have changed in FY2010 under the President's proposal, the account structure for the programs would have been different. (See Table 7 .) The budget proposal would have divided both Housing for the Elderly and Housing for Persons with Disabilities into two separate accounts apiece. In each case, the first account would have funded new capital grants and project rental assistance contracts while the second account would have funded renewals of existing rental assistance payments—in the case of Section 811, this second account would also have included renewals of mainstream vouchers while the second account under Section 202 would have funded Service Coordinators and the Assisted Living Conversion Program. However, Congress did not adopt the President's proposed account structure in the FY2010 Consolidated Appropriations Act ( P.L. 111-117 ). See Table 7 for the FY2010 funding levels enacted in P.L. 111-117 . The Community Development Fund (CDF) account supports activities undertaken through the Community Development Block Grant (CDBG) program. In addition, the CDF has funded other community development-related programs in past years, including the Economic Development Initiatives (EDI) and Neighborhood Initiative (NI) programs. The Community Development Block Grant (CDBG) program, which was first authorized under Title I of the Housing and Community Development Act of 1974 ( P.L. 93-383 , 42 U.S.C. 5301 et seq. ) is the largest source of federal financial assistance in support of state and local neighborhood revitalization, housing rehabilitation, and economic development activities. Funds are allocated by formula to approximately 1,170 entitlement communities, the 50 states, and Puerto Rico to be used to fund eligible activities that meet one of three national objectives: principally benefit low- and moderate-income persons, aid in eliminating or preventing slums or blight, or address an imminent threat to the health and safety of the public. For FY2010, the Administration's budget requested increased funding for and a revamping of the CDBG program. The Administration budget request proposed a $550 million increase in total CDF appropriations, including a request to "fully fund" the CDBG program. Excluding $1 billion in FY2009 CDBG stimulus funding , the Administration's budget request would have increased funding for the formula-based portion of the CDBG program by 14%. In addition, the budget request included $150 million to fund the Administration's proposed Sustainable Communities Initiatives, and $50 million to support activities previously funded under other HUD accounts—specifically, the Rural Innovation Fund (currently known as the Rural Housing and Economic Development Program), and the University Communities Fund, previously funded under a different account. For a review of the Administration's budget request and House, Senate, and conference action, see Table 8 . Although no formal legislative proposal has been introduced, the Administration budget noted that HUD will be seeking legislative changes to the program's current dual formula allocation. According to HUD's congressional budget justification document, the Department believes that the current dual formula does not adequately measure community development need. In addition, the Administration plans to include a hold harmless provision that would establish a transitional period for entitlement communities adversely affected by the formula change. This would enable them to prepare for reduced funding should appropriations drop below $4 billion. The House-passed version of H.R. 3288 , the THUD Appropriations Act of FY2010, included $4.599 billion for CDF activities, including $4.167 billion for formula-based CDBG funds to state and local governments. The House-passed version of H.R. 3288 recommended $149 million more in CDF appropriations and $18 million less in CDBG formula-based funding than that requested by the Administration. The difference in the amount requested by the Administration and that recommended by the House would have been used to fund congressionally designated special projects (earmarks) under both the EDI ($151 million) and NI ($16 million) subaccounts. The Senate-passed version took a similar tack, recommending an amount for CDBG formula-based funding that is $193 million less than requested by the Administration in order to fund the EDI and NI subaccounts. The final version of the act, P.L. 111-117 , closely followed the recommendations included in the Senate version of H.R. 3288 . It appropriated $4.450 billion for CDF activities, including $3.990 billion for formula-based grants to states and local governments. Although the Administration requested no funds for the EDA and NI programs, Congress appropriated $195 million less than the amount requested by the Administration for CDBG formula grants in order to fund EDI and NI activities. In addition, consistent with the House-passed and Senate passed versions of H.R. 3288 , P.L. 111-117 includes $150 million in funding for the Administration's new multipronged Sustainable Communities Initiative (SCI). SCI appropriations will be used to fund the program's three components, which include Regional Integrated Planning Grants . $100 million would be competitively awarded to regional organizations in metropolitan areas to support efforts to develop effective models that would integrate the planning requirements of various disciplines critical to the development of sustainable communities. This would be done in collaboration with the Department of Transportation, the Environmental Protection Agency , and other federal agencies. It is anticipated that the average grant award would be $4 million and would be used to focus on improvements in and coordination of metropolitan-wide housing, transportation, energy, and land use planning activities. Community Challenge Grants . $40 million would be competitively awarded to communities to reform existing building codes and zoning ordinances with the goal of promoting sustainable growth and discouraging inefficient land use patterns. HUD has proposed that the grant awards not exceed $2 million. Housing-Transportation Integration Research . $10 million would be used to fund a joint HUD-Department of Transportation research initiative that would seek to quantify and evaluate the benefits and tradeoffs of various efforts. A portion of these funds ($2 million) would be use to evaluate the long-term benefits of Regional Integrated Planning Grants and Community Challenge Grants. P.L. 111-117 includes language that directs the Secretary of HUD, in coordination with the Secretary of Transportation, to submit a plan to the congressional committees of jurisdiction (House and Senate Appropriations Committees, House Committee on Financial Services, and Senate Committee on Banking and Urban Affairs) detailing selection criteria and performance evaluation measures to be used in the administration of grant funds. It should be noted that, as proposed by the Administration, these three initiatives were to be administered through a new Office of Sustainability within HUD. At least one bill has been introduced that would provide the statutory authority to implement the new initiative. On August 6, 2009, Senator Christopher Dodd, Chairman of the Senate Banking, Housing, and Urban Affairs Committee, introduced S. 1619 , the Livable Communities Act. S. 1619 would establish the Office of Sustainable Housing and Communities within HUD, and an Interagency Council on Sustainable Communities comprising representatives from HUD, the Department of Transportation, the Environmental Protection Agency, and other agencies designated by the President. The bill would also create two new programs whose missions are similar to the programs outlined by the President—comprehensive planning grants and sustainability challenge grants. The Section 108 loan guarantee program allows states and entitlement communities to leverage their annual CDBG allocation in order to help finance brownfield redevelopment activities. CDBG entitlement communities and states are allowed to borrow, for a term of up to 20 years, an amount equal to as much as five times their annual CDBG allocation for qualifying activities. As security against default, states and entitlement communities must pledge their current and future CDBG allocations. The Obama Administration's budget proposed revamping the program by eliminating the credit subsidy and instead charging a fee-based assessment to borrowers accessing the program. The Administration sought this change as a cost saving measure. It noted that there had not been a single default since the program's inception in 1974. The House-passed measure proposed maintaining the program's present structure while the Senate-passed version of H.R. 3288 supported the Administration's proposal. P.L. 111-117 included the House-approved provisions, maintaining the program's present structure. The Brownfield Economic Development Initiative (BEDI) program is a competitive grant program that provides funds to assist communities with the redevelopment of abandoned, idled, and underused industrial and commercial facilities where expansion and redevelopment are burdened by real or potential environmental contamination. The funds are used in support of CDBG Section 108 loan guarantees and may be used in collaboration with brownfield-related funding by the Environmental Protection Agency. The Administration proposed eliminating the separate appropriation for the program for FY2010, but noted that program activities could continue to be funded under the larger CDBG program. The Senate-passed version of H.R. 3288 included no funding for the program. However, the House-passed version of the bill proposed appropriating $25 million for BEDI activities, returning the program to its pre-FY2007 funding level. P.L. 111-117 appropriates $17.5 million for BEDI activities. This account funds the Self-Help Homeownership Opportunity Program (SHOP) program and two other set-asides. Through the SHOP program, HUD provides grants to national and regional organizations and consortia that have experience in providing or facilitating self-help homeownership opportunities. Prospective homebuyers with the assistance of volunteers provide "sweat equity" by contributing labor toward the construction of their homes. In addition, the account funds the Capacity Building for Community Development and Affordable Housing Program (capacity building) and the Housing Assistance Council (HAC). The capacity building program provides technical assistance and funds to local housing and community development organizations through selected national intermediaries. HAC activities are intended to address the housing needs of the rural poor. It supports local organization involved in developing housing and homeownership opportunities in rural America through the provision of loans, research, and technical assistance. The Administration's budget request would have increased overall funding for this account by 20%, to $77 million, with all of the proposed increase targeted to the capacity building program. In addition, the Administration's budget request would have expanded the number of the Sec. 4(a) national intermediaries eligible to receive assistance from three to five, including the Local Initiative Support Corporation (LISC), the Enterprise Fund, Habitat for Humanity, YouthBuild USA, and Living Cities/National Community Development Initiative. The Administration's budget did not recommend funding for the HAC. The House-passed bill would have increased funding for capacity building activities authorized under Sec. 4 of the HUD Demonstration Act of 1993 to $53 million. This is $3 million more than requested by the Administration. The House-passed bill would have limited such grants to LISC, the Enterprise Fund, and Habitat for Humanity. The Senate version of the bill also would have limited appropriations to LISC, the Enterprise Fund, and Habitat for Humanity. It supported the Administration's $50 million request. Unlike the Administration, which requested no new funding for the Housing Assistance Council (HAC), the House bill recommended an appropriation of $5 million for the program while the Senate version of H.R. 3288 recommended $8 million for HAC activities. P.L. 111-117 includes $82 million for Self-Help and Assisted Homeownership Opportunities Programs. This is $5 million more than recommended by the Administration; the appropriation includes $27 million for the SHOP program and $50 million for Section 4(a) capacity building grants. Consistent with language included in the House and Senate versions of H.R. 3288 , capacity building funds would be limited to LISC, the Enterprise Fund, and Habitat for Humanity. Unlike the Administration's budget request, P.L. 111-117 also includes $5 million for HAC activities. In part due to a continuing rise in mortgage delinquency and foreclosure rates, lawmakers have shown an increased interest in housing counseling. Housing counseling can take many forms, including pre-purchase counseling, foreclosure mitigation counseling, and counseling for seniors seeking reverse mortgages. No federal government agency provides housing counseling directly, but the government does provide some financial support to private housing counseling agencies. Since the late 1970s, Congress has appropriated funding to HUD for the agency to distribute through competitive grants to housing counseling agencies that have been approved by HUD. This funding can generally be used to provide many different types of housing counseling. In recent years, Congress also appropriated funding specifically for foreclosure mitigation counseling, but instead of providing the funding to HUD, Congress provided the funding to the Neighborhood Reinvestment Corporation, an independent, federally-chartered non-profit agency that is commonly known as NeighborWorks America. NeighborWorks is not funded as part of the HUD budget; it receives its own appropriation as a related agency in the HUD funding bill. NeighborWorks has distributed the foreclosure mitigation funding it has received to eligible housing counseling organizations through a new National Foreclosure Mitigation Counseling Program (NFMCP). HUD received an appropriation of up to $50 million to use for housing counseling in the FY2008 appropriations act, and an appropriation of $65 million in the FY2009 appropriations act. The NFMCP received an initial appropriation of $180 million in the FY2008 appropriations act, along with an additional $180 million in the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ). In the FY2009 appropriations act, the NFMCP received an appropriation of $50 million. For FY2010, the President's budget proposed $100 million in funding for HUD housing counseling, a $35 million increase over the $65 million appropriated in FY2009. It also proposed $33.8 million in funding for the NFMCP. The House Committee-passed version of H.R. 3288 contained the same total amount of funding for housing counseling activities as the President's budget, but it distributed that funding differently between HUD and the NFMCP. The House Committee-passed bill provided $70 million in funding for HUD's housing counseling program, a $5 million increase over the FY2009 appropriation but $30 million less than the President's budget request. The House Committee-passed bill also provided $63.8 million for the NFMCP, a $30 million increase over the President's budget request. The House Committee report praised NeighborWorks's efforts with the NFMCP, and encouraged HUD to focus on funding pre-purchase counseling while NeighborWorks continues to administer funding for foreclosure mitigation counseling. The report also expressed concern that HUD housing counseling funding is not being spent quickly enough. A floor amendment passed by the full House increased the amount of funding for HUD housing counseling assistance by $5 million, which was transferred from the HOME Investment Partnerships Program account. The final House-passed version of H.R. 3288 therefore included $75 million for HUD housing counseling and $63.8 million for NeighborWorks. The Senate-passed version of H.R. 3288 included a total of $165 million for housing counseling, a higher amount than either the House-passed bill or the President's budget request. The Senate-passed bill included $100 million for HUD housing counseling assistance, the same amount requested in the President's budget and $30 million more than the House bill. At least $15 million of this amount would be specifically targeted to HUD-approved housing counseling agencies in the 100 metropolitan statistical areas with the highest foreclosure rates. The Senate-passed bill also included $65 million for the NFMCP. This is $31.2 million more than the President's request and $1.2 million more than the House bill. The Senate report urged HUD and NeighborWorks to work together to ensure that housing counseling is provided to those who need it. P.L. 111-117 , the final FY2010 funding law, included $87.5 million for HUD's housing counseling program. HUD is directed to award at least $13.5 million of that amount to housing counseling agencies operating in the 100 metropolitan statistical areas with the highest foreclosure rates in order to assist homeowners in pursuing mortgage modifications and avoiding mortgage scams. P.L. 111-117 also included $65 million for NeighborWorks to use for the NFMCP. During Senate floor consideration of H.R. 3288 , an amendment was added prohibiting any funding provided in the bill from being provided to the Association of Community Organizations for Reform Now (ACORN) or its affiliates. ACORN Housing Corporation, an allied organization of the national ACORN organization, is a HUD-approved housing counseling intermediary. As such, it has received HUD housing counseling funding as well as NeighborWorks National Foreclosure Mitigation Counseling Program (NFMCP) funding in the past. In addition, some of ACORN Housing Corporation's local affiliates may be HUD-approved local housing counseling agencies and may have received housing counseling funds as well. If this amendment is retained in conference, it appears that ACORN Housing Incorporated and its affiliates would not be eligible for any of the HUD Housing Counseling or NeighborWorks NFMCP funding provided in this bill. The Senate's ACORN language was included in the enacted version of the bill, P.L. 111-117 (Sec. 418). The Federal Housing Administration (FHA) insures mortgage loans made by private lenders to eligible borrowers. The provisions of the Federal Credit Reform Act of 1990 (FCRA) became effective for the FY1992 Budget. These provisions provide that the cost of federal loan insurance in a given fiscal year is the net present value of all expected cash flows from loans insured in that year. For FHA, the cash inflows are mainly the insurance premiums paid by borrowers, and the cash outflows are mainly the payments to lenders for the cost of loan defaults. The net value of these cash flows is expressed as a percentage of the volume of insured loans and is referred to as the subsidy rate. If the cash inflows exceed the cash outflows, the subsidy rate is expressed as a negative number because net income from business type activities is shown in the budget as negative outlays. If the cash outflows exceed the cash inflows, the subsidy rate is expressed as a positive number. When the subsidy rate is applied to the expected loan volume, the result is the amount of credit subsidy that a federal credit program needs over the life of the loans. The budget rules require an appropriation of this credit subsidy in the budget year that the loans are disbursed. But actual cash flows over the life of the loans are likely to differ from those projected in the first year. So, agencies are required to periodically revise the initial subsidy estimates to include actual experience on the loans. If the original subsidy estimates are unbiased, it would be expected that the adjustments in the subsidy rates would be up in some years and down in some years, and over time the changes in both directions would be about equal. In the FHA program, however, re-estimates have generally resulted in higher subsidy costs. It suggests that FHA has been overestimating program income, underestimating program costs, or both. The FHA home loan insurance programs are administered through two program accounts: the Mutual Mortgage Insurance/Cooperative Management Housing Insurance fund account (MMI/CMHI) and the General Insurance/Special Risk Insurance fund account (GI/SRI). The MMI/CMHI fund provides insurance for home mortgages. The GI/SRI fund provides insurance for more risky home mortgages, for multifamily rental housing, and for an assortment of special-purpose loans such as hospitals and nursing homes. (For more information, see CRS Report RS20530, FHA-Insured Home Loans: An Overview , by [author name scrubbed] and [author name scrubbed].) Historically, the MMI fund has had a negative subsidy rate, which means that it generated negative credit subsidy that could be used to offset the credit subsidy needs of other programs. In recent years, FHA has experienced adverse loan performance due to a number of reasons. As a result of this loan performance, the FY2009 HUD budget submission noted that the MMI fund has a positive credit subsidy rate and would require appropriations of credit subsidy budget authority to continue operation. The Budget did not request a credit subsidy appropriation and assumed that it would use its existing authorities to increase the insurance premiums to borrowers, and thereby avoid the need for credit subsidy appropriations. The collapse of the subprime mortgage market has resulted in an increase in applications for FHA-insured loans. For the FY2010 Budget, HUD estimates that the MMI fund has returned to a negative subsidy rate of 0.57%, which would produce $1.7 billion in negative credit subsidy. The Housing and Economic Recovery Act of 2008, P.L. 110-289 , moved the Home Equity Conversion Mortgage (HECM) program into the MMI fund, and it is separately accounted. In prior years, the HECM program was estimated to produce a negative credit subsidy. When HUD re-estimated the subsidy rates for FY2010, the subsidy rate for the HECM program was estimated as positive, because the present housing market has resulted in lower than expected appreciation rates for homes. For FY2010, the Administration estimated that the HECM program would have a positive subsidy rate of 2.66% and would need appropriations of $798 million in credit subsidy. Under the assumptions in the President's budget, the net credit subsidy for the MMI fund in FY2010 would be -$902 million, meaning that the MMI fund would provide income to the government. The Congressional Budget Office, however, assumes in its re-estimate of the President's budget that the MMI would not produce any negative credit subsidy. Under CBO's assumptions, which are used by Congress, due to large negative credit subsidy needed for the HECM program, the MMI fund would need a net positive credit subsidy appropriation in FY2010. Both the House-passed and Senate-passed versions of H.R. 3288 would have required HUD to make changes to the HECM program to minimize the amount of positive credit subsidy required in the MMI fund. Under H.R. 3288 , as passed by the House, HUD would have been directed to adjust the factors used to calculate the principal limit for HECMs such that the program operates at a net zero subsidy rate. The House bill also expected HUD to implement the changes to the HECM program recommended by the Government Accountability Office (GAO) in its recent report. The net effect of the requirements in the House bill is that the MMI fund would not have needed the $798 million in credit subsidy for HECMs assumed by the President's budget. Under the Senate version of H.R. 3288 , HUD would have been directed to reduce by 5% the factors used to calculate the principal limits for HECMs. As a result, the positive subsidy requirement for HECMs would be $288 million under the Senate-passed bill, compared to $0 under the House bill, and $798 million under the President's budget. The continuing resolution, P.L. 111-68 , adopted the House language and directed HUD to calculate these factors such that the HECM program operates at a net zero subsidy rate for the duration of the CR. Similarly, P.L. 111-117 adopted the House language directing HUD to calculate the principle limit factors such that the program operates at a net zero subsidy rate. In September 2009, HUD announced the new principle limit factors. In addition, P.L. 111-68 authorized FHA to insure loans under the Mutual Mortgage Insurance fund (MMIF) for up to $1.5 billion multiplied by the number of days covered by the resolution. P.L. 111-117 authorized the MMIF to insure up to $400 billion in loans during FY2010. For FHA-insured mortgages during CY2010, the continuing resolution enacted in P.L. 111-88 provided that, except for HECMs, the FHA loan limit for an area may not be less than the limit in effect under the Economic Stimulus Act of 2008. The higher loan limits provided under the Economic Stimulus Act of 2008 were slated to expire at the end of CY2009. This permits FHA loan limits of up to $729,750 for one-family homes. The resolution limited HECMs to $625,500. An amendment added during Senate floor consideration of H.R. 3288 would require HUD to issue a report regarding the number of homes owned by the Department and the budget impact of acquiring, maintaining, and selling such homes. HUD "owns" homes after FHA-insured borrowers are foreclosed upon. After foreclosure, HUD makes an insurance payment to the lender and takes title of the home until such time as the home can be resold. The rate of foreclosure has increased in recent years among FHA-insured homes, as it has risen throughout the housing market, and, as a result, the number of homes HUD "owns" has increased. This language was retained in the final version of the bill, P.L. 111-117 . The Government National Mortgage Association (Ginnie Mae) is the agency of HUD that guarantees the timely payment of principal and interest on securities backing mortgages insured by FHA and other government agencies. Increases in FHA activity results in an increase in Ginnie Mae activity, since Ginnie Mae backs nearly 97% of FHA-insured mortgages. The FY2010 President's budget is requesting a $500 billion limit on mortgage backed securities by Ginnie Mae, a significant increase when compared to the $300 billion requested for FY2009. The budget assumes that Ginnie Mae will carry over uncommitted loan guarantee limitation from prior years, so only $300 billion of the new commitment limit will be used in FY2010, the same as for FY2009. The subsidy rate for FY2009 was estimated at -0.21% and produced a negative subsidy of $630 million. For FY2010 the subsidy rate has been estimated at -0.24%, which results in a negative credit subsidy of $720 million. The continuing resolution, P.L. 111-68 , authorized Ginnie Mae to guarantee loan commitments up to $2.5 billion multiplied by the number of days covered by the resolution. The final appropriations law, P.L. 111-117 , authorized Ginnie Mae to guarantee $500 billion in commitments in FY2010. Jobs for Main Street Act On December 16, 2009, the House of Representatives passed a substitute amendment to H.R. 2847 . Division A, the Jobs for Main Street Act of 2009, redirects over $150 billion in unspent Troubled Asset Relief Program (TARP) funds for a combination of infrastructure and job-creation related investments as well as unemployment and health insurance expansions. As a part of the infrastructure funding, the bill would provide over $1 billion to HUD to capitalize the National Affordable Housing Trust Fund. (For more information, see CRS Report R40781, The Housing Trust Fund: Background and Issues , by [author name scrubbed].) It would also provide HUD with $1 billion for competitive grants through the Public Housing Capital Fund. The Senate has not yet taken action on the Jobs for Main Street Act of 2009.

President Obama's first budget request included over $45 billion for the Department of Housing and Urban Development in FY2010. The requested funding level was roughly $4 billion more than was provided in regular annual appropriations in FY2009 by P.L. 111-8. However, it is about $9 billion less than total FY2009 funding for HUD, if the more than $13 billion in emergency economic stimulus funding provided by P.L. 111-5 is taken into account. This budget request included increased funding for most HUD programs, such as the Section 8 voucher program, public housing program, housing programs for persons who are elderly or disabled, and block grant programs for states and localities. It also proposed several new initiatives focused on Administration priorities related to information technology and research capacity, energy efficiency, and distressed communities. On July 23, 2009, the House passed its version of the FY2010 HUD funding bill (H.R. 3288). It included increases in funding over the President's requested level for many HUD programs. It did not fund all of the President's new initiatives, citing a need for authorizing legislation (H.Rept. 111-218). In total, the House-passed bill would have provided almost $1.6 billion (3.4%) more in new appropriations for HUD than the President requested. On August 5, 2009, the Senate Appropriations Committee reported its version of H.R. 3288 (S.Rept. 111-69). Like the House-passed version, it included increases in funding for many HUD programs. It also included funding for some, but not all, of the President's new initiatives. The bill would have included about $1.2 billion less in new appropriations for HUD than the House-passed bill, but $343 million (0.7%) more than the President's request. On September 17, 2009, the bill was approved by the full Senate, with several policy-related amendments, none of which affected funding levels. Because most of the annual appropriations bills were not enacted before the start of the 2010 fiscal year, Congress approved a series of short-term continuing resolutions (CR) to maintain funding for government operations. On December 16, 2009, President Obama signed the Consolidated Appropriations Act, 2010 (P.L. 111-117) into law, funding HUD and most other government agencies for the remainder of FY2010. The act provided a higher overall funding level for HUD than requested by the President, and higher than proposed by the Senate, but lower than proposed by the House. It funded versions of several of the Obama Administration's new initiatives, including the Choice Neighborhoods Initiative and the Energy Innovation Fund. This report analyzes recent trends in the HUD budget and tracks legislative action and summarizes key budget issues in the FY2010 budget process.

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This report updates the version issued on September 10, 2001, just prior to the September 11 attacks on theWorld Trade Center and the Pentagon that killed about 3,000 persons. It is an analysis of Near Eastern terroristgroups and countries on the U.S. "terrorism list," a list of countries that the Secretary of Commerce and Secretaryof State have determined provide repeated support for international terrorism. (2) This report adopts the samedefinition of terrorism as that used by the State Department in its annual reports: the definition contained in Title22 U.S.C. Section 2656f(d). According to this section, "terrorism" means "premeditated politically-motivatedviolence perpetrated against non-combatant targets by subnational groups or clandestine agents, usually intendedto influence an audience." Five out of the seven states currently on the terrorism list are located in the Near East region -- Iran, Iraq, Syria, Libya, and Sudan. (The other two are Cuba and North Korea, which will not be covered in this report). Thecomposition of the list has not changed since Sudan was added in 1993. The groups analyzed in this reportinclude, but are not limited to, those designated as "Foreign Terrorist Organizations" (FTOs), pursuant to theAnti-Terrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 ). The last section of the report discussessignificant themes in U.S. unilateral and multilateral efforts to combat terrorism in or from the region. The StateDepartment's annual report on international terrorism, entitled Patterns of Global Terrorism: 2000 (3) is asignificant source for this report; other sources include press reports and conversations with U.S.counter-terrorism officials, experts, investigative journalists, and foreign diplomats. Although the September 11 attacks have placed Near Eastern terrorist groups at the center of U.S. anti-terrorism policy, Near Eastern terrorist groups and their state sponsors have been a focus of U.S. counter-terrorism policiesfor several decades. Since the 1970s, many of the most high-profile acts of terrorism against American citizensand targets have been conducted by these groups, sometimes with the encouragement or at the instigation of theirstate sponsors. However, no single terrorist attack -- either in or outside the Near East region -- compares inscale to the September 11 attacks on the World Trade Center and Pentagon, which killed a total of over 3,000persons. Senior U.S. officials have attributed this attack to the Al Qaeda network, whose leaders enjoyedsanctuary in Afghanistan from 1996 until their defeat at the hands of the U.S. military and its Afghan partners inlate 2001. According to Patterns of Global Terrorism: 2000 (available on the U.S. Department of State's web site at http://www.state.gov/s/ct/rls/pgtrpt/2000/ ; hereafter cited as Patterns 2000 ), worldwideterrorism-relatedcasualties increased to 405 in 2000 from 233 in 1999, but the number of attacks increased only slightly, from 392in 1999 to 423 in 2000. Of these 2000 totals, only 16 of the 423 attacks and 19 of the 405 casualties occurred inthe Middle East, although Patterns 2000 covered only three months of the Palestinian uprising that began in lateSeptember 2000. Since 2001 began, there have been dozens of terrorism-related Israeli casualties resulting fromPalestinian suicide bomb attacks, some of them in retaliation for Israeli actions against suspected Palestinianmilitants. Thirty-one of attacks and 12 of the deaths during 2000 occurred in Eurasia (Central Asia, theCaucasus, and Russia). The terrorist groups analyzed often differ in their motivations, objectives, ideologies, and levels of activity. The Islamist groups remain generally the most active, stating as their main objective the overthrow of secular,pro-Western governments, the derailment of the Arab-Israeli peace process, the expulsion of U.S. forces from theregion, or the end of what they consider unjust occupation of Muslim lands. Some groups, such as the KurdistanWorkers' Party (PKK), fight for cultural and political rights or the formation of separate ethnically-based states. Table 1 below shows the 20 Near Eastern groups currently designated by the State Departmentas FTOs. Thedesignations were mostly made when the FTO list was inaugurated in October 1997 and revised in October 1999and October 2001. A group can be added to the list at any time; Al Qaeda (the bin Laden network) was added onAugust 21, 1998, the Islamic Movement of Uzbekistan was designated on September 25, 2000, and two Pakistanigroups -- Lashkar e-Tayyiba and Jaish e-Mohammad -- were added to the FTO list on December 26, 2001. Under the Anti-Terrorism and Effective Death Penalty Act, the designation of a group as an FTO blocks its assetsin the United States and makes it a criminal offense for U.S. persons to provide it with material support orresources, such as financial contributions. Executive Order 12947 of January 23, 1995, also bars U.S. dealings(contributions to or financial transactions) with any individuals named as "Specially Designated Terrorists(SDTs)." On November 2, 2001, the Secretary of State also subjected all FTOs to the increased financialrestrictions that had been applied to Al Qaeda-related entities under Executive Order 13224 (September 23,2001). Under this new executive order, the United States can close down U.S. branches of foreign banks that donot comply with U.S. requests to end dealings with the FTOs. An SDT, according to the executive order, is aperson found to pose a significant risk of disrupting the Middle East peace process, or to have materiallysupported acts of violence toward that end. Table 1. Near Eastern Foreign Terrorist Organizations (FTOs) In contrast to Patterns 2000, this report analyzes the following: The Palestine Liberation Organization (PLO), which has not been the subject of a separate section in Patterns since Patterns 1995, is analyzed in this report because of the debate over whether PLO leaderYasir Arafat is taking sufficient steps to prevent terrorism by other groups in areas under the control of thePalestinian Authority. Since late 2000, there has been discussion about the degree to which certain PLO factionsare involved in violence against Israel and whether they should be named as FTOs. When the FTO list was reviewed and re-issued in October 1999, the Democratic Front for the Liberation of Palestine (DFLP) was dropped, largely because it has reconciled with Arafat. The group's pastinvolvement in terrorism, and the recent revival of its operations against Israel, are discussed in this report. This report contains a section on the Abu Sayyaf Group operating in the Philippines, as well as analysis of several Pakistani Islamist groups that are fighting Indian control of part of Kashmir Province. These groups are discussed in this report, even though they operate outside the Near East region, because of theiralleged connections to the bin Laden network and the Taliban of Afghanistan. In accordance with the October 2001 redesignation of the FTO list, the two Jewish extremist groups Kach and Kahane Chai will be treated as one group. Since the 1979 Islamic revolution in Iran, and particularly since the seizure of the U.S. Embassy in Tehran inNovember of that year, radical Islam has attracted widespread press attention as the driving ideology of the mostactive Middle Eastern terrorist groups and state sponsors. Of the 20 FTOs listed above, 12 are Islamicorganizations. Lebanon-based Hizballah appears to be groping for direction following Israel's May 2000 withdrawal from Lebanon. Having accomplished its main goal of ousting Israel from southern Lebanon, some in the organizationwant it to focus exclusively on political and social work, primarily through participation in parliament (it holds 8out of 128 total seats) and through its charity and reconstruction works with Lebanon's Shiite community. Somewant Hizballah to accept ministerial positions in Lebanon's cabinet, a step that Hizballah has thus far not taken. Hardliners in Hizballah want it to battle Israeli forces over the border, particularly in the disputed Shib'a farmsarea. (5) Other hardliners in the organization believethat the Israeli withdrawal validated its guerrilla strategy andappear to be helping Palestinian groups apply similar tactics against Israeli forces in the West Bank and GazaStrip. Although initially encouraged by Hizballah's relative restraint following the Israeli withdrawal, Israel and the United States remain wary of Hizballah. Hizballah's 15 year military campaign against Israeli and Israelisurrogate forces in southern Lebanon -- activity that is not technically considered terrorism by the U.S. StateDepartment -- often included rocket attacks on Israeli civilians. Even though the United Nations has certifiedthat Israel's withdrawal is complete, Hizballah has asserted that Israel still occupies some Lebanese territory (theShib'a farms) and, on that basis, has conducted several military attacks on Israel since the withdrawal. InOctober 2000, Hizballah captured three Israeli soldiers in the Shib'a farms area and kidnaped an Israelinoncombatant whom it had lured to Lebanon. Israel announced in early November 2001 that the three soldiersare believed dead. Hizballah has continued to conduct surveillance of the U.S. Embassy in Lebanon and its personnel, according torecent Patterns reports, but no major terrorist attacks have been attributed to it since 1994. However, accordingto numerous press reports and Hizballah leaders' own statements, the organization is providing advice andlogistical support to Islamist Palestinian groups fighting against Israel in the latest Palestinian uprising, whichbegan in September 2000. In January 2001, Israel accused Hizballah of serving as an intermediary in theshipment of 50 tons of weaponry from Iran that was seized by Israel and, according to the United States andIsrael, was bound for the Palestinian Authority. The PA is precluded from fielding the weapons contained in theshipment under its Oslo interim accords with Israel. If true, this suggests that Hizballah is trying to broaden itsassistance to non-Islamist Palestinian elements. In late August 2001, Jordanian officials discovered a cache ofrockets at a Hizballah-owned location in Jordan, igniting fears that Hizballah might fire rockets on Israel fromthere or might provide the weapons to Palestinian militants there or in the West Bank. (6) Jordan's King Abdullahwas said to have raised his concern about growing Hizballah activity in Jordan with President Bush in February2002. Hizballah's History. Founded in 1982 by Lebanese Shiiteclerics inspired by the Islamic revolutionary ideology of Iran's Ayatollah Khomeini, Hizballah's original goalwas to establish an Islamic republic in Lebanon. During the 1980s, Hizballah was a principal sponsor ofanti-Western, and particularly anti-U.S., terrorism. It is known or suspected to have been involved in suicidetruck bombings of the U.S. Embassy (April 1983), the U.S. Marine barracks (October 1983, killing 220 Marine,18 Navy and 3 Army personnel), and the U.S. Embassy annex (September 1984), all in Beirut. It also hijackedTWA Flight 847 in 1985, killing a Navy diver, Robert Stethem, who was on board, and its factions wereresponsible for the detention of most, if not all, U.S. and Western hostages held in Lebanon during the 1980s andearly 1990s. Eighteen Americans were held hostage in Lebanon during that period, three of whom were killed. In the early 1990s, Hizballah also demonstrated an ability to conduct terrorism far from the Middle East. In May 1999, Argentina's Supreme Court, after an official investigation, formally blamed Hizballah for the March 17,1992 bombing of Israel's embassy in Buenos Aires and issued an arrest warrant for Hizballah terrorist leaderImad Mughniyah. Hizballah did not claim responsibility for the attack outright, but it released a surveillance tapeof the embassy, implying responsibility. In May 1998, FBI Director Louis Freeh told Argentina the FBI believesthat Hizballah, working with Iranian diplomats, was also responsible for the July 18, 1994 bombing of theArgentine-Jewish Mutual Association (AMIA) building in Buenos Aires that left 86 dead. (7) In July 1999,Argentine investigators brought charges against 20 suspected Argentine collaborators in the AMIA bombings,and the trial began in late September 2001. Hizballah's Outside Connections. Hizballah maintainsconnections with similar groups in the Persian Gulf. Saudi and Bahraini investigations of anti-regime unresthave revealed the existence of local chapters of Hizballah composed of Shiite Muslims, many of whom havestudied in Iran's theological seminaries and received terrorist training there and in Lebanon. Saudi and U.S.officials believe that Saudi Shiite Muslims, possibly with connections to Lebanese Hizballah, were responsiblefor the June 25, 1996 bombing of the Khobar Towers housing complex for U.S. military personnel, nearDhahran, Saudi Arabia. The United States reaffirmed this allegation in the June 2001 U.S. indictments of 14Khobar suspects. According to Patterns 1998, in November 1998 Bahraini authorities uncovered an allegedbomb plot that they blamed on persons linked to Bahraini and Lebanese Hizballah. Patterns 1999 reiterates that Hizballah receives "substantial" amounts of financial assistance, weapons, and political and organizational support from both Syria and Iran, although it does not mention specific figures. ThenSecretary of State Christopher said on May 21, 1996 that Iran gave Hizballah about $100 million per year, afigure that U.S. officials have not since deviated from. A reported 150 of Iran's Revolutionary Guards remain inLebanon to coordinate Iran's aid to Hizballah. Syria permits Iran to supply weapons to Hizballah through theinternational airport in Damascus, although a recent Turkish shutdown of the air corridor connecting Iran andSyria has made Iranian deliveries more difficult. Specially Designated Terrorists (SDTs). (8) Hizballah membersnamed as SDTs include: (1) Secretary General Hasan Nasrallah, who is about 44 and has led Hizballah since1993; (2) Shaykh Muhammad Hussein Fadlallah, the 64-year-old senior Shiite cleric and leading spiritual figureof Hizballah; (3) Subhi Tufayli, the 54 year old former Hizballah Secretary General who leads a radicalbreakaway faction of Hizballah; and (4) Imad Mughniyah, the 39 year old Hizballah intelligence officer andalleged holder of some Western hostages in the 1980s. He was also implicated in the TWA 847 hijacking. Mughniyah, as well as several alleged perpetrators of the June 1996 attack on the U.S. housing complex ofKhobar Towers in Saudi Arabia, was included on a list of 39 entities and persons issued October 12, 2001 underExecutive Order 13224 (September 23, 2001). The order subjects listed entities to financial restrictions. Blocked Assets. According to the Treasury Department's"Terrorist Assets Report" for 2000, the Bureau of Alcohol, Tobacco and Firearms has seized $283,000 in assetsbelonging to 18 persons arrested in North Carolina in July 2000 on suspicion of smuggling goods to generatefunds for Hizballah. Prior to the September 2000 outbreak of the Palestinian uprising, it appeared that the bulk of the leadership of theSunni Muslim Palestinian group Hamas (Islamic Resistance Movement) was accommodating Yasir Arafat'sleadership of the Palestinian Authority (PA). Hamas leaders also appeared resigned to an eventual final peaceagreement between Israel and the PA, although they continued to criticize Arafat as too eager to compromisewith Israel. Since the uprising began, Hamas and its smaller ally, Palestinian Islamic Jihad (PIJ), have escalatedterrorist attacks against Israelis. Hamas claimed responsibility for the June 1, 2001 suicide bombing of the"Dolphinarium" discotheque in Tel Aviv, which killed 21, and for an August 9, 2001 suicide bombing at a pizzarestaurant in Jerusalem that killed 18, including one American. It also claimed responsibility for the December 1- 2, 2001 suicide bombings in Jerusalem and Haifa that killed about 25 persons, in addition to the three bombers. PIJ has conducted several recent suicide bombings, many of which killed only the bomber(s). Many expertsbelieve that the renewed terrorist activity is at least partly attributable to a breakdown in security cooperationbetween Israel and the Palestinian Authority -- cooperation that was widely credited with keeping terroristattacks to a minimum in the preceding few years. The renewed terrorist threat has led Israel to adopt a policy,criticized by the United States and many other countries, of assassinating Hamas and PIJ activists to preempttheir suspected attacks. Hamas continues to receive funding from businesses it runs in Palestinian controlled areas, from Iran (about 10%of its budget), from wealthy private benefactors in the Persian Gulf monarchies, and Palestinian expatriates,according to Patterns 2000. The Patterns report adds that the group conducts fundraising and propagandaactivities in Western Europe and North America. Many individual donors appear to believe their contributionsgo to charitable activities for poor Palestinians served by Hamas' social services network, and are not being usedfor terrorism. PIJ is politically closer to Iran than is Hamas, and apparently derives most of its funding from statesponsors, especially Iran. PIJ receives some logistical support from Syria, according to Patterns 2000. History. Hamas was formed by Muslim Brotherhood activistsduring the early stages of the earlier Palestinian uprising (intifada) in 1987. Its spiritual leader, Shaykh AhmadYassin, who is paralyzed, was released from prison by Israel in October 1997. He seems to serve as a bridgebetween Hamas' two main components -- the extremists who orchestrate terrorist attacks (primarily through aclandestine wing, the Izz ad-Din al-Qassam Brigades), and the more moderate elements affiliated with Hamas'social services, charity, and educational institutions. PIJ was, in part, inspired by the Iranian revolution of 1979even though PIJ is a Sunni Muslim, not a Shiite Muslim organization. PIJ remains almost purely a guerrillaorganization, with no overt component. It is led by Ramadan Abdullah Shallah, a Gaza-born, 43 year oldacademic who previously was an adjunct professor at the University of South Florida. He was chosen leader in1995 after his predecessor, Fathi al-Shiqaqi was assassinated, allegedly by Israeli agents. Recent Patterns reportscharacterize Hamas' strength as "an unknown number of hardcore members [and] tens of thousands of supportersand sympathizers," and PIJ's strength as "unknown." Hamas and PIJ generally have not targeted the United States or Americans directly, although Americans have died in attacks by these groups, along with Israelis and often the bombers themselves. Five out of the 65 killed ina series of four Hamas/PIJ bombings in Israel during February - March 1996 were American citizens. Thesebombings had the apparent effect of shifting public opinion toward the conservative Likud Party leader BenjaminNetanyahu in Israeli national elections on May 29, 1996, possibly proving decisive in his election victory asPrime Minister over then Labor Party leader Shimon Peres. Neither group conducted major attacks in the run-upto the May 1999 Israeli elections, although they did carry out attacks in an attempt to derail the negotiation andimplementation of the October 23, 1998 Israeli-Palestinian Wye River Memorandum. In total, the two groupshave conducted about 80 suicide bombings or attempted suicide bombings, killing more than 450 Israelis, sincethe signing of the Israeli-PLO Declaration of Principles in 1993. (9) Blocked Assets. The United States has blocked the assets ofsome alleged Hamas/PIJ leaders, using the authority of President Clinton's January 23, 1995 executive order onMiddle East terrorism. As of the end of 2000, a total of about $17,000 in PIJ assets in the United States wereblocked, consisting of a bank account belonging to PIJ leader Shallah. (10) On December 4, 2001, three financialentities believed linked to Hamas were designated for increased financial restrictions under Executive Order13224. The three are the Holy Land Foundation for Relief and Development, Beit al-Mal Holdings, and Al AqsaIslamic Bank. SDTs. Several Hamas and PIJ activists have been named asSDTs. They include (1) Hamas founder Shaykh Ahmad Yassin; (2) PIJ leader Ramadan Abdullah Shallah; (3)PIJ ideologist Abd al-Aziz Awda; (4) Hamas political leader Musa Abu Marzuq; and (5) alleged U.S. fundraiserfor Hamas, Mohammad Salah. Egyptian security authorities continue to gain the upper hand in their battle against the opposition Islamic Group and its ally, Al-Jihad, (11) groups that, over the pastseveral decades, periodically have gone underground and thenresurfaced. This effort could be enhanced by the U.S. defeat of Al Qaeda in Afghanistan, because militants fromthe two groups constitute a large and politically significant faction of Al Qaeda. There have been no large scaleterrorist attacks by these groups since the Islamic Group's November 17, 1997 attack on tourists near Luxor, andno attacks inside Egypt at all since August 1998. The gunmen in the Luxor attack killed 58 tourists and wounded26 others, and then committed suicide or were killed by Egyptian security forces. Even before September 11,these Egyptian groups sensed that they were on the defensive and that terrorism had made them unpopular. Inlate 1997 leaders of both groups, including their common spiritual leader, the 64 year old blind cleric ShaykhUmar Abd al-Rahman, declared a ceasefire with the Egyptian government. Muhammad Hamza, who is inoperational control of the Islamic Group in Egypt while Abd al-Rahman remains incarcerated in the UnitedStates, has abided by the truce. Connections to Al Qaeda and the 1993 Bombing of the World TradeCenter. With the decline of the groups' activities within Egypt and the incarceration of Abdal-Rahman for plots related to the February 1993 bombing of the World Trade Center, factions of the groups thatare in exile have gravitated to the Al Qaeda network. Several SDTs from the Islamic Group and Al-Jihadbecame members of bin Laden's inner circle as his top lieutenants, including Ayman al-Zawahiri, and Abu HafsMasri (Mohammad Atef). According to U.S. military officials, Atef was killed by a U.S. air strike during theU.S. war on the Taliban and Al Qaeda. These Egyptian militants oppose any truce with the Egyptiangovernment and also seek, in concert with bin Laden, to attack U.S. interests directly. Shaykh Umar Abd al-Rahman was not convicted specifically for the February 1993 bombing of the World Trade Center in New York, but he was convicted for related unsuccessful plots in the New York area. Those convictedin the Trade Center bombing were allegedly associated with him. There has been much speculation about therelationship, if any, between Abd al-Rahman and bin Laden at the time of the 1993 Trade Center bombing. Bothrecruited fighters for the Afghan conflict against the Soviet Union through organizations in the United States andelsewhere, particularly one called the Maktab al-Khidamat (Services Office), also known as Al Kifah. (12) Thetwo also had close connections to the Islamic government of Sudan, although Abd al-Rahman left Sudan in 1990,before bin Laden relocated there in 1991. Abd al-Rahman's two sons reportedly have been associated with AlQaeda in Afghanistan since 1989; one was reported killed and one reported captured during the U.S.-led war onAl Qaeda. The alleged mastermind of the 1993 Trade Center bombing, Ramzi Ahmad Yousef, reportedly wasan Al Qaeda member. (13) (See section on AlQaeda, below). Although their recruiting activity in Afghanistanhas raised questions as to whether the United States gave bin Laden or Abd al-Rahman assistance during theAfghan war, the Central Intelligence Agency has told CRS that it found no evidence that the Agency providedany direct assistance to either of them. The U.S. assistance program for the anti-Soviet groups in Afghanistanfocused primarily on indigenous Afghan mujahedin and not Arab volunteers such as those sponsored by binLaden or Abd al-Rahman. History. The Islamic Group and Al-Jihad formed in the early1970s as offshoots of the Muslim Brotherhood, which opted to work within the political system after beingcrushed by former President Gamal Abd al-Nasser. Both seek to replace Egypt's pro-Western, seculargovernment with an Islamic state. Al-Jihad was responsible for the assassination of President Anwar Sadat inOctober 1981. The Islamic Group has been responsible for several attacks on high-ranking Egyptian officials, including the killing of the People's Assembly Speaker in October 1990 and the wounding of the Minister ofInformation in April 1993. The Islamic Group also has a nonviolent arm which recruits and builds supportopenly in poor neighborhoods in Cairo, Alexandria and throughout southern Egypt, and runs social serviceprograms. Al-Jihad has operated only clandestinely, focusing almost exclusively on assassinations. SDTs. The following Egyptian Islamist figures have beennamed as SDTs or as subject to enhanced financial restrictions under Executive Order 13224: (1) Shaykh UmarAbd al-Rahman, who was acquitted in 1984 of inciting Egyptian President Anwar Sadat's assassination, is in amedical detention facility in Missouri following his October 1995 conviction for planning terrorist conspiraciesin the New York area; (2) Ayman al-Zawahiri, about 51, who is a top lieutenant of bin Laden (see below) andwas convicted in Egypt for the Sadat assassination; (14) (3) Mohammad Atef, who, as noted above, was apparentlykilled in the U.S.-led war on Al Qaeda; (4) Rifa'i Taha Musa, about 48, who was arrested in Syria and extraditedto Egypt in October 2001; (5) Abbud al-Zumar, leader of the remnants of the original Jihad who is serving a 40year sentence in Egypt; (6) Talat Qasim, about 44, a propaganda leader of the Islamic Group; and (7) MuhammadShawqi Islambouli, about 46, the brother of the lead gunman in the Sadat assassination. Islambouli, a militaryleader of the Islamic Group, also is believed to be associated with bin Laden in Afghanistan. Founded in 1988, Al Qaeda (Arabic for "the base"), the network of Osama bin Laden, has evolved from a regional threat to U.S. troops in the Persian Gulf to a global threat to U.S. citizens and national security interests. The September 11, 2001 suicide hijacking attacks, allegedly by Al Qaeda, on the World Trade Center andPentagon were considered a threat to U.S. national security and led to a U.S. military campaign against Al Qaedain its primary sanctuary in Afghanistan, and against Al Qaeda's protector, the Islamic fundamentalist Talibanregime. By December 2001, the war had resulted in the ouster of the Taliban from power and the death orcapture of thousands of Al Qaeda fighters and operatives in Afghanistan. Bin Laden's fate, and that of his topcohort, Egyptian Islamic Jihad leader Ayman al-Zawahiri, are unknown. Pakistan's leader, President PervezMusharraf, has said he believes bin Laden most likely has died, but others, particularly U.S. officials, say there isno evidence bin Laden or al-Zawahiri have died. Most experts believe that, whether bin Laden does or does not survive the war, the effort has seriously disrupted Al Qaeda's ability to plan major new acts of terrorism. At least one of bin Laden's top lieutenants, MohammadAtef, was reportedly killed in the war. Another senior recruiter, Ibn al-Shaykh al-Libi, is in U.S. custody. Zawahiri's family has been killed in the war, according to a death announcement in an Egyptian newspaper. Others say that much of the Al Qaeda network is based outside Afghanistan and its members still pose asubstantial threat to U.S. and other targets in the United States and abroad. The fate of other top operatives,including Abu Zubaydah and Safl al-Adl (Mohammad Makawi), is unknown, and some believe that they or anynumber of other senior Al Qaeda operatives are capable of reconstituting the group even if bin Laden andZawahiri have not survived. Those who believe Al Qaeda can last beyond its defeat in Afghanistan note that, in building this network, bin Laden assembled a broad coalition of disparate radical Islamic groups of varying nationalities to work towardcommon goals -- the expulsion of non-Muslim control or influence from Muslim-inhabited lands. Thenetwork's ideology, laid out in several pronouncements by bin Laden and his allies, has led Al Qaeda to sponsorIslamic fighters or terrorists against Serb forces in Bosnia; against Soviet forces in Afghanistan and now Russianforces in Chechnya; against Indian control over part of Kashmir; against secular or pro-Western governments inEgypt, Algeria, Saudi Arabia, and Uzbekistan; and against U.S. troops and citizens in the Persian Gulf, Somalia,Yemen, Jordan, and the U.S. mainland itself. Some experts believe this ideology is widely held and can outlivebin Laden or Al Qaeda's formal existence as an organization. The backbone of Al Qaeda, according to many experts, is the ideological and personal bond among the Arab volunteers who were recruited by bin Laden for the fight against the Soviet occupation of Afghanistan(1979-1989). Reflecting its initial low level of early activity, Al Qaeda was not discussed in U.S. governmentreports until Patterns 1993. That report, which did not mention a formal group name, said that several thousandnon-Afghan Muslims fought in the war against the Soviets and the Afghan Communist government during 1979to 1992, (15) and that many of these fighters hadsubsequently become engaged in Islamic opposition activity andterrorism. Al Qaeda's Global Reach. U.S. officials say that Al Qaedamay have a presence in up to 60 countries or locations worldwide. The presence varies widely in scope: fromAfghanistan, where Al Qaeda's leadership was welcomed by the Taliban, to Western and Latin Americancountries in which Al Qaeda operatives are unwelcome but might be active unbeknownst to the government ofthat country. In some cases, such as Sudan and Yemen, governments are aware of an Al Qaeda presence butmight be unwilling or ill-equipped to take action to expel Al Qaeda. In other cases, Al Qaeda activists are linkedto opposition movements, such as those in the Persian Gulf countries (Saudi Arabia, Kuwait, Qatar, Bahrain,Oman, and the United Arab Emirates). In other cases, the Al Qaeda presence is a function of the activities of its subordinate or affiliate groups, including: Egypt's Islamic Group and Al-Jihad; Algeria's Armed Islamic Group and Salafist Group for Call andCombat, which have been active not only in Algeria but in past acts of terrorism against former colonial powerFrance; the Abu Sayyaf Organization in the Philippines; Harakat ul-Mujahidin (Movement of Islamic Fighters) inPakistan; the Islamic Movement of Uzbekistan; the Islamic Army of Aden (Yemen); the Asbat al-Ansar(Partisan's Group) in Lebanon; Al Ittihad Islamiya (Islamic Union) in Somalia; and the Libyan Islamic FightingGroup, an opposition movement to Libya's government. (16) Although there are few evident links to Hamas, binLaden was a follower of Dr. Abdullah al-Azzam, a Palestinian of Jordanian origin who was influential in thefounding of both Hamas and Al Qaeda and who was assassinated in 1989. In addition to Afghanistan, Al Qaedaor its affiliates has participated in recent or ongoing wars or insurgencies, such as in Bosnia, Kosovo, Chechnya,and Kashmir. Some Uighur activists in Muslim areas of western China are said to be affiliated with AlQaeda. (17) In still other cases, Al Qaeda's affiliate groups are active in countries near their main areas of operation. For example, the Islamic Movement of Uzbekistan has transited Tajikistan and Kyrgyzstan in an effort to operateagainst the government of Uzbekistan. Chechen guerrillas allegedly linked to Al Qaeda have reportedly transitedAzerbaijan, and there may be ties between Al Qaeda and an Azeri Islamist opposition group called Hizb e-Tahrir(Liberation Party). In east Asia, Abu Sayyaf and other Islamic activists are said to be operating in Indonesia, andMalaysia, and an alleged Al Qaeda plot against the U.S. embassy in Singapore was reportedly uncovered inJanuary 2002. The Singapore plotters are alleged to be members of an organization called Jemaah Islamiah(Islamic Group), which was created in Malaysia in the mid 1990s and also has a presence in Indonesia and thePhilippines. (18) Regarding Indonesia, there isspeculation that a group called Laskar Jihad, founded in early 2000and which advocates anti-Christian violence, is associated with Al Qaeda. (19) Al Qaeda has also been present insome countries in the course of planning or committing acts of terrorism, such as several countries in east Africa,including Kenya, Tanzania, Eritrea, Ethiopia, Somalia, and Uganda. (20) A major Al Qaeda terrorist plot wasfoiled in Jordan in December 1999 (see below), suggesting that there has been Al Qaeda activity there; a segmentof that plot, which also was foiled, was attempted by an Al Qaeda cell in Canada. The September 11 attacks demonstrated that Al Qaeda cells can exist even in countries, such as the United States,where Al Qaeda is clearly considered hostile by the government and the population. These countries areworking together to uncover and arrest Al Qaeda cells that might remain. Previous investigations of Al Qaedaplots, as well as of the September 11 attacks, have turned up Al Qaeda cells in virtually every country in westernEurope, as well as a few countries in eastern Europe, including Poland. Some alleged Al Qaeda activists arereported to have transited a few countries in South America, and those countries are working with U.S.intelligence and law enforcement authorities against Al Qaeda. (21) History of Terrorist Activities. Bin Laden's network has beenconnected to a number of acts of terrorism prior to the September 11 attacks. Bin Laden himself has beenindicted by a U.S. court for involvement in several of them. Bin Laden has claimed responsibility for the December 1992 attempted bombings against 100 U.S. servicemen in Yemen -- there to support U.N. relief operations in Somalia (Operation Restore Hope). No one was killed. In press interviews, bin Laden has openly boasted that he provided weapons to anti-U.S. militias in Somalia during Operation Restore Hope and that his loyalists fought against U.S. forces there. In astreet battle in Mogadishu in October 1993, 18 U.S. special operations forces were killed in a battle withmilitiamen allegedly supplied and assisted by Al Qaeda. Al Qaeda's involvement with the Somali militiasappears to have strengthened bin Laden's view that terrorism and low-technology combat could succeed incausing the United States to withdraw from military involvement abroad. The four Saudi nationals who confessed to the November 13, 1995 bombing of a U.S. military training facility in Riyadh, Saudi Arabia, admitted on Saudi television to being inspired by bin Laden andother Islamic radicals. Three of the four who confessed to the bombing were veterans of conflicts in Afghanistan,Bosnia, and Chechnya. According to Patterns 1997, members of bin Laden's organization might have aided the Islamic Group assassination attempt against Egyptian President Mubarak in Ethiopia in June 1995. There is no direct evidence that bin Laden was involved in the February 1993 bombing ofthe World Trade Center. However, Patterns 1999 says that bin Laden's network was responsible for plots in Asiabelieved orchestrated by Ramzi Ahmad Yusuf, who was captured in Pakistan, brought to the United States, andconvicted in November 1997 of masterminding the Trade Center bombing. The plots in Asia, all of which failed,were: to assassinate the Pope during his late 1994 visit to the Philippines and President Clinton during his visitthere in early 1995; to bomb the U.S. and Israeli embassies in Manila in late 1994; and to bomb U.S. trans-Pacificflights. The August 7, 1998 U.S. embassy bombings in Kenya and Tanzania, which killed 224persons, including 12 American citizens, occurred just after a six month period in which bin Laden had issuedrepeated and open threats, including a February 1998 pronouncement calling for the killing of U.S. civilians andservicemen worldwide. On August 20, 1998, the United States launched cruise missiles on bin Laden's trainingcamps in eastern Afghanistan, based on U.S. evidence of his network's involvement in the bombings. TheUnited States also struck a pharmaceutical plant in Sudan that the Administration alleged was linked to bin Ladenand was producing chemical weapons agents. U.S. officials add that the bombings were intended to disruptplanning for a new attack. For their alleged role in the bombings, 17 alleged members of Al Qaeda have beenindicted by a U.S. court, including bin Laden. Four of the six in U.S. custody have been tried and convicted;three others were arrested and have been convicted in Britain. In December 1999, U.S. and Jordanian law enforcement authorities uncovered and thwarted two alleged plots -- one in the United States and one in Jordan -- to attack U.S. citizens celebrating the newmillennium. The United States plot, allegedly to bomb Los Angeles international airport, was orchestrated by apro-bin Laden cell of Algerian Armed Islamic Group members coming from Canada. In June 2000, Jordan tried28 persons who allegedly were planning to attack tourists during millennium festivities in that country, but 15 ofthose charged are still at large. Also in June 2000, Lebanon placed 29 alleged followers of bin Laden, whobelong to an organization called Asbat al-Ansar (see above), on trial for planning terrorist attacks in Jordan. Thepresence of bin Laden cells in Jordan and Lebanon, coupled with Israeli arrests of alleged bin Laden operatives inthe West Bank and Gaza Strip, suggests that Al Qaeda might plan acts of terrorism in connection with thePalestinian uprising. Some press reports in February 2002 indicate that some Al Qaeda activists who fledAfghanistan after the start of the U.S. war effort have gone to Lebanon. If the reports are true, the fleeing AlQaeda members might be benefitting from the Asbat al-Ansar network there. Patterns 2000 says that "supporters" of bin Laden are suspected in the October 12, 2000 bombing of the destroyer U.S.S. Cole in the harbor of the port of Aden, Yemen. The blast, which severelydamaged the ship, killed 17 and injured 39 Navy personnel. Although most governments have agreed with the United States that the evidence of Al Qaeda's responsibility for September 11 is clear and compelling, there is little agreement on responsibility for thespate of anthrax mailings in the United States that followed the September 11 events. Five people died in thesemailings, which temporarily closed several congressional buildings and post offices. No one has been arrestedfor the mailings. U.S. officials say it appears, based on tests, that the source of the anthrax was domestic, suchas a military research laboratory, but a connection to Al Qaeda has not been ruled out. SDTs/Executive Orders. President Clinton's August 20, 1998Executive Order 13099 amended an earlier January 23, 1995 Executive Order (12947) by naming Al Qaeda as anFTO. The effect of the order was to ban U.S. financial transactions with bin Laden's organization and to allowU.S. law enforcement to freeze any bin Laden assets in the United States that could be identified. The order alsonamed bin Laden as an SDT, along with Rifai Taha Musa, of the Egyptian Islamic Group (see that section above)and Mohammad Atef. Atef and Zawahiri (see above) were indicted along with bin Laden on November 4, 1998,for the Kenya/Tanzania bombings. (22) Al Qaeda Financing. Financially, Al Qaeda drew initially onthe personal fortune of bin Laden, variously estimated at anywhere from $50 million to $300 million. Theorganization, according to most press reports, later became relatively self-sustaining, relying on funding frommany other sources, including contributions, Islamic charities and lending institutions, such as Al Barakat, andsome legitimate businesses, such as a chain of honey shops and bakeries in the Middle East. Executive Order13224 of September 23, 2001, greatly expanded the number of Al Qaeda related entities under financialrestrictions, and increased the scope of the restrictions to include penalties against foreign financial entities thatconduct transactions with the named entities. Many of the entities named are individual leaders of Al Qaeda,including those mentioned in this section. (23) The Deputy Treasury Secretary said on January 22, 2002 that about$80 million in Al Qaeda assets had been uncovered and seized worldwide since Executive Order 13224 wasissued. In addition, about $221 million in assets of the Taliban movement were blocked under Executive Order13129, issued in July 1999 on the grounds that the Taliban continued to harbor bin Laden. However, in January2002 the United States released those funds to the new Afghan interim administration. The Armed Islamic Group (GIA, after its initials in French) is experiencing pressure in Algeria similar to that faced by Egyptian Islamist groups in Egypt. According to Patterns 2000, a GIA splinter group, the Salafi Groupfor Call and Combat, is now the more active armed group inside Algeria, although it is considered somewhat lessviolent in its tactics than is the GIA. Both the GIA and the Salafi Group were subjected to increased financialrestrictions under Executive Order 13224, suggesting the U.S. government considers both groups linked to AlQaeda. Some GIA members, including Ahmad Ressam, were allegedly involved in a thwarted December 1999plot to detonate a bomb in the United States, (24) a plot widely attributed to Al Qaeda by U.S. law enforcementauthorities. As noted above, it now appears that the target of the plot was Los Angeles international airport. The GIA is highly fragmented, (25) in part because it does not have an authoritative religious or political figurewho can hold its various factions together and arbitrate disputes. Founded by Algerian Islamists who fought inAfghanistan, the GIA formed as a breakaway faction of the then legal Islamic Salvation Front (FIS) politicalparty in 1992, after the regime canceled the second round of parliamentary elections on fears of an FIS victory. According to Patterns 2000, the GIA has killed over 100 expatriates in Algeria (mostly Europeans) since 1992,but, in a possible indication of regime counter-terrorism success, no foreigners have been killed in Algeria since1997. Over the past six years, the GIA has conducted a campaign of civilian massacres, sometimes wiping outentire villages in their areas of operations, in an effort to intimidate rival groups and to demonstrate that thegovernment lacks control over the country. The GIA conducted its most lethal terrorist attack on December 31,1997, when it killed 400 Algerian civilians in a town 150 miles southwest of Algiers, according to Patterns 1997. It should be noted that there are allegations that elements of the regime's security forces and other oppositiongroups have also conducted civilian massacres. Over the years, several of the GIA's leaders have been killed battling Algerian security forces. In February 2002, Algerian authorities announced that the GIA's latest leader, Antar Zouabri, was killed in a gun battle withgovernment forces. Among its acts outside Algeria, the GIA hijacked an Air France flight to Algiers in December 1994, and the group is suspected of bombing the Paris subway system on December 3, 1996, killing four. Patterns 2000repeats previous descriptions of the GIA's strength as probably between several hundred to several thousand. The organization receives financial and logistical aid from Algerian expatriates, many of whom reside in WesternEurope and in Canada. Three Islamic militant organizations based in Pakistan have been named as foreign terrorist organizations. Thesegroups, as well as others discussed below, seek the end of Indian control of Muslim-inhabited parts of thedivided region of Kashmir. They are Harakat ul-Mujahidin (Movement of Islamic Fighters), Lashkar e-Tayyiba(Army of the Righteous), and Jaish e-Mohammad (Army of Mohammad). The latter two were designated asforeign terrorist organizations on December 26, 2001, following a December 13, 2001 attack by Pakistani Islamicmilitants on India's parliament building. The three groups are also designated for financial restrictions underExecutive Order 13224. The largest and most well known of the Pakistani Islamic extremist movements is Harakat ul-Mujahidin (HUM). It is composed of militant Islamist Pakistanis and Kashmiris, as well as Arab veterans of the Afghan war againstthe Soviet Union who view the Kashmir struggle as a "jihad" (Islamic struggle). The HUM was included in theoriginal October 1997 FTO designations when its name was Harakat al-Ansar. It subsequently changed its nameto Harakat ul-Mujahidin, possibly in an attempt to avoid the U.S. sanctions that accompanied its designation asan FTO. Under its new name, the group was redesignated as an FTO in October 1999. An offshoot of the HUMkidnapped and reportedly later killed five Western tourists in Kashmir in 1995. The HUM is believedresponsible for the December 1999 hijacking of an Indian airliner because the hijackers demanded the release ofan HUM leader, Masood Azhar, in exchange for the release of the jet and its passengers (one of whom was killedby the hijackers). The group is allied with or part of the Al Qaeda coalition, but it has been focused primarily on expelling Indian troops from Kashmir and does not appear to be part of Al Qaeda's broader struggle against the United States. Then leader of the HUM, Fazlur Rehman Khalil, signed bin Laden's February 1998 pronouncement calling forterrorist attacks on American troops and civilians, although the HUM has not tended to target Americans. According to Patterns 1999, some HUM fighters were killed in the August 20, 1998 U.S. retaliatory strikes onbin Laden's training camps in Afghanistan. Khalil stepped down in February 2000 as leader of the HUM in favorof his second-in-command, Faruq Kashmiri. Kashmiri is not viewed as closely linked to bin Laden as is Khalil,and the move suggested that the HUM was seeking to distance itself from Al Qaeda. Khalil remained asSecretary General of the organization, but he is said to be in hiding since October 2001, fearing arrest byPakistan after its decision to cooperate with the U.S. war on the Taliban. Other Islamist Groups in Pakistan. The HUM fights alongsideother Pakistani Islamist groups that have not been named as FTOs. They include the following: Jaish-e-Mohammed (JEM, Army of Mohammed). This is a more radical splinter group of the HUM formed by Masood Azhar (see above) in February 2000. The group, which attracted a large percentage(up to 75%) of HUM fighters who defected to it when it was formed, is politically aligned with Al Qaeda, theTaliban, and the pro-Taliban Islamic Scholars Society (Jamiat-i Ulema-i Islam) party of Pakistan. It probablyreceives some funds from Al Qaeda, according to Patterns 2000. On December 25, 2001, Pakistan detainedMasood Azhar, a partial response to Indian demands on Pakistan to curb Kashmir-related terrorism following theDecember 13 attack on India's parliament building. Lashkar-e-Tayyiba (Army of the Righteous) is described by Patterns 2000 as "one of the three largest and best trained groups fighting in Kashmir against India." Led by Professor Hafiz MohammedSaeed and operating through a missionary organization known as the MDI (Center for Islamic Call andGuidance), its fighters are Pakistanis from religious schools throughout Pakistan, as well as Arab volunteers forthe Kashmir "jihad." Pakistan detained Saeed in late December 2001 following the attack on India's parliamentbuilding. A few other Kashmir-related groups are mentioned in press reports or in Patterns 2000, but they are not analyzed separately in the report or discussed in depth. One is the Harakat-ul Jihad Islami (IslamicJihad Movement), many of whose fighters defected to the Jaish-e-Mohammed when it was formed. Anothergroup, Lashkar-e-Jhangvi, has called for attacks on the United States and declared itself an ally of bin Laden. The Hizb-ul Mujahedin (Mujahedin Party) is an older, more established, and somewhat more moderate groupwith few apparent links to bin Laden or to Arab volunteers for the Kashmir struggle. The Islamic Movement of Uzbekistan (IMU) was named as an FTO on September 25, 2000 after kidnaping four U.S. citizens who were mountain climbing in Kyrgyzstan in August 2000. The IMU's primary objective is toreplace the secular, authoritarian government of Uzbekistan's President Islam Karimov with an Islamic regime,and it is believed responsible for setting off five bombs in Tashkent, Uzbekistan on February 16, 1999. One ofthe bombs exploded in a government building just minutes before Karimov was to attend a meeting there. Thegovernment of Uzbekistan blamed the plot on two IMU leaders, Tahir Yuldashev and Juma Namangani, both ofwhom reportedly enjoyed safe haven in Taliban-controlled Afghanistan. (26) Anti-Taliban forces in Afghanistansay Namangani was killed in the U.S. war against the Taliban while commanding Al Qaeda fighters around thecity of Mazar e-Sharif in November 2001. Yuldashev's fate is unknown. The government of Uzbekistan ishopeful that the IMU's activities will be significantly reduced by the successful U.S. war effort in Afghanistan. Press reports have indicated that Al Qaeda contributed funds to the IMU, (27) although Patterns 2000 says only thatthe IMU receives "support from other Islamic extremist movements in Central Asia." Among IMU insurgency operations, in August 1999, Namangani led about 800 IMU guerrillas in an unsuccessfulattempt to establish a base in Kyrgyzstan from which to launch cross-border attacks into Uzbekistan. In thecourse of their operations, the IMU guerrillas kidnaped four Japanese geologists and eight Kyrgyz soldiers. Inearly August 2000, about 100 guerrillas presumably linked to the IMU seized several villages just insideUzbekistan, on the Uzbekistan-Tajikistan border. At the same time, a related group of guerrillas battled securityforces in neighboring Kyrgyzstan. The Abu Sayyaf Group, which is a designated FTO, is an Islamic separatist organization operating in the southernPhilippines, founded in 1991. Although it is not known to operate in the Near East region, Abu Sayyaf isdiscussed in this report because of its alleged financial and political ties to Al Qaeda. The group is led byKhadafi Janjalani, brother of its founder, Abdujarak Janjanlani, who was killed in a battle with the Filipinomilitary in 1998. It now raises funds for operations and recruitment by kidnaping foreign hostages. Press reportsassess its numeric strength at about 2,000, some of whom have trained in Afghanistan. As of now, it is holdingabout 12 hostages, including two American citizens, in the southern Philippines. It has also expanded itskidnapings into Malaysia and is suspected of shipping weapons to Muslim extremists in Indonesia who arefighting against Christians there. (28) The United States fears that some Al Qaeda fighters who fled the recent fighting in Afghanistan might try to congregate in the Philippines, possibly in territory controlled by the Abu Sayyaf Group. U.S. officials haveannounced that approximately 600 U.S. military officers are now in the Philippines advising the Filipino militaryon how to combat the Abu Sayyaf Group. The Islamic Army of Aden, also called the Aden-Abyan Islamic Army, is a Yemen-based radical Islamic organization. It has not been designated by the State Department as an FTO, although it is designated forfinancial restrictions under Executive Order 13224. Patterns 2000 did not analyze the group as a distinct entity,although the report did mention it in its discussion of terrorism in Yemen. Little is known about the group, but itadvocates the imposition of Islamic law in Yemen and the lifting of international sanctions against Iraq, andopposes the use of Yemeni ports and bases by U.S. or other Western countries. Some of the group's members aresuspected of having links to bin Laden, and the group was one of three to claim responsibility for the bombing ofthe U.S.S. Cole on October 12, 2000. The group first achieved notoriety in December 1998, when it kidnaped sixteen tourists, including two Americans. Three British and one Australian tourist were killed in the course of a rescue attempt by Yemenisecurity forces; the rest were saved. The group's leader at the time, Zein al-Abidine al-Midhar (Abu Hassan),admitted to the kidnaping and was executed by the Yemeni government in October 1999. No new leader hasbeen publicly identified. Even before September 11, Yemen's President Ali Abdullah al-Salih had publicly vowed to eradicate terrorism from Yemen and there is no evidence that the government, as a matter of policy, supported radical Islamistgroups or alleged Al Qaeda sympathizers living in Yemen. However, there are areas of Yemen under tenuousgovernment control and experts believe that the Yemeni government has, to some extent, tolerated the presenceof Islamic extremists in Yemen. Some government workers are believed to have personal ties to individualIslamists there. Yemen interrogated many people and made a number of arrests in the Cole attack, but some U.S.law enforcement officials have been unsatisfied with its cooperation in that investigation. In mid-December2001, Yemen government forces attacked tribes in central Yemen believed to be harboring associates of binLaden, although the attack was unsuccessful and led to U.S. requests to provide Yemen with military advisoryassistance. The former South Yemen (People's Democratic Republic of Yemen, PDRY) was on the U.S. terrorism list during 1979-1990 for supporting left-wing Arab terrorist groups, but was removed from the list when SouthYemen merged with the more conservative North Yemen in 1990 to form the Republic of Yemen. Some radical Jewish groups are as opposed to the Arab-Israeli peace process as are radical Islamic groups. TheJewish groups, which derive their support primarily from Jewish settlers in the occupied territories, have beenwilling to engage in terrorism to try to derail the process. The incidents involving these Jewish groups havedeclined in recent years, although settlers possibly linked to them have attacked Palestinians throughout the latestPalestinian uprising that began in September 2000. In the October 2001 reissuing of the foreign terroristorganization list, the State Dept. combined Kach and Kahane Chai into a single designation, suggesting that thetwo have either merged or are so closely associated as to be indistinguishable. Kach was founded by Rabbi Meir Kahane, who was assassinated in the United States in 1990. (29) Kahane Chai(Kahane Lives) was founded by Kahane's son, Binyamin, following his father's assassination. Binyamin Kahaneand his wife were killed on December 31, 2000 by a Palestinian group calling itself the "Martyr's of Al-Aqsa." The two Jewish movements seek to expel all Arabs from Israel and expand Israel's boundaries to include theoccupied territories and parts of Jordan. They also want strict implementation of Jewish law in Israel. To try toaccomplish these goals, the two groups have organized protests against the Israeli government, and threatenedPalestinians in Hebron and elsewhere in the West Bank. On March 13, 1994, the Israeli Cabinet declared both to be terrorist organizations under a 1948 Terrorism Law. The declaration came after the groups publicly stated their support for a February 25, 1994 attack on a Hebronmosque by a radical Jewish settler, Baruch Goldstein, who was a Kach affiliate and an immigrant from theUnited States. The attack killed 29 worshipers and wounded about 150. Patterns 2000 says that the numericalstrength of Kach and Kahane Chai is unknown and repeats previous assertions that both receive support fromsympathizers in the United States and Europe. Prime Minister Yitzhak Rabin was killed by Israeli extremistYigal Amir in November 1995, shortly after signing the Oslo II interim agreement with the Palestinians. NeitherAmir nor his two accomplices were known to be formal members of Kach or Kahane Chai, although Amirappears to espouse ideologies similar to those of the two groups. Blocked Assets. According to the Terrorist Assets Report for2000, about $200 belonging to Kahane Chai has been blocked since 1995. Some Middle Eastern terrorist groups are guided by Arab nationalism or left-wing ideologies rather than Islamicfundamentalism. During the 1980s and 1990s, with the collapse of the Soviet Union and the loss of much oftheir backing from state sponsors, the left-wing and nationalist groups became progressively less active and werelargely eclipsed by militant Islamic groups. However, some of the left-wing nationalist groups have reactivatedtheir terrorist and commando operations since the latest Palestinian uprising began in September 2000. The PLO formally renounced the use of terrorism in 1988, and it reaffirmed that commitment as part of its September 1993 mutual recognition agreement with Israel. The PLO has not been named an FTO by the StateDepartment and Patterns 1995 was the last Patterns report to contain a formal section analyzing the PLO. ThePLO is analyzed in this CRS report because of the debate in Congress and among observers over whether thePLO, as the power behind the Palestinian Authority (PA), is taking sufficient steps to prevent Hamas, PIJ, andothers from conducting terrorist attacks against Israelis. This debate has intensified since the Palestinian uprisingbegan in September 2000: the uprising has been accompanied by a significant increase in the frequency ofHamas and PIJ terrorist attacks. Some observers maintain there is evidence that Hamas and PIJ are increasinglycooperating with militant elements linked to the PLO in conducting acts of violence against Israel. The Bush Administration has become more critical of the PA following Hamas suicide attacks in Jerusalem and Haifa on December 1-2, 2001 that killed 26 persons. The U.S. criticism escalated following Israel's seizure inearly January 2002 of a ship carrying 50 tons of Iranian arms bound for the PA and possibly Hamas, according to press reports. The weapons aboard the ship, including long range mortars and plastic explosives -- all of whichare banned under Palestinian interim agreements with Israel -- suggested that PA elements might be planningterrorist attacks against Israel, trying to build a conventional military option, or attempting to build a capability tocombat reprisal attacks on PA facilities. Patterns 2000 generally credited the PA with working with Israel to disrupt Hamas and PIJ attacks against Israel in the first half of 2000, but the report noted Israel's dissatisfaction with PA anti-terrorism cooperation after theuprising began. An Administration report to Congress on PLO compliance with its commitments (coveringDecember 15, 2000 - June 15, 2001) alleges that factions of the PLO have encouraged or participated in violenceagainst Israel. The factions mentioned include a wing of the Fatah movement called the "Tanzim"(Organization) and a PLO security apparatus called Force 17. On the basis of these allegations, some Membersof Congress maintain that Fatah, the Tanzim, Force 17, and a related armed faction that has been conductingattacks on Israel, the Al Aqsa Martyr's Brigade, should be designated as FTOs. Although some Israelis no longer view Arafat as a partner for peace, others note than many Palestinians have looked to Arafat and the PLO for leadership for more than three decades and that there is no viable alternative tohim. Yasir Arafat, who was born August 1, 1929, used the backing of his Fatah guerrilla organization to becomechairman of the PLO in 1969. After the PLO and other Palestinian guerrillas were forced out of Jordan in 1970and 1971, cross border attacks on Israel became more difficult, and some constituent groups under the PLOumbrella resorted to international terrorism. In the wake of the 1973 Arab-Israeli war, international efforts topromote Arab-Israeli peace caused Arafat to limit terrorist attacks largely to targets within Israel, Lebanon, andthe occupied territories. Ahmad Jibril, a former captain in the Syrian army, formed the PFLP-GC in October 1968 as a breakaway faction of the Popular Front for the Liberation of Palestine (PFLP, see below), which he considered too willing tocompromise with Israel. He also believed that a conventional military arm was needed to complement terroristoperations, and the group operates a small tank force at its bases in Lebanon, according to observers. Jibril'sseveral hundred guerrillas fought against Israeli forces alongside Hizballah during Israel's occupation of a strip ofsouthern Lebanon, which ended in May 2000. Recent Patterns reports have not attributed any significant terroristattacks to the PFLP-GC in the past few years. In May 2001, Jibril claimed responsibility for shipping a boatloadof weapons to the Palestinians in the occupied territories, although the shipment was intercepted by Israel's navy. Probably because of Jibril's service in the Syrian military, Syria has always been the chief backer of the PFLP-GC, giving it logistical and military support. In the late 1980s, the PFLP-GC also built a close relationshipwith Iran, and it receives Iranian financial assistance. Although only Libyan agents have been tried or convictedfor the December 21, 1988 bombing of Pan Am 103, there have been persistent reports that Iran approached thePFLP-GC to bomb a U.S. passenger jet in retaliation for the July 3, 1988 U.S. Navy's downing of an Iranianpassenger airplane (Iran Air flight 655). According to some theories, the PFLP-GC first pursued such theoperation and abandoned it or, according to other versions, handed off the operation to Libya in what became asuccessful effort to bomb the flight. (30) Patterns2000 drops assertions in previous Patterns reports that Libya,formerly a major financier of the group, retains ties to the PFLP-GC. SDTs. Jibril, who is about 64, and his deputy, TalalMuhammad Naji (about 70), have been named as SDTs. After several years of relative inactivity, the PFLP appears to be reviving its attack operations against Israel, particularly following Israel's August 27, 2001 killing of its leader, Abu Ali Mustafa. Israel killed Mustafa witha missile strike on his West Bank office. Mustafa had replaced his longtime mentor, ailing PFLP founderGeorge Habash, as PFLP Secretary-General in July 2000. (In October 1999, in the wake of the PFLP'sreconciliation talks with Arafat, Israel had allowed Mustafa to return to Palestinian-controlled territory fromexile.) Partly because Mustafa's office was located in a building inhabited by civilians, the United Statesstrongly criticized the Israeli killing of Mustafa -- and Israel's policy of targeted killings -- as an excessive useof force and unhelpful to efforts to quiet the ongoing violence. In October 2001, the PFLP retaliated for Mustafaby assassinating Israeli tourism minister Rehavam Zeevi. Mustafa's successor, Ahmad Saadat, was arrested inmid-January 2002 by PA authorities as part of Arafat's most recent crackdown on Palestinian terrorism. The PFLP was founded in December 1967, following the Arab defeat in the Six Day War with Israel in June ofthat year, by Marxist-Leninist ideologue and medical doctor George Habash, a Christian. The PFLP was activein international terrorism during the late 1960s and the 1970s; on September 6, 1970, PFLP guerrillassimultaneously hijacked three airliners and, after evacuating the passengers, blew up the aircraft. The PFLPopposed the Palestinians' decision to join the Madrid peace process and suspended its participation in the PLOafter the September 1993 Israel-PLO Declaration of Principles. In August 1999, in apparent recognition ofArafat's growing control over Palestinian territory, the PFLP held reconciliation talks with him. Arafatreportedly invited the PFLP to send a delegate to the U.S.-brokered summit talks with Israel at Camp David inJuly 2000, but the PFLP refused. Its terrorist wing had been almost completely inactive in the four years prior tothe latest Palestinian uprising, but since then has conducted five car bombings and a few other attacks on Israelis,according to Israeli officials. Patterns 2000 repeats previous estimates of the PFLP's strength as about 800, andsays that the group receives logistical assistance and safehaven from Syria. The PFLP is headquartered inDamascus and it reportedly has training facilities in Syrian-controlled areas of Lebanon. SDTs. George Habash, who is about 76 years old, is named asan SDT. He suffered a stroke in 1992. As have other non-Islamist Palestinian groups, the DFLP has revived some of its operations since the Palestinian uprising began in September 2000. Since then, the group has claimed responsibility for a few attacks on Israelimilitary patrols and settlers in the occupied territories, and has openly encouraged the Palestinian uprising. Twocommandos from the group attacked a heavily fortified Israeli military position in the Gaza Strip on August 25,2001, and killed three Israeli soldiers; the two guerrillas were killed in the exchange of fire. Recent Patternsreports estimate the total strength (for all major factions) of the DFLP is about 500. The DFLP may still receivesome financial assistance from Syria, where it has its headquarters. The DFLP formed in 1969 as an offshoot of the PFLP. The DFLP's most noted terrorist attack was the May 1974 takeover of a school in Maalot, in northern Israel, in which 27 schoolchildren were killed and 134 peoplewounded. It thereafter confined itself largely to small-scale border raids into Israel and infrequent attacks onIsraeli soldiers, officials, and civilians in Israel and the occupied territories. The DFLP, still led by its67-year-old founder Nayif Hawatmeh, abandoned its call for the destruction of Israel in the 1980s. It soughtstringent conditions for Palestinian participation in the October 1991 Madrid peace conference and publiclyopposed the September 1993 Israel-PLO mutual recognition accords and subsequent interim agreements reachedbetween Israel and the Palestinians. The DFLP began reconciling with Arafat in August 1999 and stated that itmight recognize Israel if there were a permanent Israeli-Palestinian peace. In response to the DFLP's apparentmoderation, the State Department removed the group from the list of FTOs when that list was revised in October1999. Also that month, Israel permitted Hawatmeh to relocate to the Palestinian-controlled areas, although heapparently has not moved there permanently. Patterns 1999 was the first Patterns report to exclude the groupfrom its analysis of terrorist organizations. In July 2000, the DFLP was part of the Palestinian delegation to theU.S.-brokered Israeli-Palestinian final status summit negotiations at Camp David. The PLF, founded in 1976 as a splinter faction of the PFLP-GC, has been considered dormant for at least the pastfive years. However, in late November 2001, Israel said it had uncovered a 15-member Iraq-trained PLF cell,which was allegedly responsible for the July 2001 killing of an Israeli youth and a separate bombing that injuredfive. The group's last major attack was a failed raid on the Israeli resort town of Eilat in May 1992. The leaderof the most prominent PLF faction, Abu Abbas (real name, Muhammad Zaydun), has always enjoyed closepersonal ties to Arafat. Abbas at first opposed Arafat's decision to seek peace with Israel, but, since themid-1990s, he has accommodated to that decision. In April 1996, Abu Abbas voted to amend the PLO Charter toeliminate clauses calling for Israel's destruction. In April 1998, Israel allowed Abu Abbas to relocate to the GazaStrip from Iraq, where he had settled after his expulsion from Damascus in 1985. During its most active period, the PLF conducted several high-profile attacks. Its most well-known operation was the October 1985 hijacking of the Italian cruise ship Achille Lauro, in which the group murdered disabledU.S. citizen Leon Klinghoffer and held the other passengers hostage for two days. Abu Abbas and his teamsurrendered to Egyptian forces in exchange for a promise of safe passage. They were apprehended at a NATOairbase in Italy after U.S. aircraft forced down the Egyptian airliner flying them to safehaven. Abu Abbas, whowas not on board the Achille Lauro during the hijacking, was released by the Italian government but latersentenced in absentia. A warrant for his arrest is outstanding in Italy but the Justice Department dropped a U.S.warrant in 1996 for lack of evidence. The four other hijackers were convicted and sentenced in Italy. (32) (OnApril 30, 1996, the Senate voted 99-0 on a resolution ( S.Res. 253 ) seeking Abu Abbas' detentionand extradition to the United States.) On May 30, 1990, the PLF unsuccessfully attempted a seaborne landing,from Libya, on a Tel Aviv beach. Arafat refused to condemn the raid and, as a consequence, the United Statesbroke off its dialogue with the PLO, which had begun in 1988. The dialogue resumed in September 1993,following the mutual Israeli-PLO recognition agreement. SDTs. Abu Abbas, who was born in 1948, has been named anSDT. He underwent guerrilla training in the Soviet Union. (33) The international terrorist threat posed by the Abu Nidal Organization has receded because of Abu Nidal's reported health problems (leukemia and a heart condition), internal splits, friction with state sponsors, andclashes with Arafat loyalists. It still has a few hundred members and a presence in Palestinian refugee camps inLebanon, in addition to its reported headquarters in Iraq, but it has not attacked Western targets since the late1980s. During the 1970s and 1980s, the ANO carried out over 90 terrorist attacks in 20 countries, killing about300 people. One of its most well-known operations was a December 27, 1985 attack at airports in Rome andVienna, in which 18 died and 111 were injured. One month earlier, ANO members hijacked Egypt Air 648,resulting in the deaths of 60 people. On September 6, 1986, ANO gunmen killed 22 at a synagogue (NeveShalom) in Istanbul. The group is suspected of assassinating top Arafat aides in Tunis in 1991 and a Jordaniandiplomat in Lebanon in January 1994. Also known as the Fatah Revolutionary Council, the ANO was created in 1974 when Abu Nidal (real name, Sabri al-Banna), then Arafat's representative in Iraq, broke with the PLO over Arafat's willingness tocompromise with Israel. U.S. engagement with Iraq in the early stages of the 1980-88 Iran-Iraq war contributedto Iraq's expulsion of Abu Nidal to Syria in November 1983, but Syria expelled the group four years later toreduce scrutiny on the country as a sponsor of terrorism. Abu Nidal left his next home, Libya, in April 1998,after a schism between pro and anti-Arafat members of Abu Nidal's group. He relocated to Cairo, where hestayed until December 1998, when more infighting caused his presence in Egypt to become public, and thereforea foreign policy problem for Egypt. He has been in Iraq since, but there is no hard evidence that Abu Nidal isreviving his international terrorist network on his own or on Baghdad's behalf. (34) SDTs. Abu Nidal, who was born in 1937 in Jaffa (part of what is now Israel), is the only ANO member named an SDT. He faces no legal charges in the United States,according to an ABC News report of August 25, 1998, but he is wanted in Britain and Italy. His aide, NimerHalima, was arrested in Austria in January 2000. Three groups designated as FTOs primarily are attempting to influence the domestic political structures or theforeign policies of their countries of origin. Two of them operate against the government of Turkey and the otheragainst the government of Iran. The PKK appears to be in transition from a guerrilla and terrorist organization to a political movement. It was founded in 1974 by political science student Abdullah Ocalan, who is now about 53 years old, with the goal ofestablishing a Marxist Kurdish state in southeastern Turkey, where there is a predominantly Kurdish population. It claims to have changed its goals somewhat to focus on greater cultural and political rights within Turkey. ThePKK generally targeted government forces and civilians in eastern Turkey, but it has operated elsewhere in thecountry and attacked Turkish diplomatic and commercial facilities in several Western European cities in 1993and 1995. The United States sides with Turkey in viewing the PKK as a terrorist organization, but wants to see apeaceful resolution of the conflict, and encourages Turkey to provide greater cultural and linguistic rights to theKurds. The PKK's transition accelerated in October 1998 when Turkish military and diplomatic pressure forced Syria toexpel PKK leader Ocalan and the PKK. Ocalan, who is about 52, sought refuge in several countries, but Turkey,acting on information reportedly provided by the United States, captured him as he was leaving Greece'sembassy in Kenya in early 1999. He was tried and, on June 29, 1999, sentenced to death for treason and themurder of about 30,000 Turks since 1984. The implementation of the sentence has been suspended pendingappeals to the European Court of Human Rights. In August 1999, he called on his supporters to cease armedoperations against the Turkish government, a decision affirmed at a PKK congress in January 2000. PKKviolence against the Turkish government has since subsided, but not ended, and many of the PKK's estimated5,000 fighters remain encamped and active across the border in Iran and Kurdish-controlled northern Iraq andhave conducted a few minor terrorist attacks since. The DHKP/C is becoming more active after a long period of virtual dormancy. This Marxist organization, still commonly referred to by its former name, Dev Sol, was formed in 1978 to oppose Turkey's pro-Western tilt andits membership in the North Atlantic Treaty Organization (NATO). Since the late 1980s, the DHKP/C (whichcorresponds to its acronym in Turkish) has concentrated attacks on Turkish military and security officials, but ithas since 1990 attacked foreign interests, according to Patterns 2000. The group assassinated two U.S. militarycontractors in Turkey to protest the Gulf War against Iraq and it rocketed the U.S. consulate in Istanbul in 1992. An attempt by the group to fire an anti-tank weapon at the consulate in June 1999 was thwarted by Turkishauthorities. Also foiled was a planned attack by the group in August 2000 on Incirlik air base, which hosts U.S.aircraft patrolling a "no fly zone" over northern Iraq. The group attacked an Istanbul police station, killing onepolice officer, in January 2001. The People's Mojahedin Organization of Iran (PMOI), the dominant organization within a broader National Council of Resistance (NCR), has left-wing roots but it is not composed of an ethnic minority. It was formed inthe 1960's as an opponent of the Shah's authoritarian rule and was part of the broad movement that overthrew theShah. In 1981, the PMOI turned against the Islamic revolutionary regime of Ayatollah Khomeini when Iran'sclerics violently excluded the PMOI and other groups from major roles in the new government, but the PMOIrebellion was suppressed and some of its leaders fled Iran to continue their political activities in exile. Thegroup claims that it has abandoned what some experts describe as a left-wing past and that it is committed to freemarkets and democracy. However, the State Department noted in a 1994 congressionally-mandated report thatthere is no record of an internal debate over the change in ideology, and there is reason to doubt theorganization's sincerity. The group publicly supports the Arab-Israeli peace process and the rights of Iran'sminorities. The State Department's longstanding mistrust of the group is based not only on the group's past activities, but onits killing of several U.S. military officers and civilians during the struggle against the Shah, its alleged supportfor the takeover of the U.S. Embassy in Tehran in 1979, its authoritarian internal structure, and its use of Iraq asbase for its several thousand member military wing. The State Department named the PMOI an FTO in October1997 on the grounds that it kills civilians in the course of its anti-regime operations inside Iran. In one of its mosthigh-profile attacks, the group claimed responsibility for the April 10, 1999 assassination in Tehran of a seniorIranian military officer. However, the group does not appear to purposely target civilians. In the October 1999revision of the FTO list, the State Department, partly in response to an Iranian government request, named theNCR as an alias of the PMOI, meaning that FTO-related sanctions now apply to the NCR as well. The NCR'soffices in the United States have not been closed by U.S. law enforcement authorities, because its U.S. chapterwas not included in the FTO designation. Seven persons were arrested in California in March 2001 for allegedly soliciting donations for the group, which, if proved, would be a violation of FTO sanctions regulations. Other supporters of the group often operate underthe names of local Iranian expatriate organizations. In 1998, a majority of the House signed a letter questioningthe State Department's designation of the group as an FTO, and some Members state that the group merits U.S.support as an alternative to the current regime in Tehran. Some Members and outside experts believe that thePMOI was designated as an FTO as a gesture of goodwill to Iran after the election of Mohammad Khatemi in1997. (36) The PMOI is led by Masud and Maryam Rajavi. Masud leads the PMOI's military forces based in Iraq and he isPresident of the NCR. His wife Maryam, who is now with him in Iraq after leaving France in 1997, is theorganization's choice to become interim president of Iran if it were to take power. Mozagan Parsaii is theorganization's Secretary General. U.S. officials maintain that they have made a number of gains in their efforts to reduce state sponsorship ofterrorism. Five Middle Eastern countries are on the terrorism list -- Iraq, Iran, Syria, Sudan, and Libya. (37) In thecase of Libya, Sudan, and, to a lesser extent, Iraq, U.S. and international pressure, coupled with internaldevelopments in some of these states, have reduced their support for international terrorism long beforeSeptember 11. Of the Middle Eastern countries on the list, Sudan appears to be the closest to achieving removal. The State Department openly acknowledges working with Sudan to help it meet the remaining requirements forremoving it from the list, and has praised its cooperation against Al Qaeda after September 11. In the case of Iranand Syria, however, U.S. efforts have had little success in curbing the support of these governments for terroristgroups. Under Section 6(j) of the Export Administration Act, removal from the list requires 45 day advance notification to the House International Relations Committee, the Senate Foreign Relations Committee, and the Senate andHouse Banking Committees, that the country has ceased support for international terrorism and pledges tocontinue doing so. Also under that provision, a major change of government in the listed country can serve asgrounds for immediate removal from the list. Iran's sponsorship of terrorist groups appears to be setting back the prospects for reconciliation between the United States and Iran. U.S.-Iran relations were improving prior to September 11 and subsequently in the courseof tacit cooperation in the war against the Taliban. However, in January 2002, the United States and Israelalleged that Iran sold a large shipment of arms to the Palestinian Authority. Israel seized the ship before its cargowas offloaded. The episode expanded U.S. concerns about Iran's sponsorship of terrorism by indicating a linkbetween Iran and Palestinian groups who are not Islamic in nature and with which Tehran has previously had fewlinks. In his January 29, 2002 State of the Union message, President Bush was highly critical of Iran, calling it apart of an "axis of evil" with Iraq and North Korea. Patterns 2000, as has been the case for the past 6 years, again characterized Iran as "the most active" state sponsor of international terrorism. However, the report, as did Patterns 1999, attributes Iran's terrorism supportto specific institutions -- the Revolutionary Guard and the Ministry of Intelligence and Security -- rather thanthe Iranian government as a whole. These institutions are controlled by Supreme Leader Ali Khamene'i, whoespouses hardline positions on most foreign and domestic policies. This characterization suggests that the StateDepartment believes President Mohammad Khatemi and his allies genuinely wish to overcome Iran's reputationas a "terrorist state" in order to further ease Iran's isolation. Indicating that Khatemi is attempting not to differwith Khamene'i, Patterns 2000 cites statements by Khatemi as well as by hardline leaders calling for thedestruction of Israel. In an apparent positive signal to Iran, Patterns 2000, for the third year in a row, cites PMOIattacks on Iranian officials as justification for Iran's claim that it is a victim of terrorism. Although no major international terrorist attacks have been linked to Iran since Khatemi took office in August 1997, the United States has not publicly noted any diminution of Iranian material support for terrorist groupsopposed to the Arab-Israeli peace process, such as those groups discussed earlier in this paper. Patterns 2000notes that Iran has encouraged Hizballah and Palestinian terrorist groups to escalate attacks on Israel in thecontext of the Palestinian uprising. Iran also has been accused by regional governments of sponsoringassassinations of anti-Shiite Muslim clerics in Tajikistan and Pakistan, and of supporting Shiite Muslim Islamicopposition movements in the Persian Gulf states and Iraq. On the other hand, U.S. officials acknowledge thatIran has improved relations with its Gulf neighbors dramatically in recent years, and that its support for Gulfopposition movements has diminished sharply. Iran also has largely ceased attacks on dissidents abroad thatwere so prominent during the tenures of Khatemi's predecessors. In handing down indictments of 14 people in June 2001, the Department of Justice stated its belief that Iran was involved in the June 1996 Khobar Towers bombing in Saudi Arabia, which killed 19 U.S. airmen. No Iranianswere among those indicted, but the indictments detail the role of Iranian security personnel in inspiring andsupervising the plot, which was carried out by members of Saudi Hizballah. Eleven of the 14 are in custody inSaudi Arabia, and Saudi Arabia says they will be tried there and not extradited to the United States. (39) Manyexperts believe that the Saudi and U.S. governments have sought to avoid firmly pressing the Khobar case againstIran -- legally or diplomatically -- in order not to undermine Khatemi (who was elected after the bombing) orreduce the chance to improved relations with Iran. Syria has expressed public support for the U.S. war on terrorism and has emphasized that Syria itself has long combated Islamic movements in Syria. At the same time, Syria is attempting to deflect U.S. and internationalscrutiny of its role as host to terrorist groups. Syria's position is that the movements it hosts are legitimateresistance movements against Israeli occupation. On that basis, Syria refuses to expel the groups in Syria andareas of Lebanon that Syria controls. Even before September 11, Patterns 2000 was more critical of Syria than was Patterns 1999, which came close topromising that Syria would be removed from the terrorism list if it signed a peace agreement with Israel. Thisappeared to signal that U.S. hopes had receded that President Bashar al-Assad would be more flexible on foreignpolicy than his father, the late Hafez al- Assad, who Bashar succeeded in June 2000 upon his death. Far frompraising Syria for restraining terrorist groups as was the case in some past Patterns report, Patterns 2000 says thatSyria allowed Hamas to open a new office in Damascus in March 2000. The report adds that Syria did not act tostop Hizballah or Palestinian terrorist groups, operating in Syria or areas under Syrian control or influence, fromlaunching ant-Israel attacks. Syria continues to allow Iran to resupply Hizballah through the Damascus airport,and has allowed visiting Iranian officials to meet with anti-peace process terrorist organizations based in Syria. Italso publicly opposed suggestions that Hizballah be disarmed by U.N. peacekeepers after the militia seizedpositions in southern Lebanon vacated by Israel during its May 2000 withdrawal. Syria also provides sanctuary to the PFLP-GC and other non-Islamist Palestinian groups. There are no indications that Al Qaeda members are welcome in Syria. A group active in Lebanon, Asbat al-Ansar (Partisans'Group) is believed linked to Al Qaeda and was named to the list of entities covered under Executive Order 13224restrictions. Syria exercises substantial influence over Lebanon, but Lebanon arrested several Asbat members in1999-2000 and there is no information to suggest that the group operates with Syrian or Lebanese governmentapproval. Patterns 2000 does state that Syria is generally upholding its pledge to Turkey not to support the PKK. Some believe that Syria's position on the PKK is the result of Syria's fear of Turkey's potential threat to use armedforce against Syria, and not a unilateral Syrian desire to sever relations with the PKK. An alternate interpretationis that Syria wants to sustain the recent improvement in its bilateral relationship with Turkey. Also, Patterns2000 states that Syria appears to have maintained its long-standing ban on attacks launched from Syrian territoryor against Western targets. Despite its position on the terrorism list, the United States maintains relatively normal relations with Syria. The two countries exchange ambassadors and most forms of non-military U.S. trade with and U.S. investment inSyria are permitted, subject to various licensing restrictions. The Pan Am 103 bombing issue has been at the center of U.S. policy toward Libya for more than a decade, and will likely prevent any major rapprochement as long as Muammar Qadhafi remains in power. However, somepress reports citing unnamed Administration officials indicate that the Bush Administration might considereasing sanctions, perhaps including removing Libya from the terrorism list outright, if outstanding Pan Am 103issues are resolved. (42) After an article to this effectappeared in January 2002, Bush Administration officialssought to downplay the possibility that Libya would be removed from the list anytime soon. Most experts believe Libya has reduced its involvement with terrorist groups, at least for now. In 1998, prior tothe handover, Libya had expelled Abu Nidal, it was reducing its contacts with other radical Palestinianorganizations, and it expressed support for Yasir Arafat. In an effort to reward Libya's positive steps, in 1999 aU.S. official began meeting with a Libyan diplomat for the first time since 1981, and the U.S. trade ban wasmodified to permit exports of food and medicine. On the other hand, reflecting the difficulties of assessingLibya's intentions, Patterns 2000 stated that it is unclear whether Libya's distancing itself from its "terrorist past"signifies a true change in policy. Pan Am 103 Issues. The Pan Am attack, on December 21,1988, killed 259 people aboard plus 11 on the ground. Three U.N. Security Council resolutions -- 731 (January21, 1992); 748 (March 31, 1992); and 883 (November 11, 1993) -- called on Libya to turn over the two Libyanintelligence agents (Abd al-Basit Ali al-Megrahi and Al Amin Khalifah Fhimah) suspected in the bombing, andto help resolve the related case of the 1989 bombing of French airline UTA's Flight 772. The U.N. resolutionsprohibited air travel to or from Libya and all arms transfers to that country (Resolution 748); and froze Libyanassets and prohibited the sale to Libya of petroleum-related equipment (Resolution 883). In accordance withU.N. Security Council Resolution 1192 (August 27, 1998), the sanctions were suspended, but not terminated,immediately upon the April 5, 1999 handover of the two to the Netherlands. There, their trial under Scottish lawbegan on May 3, 2000 and ended on January 31, 2001 with the conviction of al-Megrahi and the acquittal ofFhimah. Megrahi began the appeal process in January 2002. In March 2000, a group of U.S. security officialsvisited Libya briefly to assess whether to lift the U.S. restriction on the use of U.S. passports for travel to Libya. The restriction has not been lifted. The January 31, 2001 conviction of al-Megrahi brought some closure to the Pan Am case but also reinforced theperception among the Pan Am victims' families and others that Libyan leader Muammar Qadhafi had, at the veryleast, foreknowledge of the bombing. Immediately upon the conviction, President Bush stated that the UnitedStates would maintain unilateral sanctions on Libya and oppose permanently lifting U.N. sanctions until Libya:(1) accepts responsibility for the act; (2) compensates the families of the victims; (3) renounces support forterrorism; and (4) discloses all it knows about the plot. In January 2002, some persons involved in pursuing acompensation agreement with Libya expressed optimism about a settlement. (43) Other Terrorism Issues. There is no evidence that Libya hassupported Al Qaeda, and it appears to view Al Qaeda as more of a threat than a potential ally. A Libyanopposition group, the Libyan Islamic Fighting Group, is linked to Al Qaeda and was designated for financialrestrictions under Executive Order 13224. The group allegedly tried to assassinate Qadhafi in 1996, and Libyahas provided the United States some information on the group subsequent to the September 11 attacks. In theearly 1990s, the Libyan government indicted bin Laden for allegedly supporting the Libyan Islamic FightingGroup. Libya has tried to appear cooperative in resolving other past acts of terrorism. In March 1999, a French court convicted six Libyans, in absentia, for the 1989 bombing of a French airliner, UTA Flight 772, over Niger. Oneof them is Libyan leader Muammar Qadhafi's brother-in-law, intelligence agent Muhammad Sanusi. Although itnever acknowledged responsibility or turned over the indicted suspects, in July 1999 Libya compensated thefamilies of the 171 victims of the bombing, who included seven U.S. citizens. In July 1999, Britain restoreddiplomatic relations with Libya after it agreed to cooperate with the investigation of the 1984 fatal shooting of aBritish policewoman, Yvonne Fletcher, outside Libya's embassy in London. It is alleged that a Libyan diplomatshot her while firing on Libyan dissidents demonstrating outside the embassy. In what some construe as part of the effort to improve its international image, Libya also has tried to mediate anend to conflicts between Eritrea and Ethiopia, and within Sudan and the Democratic Republic of the Congo. However, some believe Libya is trying to extend its influence in Africa rather than broker peace, and some inCongress and the Administration assert that Libya continues to arm rebel groups in Africa, such as theRevolutionary United Front in Sierra Leone. (44) In March 2000, a group of U.S. security officials visited Libyabriefly to assess whether to lift the U.S. restriction on the use of U.S. passports for travel to Libya. Therestriction has not been lifted. Sudan appears closest of any of the Near Eastern countries on the terrorism list to being removed, despite congressional and outside criticism over its prosecution of the war against Christian and other rebels in its south. Prior to the September 11 attacks, the State Department said it was engaged in discussions with Sudan with theobjective of getting Sudan "completely out of the terrorism business and off the terrorism list." (46) TheAdministration has praised Sudan's cooperation with the U.S. investigation of Al Qaeda and the September 11plot. In recognition of this cooperation, the Administration did not block a U.N. Security Council vote onSeptember 28, 2001 to lift U.N. sanctions on Sudan. In recent years, Sudan has signaled a willingness to assuage international concerns about its support for terrorism. In August 1994, Sudan turned over the terrorist Carlos (Ilyich Ramirez Sanchez) to France. In December 1999,Sudan's President Umar Hassan al-Bashir, a military leader, politically sidelined Sudan's leading Islamist figure,Hassan al-Turabi. In February 2001, Turabi was arrested, and has remained under house arrest since May 2001. Turabi was one of the primary proponents of Sudan's ties to region-wide Islamic movements, including AlQaeda, the Abu Nidal Organization, Hamas, PIJ, Egypt's Islamic Group and Al Jihad, Hizballah, and Islamistrebel movements in East Africa -- the ties that prompted the United States to place Sudan on the terrorism list inAugust 1993. According to Patterns 2000, by the end of 2000 Sudan had signed all 12 international conventionson combating terrorism. One issue that apparently has been resolved is Sudan's compliance with three Security Council resolutions adopted in 1996: 1044 of January 31; 1054, of April 26; and 1070 of August 16. The resolutions demanded thatSudan extradite the three Islamic Group suspects in the June 1995 assassination attempt against PresidentMubarak in Ethiopia, restricted the number of Sudanese diplomats abroad, and authorized a suspension ofinternational flights by Sudanese aircraft, although the last measure was never put into effect. According to the Washington Post of August 21, 2001, the Bush Administration has concluded that Sudan has ended itssupportfor the terrorists involved in the bomb plot. The United States has tried to promote further progress on terrorism by slowly increasing engagement with Sudan. The United States removed its embassy staff from Khartoum in February 1996, although diplomaticrelations were not broken. U.S. diplomats posted to Sudan have since worked out of the U.S. Embassy in Kenya, but have made consular visits to the embassy in Khartoum. Beginning in mid-2000, U.S. counter-terrorismexperts have visited Sudan to discuss U.S. terrorism concerns and monitor Sudan's behavior on the issue. A U.S.envoy for Sudan, former Senator John Danforth, was appointed on September 6, 2001. There is lingering resentment among some Sudanese against the United States because of the August 20, 1998 cruise missile strike on the al-Shifa pharmaceutical plant in Khartoum, conducted in conjunction with the strikeon bin Laden's bases in Afghanistan. The United States destroyed the plant on the grounds that it was allegedlycontributing to chemical weapons manufacture for bin Laden. Although the Clinton Administration asserted thatthe al-Shifa strike was justified, several outside critics maintained that the plant was a genuine pharmaceuticalfactory with no connection to bin Laden or to the production of chemical weapons. The plant owner's $24million in U.S.-based assets were unfrozen by the Administration in 1999, a move widely interpreted as a tacitU.S. admission that the strike was in error. U.S.-Iraq differences over Iraq's regional ambitions and its record of compliance with post-Gulf war ceasefire requirements will probably keep Iraq on the terrorism list as long as Saddam Husayn remains in power. SomeU.S. officials want to expand the "war on terror" to Iraq despite a lack of hard evidence of Iraqi involvement inthe September 11 attacks. President Bush, in his January 29,2002 State of the Union message, suggested Iraqwas part of an "axis of evil" along with North Korea and Iran, a statement that some took as an indication that theUnited States would eventually take action against Iraq. Even those U.S. officials who oppose extending the warto Iraq assess Iraq's record of compliance with its postwar obligations as poor, and its human rights record asabysmal. However, international pressure on Iraq on these broader issues appears to have constrained Iraq'sability to use terrorism. Patterns 2000, as have the past few Patterns reports, notes that Iraq continues to plan and sponsor international terrorism, although Iraq's activities are directed mostly against anti-regime opposition, those Iraq holdsresponsible for its past defeats, or bodies that represent or implement international sanctions against Iraq. Thesetrends apparently accord with recent Central Intelligence Agency judgments of Iraq's terrorism policy, accordingto a New York Times report of February 6, 2002. That press report added that the CIA has no evidenceIraq hasplanned anti-U.S. terrorism since it organized a failed assassination plot against former President George H.W.Bush during his April 1993 visit to Kuwait, which triggered a U.S. retaliatory missile strike on Iraqi intelligenceheadquarters. The Times report also said that the CIA is "convinced" Iraq has not provided chemicalorbiological weapons to Al Qaeda or other terrorist groups. Among recent developments, in October 1998, Iraqi agents allegedly planned to attack the Prague-based Radio Free Iraq service of Radio Free Europe/Radio Liberty, although no attack occurred. Czech officials say an Iraqiintelligence officer in Prague met with September 11 lead hijacker Muhammad Atta in early 2001, reportedly todiscuss an attack on the radio facility. Some observers believe the meeting suggests an Iraqi role in theSeptember 11 attacks. Iraq, which historically has had close ties to Yasir Arafat, has given some support toanti-peace process Palestinian groups, and hosts the Abu Nidal Organization, Abu Abbas' Palestine LiberationFront, and other minor groups. As a lever in its relations with Iran, Iraq continues to host and provide some oldersurplus weaponry to the PMOI's army, the National Liberation Army (NLA), which has bases near the borderwith Iran. However, Iraq apparently has reduced support for the group as Iraq's relations with Tehran haveimproved over the past two years. Table 2. Blocked Assets of Middle East Terrorism List States (As of End 2000) Principal Source: 2000 Annual Report to Congress on Assets in the United States Belonging to TerroristCountries or International Terrorist Organizations. Office of Foreign Assets Control, Department of theTreasury. January 2001. Prior to September 11, there was little agreement on a strategy for countering the terrorism threats discussedabove. The apparent success of the U.S. military campaign against the Taliban and Al Qaeda in Afghanistanapparently has prompted wider acceptance of the utility of military force than was the case previously. Observerstend to agree that the continued success against Al Qaeda and other terrorist groups will depend on sustainedbilateral, multilateral, or international cooperation with U.S. efforts. Not all options focus on pressuring states or groups; some experts believe that diplomatic engagement with somestate sponsors and U.S. efforts to address terrorists' grievances could be more effective over the long term. TheUnited States has claimed some successes for its policy of pressuring state sponsors, but there are signs that theUnited States is now incorporating a greater degree of engagement into its policy framework. At the same time,the United States has not dropped the longstanding stated U.S. policy of refusing to make concessions toterrorists or of pursuing terrorism cases, politically or legally, as long as is needed to obtain a resolution. An exhaustive discussion of U.S. efforts to counter terrorism emanating from the region is beyond the scope ofthis paper, but the following sections highlight key themes in U.S. efforts to reduce this threat. (49) The success of the U.S. military against the Taliban movement of Afghanistan that had protected the Al Qaeda organization has, according to many experts, validated the utility of military force against terrorism. Somebelieve that many governments are now moving against Al Qaeda cells and other terrorist groups present in theircountries, fearing that U.S. military force might be used against regimes that tolerate the presence of terroristgroups. Advocates of broad application of military force believe that military action against Al Qaeda inAfghanistan has severely disrupted that organization's ability to plan new acts of terrorism. Skeptics of furthermilitary action maintain that conditions in Afghanistan are unique and that the anti-terrorism campaign inAfghanistan cannot easily be replicated elsewhere. U.S. officials say that the continued campaign against AlQaeda might unfold differently elsewhere, including the use of U.S. military advisers to help governmentsdestroy Al Qaeda sanctuaries in other countries. U.S. military attacks were conducted in retaliation for terrorist acts sponsored by Libya and Iraq, as well as those allegedly sponsored by Al Qaeda. On April 15, 1986, the United States sent about 100 U.S. aircraft to bombmilitary installations in Libya. The attack was in retaliation for the April 2, 1986 bombing of a Berlin nightclubin which 2 U.S. military personnel were killed, and in which Libya was implicated. On June 26, 1993, the UnitedStates fired cruise missiles at the headquarters in Baghdad of the Iraqi Intelligence Service, which allegedlysponsored a failed assassination plot against former President George Bush during his April 14-16, 1993 visit toKuwait. (Other U.S. retaliation against Iraq since 1991 has been triggered by Iraqi violations of ceasefire termsnot related to terrorism.) The August 20, 1998 cruise missile strikes against the bin Laden network inAfghanistan represented a U.S. strike against a group, not a state sponsor. The related strike on a pharmaceuticalplant in Sudan could have been intended as a signal to Sudan to sever any remaining ties to bin Laden. The effectiveness of other U.S. military action against terrorist groups or state sponsors is difficult to judge. Libya did not immediately try to retaliate after the 1986 U.S. strike, but many believe that it did eventually strikeback by orchestrating the Pan Am 103 bombing. Since the 1993 U.S. strike, Iraq has avoided terrorist attacksagainst high profile U.S. targets, but it has continued to challenge the United States on numerous issues related toits August 1990 invasion of Kuwait. The 1998 airstrikes against Al Qaeda did not prompt the Taliban leadershipto extradite or expel bin Laden from Afghanistan, nor did the strikes deter bin Laden's network from engaging infurther terrorist activities, including September 11. The United States has been willing to apply economic sanctions unilaterally, particularly against state sponsors ofterrorism, in an effort to pressure those states to expel terrorist groups they host. Analysts doubt that unilateralU.S. economic sanctions, by themselves, can force major changes in the behavior of state sponsors of terrorism. Major U.S. allies did not join the U.S. trade ban imposed on Iran in May 1995 and the move did not, in itself,measurably alter Iran's support for terrorist groups. On the other hand, virtually all Middle Eastern terrorism liststates have publicly protested their inclusion on the list and other U.S. sanctions, suggesting that these sanctionsare having an effect politically and/or economically. U.S. officials assert that U.S. sanctions, even if unilateral,have made some terrorism state sponsors "think twice" about promoting terrorism. To demonstrate that improvements in behavior can be rewarded, in April 1999 the Clinton Administration announced that it would permit, on a case-by-case basis, commercial sales of U.S. food and medical products toLibya, Sudan, and Iran. The move relaxed the bans on U.S. trade with the three countries. As noted previously,all three have recently shown some signs of wanting to improve their international images. Terrorism List Sanctions. Under a number of differentlaws, (50) the placement of a country on theterrorism list triggers a wide range of U.S. economic sanctions,including: a ban on direct U.S. foreign aid, including Export-Import Bank guarantees. a ban on sales of items on the U.S. Munitions Control List. a requirement that the United States vote against lending to that country by international institutions. strict licensing requirements for sales to that country, which generally prohibit exports of items that can have military applications, such as advanced sensing, computation, or transportationequipment. A U.S. trade ban has been imposed on every Middle Eastern terrorism list state, except Syria, under separate executive orders. Placement on the terrorism list does not automatically trigger a total ban onU.S. trade with orinvestment by the United States. In addition, foreign aid appropriations bills since the late 1980s have barred direct and indirect assistance to terrorism list and other selected countries, and mandated cuts in U.S.contributions to international programs that work in those countries. As shown in Table 2 above,the UnitedStates also tries to maintain some leverage over terrorism list states and groups by blocking some of their assetsin the United States. Some U.S. sanctions are "secondary sanctions," imposing penalties on countries that help or arm terrorism list countries. Sections 325 and 326 of the Anti-Terrorism and Effective Death Penalty Act ( P.L. 104-132 ) amendedthe Foreign Assistance Act by requiring the President to withhold U.S. foreign assistance to any government thatprovides assistance or lethal military aid to any terrorism list country. In April 1999, three Russian entities weresanctioned under this provision for providing anti-tank weaponry to Syria; sanctions on the Russian governmentwere waived. "Non-Cooperating List. " The 1996 Anti-Terrorism act alsogave the Administration another option besides placing a country on the terrorism list. Section 303 of that Actcreated a new list of states that are deemed "not cooperating with U.S. anti-terrorism efforts," and provided thatstates on that list be barred from sales of U.S. Munitions List items. Under that provision, and every year since1997, Afghanistan, along with the seven terrorism list countries, has been designated as not cooperating. No U.S.allies have been designated as "not cooperating," although the provision was enacted following an April 1995incident in which Saudi Arabia did not attempt to detain Hizballah terrorist Imad Mughniyah when a plane onwhich he was believed to be a passenger was scheduled to land in Saudi Arabia. (51) Possibly in an attempt toavoid similar incidents, on June 21, 1995, President Clinton signed Presidential Decision Directive 39 (PDD-39),enabling U.S. law enforcement authorities to capture suspected terrorists by force from foreign countries thatrefuse to cooperate in their extradition. (52) The Clinton Administration rejected several outside recommendations -- most recently those issued in June 2000 by the congressionally mandated National Commission on Terrorism -- to place Afghanistan on the terrorismlist. The Clinton Administration said that placing Afghanistan on the list would imply that the United Statesrecognizes the Taliban movement as the legitimate government of Afghanistan, a position later adopted by theBush Administration. However, President Clinton, on July 4, 1999, issued Executive Order 13129, imposingsanctions on the Taliban that are similar to those imposed on terrorism list countries and on foreign terroristorganizations. The order imposed a ban on U.S. trade with areas of Afghanistan under Taliban control, frozeTaliban assets in the United States, and prohibited contributions to Taliban by U.S. persons. The ClintonAdministration justified the move by citing the Taliban's continued harboring of bin Laden. Also in its June 2000 report, the National Commission on Terrorism recommended naming Greece and Pakistan as not fully cooperating with U.S. anti-terrorism efforts. The Clinton Administration rejected thoserecommendations as well. In Patterns 2000, the State Department implied that Pakistan and Lebanon werepotential candidates for the terrorism list, or possibly the "not cooperating" list, for supporting or toleratingoperations by terrorist groups. (53) On the otherhand, Patterns 2000 did credit both Pakistan and Lebanon withanti-terrorism cooperation in selected cases. In the aftermath of the September 11 attacks and Pakistan's decisionto align itself with the U.S. war effort, the United States has praised Pakistan's cooperation, lifted U.S. sanctions,and begun a new foreign assistance program for that country. In concert with U.S. unilateral actions, the United States has sought to enlist its friends, allies, and other countriesto employ multilateral sanctions against Middle Eastern terrorism. As noted above, the United States led effortsto impose international sanctions on Libya and Sudan for their support of terrorism, and both those states soughtto distance themselves from terrorist groups. This suggests that the perception of isolation caused by the U.N.sanctions was a factor in the terrorism policy decisions of these countries. In 1998 and 1999, the United Statesand Russia jointly worked successfully to persuade the United Nations Security Council to adopt sanctions on theTaliban because of its refusal to extradite bin Laden. U.N. Security Council Resolution 1267, adopted October15, 1999, banned flights outside Afghanistan by its national airline, Ariana, and directed U.N. member states tofreeze Taliban assets. The United States and Russia teamed up again to push another resolution (U.N. SecurityCouncil Resolution 1333, adopted December 19, 2000) that, among other measures, imposed an internationalarms embargo on the Taliban only, not on opposition factions. (54) These measures began to be implemented justprior to the September 11 attacks, but did not cause the Taliban to waiver in its refusal to hand over bin Laden. Successive administrations have identified counter-terrorism cooperation with friendly countries as a key elementof U.S. policy. In one important regional example, the United States has sought to contain Hizballah byproviding military and law enforcement assistance to the government of Lebanon. In the past few years, theUnited States has sold Lebanon non-lethal defense articles such as armored personnel carriers. In 1994, on aone-time basis, the United States provided non-lethal aid, including excess trucks and equipment, to PalestinianAuthority security forces in an effort to strengthen them against Hamas and PIJ. Prior to September 11, the United States had been expanding a counter-terrorism dialogue with Russia and the Central Asian states against Islamic militant groups linked to Al Qaeda. All of these countries subsequentlyaligned themselves, openly or tacitly, with the U.S. war against the Taliban and Al Qaeda. Every year since1999, the State Department hosted a multilateral conference of senior counter-terrorism officials from the MiddleEast, Central Asia, and Asia, focusing on combating the terrorism threat from Afghanistan. These conferencesand meetings have often resulted in agreements to exchange information, to conduct joint efforts to counterterrorist fundraising, and to develop improved export controls on explosives and conventions against nuclearterrorism. (55) For the past few years, the UnitedStates has been providing some detection equipment and a fewmillion dollars in financial assistance to the Central Asian states to help them prevent the smuggling of nuclearand other material to terrorist groups such as Al Qaeda. The measure yielded some results in April 2000, whenUzbek border authorities used this equipment to detect and seize ten containers with radioactive material boundfor Pakistan. (56) The United States has worked with the European Union (EU) to exert influence on Iran to end its sponsorship ofterrorism. In exchange for relaxing enforcement of U.S. sanctions under the Iran-Libya Sanctions Act ( P.L.104-172 ) , which would have sanctioned EU firms that invest in Iran's energy industry, in mid 1998 the UnitedStates extracted a pledge from the EU to increase cooperation with the United States against Iranian terrorism. InMay 1998, the EU countries agreed on a "code of conduct" to curb arms sales to states, such as Iran, that mightuse the arms to support terrorism. However, the code is not legally binding on the EU member governments. (57) Terrorism Fundraising Cooperation. In January 2000, theUnited States signed a new International Convention for the Suppression of Terrorist Financing, which creates aninternational legal framework to investigate those involved in terrorist financing. Since September 11, the UnitedStates has made cooperation against terrorism fundraising a major priority in its dealings with other countries,particularly Middle Eastern countries where much of the fundraising for Al Qaeda is conducted. As noted in the discussions of terrorism list countries, the Administration has shown increasing willingness to engage state sponsors, once these countries have demonstrated some willingness to curb support for terrorism. U.S. officials justify engagement with the argument that doing so creates incentives for terrorism list countries tocontinue to reduce their support for international terrorism. On the other hand, critics believe that terrorism listcountries are likely to view a U.S. policy of engagement as a sign that supporting terrorism will not adverselyaffect relations with the United States. Of the Middle Eastern terrorism list countries, the United States engages in bilateral dialogue with all except Iranand Iraq. The United States has called for a dialogue with Iran, but Iran has thus far refused on the grounds thatthe United States has not dismantled what Iran calls "hostile" policies toward that country -- a formulationwidely interpreted to refer to U.S. sanctions. Iraq has asked for direct talks with the United States, but the UnitedStates has rejected the suggestion on the grounds that Iraq is too far from compliance with Gulf war-relatedrequirements to make official talks useful. Legal action against terrorist groups and state sponsors had become an increasingly large component of U.S. counter-terrorism strategy, although the September 11 attacks and U.S. military response has, to some extent,diminished support among observers for this option. In the case of the bombing of Pan Am 103, the BushAdministration chose international legal action -- a trial of the two Libyan suspects -- over military retaliation. A similar choice has apparently been made in the Khobar Towers bombing case, although that legal effortconsists of U.S. indictments of suspects and not a U.N.-centered legal effort. The United States is planning to trysome Al Qaeda fighters captured in Afghanistan, although the U.S. strategy has been primarily to defeat AlQaeda militarily rather than treat the September 11 attacks primarily as a criminal case. Congress has attempted to give victims of international terrorism a legal option against state sponsors. The Anti-Terrorism and Effective Death Penalty Act of 1996 (Section 221) created an exception to the ForeignSovereign Immunity for Certain Cases (28 U.S.C., Section 1605), allowing victims of terrorism to sue terrorismlist countries for acts of terrorism by them or groups they support. Since this provision was enacted, a number ofcases have been brought in U.S. courts, and several multimillion dollar awards have been made to formerhostages and the families of victims of groups proven in court to have been sponsored by Iran. In 2000, theClinton Administration accepted compromise legislation to use general revenues to pay compensatory damageawards to these successful claimants, with the stipulation that the President try to recoup expended funds fromIran as part of an overall reconciliation in relations and settlement of assets disputes. The provision, called the"Justice for Victims of Terrorism Act," was incorporated into the Victims of Trafficking and Violence ProtectionAct of 2000 ( P.L. 106-386 ). The Clinton and Bush Administrations have opposed directly tapping frozen Iranianassets in the United States, such as selling Iran's former embassy in Washington, on the grounds that doing socould violate diplomatic sovereignty or provoke attacks on U.S. property or citizens abroad. The September 11 attacks have exposed the vulnerability of the United States homeland to Middle Eastern-inspired terrorism as no other previous event. The October-November 2002 anthrax mailings alsoexposed U.S. vulnerabilities, although it is not known whether these incidents were related to September 11,other Middle Eastern-related terrorism, or activity by groups in the United States not connected to the MiddleEast. The September 11 attacks have sparked stepped up law enforcement investigation into the activities ofIslamic networks in the United States and alleged fundraising in the United States for Middle East terrorism. Some observers allege that Middle Eastern terrorist groups, including Al Qaeda, have extensive political networks in the United States, working from seemingly innocent religious and research institutions andinvestment companies. (58) PIJ leader Shallah,before being tapped to lead PIJ, taught at the University of SouthFlorida in the early 1990s and ran an affiliated Islamic studies institute called the World and Islam StudiesEnterprise (WISE). Some observers believe that extraordinary security measures are needed to ferret out AlQaeda cells in the United States. Others have challenged this view, saying that most American Muslims oppose the use of violence, and donate money to organizations that they believe use the funds solely for humanitarian purposes. Some post-September11 U.S. domestic counter-terrorism efforts, particularly those dealing with immigration and investigative powers,have drawn substantial criticism from U.S. civil liberties groups, which have expressed concern about excessiveintrusions by law enforcement authorities. Some Arab-American and American Muslim organizations have longcomplained that U.S. residents and citizens of Arab descent are unfairly branded as suspected terrorists, and thatthis sentiment increased dramatically after September 11. As part of their criticism, these organizations point toerroneous initial accusations by some terrorism experts that Islamic extremists perpetrated the Oklahoma Citybombing in April 1995.

The Al Qaeda terrorist network founded by Osama bin Laden is believed to pose a continuing, although diminished, threat to the United States at home and to U.S. interests and allies abroad following the network'sdefeat in its base in Afghanistan. As stated in taped appearances by its leaders since the September 11, 2001terrorist attacks on the World Trade Center and the Pentagon, the goal of Al Qaeda is to destroy high profile U.S.targets in order to end what Al Qaeda claims is U.S. suppression of Islamic societies. In these appearances, binLaden virtually claimed responsibility for the September 11 attacks. Throughout its history, Al Qaeda has soughtto oust pro-U.S. regimes in the Middle East and gain removal of U.S. troops from the region. Before September 11, signs pointed to a decline in state sponsorship of terrorism. Since the attacks, some countries that are designated by the United States as state sponsors of terrorism, including Iran and Sudan, havecooperated to an extent with the U.S.-led war against Al Qaeda and its Taliban protectors in Afghanistan. Inspite of its cooperation against the Taliban and Al Qaeda, Iran is still considered a major sponsor of radicalIslamic groups that conduct terrorism against Israel. The Arab-Israeli peace process is a longstanding major U.S. foreign policy interest, and the Administration and Congress are concerned about any terrorist groups or state sponsors that oppose the process. Possibly because ofa breakdown in the Palestinian-Israeli peace process in September 2000, Palestinian organizations such asHamas, as well as older groups such as the Popular Front for the Liberation of Palestine that have been inactivefor years, have stepped up operations against Israelis. Following several major terrorist attacks against Israelissince December 2001, the United States has strongly criticized Palestinian Authority President Yasir Arafat forfailing to exert sufficient efforts to constrain these and other groups. Some analysts assert that Israel's actionsagainst the Palestinians have contributed to increased Palestinian support for violence against Israel. U.S. differences with other governments on the strategies for countering terrorism in the Near East have to some extent narrowed since September 11. The United States, in the past, differed with its allies, particularly on howto deal with state sponsors of terrorism; most allied governments believe that engaging these countriesdiplomatically might sometimes be more effective than trying to isolate or punish them. The United States hasgenerally been more inclined than its European allies to employ sanctions and military action to compel statesponsors and groups to abandon terrorism. Post-September 11 developments seem to have validated theimportance of both diplomacy and, in certain circumstances, more forceful responses in dealing with terrorism. Differences with allies have begun to reemerge as the Bush Administration expands its "war on terrorism,"indicating it will seek to prevent the emergence of threats by regimes -- some of which also have ties to terroristgroups -- that are developing weapons of mass destruction (WMD). This report will be updated annually.

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The potential for terrorist attacks against agricultural targets (agroterrorism) is increasingly recognized as a national security threat, especially after the events of September 11, 2001. In this context, agroterrorism is defined as the deliberate introduction of an animal or plant disease with the goal of generating fear over the safety of food, causing economic losses, and/or undermining social stability. The response to the threat of agroterrorism has come to be called "food defense." An agroterrorist event would usually involve bioterrorism, since likely vectors include pathogens such as a viruses, bacteria, or fungi. People more generally associate bioterrorism with outbreaks of human illness (e.g., anthrax or smallpox), rather than diseases affecting animals or plants. The goal of agroterrorism is not killing cows or plants. These are the means to the end of causing economic crises in the agricultural and food industries, social unrest, and loss of confidence in government. Human health could be at risk through contaminated food or if an animal pathogen is transmissible to humans (zoonotic). While agriculture may not be a terrorist's first choice because it lacks the "shock factor" of more traditional terrorist targets, an increasing number of terrorism analysts consider it a viable secondary target. Agroterrorism could be a low-cost but highly effective means toward an al-Qaeda goal of destroying the United States' economy. Evidence that agriculture and food are potential al Qaeda targets came in 2002 when terrorist hideouts in Afghanistan were found containing agricultural documents and manuals describing ways to make animal and plant poisons. Agriculture has several characteristics that pose unique problems: Farms are geographically disbursed in unsecured environments (e.g., open fields and pastures throughout the countryside). While some livestock are housed in facilities that can be secured, agriculture generally requires large expanses of land that are difficult to secure. Livestock frequently are concentrated in confined locations (e.g., feedlots with thousands of cattle in open-air pens, farms with tens of thousands of pigs, or barns with hundreds of thousands of poultry) allowing diseases to infect more animals quickly. Concentration in slaughter, processing also makes large scale contamination possible. The number of lethal and contagious biological agents is greater for plants and animals than for humans. Most of these diseases are environmentally resilient, endemic in foreign countries, and not harmful to humans—making it easier for terrorists to acquire, handle, and deploy the pathogens. Live animals, grain, and processed food products are routinely transported and commingled in the production and processing system. These factors circumvent natural barriers that could slow pathogenic dissemination. International trade in livestock, grains, and food products is often tied to disease-free status. The presence (or rumor ) of certain pests or diseases in a country can quickly stop exports of a commodity, cause domestic consumption to drop, disrupt commodities markets, and can take months or years to recover. The past success of keeping many diseases out of the U.S. means that many veterinarians and scientists lack direct experience with foreign diseases. This may delay recognition of symptoms in case of an outbreak, and the ability to respond to an outbreak. Thus, the general susceptibility of the agriculture and food industry to bioterrorism is difficult to address in a systematic way due to the geographically dispersed, yet industrially concentrated nature of the industry, and the inherent biology of growing plants and raising animals. In an attack, the agricultural sector would suffer economically from plant and animal health losses, and the supply of food and fiber may be reduced. The demand for foods targeted in an attack may decline (e.g., dairy, beef, pork, poultry, grains, fruit, or vegetables), while demand for substitute foods may rise. Economic losses would accrue to individuals, businesses, and governments through costs to contain and eradicate the disease, and to dispose of contaminated products. More losses would accumulate as the supply chain is disrupted from farm-to-fork. Domestic markets for food may drop, and trade restrictions could be imposed on U.S. exports. The economic impact would range from farmers to input suppliers, food processors, transportation, retailers, and food service providers. Significant threats to the currently-held notion of food security could affect our social order. Fear of food shortages moved further from American psyche as the United States from an agrarian society to the industrial and information age. Nevertheless, food remains an important element of everyone's daily routine and is necessary for survival. This report addresses the use of biological weapons against agriculture, rather than terrorists using agricultural inputs or equipment in attacks against non-agricultural targets. For example, the Department of Transportation issued regulations for developing security plans to protect dangerous agricultural materials such as fuels, chemicals, and fertilizers against theft. Legislation proposed in 2005-2006 ( H.R. 3197 , H.R. 1389 , and S. 1141 , 109 th Congress) would have restricted the handling of ammonium nitrate, an agricultural fertilizer that can be converted into an explosive. Another example is the concern over misuse of small aircraft, particularly crop-dusters, to spread biological weapons. This report focuses primarily on biological weapons (rather than chemical weapons) because biological weapons generally are considered the more potent agroterrorism threat. This report also focuses more on agricultural production than food processing and distribution, although the later is discussed. For more on chemical and biological weapons, see CRS Report RL32391, Small-scale Terrorist Attacks Using Chemical and Biological Agents: An Assessment Framework and Preliminary Comparisons , by [author name scrubbed] and [author name scrubbed] (pdf); and CRS Report RL31669, Terrorism: Background on Chemical, Biological, and Toxin Weapons and Options for Lessening Their Impact , by [author name scrubbed]. Even before September 11, 2001, and the focus on terrorist threats that ensued, references to agroterrorism and/or agricultural bioweapons can be found in the government, academia, and the press. For example, the Gilmore Commission (on terrorism), in its first report to Congress in 1999, noted that "... a biological attack against an agricultural target offers terrorists a virtually risk-free form of assault, which has a high probability of success and which also has the prospect of obtaining political objectives, such as undermining confidence in the ability of government or giving the terrorists an improved bargaining position." Senator Roberts from Kansas also raised the awareness of agroterrorism with a hearing of the Senate Committee on Armed Services in 1999. However, as the 20 th century ended, agriculture and food production received less attention, or sometimes was overlooked, in federal counterterrorism and homeland security activities. A Presidential directive in 1998 on protecting critical infrastructure did not include agriculture and food. Agriculture was added to this list only in December 2003. Thus, after what many observers claim to be a slow start after September 11, 2001, agriculture now is garnering more attention in the expanding field of terrorism studies and policies. Agroterrorism received heightened national attention in December 2004 when then-Secretary of Health and Human Services Tommy Thompson said in his resignation speech, "For the life of me, I cannot understand why the terrorists have not attacked our food supply because it is so easy to do." Congress has held hearings on agroterrorism and, while addressing terrorism more broadly, has implemented laws and appropriations with provisions important to agriculture. The Government Accountability Office (GAO) has studied aspects of food safety, border inspections, interagency coordination, and physical security with respect to agroterrorism. The executive branch has responded by implementing the new laws, issuing several presidential directives, creating terrorism and agroterrorism task forces, and publishing protection and response plans. The law enforcement community has recognized agroterrorism as a threat, highlighted by FBI and JTTF (Joint Terrorism Task Force) sponsorship of an annual conference on agroterrorism. The 9/11 Commission (National Commission on Terrorist Attacks Upon the United States) does not make any direct references to agroterrorism or terrorism on the food supply in its 2004 report. However, agriculture obviously would be affected, along with other sectors of the economy, by some of the commission's recommendations regarding coordination of intelligence, information sharing, and first responders. An evaluation of those separate issues, however, is outside the scope of this report. Agriculture and the food industry are very important to the social, economic, and arguably, the political stability of the United States. Although farming employs less than 2% of the of the country's workforce, 16% of the workforce is involved in the food and fiber sector, ranging from farmers and input suppliers, to processors, shippers, grocers, and restaurateurs. In 2002, the food and fiber sector contributed $1.2 trillion, or 11% to the gross domestic product (GDP), even though the farm sector itself contributed less than 1%. Gross farm sales exceeded $200 billion, and are relatively concentrated throughout the Midwest, parts of the East Coast, and California ( Figure 1 ). Production is split nearly evenly between crops and livestock. In 2002, livestock inventories included 95 million cattle, and 60 million hogs. Farm sales of broilers and other meat-type chickens exceeded 8.5 billion birds. Agriculture in the U.S. is technologically advanced and efficient. This productivity allows Americans to spend only about 10% of their disposable income on food (both at home and away from home). Productivity increases over time have allowed the share of disposable income spent on food in the U.S. to fall from 23% in 1929 to 10% in 2003. The United States has the lowest spending on food prepared at home (6.5%) compared to the rest of the world, which ranges from 10%-15% for most developed countries and 30% or higher for some developing countries. The U.S. produces and exports a large share the world's grain. In 2003, the U.S. share of world production was 42% for corn, 35% for soybeans, and 12% for wheat. Of global exports, the U.S. accounted for 65% for corn, 40% for soybeans, and 32% for wheat. If export markets were to decline following an agroterrorism event, U.S. markets could be severely disrupted since 21% of U.S. agricultural production is exported (10.5% of livestock, and 22% of crops). The U.S. exported nearly $60 billion of agricultural products (8% of all U.S. exports), and imported $47 billion of agricultural products (4% of all U.S. imports), making agriculture a positive contributor to the country's balance of trade. The price of land is directly correlated to the productivity and marketability of agricultural products, and the level of federal farm income support payments. In 2003, farm assets exceeded $1.3 trillion, with $1.1 trillion in equity. Land and other real estate accounts for 80% of those assets. Of the 938 million acres of farm land in the U.S., 46% are in crop land, 42% are pasture and range land, and 8% are wood land. Agricultural production in the U.S. is concentrated geographically and on a subset of large farms. Although the number of farms in the 2002 Census of Agriculture totaled 2.1 million, 75% of the value of production occurs on just 6.7%, or 143,500, of these farms. This subset of farms has average sales of $1 million annually, and averages 2,000 acres in size. Livestock and poultry production are concentrated in different regions of the country, and in large numbers. Cattle are the least concentrated of the major types of livestock, given the prevalence of small cow-calf herds throughout the country and pockets of dairy on the West Coast, upper Midwest, and Northeast. However, beef cattle feedlots are particularly concentrated in a swath from northern Texas through Kansas, Nebraska, eastern Colorado, and western Iowa. The top five cattle-producing states (Texas, California, Missouri, Oklahoma, and Nebraska) produce 35% of U.S. cattle ( Figure 2 ). Hog inventories are concentrated in the Midwest, especially Iowa and southern Minnesota, and in North Carolina. The top three hog-producing states (Iowa, North Carolina, and Minnesota) produce 53% of U.S. hogs ( Figure 3 ). The production of broilers for poultry meat is concentrated throughout the Southeast, ranging from the Oklahoma-Arkansas border up to the Delmarva peninsula (Delaware-Maryland-Virginia). The top three chicken-producing states (Georgia, Arkansas, and Alabama) produce 41% of U.S. chickens ( Figure 4 ). Grain production is concentrated in the Midwest, although other states may contribute significant shares for particular commodities. The top four corn-producing states (Iowa, Illinois, Nebraska, and Minnesota) produce 54% of the crop ( Figure 5 ). Economic losses from an agroterrorist incident could be large and widespread. First, losses would include the value of lost production, the cost of destroying diseased or potentially diseased products, and the cost of containment (drugs, diagnostics, pesticides, and veterinary services). Second, export markets could be lost if importing countries place restrictions on U.S. products to prevent possibilities of the disease spreading. Sanitary and phytosanitary rules in international trade agreements would be important for maintaining export markets. Third, multiplier effects could ripple through the economy due to decreased sales by agriculturally dependent businesses (farm input suppliers, food manufacturing, transportation, retail grocery, and food service). Tourism can be affected of access to certain destinations within the country is limited or perceptions of food or personal safety falter. Fourth, federal and state governments could bear significant costs, including eradication and containment costs, and compensation to producers for destroyed animals. Depending on the erosion of consumer confidence and export sales, market prices of the affected commodities may drop. This would affect producers whose herds or crops were not directly infected, making the event national in scale even if the disease itself were contained to a small region. For food types or product lines that are not contaminated, however, demand may become stronger, and market prices could rise for those products. Such goods may include substitutes for the food that was the target of the attack (e.g., chicken instead of beef), or product that can be certified to originate from outside a contaminated area (e.g., beef from another region of the country, or imported beef). For example, when Canada announced the discovery of mad cow disease (BSE, or bovine spongiform encephalopathy) in May 2003, farm-level prices of beef in Canada dropped by nearly half, while beef prices in the United States remained very strong at record or near record levels. When a cow with BSE was discovered in the United States in December 2003, U.S. beef prices fell, but less dramatically than in Canada. Consumer confidence in government may also be tested depending on the scale of the eradication effort and means of destroying animals or crops. The need to slaughter perhaps hundreds of thousands of cattle (or tens of millions of poultry) could generate public criticism if depopulation methods are considered inhumane or the destruction of carcasses is questioned environmentally. For example, during the United Kingdom's foot-and-mouth (FMD) outbreak in 2001, euthanizing thousands of cattle and incinerating the carcasses in huge open air pyres provided poignant television images and difficult public relations situations for the agriculture ministry. Dealing with these concerns can add to the cost for both government and industry. Depending on the disease and means of transmission, the potential for economic damage depends on a number of factors such as the disease agent, location of the attack, rate of transmission, geographical dispersion, how long it remains undetected, availability of countermeasures or quarantines, and incident response plans. Potential costs are difficult to estimate and can vary widely based on compounding assumptions. Drawing on the FMD outbreak in the United Kingdom in 2001, Price Waterhouse Coopers estimated that the economic impact was $1,389 to $4,477 for each of the 2.6 million head of livestock (cattle, sheep, and hogs) on which indemnities were paid in the U.K. These impacts exceed the value of the animals because of the number of industries affected by the outbreak, ranging from feed suppliers to tourism. Applying the loss ratios from the U.K. incident to the larger U.S. livestock industry, Price Waterhouse Coopers estimates that 7.5 million animals (5.3 million cattle, 1.4 million hogs, and 800,000 sheep) might be destroyed in a similar scale outbreak in the United States. The resulting economic impact could range from $10.4 billion to $33.6 billion, using the range of impacts estimated from the U.K. A 2002 National Defense University study estimates that a limited outbreak of FMD on just 10 farms could have a $2 billion financial impact. A study by the USDA Economic Research Service (ERS) outlines the wide-ranging implications of a FMD outbreak in the U.S., assigning probabilities for animal losses but not estimating a dollar loss. A 1994 study by the United States Department of Agriculture (USDA) on African swine fever suggested that if the disease were to become entrenched in the U.S., the 10-year impact would be at least $5.4 billion. The impact in today's dollars could be much higher. However, not all assessments agree that the economic consequences of an agroterrorist attack would be large and widespread. A December 2004 report by the Congressional Budget Office (CBO) concludes that the nation's economic loss from an agroterrorist attack "would probably be small, primarily because the food and agriculture industry is well adapted to the prospect of disruptions from weather, pests, and occasional health incidents." The CBO report also suggests that the food industry's experience recalling contaminated lots and the existence of commodity support programs "to sustain the incomes of some agricultural producers" might keep economic losses "within the realm of industry experience and current public plans for detection and response." Such a conclusion likely overstates the capacity of traditional farm commodity programs to respond to the scale devastation possible in agroterrorism. The purpose of farm commodity programs is to support farm income when prices and production vary within normal year-to-year cycles. They were never envisioned to compensate for losses due to agroterrorism or even widespread pest and disease outbreaks. The federal farm commodity support programs subsidize about 25 agricultural commodities (such as corn, wheat, soybeans, rice, and cotton). These supported commodities represent about one-third of gross farm sales. The list of commodities that normally do not receive direct support includes meats, poultry, fruits, vegetables, nuts, hay, and nursery products. These non-supported commodities account for about two-thirds of gross farm sales and are possibly more likely to be the targets of an agroterrorist attack. Thus, the food products more vulnerable to attack (meats, fruits, and vegetables) do not have existing federal farm income support programs. Food processors or retailers beyond the farm gate do not receive any commodity support payments. Any federal assistance to producers or processors stemming from an agroterrorist attack would likely come from the emergency transfer authority available to the Secretary of Agriculture (for producers) and through supplemental emergency appropriations enacted by Congress (for producers, and possibly processors). Making disaster payments to individuals who do not normally receive commodity payments is technically more difficult than supplementing regular program payments. In the end, despite the CBO suggestion that the economic effects of agroterrorism might fall within the realm of normal experience, numerous federal agencies, state agencies, and private corporations continue to prepare for agroterrorism based on the assumption that an attack could exceed the typical experience with naturally or accidentally occurring outbreaks. Attacks against agricultural production are not new, and have been conducted both by nation-states and by substate organizations throughout history. At least nine countries had documented agricultural bioweapons programs during some part of the 20 th century (Canada, France, Germany, Iraq, Japan, South Africa, United Kingdom, United States, and the former USSR). Four other countries are believed to have or have had agricultural bioweapons programs (Egypt, North Korea, Rhodesia, and Syria). Despite extensive research on the issue, however, biological weapons have been used rarely against crops or livestock, especially by state actors. Examples of state actors using biological weapons against agriculture include Germany's use of glanders against Allied horses and mules in World War I, the alleged use of anthrax and rinderpest by Japan in World War II, and the alleged use of glanders by Soviet forces in Afghanistan in the 1980s. Thus, in recent decades, using biological weapons against agricultural targets has remained mostly a theoretical consideration. With the ratification of the Biological and Toxin Weapons Convention in 1972, many countries, including the United States, stopped military development of biological weapons and destroyed their stockpiles. Although individuals or substate groups have used bioweapons against agricultural or food targets, only a few can be considered terrorist in nature. In 1952, the Mau Mau (an insurgent organization in Kenya) killed 33 head of cattle at a mission station using African milk bush (a local plant toxin). In 1984, the Rajneeshee cult spread salmonella in salad bars at Oregon restaurants to influence a local election. Chemical weapons have been used somewhat more commonly against agricultural targets. During the Vietnam War, the U.S. used agent orange to destroy foliage, affecting some crops. Among possible terrorist events, chemical attacks against agricultural targets include a 1997 attack by Israeli settlers who sprayed pesticides on grapevines in two Palestinian villages, destroying up to 17,000 metric tons of grapes. In 1978, the Arab Revolutionary Council poisoned Israeli oranges with mercury, injuring at least 12 people and reducing orange exports by 40%. From 1999 to 2006, Congress has held five hearings entirely devoted to agroterrorism or agricultural biosecurity, four in the Senate and one in the House, each by a different committee or subcommittee. The first Congressional hearing on agroterrorism was in October 1999, called by Senator Pat Roberts of the Subcommittee on Emerging Threats in the Senate Committee on Armed Services. The hearing was titled, "The Agricultural Biological Weapons Threat to the United States," and had both closed and open sessions with different witnesses. Four years later, on November 19, 2003, the Senate Committee on Governmental Affairs held an open hearing titled, "Agroterrorism: The Threat to America's Breadbasket," including witnesses from the Administration, state governments, and a private think tank. During the four years between these two hearings when the specter of terrorism was raised after September 11, 2001, a few individual panelists at more general hearings on food safety, homeland security, or terrorism discussed agroterrorism. In May 2005, a subcommittee of the House Homeland Security Committee held a hearing titled, "Evaluating the Threat of Agro-Terrorism." Both an open session and a closed session were held with the same two witnesses. Two months later, in July 2005, the Senate Agriculture Committee held a hearing titled, "Bio-security and Agro-Terrorism." Eight panelists from government, law enforcement, academia, and industry discussed vulnerabilities and preparedness efforts. In January 2006, the Senate Agriculture Committee's Subcommittee on Research, Nutrition, and General Legislation held a field hearing in Pennsylvania titled "BioSecurity Coordination." Ten panelists from government, academia, and industry discussed preparedness and coordination issues. The Public Health Security and Bioterrorism Preparedness and Response Act ( P.L. 107-188 , June 12, 2002) was enacted in response to vulnerabilities identified following September 11, 2001. Among many provisions affecting public health and general preparedness, the act contained several provisions important to agriculture. These provisions accomplish the following: Expand Food and Drug Administration (FDA) authority over food manufacturing and imports (particularly in sections 303-307). Tighten control of biological agents and toxins ("select agents" in sections 211-213, the "Agricultural Bioterrorism Protection Act of 2002") under rules by the Animal and Plant Health Inspection Service (APHIS) and Centers for Disease Control and Prevention. Authorize expanded agricultural security activities and security upgrades at USDA facilities (sections 331-335). Address criminal penalties for terrorism against animal enterprises (section 336) and violation of the select agent rules (section 231). The Bioterrorism Preparedness Act responded to long-standing concerns about whether the Food and Drug Administration (FDA) in the Department of Health and Human Services (HHS) had the authority to assure food safety. FDA was instructed to implement new rules for (1) registration of food processors, (2) prior notice of food imports, (3) administrative detention of imports, and (4) record-keeping. Proposed rules began being issued in early 2003; the final set of rules was published in December 2004. The act required FDA to establish a one-time registration system for any domestic or foreign facility that manufactures, processes, packs, and handles food. All food facilities supplying food for the United States were required to register with the FDA by December 12, 2003 (21 CFR 1.225 to 1.243). Registering involved providing information about the food products (brand names and general food categories), facility addresses, and contact information. Restaurants, certain retail stores, farms, non-profit food and feeding establishments, fishing vessels, and trucks and other motor carriers were exempt from registration requirements. However, many farms had a difficult time determining whether they needed to register based on the amount of handling or processing they performed. Registration documents are protected from public disclosure under the Freedom of Information Act (FOIA). The registry provides, for the first time, a complete list of companies subject to FDA authority, and will enhance the agency's capability to trace contaminated food. Critics argued that registration created a record keeping burden without proof that facilities will be able to respond in an emergency. As of December 12, 2003, importers are required to give advance notice to FDA prior to importing food (21 CFR 1.276 to 1.285). Electronic notice must be provided by the importer within a specified period prior to arrival at the border (within two hours by road, four hours by air or rail, and eight hours by water). With prior notice, FDA can assess whether a shipment meets criteria that can trigger an inspection. If notice is not given, the food will be refused entry and held at the port or in secure storage. Some critics are concerned that the administrative cost of compliance may raise the price of food. Others have argued that perishable imports are subject to increased spoilage if delays arise, or that certain perishables (especially from Mexico) are not harvested or loaded onto trucks before the two-hour notification period. However, implementation of the new system generally has not caused delays and most shippers have been accommodated. To facilitate compliance, FDA and the Department of Homeland Security (DHS) Bureau of Customs and Border Protection (CBP) integrated their information systems to allow food importers to provide the required information using CBP's existing system for imports. In December 2003, the two agencies agreed to allow CBP officers to inspect imported foods on FDA's behalf, particularly at ports where FDA has no inspectors. Upon enactment of the act, FDA obtained the authority to detain food imports under certain conditions. FDA procedures for making detention were issued on June 4, 2004 (21 CFR 1.377 to 1.406). To use the authority, the agency must show credible evidence that a shipment presents a serious health threat. Food may be detained for 20 days and up to 30 days, if necessary. The owners must pay the expense of moving any detained food to secure storage. Perishable foods (e.g., fruits, vegetables, and seafood) are to receive expedited review. FDA published a proposed rule for record-keeping on May 9, 2003, and issued a corrected final rule on February 23, 2005 (21 CFR 1.363 to 1.368). People or companies that manufacture, process, pack, transport, distribute, receive, hold, or import food (with the exception of farms, restaurants and certain others) must establish and maintain records for up to two years. In the event of a suspected food safety problem, the regulation provides FDA access to records including the facility's immediate supplier, and the immediate customer. Companies can keep the information in any form and use existing records. The rule limits access to records that may contain trade secrets and prevent disclosure of such confidential information if records are reviewed. FDA is allowed to reduce the record-keeping requirements for small businesses and to exempt farms, restaurants, and fishing vessels not engaged in processing. In December 2002, the USDA Animal and Plant Health Inspection Service (APHIS) issued regulations to reduce the threat that certain biological agents and toxins could be used in domestic or international terrorism. APHIS determined that the "select agents" on the list have the potential to pose a severe threat to agricultural production or food products. The select agent regulations (9 CFR 121 for animals, 7 CFR 331 for plants) establish the requirements for possession, use, and transfer of the listed pathogens. The rules affect many research institutions including federal, state, university, and private laboratories, as well as firms that transport such materials. The laboratories have had to assess security vulnerabilities and upgrade physical security, often without additional financial resources. Some have been concerned that certain research programs may be discontinued or avoided because of regulatory difficulties in handling the select agents. Extensive registration and background checks of both facilities and personnel were to be conducted in 2003. However, due to delays at the FBI in processing security clearance paperwork, provisional registrations were issued to laboratories that had submitted paperwork by established deadlines. The main purpose of the Homeland Security Act of 2002 ( P.L. 107-296 , November 25, 2002) was to create the Department of Homeland Security (DHS), primarily by transferring parts or all of many agencies throughout the federal government into the new cabinet-level department. In doing so, the law made two major changes to the facilities and functions of the U.S. Department of Agriculture. The Homeland Security Act transferred: personnel and responsibility for agricultural border inspections from USDA to DHS (specifically, from the USDA Animal and Plant Health Inspection Service (APHIS) to DHS Customs and Border Protection (CBP)), and possession of the Plum Island Animal Disease Center in New York from USDA to DHS. Section 421 of the Homeland Security Act authorized the transfer of up to 3,200 APHIS border inspection personnel to DHS. As of March 1, 2003, approximately 2,680 APHIS inspectors became employees of DHS in the Bureau of Customs and Border Inspection (CBP). Because of its scientific expertise, USDA retains a significant presence in border inspection, as described below. Historically, the APHIS Agricultural Quarantine Inspection (AQI) program was considered the most significant and prominent of agricultural and food inspections at the border. Because of this prominence, AQI was one of the many programs selected for inclusion when DHS was created. Some drafts of the bill creating the new department would have transferred all of APHIS (including, for example, animal welfare and disease eradication) to DHS. Concerns from many farm interest groups about the impact this might have on diagnosis and treatment of naturally occurring plant and animal diseases prompted a legislative compromise that transferred only the border inspection function and left other activities under USDA. DHS-CBP personnel now inspect international conveyances and the baggage of passengers for plant, animal, and related products that could harbor pests or disease organisms. They also inspect ship and air cargo, rail and truck freight, and package mail from foreign countries. Although the border inspection functions were transferred to DHS, the USDA retains a significant presence in border activities. APHIS employees who were not transferred continue to pre-clear certain commodities, inspect all plant propagative materials, and check animals in quarantine. APHIS personnel continue to set agricultural inspection policies to be carried out by DHS border inspectors, and negotiate memoranda of understanding to assure that necessary inspections are conducted. APHIS manages the data collected during the inspections process, and monitors smuggling and trade compliance. USDA is also statutorily charged in section 421(e)(2)(A) of P.L. 107-296 to "supervise" the training of CBP inspectors in consultation with DHS. This separation of duties is designed to allow for consolidated border inspections for intelligence and security goals, but preserve USDA's expertise and historical mission to set agricultural import policies. Under the CBP cross-training initiative in 2003 (also known as "One Face at the Border"), CBP inspectors from the former customs, immigration, and agriculture agencies were to be trained to perform inspections in all three areas equally, without specialization,—customs, immigration, and agriculture. However, due to criticism from USDA, inspection unions, and the agricultural industry, DHS created another class of inspectors called "agriculture specialists." Agriculture specialists work mainly in secondary inspection stations in passenger terminals and are deployed at cargo terminals. The cadre of agriculture specialists include former APHIS inspectors who decided not to convert to CBP generalist inspectors plus new graduates from the agricultural specialist training program. Before DHS was created, APHIS trained its inspectors in a nine-week course that had science prerequisites. The initial DHS cross-training program announced in 2003 had only 12-16 hours for agriculture in a 71-day course covering customs, immigration, and agriculture. This difference in training was one of the reasons DHS was forced to add the agricultural specialist position. DHS now has an eight-week (43-day) training program for agriculture specialists. The course is taught by CBP and APHIS instructors at a USDA training facility in Frederick, Maryland. Agriculture specialists also receive two weeks of law enforcement training, and can exercise law enforcement authority similar to regular CBP officers. However, CBP does not necessarily allow agriculture specialists to use the full extent of their law enforcement powers. The first class of agriculture specialists graduated in July 2004. Regular CBP officers receive about 12-16 hours of agricultural training during their multi-week program at the Federal Law Enforcement Training Center (FLETC) in Georgia. The agriculture module was developed by APHIS and provided to DHS. Although DHS is training new agriculture specialists, the future size of the agricultural specialist corps is not certain, given the eventual attrition of former APHIS inspectors. Also, details are not available as to how these inspectors will be deployed and how many ports of entry will be staffed with agriculture specialists (compared with the APHIS deployment prior to DHS). Without agriculture specialists, primary agricultural inspections—the first line of defense for agricultural security—may be conducted by cross-trained inspectors with limited agricultural training. Congressional agriculture committees have been concerned about whether enough attention will be devoted to agricultural inspections by DHS, and whether the United States will be as safe from the introduction of foreign pests as it was under the previous inspection system. Inspection statistics from the fall of 2003 indicate that 32% fewer insect infestations were found (under DHS) than in the previous year (under APHIS). APHIS officials cite unfilled agricultural inspector positions and difficulty in adequately cross-training former customs and immigration officers to conduct agricultural inspections. The FY2007 DHS appropriations act supports the cross-training initiative under One Face at the Border ( H.Rept. 109-699 ): The conferees recognize the benefits of cross-training legacy customs, immigration, and agricultural inspection officers as part of CBP's 'One Face at the Border Initiative' and direct CBP to ensure that all personnel assigned to primary and secondary inspection duties at ports of entry have received adequate training in all relevant inspection functions. A report by the Government Accountability Office in May 2006 found that only 21% of agricultural specialists always receive urgent alerts for agricultural inspection priorities in a timely manner. Moreover the number of canine units (inspection dogs, "beagle brigade") has declined from 140 to 80 since the transfer to DHS, and 60% of 43 canine teams that were tested failed a proficiency test. In a follow-up memorandum, the GAO analyzed a survey of morale among agricultural specialists and found many more negative responses than positive comments. (See " GAO Studies ," below.) For more information about inspection statistics and the new border inspection arrangement that combines the previously separate customs, immigration, and agriculture inspections, please see CRS Report RL32399, Border Security: Inspections Practices, Policies, and Issues . Section 310 of the Homeland Security Act transferred the Plum Island Animal Disease Center to DHS. Prior to June 1, 2003, Plum Island was a USDA facility jointly operated by APHIS and ARS (Agricultural Research Service). This transfer includes only the property and facilities of Plum Island; both APHIS and ARS personnel continue to perform research and diagnostic work at the facility, but DHS also may conduct other research at the facility as well. Plum Island and DHS's plans for a new National Bio and Agro-Defense Facility are discussed later in this report under " Laboratories and Research Centers ." The Animal Enterprise Terrorism Act ( P.L. 109-374 , Nov. 27, 2006) was enacted to expand criminal consequences for damaging or interfering with the operations of an animal enterprise. The Bioterrorism Preparedness Act ( P.L. 107-188 , Sec. 336) contained less extensive penalties for animal enterprise terrorism. P.L. 109-374 prescribes penalties and restitution in Title 18 of the U.S. Code for varying levels of economic damage and personal injury involving threats, acts of vandalism, property damage, criminal trespass, harassment, or intimidation. The act covers enterprises that use, sell, or raise animals (or animal products) for profit or educational purposes. With this broad definition, the law applies to both bioterrorism (from foreign sources) and eco-terrorism (from domestic animal rights activist groups). Since 2002, six reports from GAO have found gaps in federal controls for protecting agriculture and food. Findings from the first four reports are summarized in testimony for the Senate hearing on agroterrorism on November 19, 2003. In the first report, following the European outbreak of foot and mouth disease in 2001, a 2002 GAO study found insufficient guidance for border inspectors and an overwhelming volume of passengers and cargo for inspectors to process. Regarding prevention of BSE ("mad cow disease"), a 2002 GAO report found shortcomings in documentation for imports and enforcement of federal feed ingredient bans. A 2003 GAO study on security improvements at food processing companies found that federal agencies, particularly the Food and Drug Administration (FDA), did not have authority to impose requirements or assess security flaws. Regarding livestock disease research at USDA's Plum Island lab in New York, a 2003 GAO report found that people without adequate background checks had access to secure areas, and that security personnel on the island had limited authority. In response to GAO's security concerns about Plum Island, DHS announced that armed Federal Protective Service personnel would supplement security on the island beginning in June 2004. A 2005 GAO report summarized the issues of agroterrorism and what federal agencies are doing to prepare. It found numerous vulnerability assessments and working groups had been prepared to prioritize and oversee activities. Efforts at interagency coordination were also underway, but some were seen to be in the early stages with more coordination necessary. The report also cited a lack of veterinarians trained in foreign animal diseases and response capacity, lack of rapid diagnostic tools, and lack of rapid vaccine deployment and protocols. In the conference agreement for the FY2005 Consolidated Appropriations Act ( P.L. 108-447 , H.Rept. 108-792 ), conferees expressed concern over agricultural border inspections and research at Plum Island following the transfer of these activities in 2003 from USDA to DHS. They requested a GAO report on interagency coordination between USDA and DHS regarding agriculture inspections. The conferees are aware of ongoing concerns within the agriculture sector that the transfer of these responsibilities [border inspection and research] may shift the focus away from agriculture to other priority areas of DHS. In order to ensure that the interests of U.S. agriculture are protected ... the conferees request the Government Accountability Office to provide a report ... on the coordination between USDA and DHS ( H.Rept. 108-792 ). Accomplishments in interagency coordination that GAO cited in the 2006 report include training of both agricultural specialists and cross-training of regular border protection officers. Agriculture specialists now have access to classified data systems, allowing better targeting of agriculture inspections. DHS also created "agriculture liaisons" in district field offices to assure agriculture issues are heard, and improve operations at ports of entry. However, problems in coordination or inspection performance were cited in several areas. DHS had not developed performance measures for agriculture inspections, but was still using USDA-APHIS measures which did not reflect all DHS activities. Staffing and related staffing performance measures were also lacking. Agriculture specialists are not always notified of urgent inspection alerts issued by APHIS; a survey suggests only 21% of agriculture specialists always receive alerts in a timely manner. The number of canine units (inspection dogs, "beagle brigade") has declined from 140 to 80 since the transfer to DHS, and 60% of 43 canine teams that were tested failed an APHIS proficiency test. Several financial management issues also were problematic. While user fees were less than program costs, DHS was unable to provide APHIS with information of actual costs by type of activity, and USDA was sometimes slow to transfer user fees to DHS. In a follow-up memorandum, GAO analyzed a the open-ended questions in survey of morale among agricultural specialists. GAO found many more negative responses than positive comments. About 60% of agricultural specialists surveyed thought they were doing fewer inspections than before the transfer to DHS, and 29% were concerned that the agricultural mission is declining. An estimated 64% thought their DHS managers did not respect their work, and 29% expressed concern about working relationships with non-agriculture inspectors. Shortly after September 11, 2001, USDA created a Homeland Security Staff in the Office of the Secretary to develop a department-wide plan to coordinate agroterrorism preparedness plans among all USDA agencies and offices. Efforts have been focused on three areas: food supply and agricultural production, USDA facilities, and USDA staff and emergency preparedness. The Homeland Security Staff also has become the department's liaison with Congress, the Department of Homeland Security (DHS), and other governmental agencies on terrorism issues. The White House's National Security Council weapons of mass destruction (WMD) preparedness group, formed by Presidential Decision Directive 62 (PDD-62) in 1998, included agriculture, especially in terms of combating terrorism. Many observers note that, as a latecomer to the national security table, USDA has been invariably overshadowed by other agencies. In addition to the following Presidential directives and actions, many departments and agencies in the executive branch have undertaken efforts to improve preparedness for agroterrorism. Many of these actions are discussed later in this report under "Countering the Threat." In terms of protecting critical infrastructure, agriculture was added to the list in December 2003 by Homeland Security Presidential Directive 7 (HSPD-7), "Critical Infrastructure Identification, Prioritization, and Protection." This directive replaces the 1998 Presidential Decision Directive 63 (PDD-63) that omitted agriculture and food. Both of these critical infrastructure directives designate the physical systems that are vulnerable to terrorist attack and are essential for the minimal operation of the economy and the government. These directives instruct agencies to develop plans to prepare for and counter the terrorist threat. HSPD-7 mentions the following industries: agriculture and food; banking and finance; transportation (air, sea, and land, including mass transit, rail, and pipelines); energy (electricity, oil, and gas); telecommunications; public health; emergency services; drinking water; and water treatment. More significant recognition came on January 30, 2004, when the White House released Homeland Security Presidential Directive 9 (HSPD-9), "Defense of United States Agriculture and Food." This directive establishes a national policy to protect against terrorist attacks on agriculture and food systems. HSPD-9 generally instructs the Secretaries of Homeland Security (DHS), Agriculture (USDA), and Health and Human Services (HHS), the Administrator of the Environmental Protection Agency (EPA), the Attorney General, and the Director of Central Intelligence to coordinate their efforts to prepare for, protect against, respond to, and recover from an agroterrorist attack. In some cases, one department is assigned primary responsibility, particularly when the intelligence community is involved. In other cases, only USDA, HHS, and/or EPA are involved regarding industry or scientific expertise. The directive instructs agencies to develop awareness and warning systems to monitor plant and animal diseases, food quality, and public health through an integrated diagnostic system. Animal and commodity tracking systems are included, as is gathering and analyzing international intelligence. Vulnerability assessments throughout the sector help prioritize mitigation strategies at critical stages of production or processing, including inspection of imported agricultural products. Response and recovery plans are to be coordinated across the federal, state, and local levels. A National Veterinary Stockpiles (NVS) of vaccine, antiviral, and therapeutic products is to be developed for deployment within 24 hours of an attack. A National Plant Disease Recovery System (NPDRS) is to develop disease and pest resistant varieties within one growing season of an attack in order to resume production of certain crops. The Secretary of Agriculture is to make recommendations for risk management tools to encourage self-protection for agriculture and food enterprises vulnerable to losses from terrorism. HSPD-9 encourages USDA and HHS to promote higher education programs that specifically address the protection of animal, plant, and public health. It suggests capacity-building grants for universities, and internships, fellowships and post-graduate opportunities. HSPD-9 also formally incorporates USDA and agriculture into the ongoing DHS research program of university-based "centers of excellence." As a presidential directive, HSPD-9 addresses the internal management of the executive branch and does not create enforceable laws. Moreover, it is subject to change without Congressional consent. While Congress has oversight authority of federal agencies and may ask questions about implementation of the directive, a public law outlining an agroterrorism preparedness plan would establish the statutory parameters for such a plan, and, as a practical matter, might result in enhanced oversight by specifically identifying executive branch entities responsible for carrying out particular components of such a plan. In implementing HSPD-9, the USDA Homeland Security Staff and other agencies are drawing upon HSPD-5 (regarding the national response plan) and HSPD-8 (regarding preparedness). Implementing many of the HSPD-9 directives depends on the executive branch having sufficient appropriations for those activities. Homeland Security Presidential Directive 5 (HSPD-5) called for a National Response Plan (NRP) to coordinate federal bureaucracies, capabilities, and resources into a unified, all-discipline, and all-hazards approach to manage domestic incidents, both for terrorism and natural disasters. The National Response Plan, developed by DHS, was unveiled in December 2004. The NRP addresses agriculture and food in two annexes at the end of the plan. The first is in terms of emergency support. The Emergency Support Function (ESF) annexes to the NRP seek to coordinate federal interagency support by describing the roles and responsibilities of departments and agencies. USDA is the coordinator and primary responding agency for ESF #11, the "Agriculture and Natural Resources Annex," which addresses: Provision of nutrition assistance by determining nutrition assistance needs in disaster areas, obtaining appropriate food supplies, arranging for delivery of the supplies, and authorizing disaster food stamps, Control and eradication of animal and plant pests and diseases, Assurance of food safety and food security, including food safety inspection at processing plants, distribution, retail sites, and ports of entry; laboratory analysis of food samples; food borne disease surveillance; and field investigations, and Protection of natural and cultural resources and historic properties. The NRP also contains "incident annexes" that more specifically address hazard situations requiring special attention. The incident annexes describe the overarching policies, situations, general operating procedures, and responsibilities most relevant when responding to a particular type of incident. The 10-page "Food and Agriculture Incident Annex" was first published in July 2006, about 18 months after the NRP was first released. The annex identifies roles for federal involvement, particularly when first responders at the state and local levels are overwhelmed by multiple incidents, for example. It establishes USDA and HHS as the primary agencies for coordination and notification when incidents and outbreaks affect food and agriculture, but law enforcement agencies are to be notified immediately through the FBI if the incident appears to be intentional. HHS is the coordinating agency for food inspected by the FDA beyond the farm gate (all domestic and imported food except meat, poultry and egg products), animal feed, and animal drugs. USDA is the coordinating agency for food inspected by the Food Safety Inspection Service (FSIS) such as processed meat, poultry and egg products, and for coordinating the response to animal and plant diseases and pests. EPA is identified in the annex to provide expedited assistance for approving particular types of pesticide applications, and to provide technical assistance for decontamination and disposal efforts. DHS appears to be involved to the extent that other parts of the NRP are activated by the agriculture and food incident, especially when law enforcement, investigative, or border inspection activities are involved. The annex mentions the importance of laboratory networks for detection, diagnosis, confirmation, and investigation of an incident, particularly through the DHS Integrated Consortium of Laboratory Networks (ICLN). The "capacity of the ICLN derives from ... established laboratory networks such as Food Emergency Response Network (FERN), the Laboratory Response Network (LRN), the National Animal Health Laboratory Network (NAHLN), and the National Plant Diagnostic Network (NPDN)." Each of these networks, discussed later in this section, feeds its industry- and sector-specific information into the general homeland security network for analysis and data sharing. Specific response plans below the level of the NRP annex rest with USDA, HHS, and state and local governments. The National Infrastructure Protection Plan was developed to unify and enhance the protection of critical infrastructure through public-private partnerships. It provides a coordinated approach to establish national priorities and goals. The sector partnership model encourages formation of Sector Coordinating Councils (SCCs) and Government Coordinating Councils (GCCs). DHS provides guidance, tools, and support so that these groups can work together to develop and coordinate a wide range of infrastructure protection activities. Sector Coordinating Councils are self-organized, self-run, and self-governed organizations of key stakeholders within a sector, serving as the government's principal point of entry into each sector. A Government Coordinating Council is the government counterpart to a SCC, comprised of federal, state and local representatives, enabling coordinating across government agencies and jurisdictions. The Food and Agriculture Sector Coordinating Council (FASCC) has seven sub-councils with representatives from private corporations and associations, including: Agricultural production inputs and services Animal producers Plant producers Processors and manufacturers Restaurants and food service Retail Warehousing and logistics The agriculture SCC has been successful among the early SCC's, and is used by DHS as a model for developing other sector councils. The FASCC's recent accomplishments include reviewing and commenting on drafts of the National Infrastructure Protection Plan, developing a Food and Agriculture Sector Specific Plan (SSP), sharing best practices, identifying gaps in security or preparedness, and striving to improve communications and information sharing capabilities among companies and government. The Strategic Partnership Program Agroterrorism initiative is another public-private partnership to assess vulnerabilities in the agriculture and food industry. Four government agencies including DHS, USDA, FDA, and FBI collaborate with private industry and states to conduct site surveys of specific private industries within the agriculture industry. The intent is to: Determine critical points in the food and agriculture system that may be the target of a terrorist attack, Identify early indicators and warnings that would signify planning and/or preparation for an attack, Develop a focus for intelligence collection strategies around these indicators and warnings, and Develop mitigation strategies for early detection, deterrence, disruption, interdiction, and prevention. In 2005, the SPPA began working with the Food and Agriculture Sector Coordinating Council and the Government Coordinating Council to identify about 50 sites to visit in 2006-2007. The sites are to span the entire food production cycle. An Information Sharing and Analysis Center is an industry contact point to federal law enforcement and intelligence community (including the Federal Bureau of Investigation, Central Intelligence Agency, and National Security Agency). The objective to detect potential threats, assess, prevent attacks, and investigate and respond to attacks against critical infrastructure. The Food and Agriculture ISAC was created in February 2002. Members generate information on many of food safety and bio-security related topics such as security threats, food system vulnerabilities, product contamination, microbial isolates, and reports of consumer illness from food. The information is shared confidentially with the law enforcement and intelligence community, with the expectation that relevant intelligence will returned to the industry. The ISAC network is similar to an FBI program for public-private information sharing called Infragard. In 2005, a new FBI program called AgGard was created to encourage members of the agricultural community to use a secure internet connection to share information and alert each other, state and local law enforcement, and the FBI of suspicious activity. Since September 11, 2001, and the ensuing recognition of agroterrorism as a threat to critical infrastructure, the United States has expanded its agricultural laboratory and diagnostic infrastructure. New federal laboratories have been completed, existing facilities have been upgraded, and networks of federal, state and university laboratories have been created to share information and process samples. The Department of Homeland Security is proceeding with plans to replace the aging Plum Island Animal Disease Center with a new "National Bio and Agro-Defense Facility" for research on high consequence foreign animal diseases. Congress has appropriated funds for planning and site selection. DHS is beginning the conceptual design process, and has reviewed submissions from universities and other locations interested in hosting the new facility. In August 2006, it selected a long list of 18 sites in 11 states for further consideration. Currently, the premier U.S. facility for research on foreign animal diseases is the Plum Island Animal Disease Center, located on an island off the northeastern tip of Long Island, NY. The property of Plum Island was transferred from USDA to DHS in the Homeland Security Act ( P.L. 107-296 ), although personnel from both USDA and DHS still conduct research there. Built in the 1950s, many experts agree that the 50-year old Plum Island facility is nearing the end of its useful life and unable to provide the necessary capacity for current biosecurity research. Plum Island is the only facility in the United States that is currently approved to study high-consequence foreign livestock diseases, such as foot-and-mouth disease (FMD), because its laboratory has been equipped with a specially designed BSL-3 bio-containment area for large animals that meets specific safety measures. Live FMD virus may be used only at coastal islands such as Plum Island, unless the Secretary of Agriculture specifically authorizes the use of the virus on the U.S. mainland (21U.S.C. 113a). Because of this geographical restriction in statute, some observers question whether the proposed NBAF should be built on the mainland or on an island similar to Plum Island. Locating the facility in regions where cattle or other livestock are raised may pose too great a risk if security features are breached by terrorism, critics say. Biosafety levels (BSLs) are combinations of laboratory facilities, safety equipment, and laboratory practices. The four levels are designated in ascending order, by degree of protection provided to personnel, the environment, and the community. BSL-1 laboratories handle pathogens of minimal hazard. The highest level laboratories, BSL-4, handle high-risk, life-threatening diseases with a high risk of aerosol transmission. Only a handful of BSL-4 labs exist in the U.S., including a CDC lab in Athens, Georgia, and an Army lab in Ft. Dietrick, Maryland. Agricultural BSL labs can house large animals for experiments, and thus are less common than regular BSL laboratories. The Plum Island Animal Disease Center and the USDA National Veterinary Services Laboratories (NVSL) in Ames, IA, are the only BSL-3 agriculture facilities in the United States. As the number and importance of zoonotic diseases increase (such as with the recent discovery of Nipah and Hendra viruses, and the ongoing concern over foot and mouth disease), scientists increasingly need BSL-4 laboratories to study zoonotic pathogens and BSL-4 agriculture facilities to work with those pathogens in host animals. The U.S. currently has no BSL-4 agricultural facility; instead, scientists must conduct experiments at facilities in Winnipeg, Canada, or Australia. The concept for the NBAF was first outlined in the FY2006 budget request for DHS. At that time, the estimated design and construction cost was $451 million. The current time line calls for construction to be completed in FY2013. DHS began the process in FY2005 by using $3 million for a planning and feasibility study. In FY2006, Congress appropriated $23 million specifically for the NBAF in the DHS appropriations act ( P.L. 109-90 ). The FY2007 DHS appropriation ( P.L. 109-295 ) furthers that commitment with a second installment of $23 million for pre-construction activities. With the FY2006 appropriation, DHS issued a request for "Expressions of Interest" (EOI) in January 2006. Parties interested in hosting the facility (such as federal agencies, State and local governments, private industry, and universities) were invited to reply by March 31, 2006. Evaluation criteria for site selection include capacity for research, workforce availability, construction and operation, and community acceptance. DHS received 29 expressions of interest from 20 states and the District of Columbia. In August 2006, DHS released a subset of 18 sites in 11 states that will be considered further. By the end of 2006, DHS expects to narrow the list further and initiate an Environmental Impact Statement (EIS) analysis. A final location will be chosen early in 2008. Conceptual design began in April 2006 by soliciting architect and engineering firms. DHS plans to award this contract later in 2006, with conceptual design to begin shortly thereafter. This level of design is not site specific and can proceed concurrently with site selection and environmental impact statements. The conceptual design process may update the current projected total cost of $451 million. Construction is scheduled to begin in FY2010 and be completed in FY2013. Within USDA, several agencies have upgraded their facilities to respond better to the threat of agroterrorism by expanding laboratory capacity and adding physical security. These programs include the ARS research on foreign animal diseases at the Plum Island Animal Disease Center in New York (the physical facility is now managed and operated by DHS) and the ARS Southeast Poultry Research Lab in Athens, Georgia. Three major USDA laboratories are consolidating operations in a new BSL-3 agriculture facility in Ames, Iowa, called the National Centers for Animal Health. These include the ARS National Animal Disease Center (NADC), the APHIS National Veterinary Services Laboratories (NVSL), and the APHIS Center for Veterinary Biologics (CVB). The complex will be USDA's largest animal health center for research, diagnosis and product evaluation. The NVSL is especially visible because it makes the final, official determination for the presence of most animal diseases when samples are submitted for testing. USDA also cooperates with other federal agencies on counterterrorism research and preparedness, including the ARS and APHIS partnership with the U.S. Army Medical Research Institute for Infectious Diseases at Ft. Dietrick, Maryland. The Ft. Dietrick site offers USDA access to additional high-level biosecurity laboratories, including a BSL-4 laboratory. In the recent past, USDA has conducted research on soybean rust at Ft. Dietrick. Several laboratory networks have been created for animal, plant, food, and general bioterrorism issues. The primary goals of these networks are to improve the diagnosis and detection of a deliberate or accidental disease outbreak. Primary examples are the CDC-led Laboratory Response Network (LRN), the USDA-funded National Plant Diagnostic Network (NPDN) and its sister group the National Animal Health Laboratory Network (NAHLN), and the joint FDA/FSIS Food Emergency Response Network (FERN). Laboratory Response Network (LRN). The Laboratory Response Network, created by CDC, is a national and international network of about 140 laboratories equipped to respond quickly to acts of chemical or biological terrorism, emerging infectious diseases, and other public health threats and emergencies. The network includes federal labs (CDC, USDA, FDA), state and local public health labs, military labs, food labs, environmental labs, veterinary labs, and international labs in Canada, the United Kingdom, and Australia. National Plant Diagnostic Network (NPDN) . The National Plant Diagnostic Network is a collective of land grant university plant disease and pest diagnostic facilities organized by USDA. The national network is led by five regional labs (Cornell, Florida, Michigan State, Kansas State, and California at Davis) and one support lab (Texas Tech). The NPDN facilitates the initial detection, positive identification, national notification, and coordinated response to pests and pathogens by intentional, accidental, or natural means. By using common communications and laboratory testing protocols, the network allows efficient, timely, and secure exchange of plant disease information. National Animal Health Laboratory Network (NAHLN). This network, created by USDA and the American Association of Veterinary Laboratory Diagnosticians, augments federal resources with extensive state and university laboratories to allow better detection and response to animal health emergencies. These labs provide timely and consistent methods, and meet epidemiological reporting standards. The USDA National Veterinary Services Laboratory (NVSL) serves as the central reference laboratory. State and university labs perform non-emergency surveillance testing, provide surge capacity during outbreaks, assist with epidemiologic investigations, and conducting follow-up surveillance. Food Emergency Response Network (FERN). The Food Emergency Response Network was established jointly by the Food and Drug Administration (FDA) and the Food Safety and Inspection Service (FSIS), and integrates at least 72 state and federal laboratories that analyze food samples implicated in threats, terrorist events, or contamination. It links local, state, and federal information to allow officials to prevent or respond to incidents of contaminated food. Another important network, albeit not a laboratory network, is the Extension Disaster Education Network (EDEN) . EDEN is sponsored by USDA, and links extension educators from various states and disciplines to share resources. EDEN helps extension agents build relationships with local and state emergency management networks, provide educational programs on disaster preparation and mitigation to citizens and local leaders, train extension personnel for appropriate roles during disasters, and collaborates during recovery. In April 2004, the DHS Science and Technology Directorate announced the department's first university research grants for agriculture as part of its "centers for excellence" program. The University of Minnesota and Texas A&M will share $33 million over three years. Texas A&M's new Center for Foreign Animal and Zoonotic Disease Research will study high consequence animal diseases. The University of Minnesota's new Center for Post-Harvest Food Protection and Defense will establish best practices for the management of and response to food contamination events. Texas A&M is partnering with four universities and will receive $18 million; Minnesota is partnering with ten universities and will receive $15 million. The House Appropriations Committee addressed agroterrorism research in report language for the FY2004 homeland security appropriations bill. The "centers for excellence" program appears to fit the type of research the committee suggested. Agro-terrorism research. The Committee is familiar with potential agro/bioterrorism vulnerabilities, from animal and plant diseases to food chain introductions. While some agro-terrorism research is already being done by the Department of Agriculture, the Committee is aware of the need for more such research, particularly in the areas of threats to field crops, farm animals, and food in the processing and distribution chain. The Homeland Security Act of 2002 provides for coordination of research between the Department of Homeland Security (DHS) and other relevant federal agencies in various areas of research. Because the Department of Agriculture (USDA) already possesses mechanisms, authorities, and personnel to carry out needed agro/bioterrorism research, the Committee expects to see effective coordination between the USDA and the DHS to move such research forward in an effective and expeditious fashion. The Committee expects USDA to coordinate with DHS to identify research gaps and develop a plan, to include research priorities, for proceeding to fill such gaps. Further, the Committee expects that non-government entities selected to carry out research will be ones with proven expertise in agriculture research, and strong familiarity with USDA animal and plant diagnostic laboratories and practices ( H.Rept. 108-193 ). This report treats federal funding for agroterrorism preparedness broadly, including appropriations and user fees , both within USDA and DHS. However some general activities that support agroterrorism preparedness, such as certain intelligence and warning functions performed by the FBI and CIA, often cannot be identified exclusively as agriculture spending, and thus cannot be included in this report. However, items that can be identified specifically to agroterrorism preparedness within the budgets of USDA and DHS are included. The President's annual budget request to Congress includes a government-wide cross-cutting budget analysis of homeland security issues, as mandated by the Homeland Security Act of 2002 ( P.L. 107-296 , section 889). The budget request includes details on the most recently passed appropriations law and the previous fiscal year. Comprehensive details on agroterrorism funding are difficult, if not impossible, to compute while appropriations bills are being debated in the House and Senate. Legislative language rarely mentions specific amounts for agroterrorism, and report language usually mentions only a few agroterrorism related items that the appropriations committees wish to highlight. For a comprehensive accounting, analysts must wait until the President's budget is released. In USDA, five agencies and three offices receive homeland security funding: Agricultural Research Service (ARS) Animal and Plant Health Inspection (APHIS) Cooperative State Research, Education, and Extension Service (CSREES) Food Safety and Inspection Service (FSIS) Economic Research Service (ERS) Departmental Administration and Executive Operations (including Office of the Secretary, Homeland Security Staff (HSS), and Office of Chief Information Officer (OCIO)). In the DHS, two directorates receive funding related to agroterrorism: Customs and Border Protection Science and Technology Classifying spending on agroterrorism and homeland security requires judgments about which programs are relevant, especially when some have dual purposes. This subjectivity introduces discrepancies when agencies refine criteria or definitions, or change the way activities are characterized in their homeland security mission. In such cases, the most recently available data are used to update prior year data. Examples of dual-use programs for agricultural homeland security are animal and plant health programs. These programs, such as border inspection and disease surveillance existed before September 11, 2001, and would be needed at some level due to natural and accidental disease outbreaks. However, the scale and scope of these programs have been expanded primarily due to agroterrorism. For budget and accounting purposes, all or part of dual-use activities may be counted as homeland security spending, depending on each agency's criteria. For example, GAO reports that the Animal and Plant Health Inspection Service (APHIS) attributes 100% of an activity's budget authority to homeland security if any of the following questions apply: Is this a new activity or program focus as a result of 9/11? Has the bulk of the program activity changed as a result of 9/11? Does the activity address international pest or disease outbreaks or other acts of agro-bioterrorism? Was the activity initiated with homeland security supplemental funds? Did APHIS receive enhanced homeland security funds for the activity? Is the activity needed in order to comply with one or more Homeland Security Presidential Directives or the Bioterrorism Act of 2002? Prior to September 11, 2001, USDA spent between $45-60 million in regular annual appropriations to combat terrorism, primarily through border inspections and research. User fees for border inspection added about $180 million in FY2002, bringing the total funding (regular appropriations plus user fees) to about $225-240 million in FY2002. This range can be considered the starting baseline for homeland security funding for agriculture (the regular FY2002 agriculture appropriations bill was outlined prior to September 11, 2001, even though it was enacted about two months later.) Appropriations and user fees for agriculture-related homeland security activities in USDA and DHS have more than tripled from the $225 million "pre-September 11" baseline to $818 million in FY2007. Counting the supplemental appropriations in FY2002-FY2003, and regular annual appropriations and user fees for both USDA and DHS, homeland security funding for agriculture has grown by 48% over five years, from $552 million in FY2002 to $818 million in FY2007. As a percentage of non-defense budget authority for homeland security, agriculture receives about 2.1% of the total. In FY2002, the ratio was 2%, which fell to 1.4% in 2003, and has since risen to between 2.1% and 2.3% currently ( Table 1 ). The regular appropriation devoted to preparing for agroterrorism has grown significantly since FY2002, and supplanted the need for further supplemental funding ( Figure 6 ). Regular annual appropriations for homeland security in USDA increased more than three-fold from FY2002 to FY2003, and by 60% in each of FY2004 and FY2005. In FY2006, the regular appropriation to USDA for homeland security dropped by about 9%, and the estimate for FY2007 is another 19% decrease. The Administration's request for FY2008 calls for a 54% increase to make up for these losses and to increase preparedness efforts even more. Regular annual appropriations for agriculture in DHS are irregular and tied to particular initiatives, such as university research grants or facility construction. Supplemental appropriations acts in 2002 and 2003, ( P.L. 107-117 and P.L. 108-11 ) augmented the regular appropriations acts, providing significant additional funds to rapidly increase the response to agroterrorism vulnerabilities ($328 million and $100 million, respectively). User fees to support agricultural border inspection have grown with passenger and cargo volume, particularly in the immediate years following September 11, 2001, when passenger volume dropped due to public concerns. In FY2002, user fees for agricultural border inspections totaled $181 million. By FY2005, that amount grew by 87% to $339 million, and another 24% into FY2006. User fees fund about half of the total amount available in FY2007 for homeland security in agriculture. Figure 7 presents homeland security funding for agriculture by agencies in USDA and DHS. APHIS (USDA) and CBP (DHS) conduct most of the activities related to homeland security in agriculture. In FY2007, APHIS is expected to account for 51% of homeland security spending on agriculture, and CBP about 33%. Research agencies in USDA (ARS and CSREES) account for nearly 10%. Much of the APHIS activity (about 43%) and all of the CBP activity in the agriculture homeland security area have been for border inspections, predominantly funded through user fees rather than appropriations. APHIS retains about 39% of the total user fees collected each year, and transfers the rest to DHS for its Customs and Border Patrol agency ( Table 2 ). For the President's annual budget request, agencies throughout the federal government categorize their funding based on six mission areas (functions), as defined in the National Strategy for Homeland Security: Intelligence and warning Border and transportation security Domestic counterterrorism Protecting critical infrastructure and key assets Defending against catastrophic threats Emergency preparedness and response Figure 8 and Table 3 present the funding information by homeland security function. As in every year since 2002, border inspections are the largest homeland security activity for agriculture in FY2007, conducted jointly by USDA-APHIS and DHS-CBP. Defending against catastrophic threats is the next largest activity, particularly in APHIS, which includes monitoring, surveillance and laboratory response capacity. Protecting critical infrastructure has been another large activity. Emergency preparedness and intelligence have received relatively less funding. Primary intelligence gathering is viewed more appropriately as the responsibility of other federal agencies such as the FBI and CIA. These agencies track and act upon bioterrorism information, sharing relevant information with USDA, DHS, and other agencies. The following list outlines appropriations acts that have provided funds for homeland security related to agriculture and food since September 11, 2001. Emergency Supplemental Appropriations for FY2001 ( P.L. 107-38 ; September 18, 2001). Within days of September 11, Congress approved $40 billion in emergency supplemental appropriations partitioned over three time periods. USDA received no money for domestic homeland security programs in the first two installments, but did receive an allocation in the final installment for FY2002 (see FY2002 Emergency Supplemental Act below). FY2002 Agriculture Appropriations Act ( P.L. 107-76 ; November 28, 2001). This regular annual appropriations act was outlined prior to September 11, 2001, and provides the baseline amount for homeland security functions in agriculture, without any particular discussion of agroterrorism. The appropriation for homeland security was not clearly defined, but was approximately $45-60 million. Together with user fees, the baseline for homeland security for agriculture was about $225-240 million. FY2002 Emergency Supplemental Act ( P.L. 107-117 ; January 10, 2002). Congress made the final $20 billion installment from the FY2001 supplemental in Division B of the FY2002 Defense Department Appropriation ("Transfers from the Emergency Response Fund [ERF] Pursuant to P.L. 107-38 "). USDA received $328 million for homeland security programs. This supplemental appropriation, however, preceded the creation of the Department of Homeland Security, which resulted in some of the funds being moved to DHS when border inspections and the Plum Island Animal Disease Center were transferred DHS. USDA documents suggest about $220 million were for functions transferred to DHS. FY2002 Supplemental Appropriations Act for Further Recovery ( P.L. 107-206 ; August 2, 2002). In this $28 billion supplemental appropriation, Congress included about $123 million for USDA programs related to homeland security. These amounts, however, were designated among $5.1 billion of "contingent emergency spending" that President Bush chose not to use, and thus the funds were not available to USDA and other departments (see CRS Report RL31406, Supplemental Appropriations for FY2002: Combating Terrorism and Other Issues . FY2003 Omnibus Appropriations Act ( P.L. 108-7 ; February 20, 2003). This regular annual appropriations act provided $181 million to USDA for homeland security activities. FY2003 Emergency Wartime Supplemental Appropriations Act ( P.L. 108-11 ; April 16, 2003). Congress appropriated $110 million to the Agricultural Research Service "for continued modernization of facilities in Ames, Iowa, which will provide a laboratory building, fixed equipment, and associated infrastructure" ( H.Rept. 108-076 ). FY2004 Consolidated Appropriations Act ( P.L. 108-199 ; January 23, 2004). This regular annual appropriations act provided $292 million for homeland security activities in USDA and $33 million in university grants for agriculture biosecurity from DHS. Conferees made the following statement about USDA's homeland security activities: "[A]s of September 30, 2003, $80,000,000 remains available to the Department from funds provided through the Emergency Response Fund (ERF) [see discussion of P.L. 107-38 and P.L. 107-117 above], of which nearly $9,000,000 is available to the Secretary. Since these funds were provided, USDA has been one of the slowest Federal agencies to obligate its ERF funds. The conferees are aware of concerns about security, [and] urge the Secretary to act promptly to address identified security needs and to advise the Committees on Appropriations of needs for which additional funds may be necessary" ( H.Rept. 108-401 ). FY2005 Consolidated Appropriations Act ( P.L. 108-447 , December 8, 2004). This regular annual appropriations act provided $465 million for homeland security activities in USDA. FY2006 Homeland Security Appropriations Act ( P.L. 109-90 , October 18, 2005). This regular annual appropriations act for DHS (1) provides $23 million within Science and Technology directorate: "to select a site for the National Bio and Agrodefense Facility [NBAF] and perform other pre-construction activities...to protect animal and public health from high consequence animal and zoonotic diseases." (2) Conferees also encourage the DHS: "to work in conjunction with USDA and HHS and other organizations on agroterrorism and animal-based bioterrorism, including the development and stockpiling of veterinary vaccines ... [and with] one or more states to develop a model integrated agricultural response system, utilizing geographic information systems that identify critical agricultural infrastructure." (3) Conferees also directed that DHS coordinate with USDA to submit a report "which details the specific actions each agency will take, or has already taken, to address the apparent 32% reduction in agriculture inspections and the lack of coordination between [DHS and USDA]" ( H.Rept. 109-241 ). FY2006 Agriculture Appropriations Act ( P.L. 109-97 , November 10, 2005). This regular annual appropriations act provided $420 million for homeland security activities in USDA. FY2007 Homeland Security Appropriations Act ( P.L. 109-295 , October 4, 2006). This regular annual appropriations act for DHS (1) provided a second installment of $23 million for the National Bio and Agro-defense Facility, (2) instructed DHS to prepare a report describing improvements in the targeting of agricultural inspections and coordination for inspections with the Department of Agriculture. ( H.Rept. 109-699 ). FY2007 Revised Continuing Appropriations Resolution ( P.L. 110-5 , February 15, 2007). The year-long continuing resolution for FY2007 generally funds USDA (and other federal departments with the exception of DHS and the Department of Defense) at FY2006 levels with minor adjustments. In its annual budget request, USDA highlights several programs in a "Food and Agriculture Defense Initiative." The initiative does not include all homeland security programs for agriculture, but is rather a list of priority programs that USDA wishes to highlight during the appropriations process. The initiative was first mentioned in the FY2005 budget request. For example, border security activities have not been included in the initiative, even though they are included in the broader measure of homeland security funding presented on previous pages. For FY2006, appropriations for the Food and Agriculture Defense Initiative totaled $247 million, but total USDA homeland security appropriations as reported by OMB were $420 million (excluding user fees). USDA's budget for FY2008 calls for significantly increased spending on several agroterrorism preparedness programs. The Food and Agriculture Defense Initiative requests an FY2008 appropriation of $340 million, nearly double the $177 estimated for items in the initiative for FY2007 ( Table 4 ). Using OMB's more comprehensive analysis of homeland security funding for agriculture cited on previous pages, the requested FY2008 increase in homeland security funding for agriculture is 54%, up from $340 million estimated for FY2007 to $524 million requested for FY2008 ( Table 2 ). The largest item in the initiative for FY2007 is enhanced surveillance by APHIS of animal and plant health. The initiative includes a new $16 million request to begin construction for a new poultry research laboratory in Athens, Georgia. Many of the initiative's programs would improve the Federal government's ability to more quickly identify and characterize an agroterrorist attack through surveillance and monitoring. In its justification for the initiative, USDA says these activities will promote data sharing and joint analysis among federal, state and local levels. An example of such coordination is the Food Emergency Response Network (FERN) of laboratories. These computer networks allow labs to improve information sharing, rapid identification, and consistent diagnostic methods for contaminated foods. Another preparedness effort in the initiative is the National Veterinary Vaccine Bank and the National Plant Disease Recovery System (both of which are mentioned in HSPD-9). The FY2008 DHS budget request does not include any individual line items for agriculture. Ongoing border inspection and science and technology activities are mentioned, but no specific allocations or requests are mentioned. Of the hundreds of animal and plant pathogens and pests available to an agroterrorist, perhaps fewer than a couple of dozen represent significant economic threats. Determinants of this level of threat are the agent's contagiousness and potential for rapid spread, and its international status as a "reportable" pest or disease (i.e., subject to international quarantine) under rules of the World Organization for Animal Health (also commonly known as the OIE, the Office International des Epizooties). A widely accepted view among scientists is that livestock are more susceptible to agroterrorism than cultivated plants. Much of this has to do with the success of efforts to systematically eliminate animals diseases from U.S. herds, which leaves current herds either unvaccinated or relatively unmonitored for such diseases by farmers and some local veterinarians. Once infected, livestock can often act as the vector for continuing to transmit the disease, facilitating an outbreak's spread, especially when live animals are transported. Certain animal diseases may be more attractive to terrorists because they can be zoonotic, or transmissible to humans. In contrast, a number of plant pathogens continue to exist in small areas of the U.S. and continue to infect limited areas of plants each year, making outbreaks and control efforts more routine. Moreover, plant pathogens generally are more difficult to manipulate from a technical perspective. Some plant pathogens require particular environmental conditions of humidity, temperature, or wind to take hold or spread. Other plant diseases may take a longer time than an animal disease to become established or achieve a level of destruction that a terrorist may desire. The Agricultural Bioterrorism Protection Act of 2002 (Subtitle B of P.L. 107-188 , the Public Health Security and Bioterrorism Preparedness and Response Act) created the current, official list of animal pathogens that are of greatest concern for agroterrorism. The list is specified in the select agent rules implemented by USDA-APHIS and the Centers for Disease Control and Prevention (CDC) of the Department of Health and Human Services (HHS). The act requires that these lists ( Table 5 ) be reviewed at least every two years. The select agent list for animal pathogens draws heavily from the enduring and highly respected OIE lists of high-concern pathogens. The select agent list is comprised of an APHIS-only list (of concern to animals) and an overlap list of agents selected both by APHIS and CDC (of concern to both animals and humans). Prior to the Agricultural Bioterrorism Protection Act, the commonly accepted animal diseases of concern were all of the OIE's "List A" diseases and some of the "List B" diseases. In 2004, the OIE replaced its Lists A and B with a single list that is more compatible with the Sanitary and Phytosanitary Agreement (SPS) of the World Trade Organization (WTO). The new OIE list classifies diseases equally, giving each the same degree of importance in international trade. Many of these OIE-listed diseases are included in the select agent list ( Table 5 ). The OIE's List A diseases were transmissible animal diseases that had the potential for very serious and rapid spread, irrespective of national borders. List A diseases had serious socioeconomic or public health consequences and were of major importance in international trade. List B diseases were transmissible diseases considered to be of socioeconomic or public health importance within countries and significant in international trade. In creating the new list, OIE reviewed its criteria for including a disease, and the disease or epidemiological events that require member countries to file reports. Nearly all of the former List A and List B diseases are included in the new single OIE list. The regulations establishing the select agent list for animals (9 CFR 121) set forth the requirements for possession, use and transfer of these biological agents or toxins. They are intended to ensure safe handling and for security to protect the agents from use in domestic or international terrorism. APHIS and CDC determined that the biological agents and toxins on the list have the potential to pose a severe threat to agricultural production or food products. The 23 animal diseases listed exclusively by APHIS in 9 CFR 121.3—the left column of Table 5 —include 20 of the OIE-listed diseases and three other disease agents (Akabane, Camel pox, and Menangle) considered to be emerging animal health risks for terrorism. The much larger OIE list includes other diseases that are not listed as "select agents." However, the select agent list was created to account for the additional risks perceived to be posed by terrorism. The 20 diseases and overlap agents/toxins included by both APHIS and CDC in 9 CFR 121.4—the right column of Table 5 —pose a risk to both human and animal health. The overlap list includes ten OIE-listed diseases, including anthrax, brucellosis of cattle, brucellosis of sheep, brucellosis of swine, glanders, Rift Valley fever, Q fever, Eastern equine encephalitis, tularemia, and Venezuelan equine encephalitis. The select agent list designates and regulates pathogens, not diseases, by regulating access to and handling of high-consequence pathogens. The overlap list is more comprehensive than a disease-only list, because certain pathogens may not cause a disease, per se , but may cause symptoms such as food poisoning or central nervous systems responses. Some of select agent pathogens receive more attention than others. For example, foot and mouth disease (FMD) is probably the most frequently mentioned disease when agroterrorism is discussed, due to its ease of use, ability to spread rapidly, and potential for great economic damage. In testimony before the Senate Governmental Affairs Committee on November 19, 2003, Dr. Thomas McGinn of the North Carolina Department of Agriculture described a simulation of an FMD attack by a terrorist at a single location. Only after the 5 th day of the attack would the disease be detected, by which time it may have spread to 23 states. By the 8 th day, 23 million animals may need to be destroyed in 29 states. On the other hand, the causative agent of bovine spongiform encephalopathy (BSE, or "mad cow disease") is considered dangerous enough to be a select agent, even though mad cow disease is less likely to be a terrorist's choice than other diseases. With BSE, infection is not certain, symptoms take years to manifest, and the disease may not be detected—all making credit for an attack more doubtful. Widespread animal diseases like brucellosis, influenza, or tuberculosis receive relatively less attention than FMD, hog cholera, or Newcastle disease. However, emerging diseases such as Nipah virus, Hendra virus, and the H5N1 strain of avian influenza (zoonotic diseases that have infected people, mostly in Asia) can be lethal since vaccines are elusive or have not been developed. The Agricultural Bioterrorism Protection Act of 2002 (Subtitle B of P.L. 107-188 ) also instructed APHIS and CDC to create the current official list of potential plant pathogens. The Federal government lists biological agents and toxins for plants in 7 CFR 331.3 ( Table 6 ). The act requires that these lists be reviewed at least every two years, and revised as necessary. Prior to the act, there was not a commonly recognized list of the most dangerous plant pathogens, although several diseases were usually mentioned and are now included in the APHIS select agent list. The list of seven biological agents and toxins in 7 CFR 331.3 was compiled by the Plant Protection and Quarantine (PPQ) program in APHIS, in consultation with USDA's Agricultural Research Service; Forest Service; Cooperative State Research, Education, and Extension Service; and the American Phytopathological Society. The listed agents and toxins are viruses, bacteria, or fungi that can pose a severe threat to a number of important crops, including potatoes, rice, corn, and citrus. Because the pathogens can cause widespread crop losses and economic damage, they could potentially be used by terrorists. Other plant pathogens not included in the select agent list possibly could be used against certain crops or geographic regions. Examples include Karnal bunt, citrus canker, and soybean rust, all of which currently exist in the U.S. in regions quarantined or under surveillance by USDA. As with other agents, the effectiveness of an attack to spread such a disease may be dependent on environmental conditions and difficult to achieve. The goal of the U.S. animal and plant health safeguarding system is to prevent the introduction and establishment of exotic pests and diseases, to mitigate their effects when present, and to eradicate them when feasible. In the past, introductions of pests and pathogens were presumed to be unintentional and occurred through natural migration across borders or accidental movement by international commerce (passengers, conveyance, or cargo). However, a system designed for accidental or natural outbreaks is not sufficient for defending against intentional attack. Consequently, the U.S. system is being upgraded to address the reality of agroterrorism. Different analysts and agencies have various ways to outline a response for agroterrorism. The National Research Council outlines a three-pronged strategy for countering the threat of agroterrorism: Deterrence and prevention Detection and response Recovery and management Even though no foreign terrorist attacks on crops or livestock have occurred in the United States, government agencies and private businesses have not taken the threat lightly. Biosecurity is an increasingly prominent among food manufacturers, merchandisers, retailers, and commercial farmers. Many agribusinesses have prepared response plans or added security measures to protect their product and brand names, ranging from input sources to processing and retail distribution networks. Primary prevention and deterrence interventions for foreign pests and diseases include international treaties and standards (such as the International Plant Protection Convention, and those of the OIE/World Organization for Animal Health), bilateral and multilateral cooperative efforts, off-shore activities in host countries, port-of-entry inspections, quarantine, treatment, and post-import tracking of plants, animals and their products. Every link in the agricultural production chain is susceptible to attack with a biological weapon. Traditionally the first defense against a foreign animal or plant disease has been to try to keep it out of the country. Agricultural inspectors at foreign pre-clearance inspections and at the U.S. borders are the first line of defense. Smuggling interdiction efforts can act as deterrents before biological agents reach their target. DHS and USDA already conduct such inspection and quarantine practices, but continued oversight is necessary to determine which preparedness activities and threats need more attention. Off-shore activities include pre-clearance inspection by APHIS of U.S. imports before products leave their port of origin. APHIS has personnel in at least 27 host countries. Although many of these inspections programs were built to target unintentional threats, they are being augmented with personnel and technology to look for intentional threats. Various U.S. intelligence and law enforcement agencies collect information about biological weapons that could be used against U.S. agriculture. Building and maintaining a climate of information sharing between USDA, DHS, and the intelligence community is necessary, especially so that agriculture is not overlooked compared to other infrastructure and human targets. Once inside the U.S., many parts of the food production chain may be susceptible to attack with a biological weapon. For example, terrorists may have unmonitored access to geographically remote crop fields and livestock feedlots. Diseases may infect herds more rapidly in modern concentrated confinement livestock operations than in open pastures. An undetected disease may spread rapidly because livestock are transported more frequently and over greater distances between farms, and to processing plants. Processing plants and shipping containers need to be secured and/or tracked to prevent tampering. An important line of defense is biosecurity—the use of preventive security measures against pathogens. On farms, biosecurity includes farm management practices that both protect animals and crops from the introduction of infectious agents and contain a disease to prevent its rapid spread within a herd or to other farms. Biosecurity practices include structural enclosures to limit outside exposure to people and wild animals, and the cleaning and disinfection of people, clothing, vehicles, equipment, and supplies entering the farm. USDA promotes such practices for poultry in a program called "Biosecurity for the Birds." Most farm specialists agree that livestock farmers are increasingly aware of the importance of biosecurity measures, particularly since the FMD outbreaks in European cattle and the avian flu and exotic Newcastle infections in U.S. poultry. More farm operators are restricting visitors or requiring them to wear boot covers or other protective clothing to guard against bringing in disease. Regardless of the reason for following biosecurity measures (terrorism or accidents), these precautions help prepare farms against diseases. In the FY2004 Consolidated Appropriations Act ( P.L. 108-199 ), the conference committee made the following observation about agroterrorism preparedness: "The conferees agree that emergency preparedness related to field crops, farm animals and food processing and distribution is of critical importance, and that the agriculture and food sectors are part of the critical infrastructure requiring heightened attention and protection. Given the integral roles of state and local governments and the private sector in detecting, deterring and responding to acts of agro-terrorism, the conferees expect the Department of Agriculture and the Department of Homeland Security to coordinate efforts in assisting states, particularly by providing financial and technical support to initiatives oriented toward interstate cooperation in joint preparedness initiatives. The conferees are particularly interested in those states that have developed or are currently developing coordinated interstate initiatives" ( H.Rept. 108-401 for P.L. 108-199 ). Because biological attacks on crops and livestock may not be immediately apparent, existing frameworks for detecting, identifying, reporting, tracking, and managing natural and accidental disease outbreaks need to be upgraded to combat agroterrorism. Appropriate responses are being developed based on specific pathogens, targets, and other circumstances that may surround an attack. The exact methods for control and eradication operations are difficult to predict. Past experience and simulations have shown that day-to-day decisions would be made using "decision trees" that include factors such as the geographical spread, rates of infestation, available personnel, public sentiment, and industry cooperation. Response procedures are outlined in the APHIS Plant Protection and Quarantine (PPQ) Emergency Programs Manual and the APHIS Veterinary Services (VS) Federal Emergency Response Plan for an Outbreak of Foot-and-Mouth Disease or Other Highly Contagious Diseases . The National Response Plan (NRP) also discusses USDA's role in responding to terrorist attacks or other disasters. In an outbreak, damage is proportional to the time it takes to first detect the disease. If a foreign disease is introduced, responsibility for recognizing initial symptoms rests with farmers, producers, veterinarians, plant pathologists and entomologists. But farmers sometimes are reluctant to voluntarily test crops or livestock for fear of economic loss or professional stature. Cooperative Extension Service agents at state universities are receiving additional training on recognizing the likely symptoms of an agroterrorism attack. Effective detection depends on a heightened sense of awareness, and on the ability to rapidly determine the level of threat (e.g., developing and deploying rapid disease diagnostic tools). Lessons from disease outbreaks, including the 2001FMD outbreaks in Europe and 2003-06 spread of H5N1 avian flu globally, show that the speed of detection, diagnosis, and control spell the difference between an isolated incident and an economic and public health disaster. The capacity to respond, however, is not always as strong as desired. In recent years, the number of veterinarians with experience to recognize many foreign animal diseases has declined. Success in eradicating many animal diseases in the United States has reduced the "opportunity" for new veterinarians to see such diseases. Also, the number of large animal veterinarians in private practice and within APHIS has declined. The American Veterinary Medical Association predicts that 7% of USDA positions for large animal veterinarians may go unfilled, and 4-5% of such positions nationwide. In light of this trend, APHIS has initiated efforts to increase training for foreign animal diseases and create registries of veterinarians with appropriate experience. The National Veterinary Medical Service Act, P.L. 108-161 , provides new veterinarians with loan repayment assistance in exchange for practicing areas with veterinary shortages and for being tasked by the government in emergency situations. DHS and USDA have worked to improve the coordination of their response plans to secure the food supply, particularly following the announcement of HSPD-9. The departments are cooperating on research funding, detection technology, surveillance, partnerships with private industry, and state and local response coordination. Examples of the public-private partnerships for detection include the food and agriculture Information Sharing and Analysis Center (ISAC) and the food and agriculture Sector Coordinating Council (SCC)—both discussed earlier in this report. Numerous simulation ("table top") exercises have been conducted by both federal, state and local authorities to test the response and coordination efforts of a agroterrorism attack. Examples of such simulations include the Silent Prairie exercise in Washington (February 11, 2003), the Silent Farmland exercise in North Carolina (August 5, 2003), and Exercise High Stakes in Kansas (June 18, 2003). The last line of defense, and the costliest, is the isolation, control, and eradication of an epidemic. The more geographically widespread a disease outbreak, the costlier and more drastic the control measures become. Officials gained valuable experience from recent agricultural disease outbreaks such as avian influenza in the U.S., Canada, and Asia; FMD in the UK; and citrus canker in Florida. Each one of these epidemics has required the depopulation and destruction of livestock and crops in quarantine areas, indemnity payments to farmers, and immediate suspension of international trade. Of all lines of defense, mass eradication is the most politically sensitive and difficult. Actions taken in each of these outbreaks have met with varying degrees of resistance from groups opposed to mass slaughter of animals, citizens concerned about environmental impacts of destroying carcasses, or from farmers who fear the loss of their livelihood. During the 2001 outbreak of FMD in the United Kingdom, the public was clearly opposed to the large pyres of burning carcasses. The disposal of millions of chicken carcasses in British Columbia, Canada, during 2004 also caused a significant public debate. Thus, scientific alternatives are needed for mass slaughter and carcass disposal. Judicial roadblocks also can interfere with eradication and control efforts. For example, science-based measures (tree removal within certain perimeters) to eradicate citrus canker in Florida's residential neighborhoods were challenged and delayed in the courts. The disease continued to spread and, before it could be eradicated, was spread very widely by hurricanes in 2005. When a foreign animal disease is discovered, whether accidentally or intentionally introduced, the Secretary of Agriculture has broad authority to eradicate it or prevent it from entering the country. The use of these authorities is fairly common, as shown recently by the import restrictions placed on H5N1 avian flu-infected countries. Federal quarantines and restrictions on interstate movement within the U.S. are also common for certain pest and disease outbreaks, such as for sudden oak death in California and citrus canker in Florida. In addition to federal authorities, most states have similar authorities, at least for quarantine and import restrictions. In fact, the initial response to many outbreaks is at the state or local level. If an outbreak spreads across state lines or if state and local efforts are inadequate, federal involvement quickly follows. State and local officials usually consult with federal authorities and often seek federal assistance. If an animal disease outbreak is found in the United States, the Secretary of Agriculture is authorized, among other things, to: Stop imports of animals and animal products into the U.S. from suspected countries (7 U.S.C. 8303); Stop animal exports (7 U.S.C. 8304) and interstate transport of diseased or suspected animals (7 U.S.C. 8305); Seize, quarantine, and dispose of infected livestock to prevent dissemination of the disease (7 U.S.C. 8306); Compensate owners for the fair market value of animals destroyed by the Secretary's orders (7 U.S.C. 8306(d)); and Transfer the necessary funding from USDA's Commodity Credit Corporation (CCC) to cover costs of eradication, quarantine, and compensation programs (7 U.S.C. 8316). Similar authorities cover plant pests and diseases (7 U.S.C. 7701-7772). However, the capacity of local law enforcement may be stretched too thin in a full-scale agroterrorist attack. A study by the U.S. Department of Justice says that agroterrorism events are more likely to be handled as a crime scene investigation with law enforcement having primary responsibility, rather than a public health response. Quarantines of a 6-mile radius, combined with statewide roadblocks to enforce stop-movement orders, would require many officers and much equipment to be redeployed from other assignments and coordinated among many jurisdictions of different levels. HSPD-9 calls for a National Veterinary Stockpile (NVS) "containing sufficient amounts of animal vaccine, antiviral, or therapeutic products to appropriately respond to the most damaging animal diseases affecting human health and the economy and that will be capable of deployment within 24 hours of an outbreak." At a Senate agriculture committee hearing in 2005, Dr. James Roth, veterinary professor at Iowa State University, highlighted Rift Valley fever, Nipah virus, and avian influenza as candidates for the stockpile because the agents are contagious and can cause serious illness or death in humans. "Safe and effective vaccines for these three diseases can be developed in a short time frame. This preventive measure would effectively reduce the serious threat these diseases pose to both public health and animal agriculture. Animal vaccines can be developed for a small fraction of the cost of developing human vaccines. Vaccinating animals for zoonotic diseases effectively protects the human population from infection, and reduces the need to vaccinate people." The NVS received $3 million in FY2005 and $3 million in FY2006. The Administration requests $8 million for FY2007 as part of the Food and Agriculture Defense Initiative. Some activities, such as confinement and eradication, start in the response phase but continue throughout the recovery and management phase. Long-term economic recovery includes resuming the husbandry of animals and plants in the affected areas, introducing new genetic traits that may be necessary in response to the pest or disease, rebuilding public confidence in domestic markets, and regaining international market share. Confidence in food markets, by both domestic and international customers, depends on continuing surveillance after the threat is controlled or eradicated. Communication and education programs would need to inform growers directly affected by the outbreak, and inform consumers about the source and safety of their food. The social sciences and public health institutions play a complementary role to the agricultural sciences in responding to and recovering from agroterrorism. If eradication of the pest or disease is not possible, an endemic infestation would result in a lower equilibrium level of production and/or product quality. Resources would be devoted to acquiring plant varieties with resistance characteristics and breeds of animals more suitable to the new environment. This is the goal of the National Plant Disease Recovery System (NPDRS) mentioned in HSPD-9 and being initiated by APHIS. HSPD-9 calls for a National Plant Disease Recovery System (NPDRS) "capable of responding to a high-consequence plant disease with pest control measures and the use of resistant seed varieties within a single growing season to sustain a reasonable level of production for economically important crops." The primary resources for this recovery system are the U.S. National Plant Germplasm System in conjunction with federal, state, university, extension, and industry scientists. Planning includes finding or developing seed varieties that resistant to certain diseases, and pesticide control measures that prevent, slow, or stop high-consequence plant diseases from spreading. The NPDRS received $2 million in FY2005 and $2 million in FY2006. The Administration requests $6 million for FY2007 as part of the Food and Agriculture Defense Initiative. The annual appropriations process provides an opportunity for legislators to influence homeland security activities separate from writing authorizing legislation or conducting oversight hearings. In addition to the primary purpose of appropriations laws—providing or limiting funding—appropriators may also use committee report language to request reports from federal agencies or make statements and stipulations about future counterterrorism activities. USDA's budget request for FY2008 calls for significantly increased spending on several agroterrorism preparedness programs. The Food and Agriculture Defense Initiative requests an FY2008 appropriation of $340 million, nearly double the $177 estimated for items in the initiative for FY2007 ( Table 4 ). Using OMB's more comprehensive analysis of homeland security funding for agriculture cited on previous pages, the requested FY2008 increase in homeland security funding for agriculture is 54%, up from $340 million estimated for FY2007 to $524 million requested for FY2008 ( Table 2 ). The FY2008 DHS budget request does not include any individual line items for agriculture. Ongoing border inspection and science and technology activities are mentioned, but no specific allocations or requests are mentioned. These budget issues and past appropriations for agroterrorism are discussed earlier in this report under the heading " Federal Funding to Respond to Agroterrorism ." Increasing the level of terrorism preparedness remains a concern, not only for agroterrorism, but also for other forms of terrorism. Several bills were introduced in the 109 th Congress to authorize funding or otherwise improve the level of preparedness or coordination of response to an agroterrorist attack. These bill are listed in Table 7 and discussed in the context of several issues below. The 110 th Congress may consider similar bills regarding coordination and response activities. Two complementary bills addressing agroterrorism preparedness were introduced by Senator Akaka: S. 572 (the Homeland Security Food and Agriculture Act, 109 th Congress) and S. 573 (the Agricultural Security Assistance Act, 109 th Congress). Versions of both bills were introduced in the 108 th Congress. Both bills addressed different aspects of agroterrorism preparedness and coordination. S. 572 would have amended the Homeland Security Act of 2002 by giving additional responsibilities to the Department of Homeland Security for agroterrorism preparedness. S. 573 (which subsequently was incorporated into Project Bioshield II, S. 975 , 109 th Congress) would have tasked the Secretary of Agriculture with various studies and programs, and authorized funding for state and local preparedness, public awareness programs, and biosecurity grants for farmers. S. 573 / S. 975 also would have established agriculture liaison position in the Department of Homeland Security and Department of Health and Human Services. Another agroterrorism preparedness bill, S. 1532 (the Agroterrorism Prevention Act, 109 th Congress) was introduced by Senator Specter. It would have authorized funding for public awareness, on-farm biosecurity guidelines, and state and local preparedness assistance, and bolstered laboratory and other response capacity. S. 1532 also would have addressed criminal penalties for agroterrorism, and coordination for agricultural issues in the intelligence community. S. 3898 / H.R. 6086 (National Reportable Conditions Act, 109 th Congress) would have directed DHS, in coordination with USDA and several other agencies, to develop a list of diseases, conditions, and events that represent a threat to humans, animals, food production, and the water supply. A commission of public health professionals, veterinarians, animal and food specialists, and environmental, and utility, and laboratory workers would have advised the Secretary. The bill would have created a coordinated notification system to a single government agency. P.L. 109-374 (the Animal Enterprise Terrorism Act) was enacted in 2006 to enhance criminal penalties for terrorism against animal enterprises, not only for agroterrorism as discussed in this report, but also for what is sometimes called "eco-terrorism" against animal research facilities or types of livestock production. The law prescribes penalties and restitution in Title 18 of the U.S. Code for varying levels of economic damage and personal injury involving threats, acts of vandalism, property damage, criminal trespass, harassment, or intimidation. In terms of preparedness and coordination, the bills from the 109 th Congress sought to provide more concrete Congressional instructions and budget authorizations for agroterrorism preparedness. However, similar results could occur if the presidential directive HSPD-9 is implemented successfully. The presidential directives facilitating agroterrorism preparedness, and subsequent administrative actions, did not exist when Senator Akaka's bills were introduced in the 108 th Congress. While Congress certainly has oversight authority of federal agencies and may ask questions about implementation of HSPD-9, a public law outlining and directing the implementation of an agroterrorism preparedness plan would establish the statutory parameters for such a plan, and, as a practical matter, might result in enhanced oversight by specifically identifying executive branch entities responsible for carrying out particular components of such a plan. In the 109 th Congress, S. 573 was referred to the Agriculture Committee, but the most of the text was incorporated subsequently into Title 27 of S. 975 (Project Bioshield II, 109 th Congress) which is referred to the Health, Education, Labor, and Pensions Committee. The bills would have authorized such sums as necessary, subject to annual appropriations, for state and local vulnerability assessments, emergency response plans, geographic information systems, and grants to State and local agriculture health officials. The bills also would have created awareness programs and grants for farm-level producers to improve biosecurity measures. These farm-level activities would have included development and dissemination of on-farm biosecurity guidelines, and on-farm biosecurity improvement grants (up to $10,000 per farm). S. 1532 (the Agroterrorism Prevention Act, 109 th Congress) would have authorized funding for USDA and DHS-FEMA to assist states in developing response plans. It also would have authorized funding for public awareness, the dissemination of farm-level biosecurity guidelines, and mandated further development of a National Veterinary Stockpile and a National Plant Disease Recovery System, largely as mentioned in HSPD-9. The Homeland Security Food and Agriculture Act ( S. 572 , S.Rept. 109-209 , 109 th Congress) would have amended the Homeland Security Act of 2002 ( P.L. 107-296 ) by giving additional biosecurity responsibilities to the Department of Homeland Security. The bill was reported favorably by the Homeland Security and Governmental Affairs Committee in September 2005. It would have given a leadership role to DHS for agriculture security preparedness and disaster response. S. 572 (109 th Congress) would have authorized an agriculture security program in DHS that would advise and consult with federal, State, local, and other agriculture officials regarding agroterrorism preparedness. It would have given the Secretary of DHS authority to execute responsibilities mentioned in HSPD-7 and HSPD-9, and tasked DHS with coordinating much of an agroterrorism response by communicating, equipping, and otherwise facilitating emergency response providers. DHS also would have become the lead responder by coordinating with the Department of Transportation, the Environmental Protection Agency, Department of Agriculture, and Department of State. DHS would have coordinated task forces to identify and recommend best practices for State response plans. The bill also would have created a grant program to help State and local agricultural specialists prepare for agroterrorism by funding conferences and agroterrorism response exercises. The Congressional Budget Office estimated that implementing S. 572 would cost $8 million in 2006 and $53 million over a five-year period. Of this total, $48 million would fund additional staff and expenses in the current DHS Directorate for Preparedness, and $5 million would be for grants to State and local agriculture officials. Shortly following enactment of the Homeland Security Act and the 2003 transfer from USDA to DHS of agricultural border inspections and the Plum Island agricultural research facility, concerns over DHS dedication to these agricultural functions began rising. Moreover, concern over coordination between established agencies and DHS is not unique to agriculture. Nonetheless, the issue of improved coordination between federal agencies with various jurisdictions, which agency has primary responsibility, and encouraging agencies to seeking adequate consultation from other stakeholders has been raised in many venues and proposed legislation. For example, the Agricultural Security Assistance Act ( S. 573 , 109 th Congress) would have established agriculture liaison position in the Department of Homeland Security (specifically with the Federal Emergency Management Agency, FEMA), and in the Department of Health and Human Services. The bill, among other things, would have given leadership roles for preparedness and response, particularly with first responders, to DHS. S. 1532 (the Agroterrorism Prevention Act, 109 th Congress) would have instructed DHS, HHS, USDA, intelligence agencies, Interior, EPA, and other agencies to coordinate response plans, conduct vulnerability assessments, and expand monitoring and surveillance for agroterrorism. The bill also mentioned enhanced intelligence systems and cooperation, tracking systems for agricultural products, laboratory networks, and border inspection training. The bill would have directed DHS, in coordination with other agencies, to assess the need for modernizing or replacing BL-3 and BL-4 laboratories with agricultural capacity. Project Bioshield II ( S. 975 , 109 th Congress) would have established a working group spanning USDA, DHS, HHS, and FDA to identify and recommend specific actions, capacities, and limitations regarding agroterrorism preparedness. Section 2708 of S. 975 (109 th Congress) would have compelled DHS to cooperate with USDA and other intelligence agencies to improve the targeting of agricultural border inspections. While the agencies are working together already toward this goal, such legislation would further compel the coordination of the departments. S. 3898 / H.R. 6086 (National Reportable Conditions Act, 109 th Congress) would have created a coordinated notification system to a single government agency for a specific list of diseases, conditions, and events deemed to be a threat to human or animal health, or the safety of the food and water supply. Once agricultural border inspectors were transferred from USDA to DHS, some Members and industry groups expressed concerns that DHS would concentrate on more immediate or catastrophic homeland security issues such as immigration or radiological threats, and neglect agricultural functions. Some were also concerned that personnel and resources formerly devoted to agriculture would be shifted to other DHS areas (for more background, see the earlier section on the Homeland Security Act). Coordination over agricultural border inspections was raised in the conference report for the FY2007 DHS appropriations act ( P.L. 109-295 ). Appropriators directed DHS to report on activities to target agricultural inspections, adjust to new agricultural threats, improve training, generally coordinate with USDA and state governments regarding agricultural inspections. The conferees are concerned with the steps the Department is taking to improve the targeting of agricultural inspections and direct the Secretary to submit a report consistent with section 541 of the Senate bill. ( H.Rept. 109-699 ) Sec. 541. The Secretary of Homeland Security shall submit a report to the Committees on Appropriations of the Senate and the House of Representatives, not later than February 8, 2007, that—(1) identifies activities being carried out by the Department of Homeland Security to improve—(A) the targeting of agricultural inspections; (B) the ability of United States Customs and Border Protection to adjust to new agricultural threats; and (C) the in-service training for interception of prohibited plant and animal products and agricultural pests under the agriculture quarantine inspection monitoring program of the Animal and Plant Health Inspection Service; and (2) describes the manner in which the Secretary of Homeland Security will coordinate with the Secretary of Agriculture and State and local governments in carrying out the activities described in paragraph (1). ( H.R. 5441 , 109 th Congress) The coordination issue was previously raised FY2005 Consolidated Appropriations Act ( P.L. 108-447 , H.Rept. 108-792 ). Conferees expressed their concern over two agricultural functions transferred to DHS, and requested a GAO study of coordination between DHS and USDA. The conferees are aware of ongoing concerns within the agriculture sector that the transfer of these responsibilities [border inspection and research] may shift the focus away from agriculture to other priority areas of DHS. In order to ensure that the interests of U.S. agriculture are protected and that the intent of the Homeland Security Act of 2002 is being fully met, including the proper allocation of AQI [Agricultural Quarantine Inspection] and other funds, the conferees request the Government Accountability Office to provide a report, no later than March 1, 2005, on the coordination between USDA and DHS in protecting the U.S. agriculture sector, including a description of the long-term objectives of joint activities at Plum Island and the effectiveness of AQI and other inspection activities ( H.Rept. 108-792 ). This was the impetus for the 2006 GAO study, Management and Coordination Problems Increase the Vulnerability of U.S. Agriculture to Foreign Pests and Disease (GAO-06-644), discussed earlier in this report, which identified several problems concerning inter-agency coordination and inspection performance. Both S. 573 (109 th Congress) and S. 975 (109 th Congress) would have instructed the Attorney General to review State and local laws relating to agroterrorism to determine whether any such laws would facilitate (or impede) the implementation of agroterrorism response plans and whether a State court could delay the implementation of such federal response plans. S. 1532 (109 th Congress) would have criminalized acts of agroterrorism by amending Title 18 of the U.S. Code to define agroterrorist acts and prescribing penalties of fines, imprisonment, or death. The Animal Enterprise Terrorism Act ( P.L. 109-374 ) enhanced the authority of the Department of Justice to prosecute and convict individuals committing terrorism against animal enterprises. The act defines such acts and prescribes penalties. It applies not only to international actors committing agroterrorism in the United States, but also to acts commonly considered "eco-terrorism" that are conducted by parties within the United States against locations such as animal research facilities or confinement livestock operations.

The potential for terrorist attacks against agricultural targets (agroterrorism) is increasingly recognized as a national security threat, especially after the events of September 11, 2001. Agroterrorism is a subset of bioterrorism, and is defined as the deliberate introduction of an animal or plant disease with the goal of generating fear, causing economic losses, and/or undermining social stability. The goal of agroterrorism is not to kill cows or plants. These are the means to the end of causing economic damage, social unrest, and loss of confidence in government. Human health could be at risk if contaminated food reaches the table or if an animal pathogen is transmissible to humans (zoonotic). While agriculture may not be a terrorist's first choice because it lacks the "shock factor" of more traditional terrorist targets, many analysts consider it a viable secondary target. Agriculture has several characteristics that pose unique vulnerabilities. Farms are geographically disbursed in unsecured environments. Livestock are frequently concentrated in confined locations, and transported or commingled with other herds. Many agricultural diseases can be obtained, handled, and distributed easily. International trade in food products often is tied to disease-free status, which could be jeopardized by an attack. Many veterinarians lack experience with foreign animal diseases that are eradicated domestically but remain endemic in foreign countries. In the past five years, "food defense" has received increasing attention in the counterterrorism and bioterrorism communities. Laboratory and response capacity are being upgraded to address the reality of agroterrorism, and national response plans now incorporate agroterrorism. Congress has held hearings on agroterrorism and enacted laws and appropriations with agroterrorism-related provisions. The executive branch has responded by implementing the new laws, issuing several presidential directives, and creating liaison and coordination offices. The Government Accountability Office (GAO) has studied several issues related to agroterrorism. Appropriations and user fees for agriculture-related homeland security activities in USDA and DHS have more than tripled from a $225 million "pre-September 11" baseline in FY2002 to $818 million in FY2007. Agriculture now receives about 2.1% of the total non-defense budget authority for homeland security. Increasing the level of agroterrorism preparedness remains a concern, as do interagency coordination and adequate border inspections. The 110th Congress may consider bills or oversight hearings to address funding and the level of preparedness or coordination to respond to an agroterrorist attack. This report will be updated as events warrant.

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On May 6, 2010, the Dow Jones Industrial Average (DJIA), a broad stock index, fell by nearly 1,000 points over the course of several minutes and then quickly rebounded. This was one of the largest intraday declines in the history of the DJIA and was described by one commentator as "one of those eye-opening events that exposed many flaws in the structure of the market." Dubbed the Flash Crash , the event led to several analytical studies and reports and to greater scrutiny of a broad trading protocol known as high-frequency trading (HFT), a form of algorithmic securities trading, which has no formal consensus definition. In addition to the heightened scrutiny it received after the Flash Crash, HFT, which accounts for a large share of total domestic securities trades, has raised other public policy concerns. Among them are whether (1) HTF plays a role in exacerbating market fragility; (2) it may heighten the market's systemic risk; (3) it enhances or harms the quality of the securities market; (4) certain kinds of HFT may constitute an illegal form of front-running; (5) HFT helps foster a system of two-tiered trading markets that benefits certain traders at the expense of others due to their access to faster trading data and advantageous trade infrastructure; and (6) the presence of HFT has been to the detriment of non-HFT investors and investor confidence in the securities market. As in earlier major market disruptions, such as the October 1987 market crash (when the DJIA lost almost 22% in a single day, setting off a global stock market decline), congressional interest in the Flash Crash derives in part from Congress's decades-old legislative mandate that, among other things, delegated to the Securities and Exchange Commission (SEC) responsibility for investor protection (through a regime of mandatory disclosure) and maintaining fair and orderly markets. In the 113 th Congress, congressional interest in HFT has been reflected in legislation that would levy securities transaction taxes on securities trades, presumably raising the cost and thus reducing the incidence of conducting HFT. Specifically, in the 113 th Congress, S. 410 (Harkin), H.R. 880 (DeFazio), and H.R. 1579 (Ellison) would levy taxes on various financial trades, including trades conducted by HFT traders. H.R. 2292 (Markey) would require the Commodity Futures Trading Commission (CFTC) to provide a regulatory definition of HFT in the derivatives markets that the agency oversees. It would also require high-frequency traders in derivatives to register with the CFTC, submit semiannual reports to the agency, and conform to business conduct requirements that the CFTC may issue. H.R. 2292 would also grant the CFTC the authority to impose civil penalties under the Commodity Exchange Act for violations of a HFT regulation. The amount of the fine would be based on the duration of the violation. In addition, in exercising congressional oversight authority over the SEC and the CFTC, a number of committee and subcommittee hearings have touched on the subjects of HFT and the Flash Crash. Meanwhile, the CFTC and the SEC, which respectively regulate derivatives and equities, have both issued studies that provide far-reaching explorations of HFT. The studies also pose a number of questions about the value of HFT and propose several ways to further regulate it or intervene to mitigate consequences of HFT that some consider to be problematic. Interest in HFT has also been heightened by the release of the book Flash Boys by Michael Lewis and its offshoots, including an interview with the author on 60 Minutes and an adaptation of the book in the New York Times . Among other things, a former securities trader at the Canadian brokerage firm RBC charges that the HFT firms on which Lewis reports have significantly relied on a form of "legalized front-running" and observes that many major institutional investors, including various mutual funds, appear to have been unaware of the existence of such behavior, which could allegedly be costly to them. The Department of Justice (DOJ), Federal Bureau of Investigation (FBI), CFTC, SEC, New York Attorney General, and Massachusetts Secretary of Commerce are variously conducting investigations and probes into specific HFT firms, certain HFT strategies, and HFT in general. Specifically, Attorney General Eric Holder has announced that the DOJ is "investigating [HFT] … to determine whether it violates insider trading laws." In addition, the FBI is reportedly probing (1) whether HFT firms are trading ahead of other investors based on information that other market participants cannot see, a possible form of front-running, a type of illegal insider trading; (2) practices in which a HFT trader submits trade orders and then cancels them to foster the illusion of market activity, a possible form of market manipulation that may prompt others to respond to illusory trade orders; and (3) the use of HFT to place orders to hide transactions that may be based on an illegal tip. To facilitate these probes, the agency has reportedly openly solicited traders and stock-exchange workers to divulge any evidence suggesting front-running and manipulation. These inquiries reportedly derive from a multiyear agency probe of illegal insider trading, an effort that reportedly has led to at least 79 convictions of hedge-fund traders and others. The New York Attorney General is responsible for enforcing the state's Martin Act, a securities law that dates back to the 19 th century, which gives the Attorney General statutory powers "to conduct investigations of suspected fraud in the offer, sale or purchase of securities [and] [w]here appropriate… [to] commence civil and criminal prosecutions … to protect investors." Under the act's auspices, New York Attorney General Eric Schneiderman has opened an investigation into whether stock exchanges provide HFT firms with improper advantages, including accepting payment to locate HFT firm computer servers within an exchange's data center. The Attorney General has also struck deals with several entities, including Business Wire and Marketwired, that for a fee provided potentially market moving news releases to HFT traders in advance of public release. The entities agreed to suspend the advance news feeds. Reports also indicate that the Attorney General has subpoenaed several HFT firms as he investigates whether certain traders have an unfair advantage over others. In the class action civil case City of Providence, Rhode Island v. BATS Global Markets Incorporated et al. (U.S. District Court, Southern District of New York, No. 14-2811), the city of Providence is suing BATS Global Markets Incorporated, the Chicago Board Options Exchange, NASDAQ OMX Group, the New York Stock Exchange, and others for engaging in fraud designed to manipulate the markets. The suit alleges that the fraud was conducted in conjunction with several brokerage firms and several HFT firms and that it resulted in the diversion of "billions of dollars annually from buyers and sellers of securities to themselves." The suit is being brought by the city of Providence on behalf of investors that acquired securities in the United States after April 2009. The civil case's allegation that HFT has resulted in the diversion of billions of dollars from investors to a collective of market centers, brokerage firms, and HFT firms is not unlike a commonly heard characterization that HFT "is not trading—it is skimming … [or] legalized theft [that constitutes] ... a tax on investors." Media reports also indicate that William F. Galvin, the Massachusetts Secretary of Commerce, has sent inquiries to investment advisers and private equity and hedge-fund firms in which he requested answers to a number of questions related to their HFT practices, including their use of direct data feeds from exchanges and whether they have a computer server located within an exchange's data center. Spokespersons have reportedly said that the inquiries are a way to learn about "the extent of the [HFT] practices." SEC officials report that the agency is involved in "a number of ongoing investigations regarding various market integrity and structure issues, including high-frequency traders and automated trading." In June 2014, SEC Chair Mary Jo White made what was arguably the first explicit agency discussion of prospective HFT-related regulatory initiatives. In the speech, which included a number of potential market structure regulatory reforms, White praised the benefits brought by algorithmic trading and electronic trading, such as the reduction of investor trading costs. Referencing HFT, however, she said she had concerns with "aggressive, destabilizing trading strategies in vulnerable market conditions." Such concerns over HFT, she indicated, had prompted her to direct SEC staff to develop recommendations for "an anti-disruptive trading rule" that would "apply to active proprietary traders in short time periods when liquidity is most vulnerable and the risk of price disruption caused by aggressive short-term trading strategies is highest"; clarify "the status of unregistered active proprietary traders to subject them to... [SEC] rules as dealers" and look into crafting "a rule eliminating an exception from ... [Financial Industry Regulatory Authority] membership requirements for dealers that trade in off-exchange venue"; and prepare recommendations for the SEC "to improve firms' risk management of trading algorithms and to enhance regulatory oversight over their use." The SEC Chair also stated that the agency needed to explore whether "low-latency tools … tend to advantage certain types of proprietary trading strategies that may detract from the interests of investors." At present, the CFTC appears to be deliberating whether additional regulatory intervention has merit and, if so, what form that intervention might take. CFTC officials have reportedly said the agency is responding to concerns brought to it about certain potentially abusive HFT practices and investigating whether these practices meet the definition of market manipulation under the federal securities laws that the CFTC enforces. This report provides an overview of equities HFT and its potential economic and regulatory implications. It examines (1) recent developments regarding probes and investigations of HFT, (2) what equities HFT is, (3) the nature of the general equities HFT landscape, (4) how equities HFT works and who conducts it, (5) equity HFT's perceived benefits and disadvantages, (6) the Flash Crash of 2010 and the alleged role of HFT, (7) SEC programmatic and regulation-related initiatives to potentially monitor HFT and address its potentially negative market impact, (8) European Union HFT regulatory developments,; and (9) various domestic HFT regulatory ideas under discussion. This report principally focuses on equities HFT. However, because the performance of many SEC-regulated equity products is interconnected with those of various CFTC-regulated derivative products, the report also provides a brief overview of HFT in CFTC-regulated derivatives and key HFT-related regulatory developments at the CFTC. HFT is an imprecise "catchall" term that currently has no legal or regulatory definition. It is used to describe what many characterize as a subset of algorithmic trading (AT) largely associated with the sell side of the financial industry. AT is the use of computer algorithms to automatically make certain securities trading decisions, submit securities trades, and manage those securities orders after their submission. A detailed description of HFT comes from a 2010 SEC concept release on market structure: One of the most significant market structure developments in recent years is high frequency trading. The term is relatively new and is not yet clearly defined. It typically is used to refer to professional traders acting in a proprietary capacity that engage in strategies that generate a large number of trades on a daily basis.… Other characteristics often attributed to proprietary firms engaged in HFT are: (1) the use of extraordinarily high-speed and sophisticated computer programs for generating, routing, and executing orders; (2) use of co-location services and individual data feeds offered by exchanges and others to minimize network and other types of latencies; (3) very short time-frames for establishing and liquidating positions; (4) the submission of numerous orders that are cancelled shortly after submission; and (5) ending the trading day in as close to a flat position as possible (that is, not carrying significant, unhedged positions over-night). The CFTC created the Technology Advisory Committee (TAC) to advise it on the impact and potential legislative and regulatory implications of technological innovations on financial services and the futures markets. Members include representatives of futures exchanges, self-regulatory organizations, financial intermediaries, market participants, and traders. In late 2011, a TAC working group said the attributes of HFT include algorithms for decision making, order initiation, generation, routing, or execution for each individual transaction without human direction; low-latency technology that is designed to minimize response times, including proximity and colocation services; high-speed connections to markets for order entry; and recurring high-message rates (orders, quotes, or cancellations) determined using one or more objective forms of measurement, including cancel-to-fill ratios; participant-to-market message ratios; or participant-to-market trade volume ratios. Some securities regulators have argued that the absence of a clear definition of HFT has hurt their efforts to fully understand securities market structure issues. From a regulatory standpoint, the CFTC has also asked whether a formal definition of HFT should be adopted and, if so, what form it should take. Others, however, balk at the idea of crafting a definition of HFT for regulatory purposes, arguing that it is impossible to make a "clear distinction" between HFT and automated trading. They note that although HFT is generically defined as "a subset of automated trading," it "should not be used interchangeably with the term automated trading or as a way of arbitrarily identifying a type of market participant." Others say that promulgating a useable and objective definition would require "selecting arbitrary [performance] thresholds"—which some researchers have said would require the measurement and collection of data at a scale that would be "exceedingly complicated." Some of the potential challenges in defining and differentiating HFT are illuminated in this discussion by the SEC staff: [I]n the absence of trading account data, the use of general proxies for HFT that can be calculated with publicly available, market-wide data may capture a great deal of algorithmic and computer-assisted trading that should not be classified as HFT. Examples of such HFT proxies derived from market-wide data include high message rates, bursts of order cancellations and modifications, high order-to-trade ratios, small trade sizes, and increases in trading speed. These market-wide proxies are associated with the broader phenomena of algorithmic trading and computer-assisted trading in all their forms.… HFT represents a large subset, but by no means all, of algorithmic and computer-assisted trading…. In addition, other types of computer-assisted trading tools are common in today's markets that may generate market activity that is difficult to distinguish from HFT, at least in the absence of datasets that can tie market activity to particular trading accounts. These tools include smart order routing systems that are designed to deal with the large number of trading venues in the fragmented U.S. equity market structure. They also include trading systems with automated functionalities that, while perhaps not falling within the definition of an algorithm (and therefore not appropriately classified as HFT), nevertheless enable orders to be submitted to the marketplace in ways that are far beyond the manual capacities of a human trader." Alternative trading systems (ATSs) are integral parts of the securities market landscape in which HFT takes place, and HFT often interacts with them. ATSs can be subdivided into electronic communication networks (ECNs) and dark pools. This section provides a basic overview of those components of the securities market. ATSs are broker-dealer firms that match the orders of multiple buyers and sellers according to established, nondiscretionary methods and have been around since the late 1960s. They grew in popularity in the mid-1990s as technological developments made it easier for broker-dealers to match buy and sell orders. In 1998, the SEC adopted a new regulatory framework, Regulation ATS, that sought to reduce barriers to entry for such systems while also promoting competition and innovation and regulating the exchange functions they performed. In 2013, 35 broker-dealers reportedly operated 44 ATSs that actively traded exchange-listed stocks. One type of ATS, known as an ECN, chooses to publicly display its best orders in the consolidated quote stream as exchanges, as the New York Stock Exchange (NYSE) and Nasdaq do, and allow its stock trade offers, known as quotes, to be accessed by investors. ECNs are widely perceived to have benefited the equity market over the last decade or so through such features as faster trading technologies, innovative pricing strategies, and robust inter-market linkages. Two of the best known independent ECNs are INET and Archipelago. Other ECNs have merged with registered securities exchanges (of which there are 13) or have themselves become exchanges, as have BATS and Direct Edge, which are major exchanges that compete with the NYSE and Nasdaq. The ATSs, including the ECNs, have gained growing equity trading market shares through the years. By various accounts, the competitive pressure from the ATSs has led to legacy exchanges like the NYSE adopting various innovations designed to enhance the customer trading experience. Another type of ATS is called a dark pool. An ATS that performs as a dark pool does not provide quotes into the public quote stream. This attribute of trade quote opacity has attracted institutional investors that want to anonymously trade blocks of shares without triggering potentially unfavorable price movements. Currently, 40 or so dark pools exist in the market. Categorically, dark pools have been divided into subgroups that include Broker-dealer owned . Some dark pools have been created by large broker-dealers for their clients and at times for the benefit of their own proprietary traders. These dark pools reportedly derive their share prices from the broker-dealer's order flow. As a consequence, they are said to provide some price discovery. Examples reportedly include Credit Suisse's CrossFinder, Goldman Sachs' Sigma X, and Morgan Stanley's MS Pool. Agency broker or exchange-owned . These dark pools act as agents, not principals. The trades they conduct are based on the securities prices that derive from the exchanges. As such, they have no price discovery function. Examples of agency broker dark pools include Liquidnet and ITG Posit. Exchange-owned dark pools include those offered by BATS and the NYSE. Electronic market maker. These dark pools are affiliated with independent securities operators like Getco and Knight, which operate as principals for their own accounts. Like the aforementioned broker-dealer-owned dark pools, the transaction prices overseen by these pools are not calculated from the national best bid and offer (NBBO). As such, the dark pools do not provide price discovery. Under Regulation ATS, dark pools are required to register either as exchanges with the SEC or as broker-dealers with Financial Industry Regulatory Authority (FINRA), the frontline regulator of SEC-registered broker-dealers that the SEC oversees. As such, dark pools are subject to the same rules that govern trading on an exchange or by a broker-dealer. At a House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises hearing on February 28, 2014, some subcommittee members expressed concerns that the presence of dark pools might contribute to market uncertainty, potentially harming small investors. However, Roel Campos, a former SEC commissioner, testified at the hearing that although the pools may have a "sinister" connotation, the rules that govern them are very explicit, and the pools must "reflect the last, best price" for a given security. In Flash Boys , Michael Lewis discusses various large broker-dealers that owned dark pools to which they would channel customer orders for execution. Although all customer orders are supposed to fetch the best prevailing buy or sell price, the book notes that due to the pools' opacity, evidence of whether this has happened is essentially unavailable. According to an article by Sullivan and Russello in the New York Law Journal , there are "several ways in which dark pools can be used to further potentially improper trading motives." The authors cite as one such example an insider trading case complaint filed by the DOJ and the SEC against a former fund manager at SAC Capital Advisors. According to the SEC's complaint, the manager's emails showed that allegedly unlawful trades were "executed quietly and efficiently over a four day period through algorithms and dark pools and booked into two firm accounts with very limited viewing access." The authors then argue that the case illustrates the possibility that a dark pool's "promise of confidentiality could entice traders to employ those systems for unlawful purposes." Relatedly, in April 2014, SEC Chair Mary Jo White noted that the agency has "a number of ongoing investigations as to practices" by dark pools. Another major policy concern over dark pools is whether having a significant portion of a security's trade volume executed in the pools harms the overall price discovery process in the security. Effective May 2014, FINRA rules require ATS to publicly report weekly trading volume information, specifically the number of securities trades (both equity and debt) within the ATS. FINRA has said the rules should enhance transparency in the dark pools by improving available information concerning specific stock prices and liquidity. HFT is conducted through supercomputers that give firms the capability to execute trades within microseconds or milliseconds (or, in the technical jargon, with "extremely low latency"). In practice, depending on the particulars of the trade, trading opportunities can last from milliseconds to a few hours. Generally, the traders that employ HFT strategies are attempting to earn small amounts of profit per trade. Some arbitrage strategies can reportedly earn profits close to 100% of the time, but many HFT strategies are based on the law of averages. Reports indicate such strategies might make money on only 51% of the trades, but because the trades are conducted hundreds or thousands of times per day, the strategies may still be profitable. HFT traders employ a diverse range of trading strategies that may also be used in combination with each other. Some analysis broadly categorizes these strategies into passive and aggressive trading strategies. Passive strategies involve the provision of limit orders, offers to buy or sell certain amounts of securities when certain designated share prices thresholds are met that have not yet been executed. Providing limit orders injects liquidity into the markets, which is considered an integral part of market quality. An example of this is the market making strategy described below. Aggressive HFT involves the provision of market orders or marketable (immediately executable) limit orders, which do not put liquidity into the markets and are said to result in the removal of liquidity-producing limit orders. Such strategies are said to include momentum ignition trading, described below. A number of observers say the aggressive form of HFT should be the central focus of public policy concerns over HFT because the passive form tends to result in price and liquidity improvements to HFT counterparties. A micro-market structure study of passive and aggressive HFT found that "a majority of HFTs consistently specialize either in … aggressive HFTs or … passive HFT [and that] [a]ggressive HFTs earn substantially higher returns than [p]assive HFTs—the average [a]ggressive HFTs earns an annualized alpha of 90.67%, while the average passive firm earns 23.22%—suggesting that there is a stronger profit motive for liquidity taking compared to liquidity provision." HFT strategies include Market making , which involves a firm providing liquidity by matching buyer and seller orders or by buying and selling through its own securities inventories if a market maker cannot immediately match buyers and sellers. Market makers earn a profit on the difference between the bid prices buyers are willing to pay for a security and the ask prices sellers are willing to accept. Some of this kind of HFT market making is reportedly driven by the HFT firm's receipt of so-called liquidity rebates (usually a fraction of a penny a share) provided by ECNs and exchanges for the limit orders that they post to those trading centers. Some argue that the subsidies help to ensure sustained market participation regardless of market conditions. Arbitrage trading , which involves profiting from price differentials for the same stocks that are traded on different market centers, such as the London Stock Exchange and the NYSE, or the same stock and its derivatives, such as stock options. Within this context, various HFT firms employ something called slow market arbitrage wherein the firms attempt to arbitrage minute price differences for stocks between various exchanges resulting from infinitesimal time differences in the trading prices that they report on the same securities, a practice described in Flash Boys . Pair arbitrage trading , which involves exploiting relative price discrepancies between closely related companies (like Home Depot and Lowes, for example). Momentum ignition strategies , which involve a proprietary trading firm initiating a series of orders or trades aimed at causing rapid up or down securities price movements. By establishing an early position, the proprietary trading firm is attempting to profit when it subsequently liquidates the position if it has succeeded at sparking the aforementioned price movements. Liquidity detection trading , which involves the use of computer algorithms to identify large institutional orders that sit in dark pools or other stock order trading venues. HFT traders may repeatedly submit small-sized exploratory trading orders intended to detect orders from large institutional investors. The process can provide the HFT trader with valuable intelligence on the existence of hidden large investor liquidity, which may enable the trader to trade ahead of the large order under the assumption that the large order will ultimately move the market's pricing of the security to the benefit of the HFT firm. Flash Boys describes the phenomenon in which the broker-dealer owners of dark pools, such as Credit Suisse and Morgan Stanley, sold access to HFT firms to trade against orders in dark pools. The book asks "Why would anyone pay for access to the customers' orders inside a Wall Street bank's dark pool?" It then answers the question: "[A] customer's stock market order, inside a dark pool, was fat and juicy prey. The order was typically large, and its movements were especially predictable: Each Wall Street bank had its own detectable pattern for handling orders. The order was also slow, because of the time it was forced to spend inside the dark pool before accessing the wider market." Flash Boys also described a variation on this liquidity detection strategy called pinging. This involves HFT firms placing buy and sell offers in 100-share lots for every listed stock (the minimum order needed to get them to the front of the trading queue). They may then receive a ping or a series of pings, which means the order or orders have been executed. The pings alert the HFT firm to the presence of a large buy side investor's order. A HFT trader would then act to be the buy side order's counterparty at the first exchange, which part of the order arrived at. Milliseconds later when other parts of a buy side order reach other trading venues, the HFT firm is described as having outmaneuvered the buy side, thus reportedly enabling it to profitably take advantage of the buy side order. Some market participants have likened this pinging to a form of baiting in which institutional investors are enticed into divulging the intent behind their orders. However, there are some indications that may at least in part challenge this characterization of "predatory" liquidity detection HFT as being an aggressive strategy aimed at vulnerable buy side trading. For example, citing market data the agency has been receiving, SEC officials report evidence that the more traditional buy side was becoming at least as complex in trading patterns as the sell side firms that are involved in HFT. In addition, Blackrock, an asset manager and the nation's largest buy side firm, observed that "for institutional investors, there is risk that transaction costs may be inflated due to predatory HFT activity" but also noted that Blackrock "employs various strategies to mitigate predatory HFT activity wherever possible, leveraging technology, trading tactics and transaction cost analysis ." Major types of HFT practitioners include Traditional broker-dealers and now bank holding companies, such as Goldman Sachs, Morgan Stanley, and Deutsche Bank, that have conducted HFT strategies through their proprietary trading desks (outside of their client businesses); Independent proprietary trading firms like Getco, Tradebot, QuantLab, and Virtu; and Hedge funds such as Citadel, D.E. Shaw, SAC Global Advisors, and Renaissance Technologies. HFT takes place among several types of securities classes, including equities, options, derivatives, fixed income securities, and foreign currencies. In the domestic equities arena, the volume of HFT appears to have leveled off in recent years. Estimates from Rosenblatt Securities indicate that although as much as two-thirds of all domestic stock trades between 2008 and 2011 were executed by HFT firms, this share may have declined to about one-half. In addition, Rosenblatt estimates that whereas HFT firms accounted for a trading volume of about 3.25 billion shares a day in 2009, that figure had fallen to about 1.6 billion shares in daily volume by 2012. HFT profits also appear to be in decline. Rosenblatt estimates that HFT firms' average profits have fallen from about a tenth of a penny per share traded to a twentieth of a penny. The TABB Group, a securities market research firm that has done extensive research on HFT, estimates that domestic HFT revenues fell from approximately $7.2 billion in 2009 to about $1.3 billion in 2014. Commenting on this changing HFT landscape, Mark Gorton, founder of Tower Research Capital, a large HFT firm, observed: "Profits have collapsed. The easy money's gone. We're doing more things better than ever before and making less money doing it." As a number of HFT firms went out of business in 2012, Raj Fernando, chief executive officer and founder of Chopper Trading, a large Chicago-based firm that employs HFT strategies, reportedly observed, "The margins on trades have gotten to the point where it's not even paying the bills for a lot of firms. No one's laughing while running to the bank now, that's for sure." A number of factors have been cited for the diminishing profits, including the assertion that "the rest of the market has rushed to catch up technologically using smart order routers and other tools" and the claim that securities exchanges began charging HFT firms substantially more for the right to be connected to the exchange's data servers. Another explanation is that a few years ago, the promise of outsized profits resulted in HFT firms "flood[ing] the market," only to find later that "it became harder to make money—especially since trading volumes were steadily declining as investors pulled out of stocks and poured their money into bonds … [as they were] competing for shrinking profits against hundreds of other speed traders who were just as fast and just as smart" as HFT firms. Some researchers have found that "trading profits persistently and disproportionally accumulate to a handful" of HFT firms and that there is evidence that is "consistent with a winner-takes-all industry structure." In such an environment, they say the HFT practitioners that are the first to identify and exploit profitable trading opportunities are able to capture virtually all of the gains. As such, some research also found that new firms that attempt to begin HFT "earn substantially fewer profits and are more likely to exit" HFT. One researcher observed that the HFT industry appeared to be "dominated by a small number of fast" HFT firms. Technological and financial developments that have played roles in the emergence of HFT include technological advances in the speed and sophistication of securities trading-based computer technology and software and the falling costs of such technology; and for-profit market trading centers like Nasdaq, the NYSE, and BATS that have responded to demand by HFT traders by selling faster access to their trading infrastructure and direct connections to their trade data transmissions. In addition, several regulatory changes by the SEC have reportedly altered the securities market structure in ways that appear to have promoted the growth of HFT. Such SEC regulatory reforms include Decimalization . This protocol was adopted by the SEC in 2000 and directed stock exchanges to quote share prices in decimals instead of using the traditional fractions. This change reportedly made traditional market making less profitable, reduced the size of securities trades, and enhanced the demand for more sophisticated computerized trading devices. Regulation Alternative Trading System . This protocol was adopted by the SEC in 1998 and required alternative trading systems to comply with some of the regulatory obligations applicable to registered exchanges. The regulation appears to have contributed to the development and registration of ECNs. This helped to expand the number of trading centers for listed-stocks, further fragmenting the universe of market centers, a situation that appears to have aided certain HFT arbitrage strategies. Regulation National Market System (Reg NMS) . Adopted by the SEC in 2005, Reg NMS was a set of rules to improve domestic exchanges through improved price execution, quotes, and investor access to market data. Three key Reg NMS rules are (1) the order protection rule , which was aimed at ensuring investors receive the best buy or sell price when their order is executed by eliminating the ability to have orders traded through (executed at a worse price); (2) the access rule , which attempted to improve access to trade quotations from trading centers in the National Market System by requiring better market center linkages and lower access fees; and (3) the market data rule , which allocated revenue to self-regulatory-organizations (exchanges such as the NYSE) that promote and improve market data access by requiring market centers to route orders for execution to the market center that shows the best price, the NBBO. Various observers have asserted that Reg NMS contributed to today's fragmented trading marketplace, which includes 13 exchanges and about 40 dark pools that compete for business in listed stock trades. HFT firms often exploit those fragmented markets by moving quickly between trading venues. Since HFT's emergence in the early and mid-2000s, academics, financial market participants, and other observers have vigorously debated its costs and benefits. As discussed earlier, high-frequency traders use several distinct HFT strategies. Individual strategies may have markedly different effects on market quality and investors. According to one major asset manager from the buy side, which often finds itself in competition with HFT firms, [H]igh frequency trading encompasses a wide variety of trading strategies and care must be taken to differentiate predatory practices from practices that benefit end-investors.... "[E]lectronic market making" is a type of HFT that brings tangible benefits to our clients through tighter spreads and by delivering intermediation in a fragmented trading landscape. Additionally, HFT is difficult to distinguish from computer-based trading tools such as algorithms or smart order routers which are used by market participants to execute orders for institutional and retail investors. All are characterized by low latency and infrastructures and automated order management. But, electronic market making and algorithmic trading are both activities which are legitimate elements of market structure and help asset managers to achieve best execution for clients. Similarly, a SEC staff literature survey of academic research on HFT concluded, Perhaps the most noteworthy finding of the HFT Dataset papers is that HFT is not a monolithic phenomenon, but rather encompasses a diverse range of trading strategies. In particular, HFT is not solely, or even primarily, characterized by passive market making strategies that employ liquidity providing orders that rest on order books and can be accessed by others.… [T]he level and nature of HFT activity can vary greatly across different types of stocks. Below are descriptions of arguments in support of, in defense of, and critical of HFT. As the reader goes through these, it is helpful to keep in mind the aforementioned caveats on the disparate range of HFT strategies and the limitations of HFT research. In addition, although the critical arguments outnumber the supportive arguments, one should not necessarily interpret this to mean that HFT criticism trumps supportive HFT arguments; individual supportive arguments such as market quality include several key market attributes that contribute to the overall quality of a securities market. In turn, the level of market quality can have significant monetary implications for investors. Arguments in support of HFT or that might mitigate criticism directed at it include the following: Market Quality . The bid-ask spread of a security is essentially the difference between the price investors are willing to pay for it and the price other investors are willing to sell it for. Theoretically, lowered bid-ask spreads should reduce the costs of trading for all investors. Liquidity describes an investor's ability to promptly purchase or sell a security while having a minimal impact on its price. Price discovery is the process by which the value of a security is established through market supply and demand dynamics. Surveys of empirical research suggest that in both equity and foreign exchange markets, HFT appears to have narrowed bid-ask spreads, bolstered market liquidity, reduced some measures of price volatility, and improved the price discovery process. Research indicates that some HFT can involve a price reversal strategy in which the trader rapidly buys securities after price declines and rapidly sells them after prices increase. This process could arguably help detect price anomalies and help stabilize prices. The aforementioned SEC HFT literature survey concluded that the research it examined generally found that primarily passive as opposed to aggressive HFT strategies appear to have had a beneficial impact on market quality metrics such as reducing bid-ask spreads. Correspondingly, various observers assert that HFT appears to have contributed to improvements in general market liquidity and bid-ask spreads over the past decade or so. However, correlation is not necessarily causation; various changes in the equity market structure, including developments such as decimalization, Regulation NMS, and the general expansion in computer technology during the period likely also contributed to these improvements, and it is hard to disentangle their individual roles. Volatility . Volatility refers to the frequency and magnitude of asset fluctuations. A major concern with heightened market volatility is that it fosters investor uncertainty and erodes market confidence. Noting that some HFT strategies are designed to profit from volatile markets, research found that there have been historical instances in which HFT appears to have helped reduce volatility when interacting with volatile markets. Such a dynamic was reportedly observed during the particularly volatile months of September and October 2008. The aforementioned SEC HFT literature survey found that on average, passive as opposed to aggressive HFT strategies tended to reduce intraday volatility. However, the SEC survey also referenced studies that found that HFT was associated with increased intraday volatility, but the research did not disaggregate the effects of aggressive and passive HFT. HFT Has Not Been Proven to Foster U nduly F ast M arket s . Concerns have been raised about the rapidity of trading in today's securities market and how such fast speeds may reduce market transparency for traders. Using data from a robust market-data feed system known as Midas, a staff official with the SEC's Office of Analytics and Research Division of Trading and Markets observed that HFT may not be pushing the securities market to move at a problematically fast rate. According to the official, the data suggest that investors are generally able to access even the most short-lived quotes. Focusing on the S ell S ide's U se of HFT- R elated S trategies M ay B e O nly a P art of the P icture . In a March 2014 speech, a SEC official with the Office of Analytics and Research Division of Trading and Markets spoke of some analysis of market data that the agency was receiving. Although the general tendency is to associate HFT-related strategies with the sell side, the analysis reportedly suggested to the SEC that the more traditional buy side was becoming at least as complex in trading patterns as the sell side firms involved in HFT. This provides a counterpoint to the narrative in Flash Boys and other observations that HFT significantly disadvantages institutional investors. To the extent that some have suggested HFT can financially harm institutional investors, this could imply that at least some of them may be able to improve their ability to trade with HFT firms on more equal terms. By contrast, key concerns and criticisms of HFT include the following: Lack of Dependable Liquidity . Some observers are concerned that overall market liquidity could deteriorate if HFT firms were to quickly and unexpectedly incur large losses. An attendant worry is that the liquidity provided by high-frequency trades is often not qualitatively comparable to the liquidity provided by traditional market makers. The high-frequency trades are said to generally lack depth because of the relatively small size of HFT quotes (offers to buy or sell certain securities) and the fact that HFT firms have no affirmative market-making obligation. In addition, a number of market participants contend that HFT firms tend to focus their trades and thus the provision of liquidity on the securities of companies with large capitalizations, often ignoring the stocks of smaller capitalized companies. Among other things, HFT proponents, however, cite analysis that examined two months' worth of trading in the United Kingdom. The study found that HFT traders provide liquidity when spreads tend to be wide, demand liquidity when spreads tend to be narrow, and generally smooth out liquidity over the long run. Phantom Liquidity . A separate criticism of HFT is that the liquidity provided is often fleeting and has been alternatively dubbed "phantom liquidity" or "flickering quotes." Several factors are said to underlie this, including the speed differences between trading venues and rapidly changing order book dynamics due to HFTs' penchant for posting and then canceling orders. As a consequence, the available liquidity for given securities may often be less than what appears to be the case. Some institutional investors are said to have difficulties evaluating whether or not posted liquidity is transient. Such challenges have led to concerns that HFT may have helped increase the total trading costs of institutional investors. Former SEC Chair Mary Schapiro noted that although there may be justifiable explanations for many cancelled orders to reflect changing market conditions, the SEC and other regulators are looking carefully at certain practices in this area to assess whether they violate existing rules against fraudulent or other improper behavior [and that] we also must understand the impact this activity has on price discovery, capital formation and the capital markets more generally, and consider whether additional steps such as registration and trading requirements are needed to ensure that these and other practices are used only in ways that foster—not undermine—fair and orderly markets. Others, however, argue that a significant number of the cancellations may reflect logical market responses in which a HFT firm pulls back submitted quotes that do not get "a favorable execution," perhaps because "conditions didn't move in … [the firm's] favor … when [it] put the order in." A corollary perspective questions the notion that high cancellation rates are symptomatic of low-quality liquidity. It argues that elevated cancellation rates reflect robust competition between market makers, including HFT firms, that are simply vying for trade execution priority as part of the securities trade price determination process. In April 2014, an official with the SEC's Office of Analytics and Research spoke about the results of some analysis of 2013 market data. The analysis found that although about 39% of all canceled orders were initially active for one-half of one second or less, about 27% of executed trades were the result of another trader accessing posted orders within that window of time. The office also found that although 23% of all cancellations occurred within 50 milliseconds, approximately 19% of all the monitored trades took place within that time frame. After evaluating these findings, the official suggested there were several potential takeaways, including (1) the speed of canceled orders and the speed of executed trades have been relatively aligned, (2) the degree to which stock exchanges and non-dark pool ATSs have been dominated by HFT may have been overstated by some, and (3) regulation aimed at reducing high cancellation rates would also have to reduce the trading speeds of liquidity "takers." Front -R unning . Front-running is a form of illegal insider trading. CRS Report RS21127, Federal Securities Law: Insider Trading (pdf), by [author name scrubbed], observes that insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company's securities and makes a profit or avoids a loss. The Securities Exchange Act of 1934 and the Insider Trading Sanctions Act of 1984 have provisions which forbid insider trading. One provision of the 1934 Act requires the disgorgement of short-swing profits by named insiders. The 1934 Act's general antifraud provision has been used many times to sanction insider trading. FINRA, the frontline regulator of broker-dealers, describes its prohibition on illegal front-running: [N]o member or person associated with a member shall cause to be executed an order to buy or sell a security or a related financial instrument when the member or person associated with the member causing the order to be executed has material, non-public market information concerning an imminent block transaction in that security, a related financial instrument or a security underlying the related financial instrument prior to the time information concerning the block transaction has been made publicly available or has otherwise become stale or obsolete. As reported earlier, the DOJ and the FBI are among a number of entities involved in examining whether HFT traders may have been engaged in front-running and insider trading. Two divergent perspectives on whether HFT traders illegally front run follow: [A] recent University of Michigan report claims "[b]y anticipating future NBBO, an HFT algorithm can capitalize on cross-market disparities before they are reflected in the public price quote, in effect jumping ahead of incoming orders."… What's actually happening behind the scenes may be frustratingly complicated, but it's not … illegal.… HFTs generally use direct connections to exchanges in order to post bids and offers and collect market data, rather than relying on the centralized SIP feed. This is because the SIP feed is unacceptably slow.... When an order is placed, it takes some time to be reflected in the NBBO. But that order is already in the market before the HFT can see it, even on the direct feed, by definition. HFTs never know what a customer's order is before it's in the market. HFTs have no customers. HFTs cannot front-run anyone. In April 2014, when asked of her views on whether HFT firms may be involved in illegal front-running, SEC Chair Mary Jo White said some may be erroneously conflating the ability of some HFT firms to conduct trades based on their quick reactions to "public information" with illegal front-running wherein traders have "early access to order information." If, however, federal prosecutors go forward with cases involving HFT front-running, an article in the New York Times spoke of the legal challenges they could encounter: The cornerstone of insider trading law is identifying a misuse of confidential information that constitutes a breach of a fiduciary duty.… High-frequency traders get the best prices by stepping ahead of others in having their trades executed first, making the transactions of other investors a bit less profitable. This sounds like front-running, in which a broker buys or sells before execution of a client's order to take advantage of a more favorable price.... One way in which high-frequency traders try to gather information about the flow of orders is by "pinging" different markets. That means a firm sends multiple orders out into the markets to determine whether any will be filled, which can give an indication of the direction of a stock.... Can this be the basis for pursuing charges against high-frequency trading firms? The problem with proving market manipulation is that the government must show intent to either artificially affect stock prices or to defraud others. High-frequency traders send out orders to learn the best price so they can trade ahead of others, not necessarily to drive the price up or down. In fact, they usually do not want the price to move until after they have traded. Proving intent to defraud requires purposeful or reckless conduct to deprive the victim of property. That standard would be difficult to prove when an algorithm makes the investment decision in the blink of an eye and the firms have no real interest in the underlying value of the companies whose shares they trade. Two-Tiered Markets T hrough Differential Access to Market Center Trading Infrastructure . HFT firms often pay for the right to access two pieces of technology for market trading centers like the NYSE, Nasdaq, and BATS: (1) direct access to market center overall trade data and (2) being able to locate a trader's servers in close proximity to a market center's trade order dissemination servers, known as colocation . The direct data feeds give subscribers real-time market quote and trading data fractions of a second before the data reach other investors through the conventional aggregate real-time quote and trading data feeds provided by the Consolidated Tape Association/Securities Information Processor (CTA). Getting early access to market data via direct feeds reportedly gives HFT firms an earlier peek at the CTA data, which relies on data from all market center securities and must be aggregated and then normalized and thus lags direct data feeds from individual trading centers. Colocation permits HFT traders to minimize transmission times through paying securities exchanges for the right to place their servers in the same data centers in which an exchange's or an ECN's market data systems are located. This is said to enable HFT firms to reduce the data transmission time between their own technology systems and the systems operated by the market centers. By some accounts, the pairing of direct access feeds with colocation can provide HFT traders with a fraction of a microsecond advantage over conventional traders that depend on the CTA feeds. This has led to charges that HFT firms are unfairly advantaged vis-à-vis other traders that, it is said, are thus competitively disadvantaged. Some argue that an advance information advantage of just a fraction of a microsecond can be "enough to get a better price, even for a later-placed order." Others, however, say securities markets have always been characterized by differential or tiered access to securities trades, going back to the time when floor traders had favored access to stock orders. Moreover, they note that the benefits of direct feeds and colocation are available to anyone willing to pay for the services, albeit at prices that may be beyond the reach of many traders. Still others argue that "the cost-benefit tradeoff for investing in these tools and capabilities is likely to be much more favorable to organized, institutional, strongly capitalized high-frequency traders, given that the proportional increase in HFT profits from minute improvements in trading speed is potentially far greater across very large volumes of trades per day rather than for long-term, low-frequency investors." Two-Tiered Markets T hrough Customized HFT Order Types . Market centers, including the NYSE, Nasdaq, BATS, and Direct Edge, are reportedly involved in customizing order types to fit the needs of their HFT firm clients. The order types give HFT traders different ways to interact with the securities market and, as one trader from an HFT firm reportedly said, such customized trading protocols "optimize the order type for a given trade…. [S]ometimes you'll want to pay the [liquidity provision] rebate and sometimes want to take [receive] it—but what's really essential is to jump to the head of the queue.… You pay for it, but you jump to the head." Market centers say they do not favor one group of clients over others and such orders are available to all customers. A NYSE official, however, reportedly acknowledged that "we're always competing for market share, so we try to create products that will attract more volume. We listen to clients and see how orders can help their execution strategy." Research published by Barclays Bank in early 2013 reportedly detailed 34 order types at the NYSE and 30 at BATS, for example. The order types are apparently often combined, so thousands of order types are said to effectively exist. In April 2013, Haim Bodek, a former HFT practitioner and now a critic of the order types, praised the industry for what he sees as moving in the right direction with respect to the order types. He observed that market centers "have been cleaning up their act, tweaking order types combinations to remove problems, and expected them to have eliminated all perverse orders by the end of 2014." Meanwhile, the SEC has reportedly been reviewing the process of providing customized order types with respect to which order types are developed, approved, and monitored. Market Manipulation . Another criticism is that HFT firms may engage in potentially manipulative strategies that involve the use of quote cancellations. FINRA, the frontline broker-dealer regulator, has observed that although many HFT strategies are legitimate, some are not and may be used for manipulative purposes. Given the scale of the potential impact these practices may have, the surveillance of abusive algorithms remains a high priority for FINRA.... [A]reas of concern [include] … the use of so-called "momentum ignition strategies" where a market participant attempts to induce others to trade at artificially high or low prices. Examples of this activity reportedly include layering and spoofing strategies. Layering involves the placement of multiple, often large orders that are not meant to be executed and that are subsequently rapidly canceled. The aim is to create artificial levels of supply and demand that drive the price of stock up or down. After this, "genuine" orders are transacted that benefit from the artificially inflated or reduced securities prices. In spoofing, a HFT firm places large limit orders to sell that are above the best asking price with the intention of quickly canceling them if the price moves upward so they will not be executed. HFT firms allegedly hope that during spoofing the size of the sell orders will scare other traders into selling at a low price, potentially enabling the HFT firm to profit from the bargain prices. The causes and effects of spoofing are said to be similar to certain human-based market manipulations such as pump-and-dump and bear raid schemes. The SEC and the CFTC have reportedly prosecuted a number of alleged spoofing offenders. However, detecting spoofing is said to be both difficult and complicated. Small I nvestors M ay B e H armed by HFT . Among other things, Flash Boys alleges that HFT tends to profit at the expense of small investors: The simple retail stock market order was, from the standpoint of high-frequency traders, easy kill.… High frequency traders sought to trade as often as possible with ordinary investors, who had slower connections … because the investors themselves had only the faintest clue of what was happening to them, and also because the investors, even big, sophisticated ones, had no ability to control their own orders. When, say, Fidelity Investments sent a big stock market order to Bank of America, Bank of America treated that order as its own—and behaved as if it, not Fidelity, owned the information associated with that order. The same was true when an individual investor bought stock through an online broker [like] … E*Trade or TD Ameritrade or Schwab. [T]he role of the big nine Wall Street banks that controlled 70 percent of all stock market orders was more complicated.… [They] controlled not only the orders, and the information value of those orders, but dark pools in which those orders might be executed.… All of them tended to send the orders first to their own dark pools before routing them out to the wider market. Inside the dark pool, the bank could trade against the orders themselves, or they could sell special access to the dark pool to high frequency traders. With respect to empirical research on HFT and small investors, a micro market structure HFT analysis by Baron, Brogaard, and Kirilenko found that on the securities contract level, fundamental traders, which are likely to be institutional investors, incurred the least cost to HFT and small traders, which are likely to be retail investors, incurred the most. Given that this analysis involved individual firms, it is unclear how HFT may affect small investors in the aggregate. Blackrock, the nation's largest buy side firm, spoke to that issue, stating that small or retail investors are generally not affected by HFT: "[F]or virtually all retail investors, we expect there should be no negative impact on their trades from HFT; small orders will under normal market conditions get filled immediately at the NBBO." Another argument is that the majority of retail orders do not go to stock exchanges where they could encounter HFT. Instead, the vast majority of such orders are said to be filled internally within large wholesalers, including UBS, Citadel, KCG (formerly Knight Capital Group), and Citigroup, in a process called internalization . Internalizers' algorithms are said to generally be in competition among themselves to capture those orders and then match them internally. The internalizers are thus able to avoid paying fees for sending the orders to exchanges, savings which are reportedly passed on to the retail investor. In 2012, Canadian stock market regulators increased the fees on market messages sent by all broker-dealers, such as trades, order submissions, and cancellations. The fee had a disproportionately large effect on the activity level of high-frequency traders because they transmit more messages than do other traders. On the Toronto Stock Exchange, researchers found that the number of messages fell by 30%. Average bid-ask spreads rose by about 10%. The study's authors concluded that retail investors saw their aggregate transaction costs remain unchanged, although their intraday trading losses grew with the presumed fall in HFT activity. Retail investors that engage in day trading, which entails significant trading over the course of a trading day, may be more affected by HFT. By contrast, "buy and hold" investors that trade sparingly are less likely to be affected by HFT, according to this study. However, it is important to note that many retail investors interact with the market via institutional investors such as pension and mutual funds. The extent to which retail purchasers in mutual funds and pension funds may be affected by HFT is addressed below during the discussion of the impact of HFT on institutional investors. HFT M ay H arm I nstitutional I nvestors . This report has discussed the use by HFT firms of liquidity detection strategies particularly aimed at buy side firms, tactics that some have described as predatory. There are indications that at least some on the buy side may be getting more adept at handling aggressive HFT. A micro market structure analysis of HFT by Baron, Brogaard, and Kirilenko identified four basic types of HFT trading counterparties: (1) fundamental traders, said to likely be large institutional investors; (2) non-HFT market makers; (3) small traders, said to likely be retail traders; and (4) opportunistic traders, said to likely be arbitrageurs, small asset managers, and hedge funds. Among other things, the study found that on a per contract basis, the fundamental traders incurred the least cost to HFT and small traders incurred the most. The analysis is, however, limited to the micro realm of securities transaction and is not an aggregate analysis. More broadly, institutional investors' exposures to HFT may vary, with index mutual funds likely among some of the least affected. Institutional investors' perceptions on how HFT affects them can also vary. For example, in 2014, the ConvergEx Group LLC, which provides brokerage and trading-related services, surveyed people who work for money managers such as mutual funds, hedge funds, broker-dealers, and banks with regard to their views of HFT. With 233 of the 357 total respondents working for the buy side's money managers and hedge funds, the survey found that just over 51% of the total respondents considered HFT to be either harmful or very harmful. Officials at the Vanguard Group, one of the nation's largest mutual fund complexes, expressed a rather optimistic view of HFT, reportedly observing: "We believe the majority of 'high-frequency traders' play within the rules governing our current equity markets.… We believe a majority of 'high-frequency traders,' which is not a defined term, add value to our current structure by 'knitting' together today's fragmented market centers." AQR Capital Management is an institutional investor that largely manages long-term investment strategies. Media sources report the views of officials at the buy side firm on the direct impact of HFT: We think it helps us. It seems to have reduced our costs and may enable us to manage more investment dollars. We can't be 100% sure. Maybe something other than HFT is responsible for the reduction in costs we've seen since HFT has risen to prominence, like maybe even our own efforts to improve…. One of the biggest headline-grabbing worries about HFTs is how fast the trades are conducted. The speed sounds unnecessary, dangerous and possibly nefarious. "These guys care about the speed of light!" For the most part, though, HFTs don't need that super speed to get ahead of the little guy or even institutional traders, but to get ahead of other HFTs. Some of the loudest complaints about high-frequency trading come from the slower traders who used to win the races. While we like HFTs on balance for reducing our clients' trading costs, some may push the envelope at times. Some of them may negotiate advantages that might be bad for markets. Worse, these arrangements tend to be little understood by the broader range of market participants. One of the challenges that buy side firms may have in ascertaining how HFT affects them is simply the complexity of the electronic markets. The nation's largest buy side company, asset manager Blackrock, observed, HFT is difficult to distinguish from computer-based trading tools such as algorithms or smart order routers which are used by market participants to execute orders for institutional and retail investors. All are characterized by low latency and infrastructures and automated order management. But, electronic market making and algorithmic trading are both activities which are legitimate elements of market structure and help asset managers to achieve best execution for clients. Having said that, Blackrock observed that it was firmly opposed to predatory HFT practices which seek to manipulate the market or disadvantage end-investors. These practices constitute market abuse and should be treated as such in law. However, "high frequency trading" encompasses a wide variety of trading strategies and care must be taken to differentiate predatory practices from practices that benefit end-investors. For example, "electronic market making" is a type of HFT that brings tangible benefits to our clients through tighter spreads and by delivering intermediation in a fragmented trading landscape. From an empirical standpoint, the aforementioned SEC HFT literature survey referenced two studies that suggested that some HFT firms may employ order anticipation and momentum ignition strategies. The survey then observed that such strategies can potentially exacerbate institutional investor transaction costs and contribute to extreme volatility events. As noted earlier, in the study that looked at the impact of the imposition of messaging fees on the Toronto Stock Exchange, the fees appear to have disproportionately curbed HFT. However, the study found that neither the aggregate transaction costs nor intraday returns of institutional traders were significantly impacted by the trading slowdown. Another study found that more pronounced HFT activity on the Nasdaq was associated with higher trade implementation costs for institutional investors. However, it did not distinguish between the effects of aggressive and passive HFT. Investor Confidence . HFT may diminish investors' confidence in the markets. Such concerns were illustrated in a letter released by officials at the Charles Schwab Corporation, a major securities brokerage firm, which described HFT as "undermining investor confidence in the fairness of the markets." Two article excerpts discuss the complicated issue of investor stock market exposure and confidence and the hard-to-quantify effect of HFT on these: The Investment Company Institute has been polling investors every few years about their exposure to the stock market. This survey is a big one—responses from more than 4,000 households in the latest poll—and it doesn't take much to be counted as a stock-market participant. If one owns individual stocks, equity mutual funds or exchange-traded funds, hybrid funds or variable annuities, that person is grouped in the stock-ownership category. Yet equity ownership in the U.S. peaked more than a dozen years ago, in the aftermath of the tech-bubble collapse. The number of stock-owning households has dropped from 57 million back then to 54 million last year. More tellingly, the proportion of equity-owning households has tumbled from 53 percent to 44 percent, meaning investors clearly are in the minority. Many factors might explain this disconnect. One is that the population is graying and thus should be getting a bit more risk-averse. Also, some people likely have had to tap into their investment portfolios because of job losses or employment uncertainty. Others have focused on repairing their personal balance sheets by paying down debt. A February [2014] survey of affluent investors by Wells Fargo Private Bank found widespread wariness even among this well-off group. One-fifth of the respondents indicated 'nothing would get them to add more stocks to their portfolio,' said Dean Junkans, chief investment officer for the private bank, in a statement. Only 15 percent of respondents said they 'trust' the stock market in a recent poll of consumer confidence by the University of Chicago and Northwestern University. People are two and half times more trusting of banks.… This skittishness provides a fertile backdrop for media reports that sometimes feed the fear. A case in point was the 60 Minutes segment … about the stock market being rigged by firms that practice ultra high-speed, high-frequency trading…. "Reports like this one provide an excuse some investors may use to justify avoiding the stock market.… The stock market arguably offers a more level playing field than ever before, with lower trading costs … and access to more asset classes and investment vehicles," [observed Jeremy Kisner of Surevest Wealth Management]. The last few years can only be characterized as market chaos where market confidence has been mortally wounded. Along with the macroeconomic issues, what we saw was a market of intense volatility where Main Street investors, who number 90 million strong, pulled their money out of equities and either put it in their mattresses or into low-yielding instruments. While a number of factors were at play, the growing role of high-frequency trading and its ability to take advantage of the volatility and inefficiencies in the market cannot be dismissed." Systemic R isk . Some research has concluded that algorithmic trades in general tend to be correlated, which suggests that some HFT strategies may not be as varied as those employed by human traders. A potential concern here is that because of this correlation, shocks that hit a small number of very active HFT traders could detrimentally affect the entire market. Another criticism is that independent HFT traders that are not part of larger conglomerates are often described as being lightly capitalized, a factor that could exacerbate their financial risk. Additional concern exists that the ability of many HFT traders to handle the corresponding counterparty risk in such scenarios could be challenged because these traders tend to turn over their positions many times a day and securities trade clearing systems tend to operate at a much slower rate. In combination, these aspects of HFT have led to concerns that under certain scenarios the firms could help generate systemic market disruptions. Similarly, the Treasury Department's Office of Financial Research (OFR) has identified the "operational risk from automated trading systems, including high-frequency trading" as one of a number potential threats to financial stability that it is monitoring. HFT A lleged to H ave H elped F oster " R igged" S tock M arkets . In Flash Boys , while exploring the significant role played by HFT, Brad Katsuyama, a securities trader and a principal figure in the book, claimed that "the stock market at bottom is rigged." Fleshing out this theme of rigged markets, Michael Lewis wrote, Financial intermediation is a tax on capital; it's the toll paid by both the people who have it and the people who put it to productive use.… Technology should have led to a reduction in this tax.… [T]he ability of investors to find each other without the help of some human broker might have eliminated the tax altogether. Instead, this new beast [HFT] rose up … and the tax increased by billions of dollars. The term "rigged" was not defined, but several financial market observers have responded to the characterization. According to the testimony of SEC Chair Mary Jo White, "The markets are not rigged. The markets—the U.S. markets are the strongest and most reliable in the world. That—you know, that's not to say they're perfect." One nuanced non-regulator response to the "rigged" charge is For individual traders (i.e., traders not dealing in amounts big enough to move market prices), HFT has proven to be beneficial through compressed bid-ask spreads along with reduced trade execution times. For larger traders, the effects are more ambiguous. They also benefit from smaller spreads, but they can be disadvantaged by the front running by HFT firms. Among these institutional investors are fund providers (such as mutual funds and exchange traded funds). To the extent that front running results in additional trading costs, this activity could cause a drag on fund returns, and thus small retail investors (those investing in those funds) can share in this pain as well. There has not been sufficient research on high-frequency trading to give a definitive answer to whether or not the benefits of smaller spreads outweigh (or are outweighed by) the costs of front running, so it is difficult to identify the net effect of HFT. However, calling markets "rigged" seems a bit extreme. An additional area of focus with respect to HFT involves concerns that HFT may play a contributing role in extreme market movements. Such concerns intensified after the Flash Crash of 2010 and have continued with observations of ongoing mini-flash crashes. By the afternoon of May 6, 2010, the Dow Jones Industrial Average (DJIA) had already fallen by more than 300 points on the day. It then began a precipitous decline of nearly 700 points in a few minutes, amounting to a roughly 1,000 point drop on the day at that point. Twenty minutes later, the market rebounded, regaining most of the 700 point drop on the DJIA. The earlier 1,000 point decline was historical, representing the largest one-day decline in the history of the DJIA. The whole event has been dubbed the Flash Crash . On September 30, 2010, the SEC and the CFTC issued a joint report, Findings Regarding the Market Events of May 6, 2010 , which identified the agencies' consensus view on the chain of events that led up to the Flash Crash. The report described "a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral." The report also detailed how an undisclosed large institutional trader executed that single trade, which consisted of a large sell order worth about $4 billion through an automated execution algorithm (but not through HFT) at a time when the markets were already extremely stressed. The order of E-Mini S&P 500 (a stock market index futures contract traded on Globex, the Chicago Mercantile Exchange's [CME's] electronic platform) contracts initially exhausted available buyers, including high-frequency traders, which began to aggressively sell them. The report, which largely focused on market structure and liquidity concerns, did not place blame on HFT for the crash. Rather, it raised questions about the ability of HFT to provide continuous market liquidity. The report also observed that HFT traders "in the equity markets, who normally both provide and take liquidity as part of their strategies, traded proportionally more as volume increased, and overall were net sellers in the rapidly declining broad market along with most other participants." It nevertheless noted that there were some high-frequency traders that remained active traders throughout the event. At the official release of the report, Brooksley Born, a member of the committee that authored the Flash Crash report and a former chairman of the CFTC, observed, "Algorithmic trading, high-frequency trading poses some special problems in terms of orderly trading on the markets. The high percentage of order cancellations I think could well be considered a disruptive trading practice that should be looked at very carefully by the commissions." Baron, Brogaard, and Kirilenko conducted another examination of the crash to help determine the role played by HFT firms. That study found that HFT did not trigger the crash but that the firms' responses to the abnormally large selling pressure exacerbated market volatility. The CME Group conducted an additional study of the incident. That report criticized the joint SEC and CFTC report, saying that the alleged precipitating E-mini S&P 500 trade was a small part of the volume of related trades at the time and that traders thus paid little attention to it. Consequently, the CME Group report argued that the timing of the trade was at odds with the notion that it was the cause of the crash. In the aftermath of the Flash Crash, several observers, including officials from the CFTC and Nanex, a market data provider, have said that so-called mini-crashes, significant and precipitous drops in the prices of individual securities that do not reach the level of the 2010 crash, appear to be fairly common and an ongoing feature of the market. Observers have suggested that a contributing factor behind some of these mini-crashes is HFT. SEC officials have responded that those who "try to use instances of mini-flash crashes as clear and incontrovertible evidence of the problems with high-frequency trading, high-speed markets, fragility, and impending doom ... may be looking in the wrong places." Instead, the officials attribute such developments to various kinds of human errors, including inadequate risk management practices in which there has been a "lack of checks and balances." In 2010, the SEC released its first comprehensive exploration of the public policy implications of HFT. The document, The SEC Concept Release on Equity Market Structure (the release), was essentially aimed at establishing the conceptual framework for a potentially wide-ranging review of the nation's equity market structure. The release sought public comment on a range of issues that had arisen after SEC implementation of Regulation NMS. Among the key areas of discussion were the various implications of HFT. In the concept release, the SEC requests public comment on literally hundreds of questions on equity market structure performance (in particular for "long-term investors"), HFT that would provide a broad review of the equity market structure with respect to concerns such as the following: Is the current highly automated, high-speed market structure fundamentally fair for other investors? What types of strategies are used by high-frequency traders, and are the strategies beneficial or harmful to other investors? Are HFT trading strategies sufficiently harmful that the SEC should consider regulatory initiatives aimed at alleviating those damages? Does colocation give proprietary trading firms an unfair advantage over other investors and, if so, should the firms that use the services be subject to any specified trading obligations? Does colocation provide benefits to long-term investors as well as overall market quality? Does colocation enable liquidity providers to operate more efficiently and thereby increase the quality of liquidity? Does HFT pose a risk to the integrity of the equity market structure? Should all proprietary trading firms be required to register as broker-dealers and become members of FINRA so that their operations are subject to full regulatory oversight? Does the current regulatory regime sufficiently address various concerns related to the trading activity of proprietary trading firms and their trading strategies? In the aforementioned June 2014 speech, SEC Chair Mary Jo White spoke of several specific HFT-related prospective regulatory initiatives. Meanwhile, the SEC has already adopted a number of regulatory and programmatic initiatives intended to help fulfill the agency's statutory mandate to provide for investor protection and maintain fair, orderly, and efficient markets. These initiatives, which could also help monitor HFT developments that could have problematic market impacts or mitigate potentially troublesome and immediate market impacts of HFT, include MIDAS . In 2013, the SEC adopted MIDAS, the Market Information Data Analytics System. The trade monitoring system captures all orders posted on the national exchanges, all modifications and cancellations of those orders, all trade executions of those orders, and all off-exchange executions, providing the agency with what some officials called "an unprecedented aggregation of trading information data." MIDAS will reportedly help the agency monitor and understand mini-flash crashes or ascertain potentially troublesome or illegal behavior, for example by alerting the agency to excessive order cancellations. The Consolidated Audit Trail . Adopted by the SEC in 2012, the Consolidated Audit Trail requires all domestic stock exchanges and other markets to create a uniform system for tracking the life cycle of all orders and trades. With the audit trail in place, the SEC is reportedly able to receive real-time access to most of the data needed to reconstruct a market dislocation such as a flash crash. Regulation SCI . In March 2013, the SEC proposed a new set of rules, Regulation Systems Compliance and Integrity (Regulation SCI), that would create new, enforceable standards for maintaining and testing the trading systems used by securities exchanges and brokers. The rules, which have not yet been adopted, would replace the existing, voluntary guidelines that pertain to such market trading technology. Large Trader Reporting Rule . The Large Trader Reporting Rule was adopted by the SEC in 2011. It imposes certain SEC registration and reporting requirements on large traders, which it defines as entities that trade either 2 million shares or $20 million during any calendar day or 20 million shares or $200 million during any calendar month. The SEC has said that the reporting regime will help it to identify and obtain certain baseline trading information about traders that are involved in substantial amounts of trading activity. That information will then reportedly aid the agency in (1) assessing the impact of large trader activity on the securities market, (2) reconstructing trading activity following periods of unusual market volatility, and (3) analyzing significant market events for regulatory purposes. Naked Access . Before the Flash Crash, many HFT firms gained special access to securities exchanges through "naked access," a process through which SEC-registered brokers allowed the firms to basically piggyback on their direct access to securities markets. The arrangement enabled the firms to reduce their trade latency while avoiding the various risk checks and capital requirements with which they would have needed to comply had they been registered brokers. In 2010, the SEC adopted a new rule aimed at the registered brokers, Rule 15c3-5, which essentially prohibited HFT firms from receiving naked access. New Circuit Breakers . In 2012, the SEC adopted a "limit up-limit down" mechanism to replace the single-stock circuit breaker rules. Because single-stock circuit breakers are triggered after a trade occurs at or outside of the applicable percentage threshold, circuit breakers have been triggered by erroneous trades. The new limit up-limit down mechanism is intended to prevent trades in individual securities from occurring outside of a specified price band, which will be set as a percentage level above and below the average price of the stock over the immediately preceding five-minute trading period. The price limit bands are 5%, 10%, 20%, or the lesser of $0.15 or 75%, depending on the price of the stock. The bands will be more generous during the often more volatile opening and closing periods of the trading day, during which they will double in size. In April 2014, the European Parliament adopted the European Union's (EU's) first common HFT-related regulatory initiative. The development's importance for domestic markets is twofold: the HFT-related regulatory initiatives may provide a model for U.S. regulators, and some assets that might be potentially affected by the EU regulations, such as foreign exchange securities, might also be traded in the United States. The Markets in Financial Instruments Directive (MiFiD) has been in force since 2008 and is the framework for the regulation of the EU's financial markets. The EU is now involved in implementing an updated MiFiD known as MiFiD II, which EU officials say is aimed at establishing "a safer, sounder, more transparent and more responsible financial system." On April 15, 2014, the EU Parliament adopted various parts of MiFiD II, including a regulatory framework aimed at increasing transparency in equity, bond, and derivatives markets and a regulatory framework aimed at improving conditions for competition in the trading and clearing of financial instruments. MiFiD II also defines HFT as algorithmic trading that relies on computer programs to determine the timing, prices , or quantities of orders in fractions of a second , and it included the first ever EU-based regulatory curbs on such activities. Under the MiFiD II regulatory frameworks adopted by the European Parliament, "any investment firm engaging in such trading will have to have effective systems and controls in place, such as 'circuit breakers' to stop trading process if price volatility gets too high [and] to minimize systemic risk, the algorithms used will have to be tested on venues and authorized by regulators.... [In addition, the] records of all placed orders and cancellations of orders would have to be stored and made available to the competent authority upon request." Explaining the reasoning behind the HFT regulations, European Commissioner for Internal Markets and Services Michel Barnier said, "The dramatic increase in the speed and volumes of order flows can pose systemic risks. The new rules ensure safe and orderly markets and financial stability through the introduction of trading controls, an appropriate liquidity provision obligation for high-frequency traders pursuing market-making strategies, and by regulating the provision of direct electronic market access." As stated earlier, the prospective HFT regulations are part of MiFID II, which is an EU Directive. EU Directives need to be adopted separately by the individual EU members, a process that could take some time. In addition, the individual country versions of MiFID II may ultimately vary from that which was adopted at the EU level. Below is a discussion of a number of the potential HFT regulatory ideas that have become part of the public policy discourse on the trading. Order Cancellation Fees . Some observers argue that by imposing penalty charges for excessive order cancellations, HFT traders would be discouraged from posting orders they do not intend to execute or using cancellations as part of manipulative strategies like spoofing. Others respond that order cancellation fees would likely reduce the provision of liquidity, thus reducing market depth. Nasdaq currently imposes such fees, a levy that is primarily described as a means of preventing an overload of exchanges' computer systems and reportedly discouraging only the most blatant use of excessive cancellations. Some observers say it is probably too early to gauge the Nasdaq fee's impact. Minimum Order Exposure Times . Under this scheme, submitted securities orders could not be canceled for some minimum duration, for example 50 milliseconds. Some argue that such a requirement, an idea proffered by SEC Chair Mary Jo White, would be another means of curbing what many perceive to the problematic and excessive use of canceled orders by HFT firms. Detractors, however, argue that such a protocol would have an asymmetric impact, affecting liquidity providers but having no effect on liquidity demanders. A major concern here derives from the premise that much of the alleged benefits from HFT are due to the fact that the firms are efficient providers of liquidity. As a consequence, it has been argued that the introduction of a minimum exposure time protocol would have an adverse market impact. Batch Auctions . One concern of HFT detractors is that conventional providers of market liquidity, including various trading firms, may suffer when securities prices fluctuate excessively due to the presence of HFT. Moreover, they argue that the status quo tends to reward HFT traders that continuously flood the securities market with orders because the emphasis is on speed over securities pricing. As a result, they argue that quotes of conventional liquidity providers may often not get matched, resulting in potential losses to such liquidity providers. Some theorize that to accommodate those losses, such liquidity providers may tend to widen their bid-ask spreads, which would cause investors to pay more to trade. Orders to buy or sell securities at certain prices are governed by price-time priority, in which the best prices are executed first. When two identical offers arrive, as tracked by a continuous limit order book, the first order to arrive is the first to be executed. However, some researchers claim to have evidence that continuous limit order books do not always work in continuous time. Normal pricing relationships between related securities that exist for what they call "human time intervals" of a second, minute, or hour may reportedly collapse when trading is done at the millisecond trading speeds of HFT. To remedy this situation, there is a proposal that exchanges run what are called batch auctions at frequent intervals, such as once per second. Under this protocol, exchanges would collect and aggregate orders to trade securities and then execute them at the price at which the most bids and offers match, reconciling demand and supply. Proponents assert that many exchanges already run batch auctions when they open their trading day. More importantly, the idea's proponents argue that "if multiple traders observe the same information at the same time, they are forced to compete on price instead of speed." Such a reform, which has been praised by New York Attorney General Eric T. Schneiderman, could arguably produce markets with narrower bid-ask spreads, improved market liquidity, greater stability, and significant investor savings. Critics, however, counter that exchanges are unlikely to embrace changes such as batch auctions that would curb the volume of orders (both filled and not filled) that they process because exchanges profit from such order volumes. Others believe HFT firms would find work-arounds in which they would "wait until that last brief period before the auction happens to place their orders." An additional criticism is that batch auctions would be at odds with the continuous trading protocol that prevails in most trading systems worldwide. A Transaction Tax. Some critics of HFT have proposed a transaction tax on HFT trades as a way of limiting that kind of trading and its perceived negative consequences. As observed in CRS Report R41192, A Securities Transaction Tax: Financial Markets and Revenue Effects , A tax on securities transactions has precedents in the United States. At the federal level there was a stock transfer excise tax (sometimes called documentary stamp tax) on the issuance and subsequent transfers of securities from 1914 to 1966. The tax rates on these transactions were 0.1% and 0.04%, respectively. The tax was repealed as part of the Excise Tax Reduction Act of 1965 (P.L. 89-44), which also repealed a number of other excise taxes, many of which were imposed to deal with the emergencies during the Great Depression or wartime. The purpose of the act was to remove unnecessary impediments to economic growth and consumer and business spending in the context of improving federal fiscal positions. Proposals for an STT [securities transaction tax] have been made in … [various] Congresses and by previous Administrations … [including] proposals by Presidents George H. W. Bush and Bill Clinton, as well as former Speaker of the House James Wright, to introduce some sort of an STT in the United States. Some of these proposals were targeted to narrow segments of financial markets, such as trades in derivatives, while others were broader and covered most financial transactions. No proposal was ever enacted into law. In 2013, Italy imposed a tax on trades on Italian financial markets that are generated by a computer algorithm that automatically determines the decisions related to relevant orders or metrics, their changes or cancellation. The tax rate is 0.02% and applies to any portion of changed or canceled daily orders in which the ratio of the changed or canceled orders less than half a second in duration exceeds 60% of the total number of submitted orders. It does not apply to market makers. The tax was reportedly introduced due to concerns that the growth of HFT in Italy could potentially have an adverse impact on the integrity and quality of Italian financial markets, particularly with regard to volatility and liquidity. Prior to its adoption, Italian banks and some other traders warned that the tax would have a detrimental effect on the provision of liquidity in the nation's market. In the 113 th Congress, S. 410 (Harkin) and H.R. 880 (DeFazio) propose instituting a 0.03% tax on all financial transactions. Proponents of these legislative proposals say such a levy could help reduce the budget deficit or pay for needed public spending without unduly burdening individual investors and could also curb high-frequency trading and reduce market volatility. H.R. 1579 (Ellison) would levy a 0.5% tax on stock trades, a 0.1% tax on bond trades, and a 0.005% tax on trades of derivatives and other investments. The bill's supporters say it would both raise revenue and help slow down financial markets that have become faster and more volatile due to HFT. On the idea of imposing taxes to curb HFT, CRS Report R41192, A Securities Transaction Tax: Financial Markets and Revenue Effects , concluded, If the objective of policymakers is to improve financial market operations, then it is not clear that an STT would be the most effective tool, or effective at all. The analysis in the body of this report suggests that the tax's effects on financial market efficiency are uncertain. Thus, improving financial market operations may be better handled via some other mechanism such as reforming the regulatory environment within which derivatives and high-frequency traders operate, for example. If policymakers do proceed with an STT as a means for improving financial market operations, one option would be to begin with a low tax rate, perhaps lower than 0.25%, and increase it only if additional research supports such a move. Affirmative Trade Obligations . Some suggest that consideration be given to imposing certain affirmative trade obligations on HFT firms that are not registered broker-dealers and thus are not legally obligated to step in and provide needed liquidity, particularly during market disruptions similar to the Flash Crash. Supporters of HFT could argue that such regulations change the business model of some HFT firms and could reduce profits. Critics of HFT affirmative trade obligations cite the examples of other severe market disruptions when SEC-registered market makers refused to conduct their market making activity. The stock market crash of October 1987, when Nasdaq market makers and others did not answer their phones or provide liquidity-enhancing market-making activity, has been identified as such a case. A Kill Switch . A kill switch would permit the suspension of an individual firm's trades following erroneous trades or excessive trading volume. Some regulators have argued in favor of such a protocol as a way of thwarting large-scale market events in which HFT has played a role. At a SEC technology roundtable in 2012, there appeared to be widespread agreement that a kill switch could be useful but that it would require multiple layers and thresholds to ensure that it would not be used at inappropriate times. There were, however, concerns over how and when such mechanisms would be implemented, whether market stakeholders would be willing to "pull the trigger" during market disruptions, and that the switches might tend to be mere "after the fact" interventions on the heels of major market disruptions. As indicated earlier, in addition to equities markets HFT takes place in certain derivatives markets, such as in the futures markets, which are regulated by the CFTC. Such trading has attracted attention somewhat later than equities HFT but has subsequently grown to become a large portion of market volume. By 2012, the TABB Group, a financial market consulting firm, reportedly estimated that HFT comprised over 60% of all futures volume in 2012 on U.S. futures exchanges. A 2013 CFTC concept release on automated trading reported that by 2012, about 92% of exchange-trading futures volume in the United States were executed electronically. By 2010, Automated Trading Systems (ATS) trading accounted for over 50% of trading volume in a number of significant futures exchange products, the CFTC reported. By various accounts, the proportion of trades on the futures exchanges attributable to HFT has grown briskly during the last few years. As in the equities markets, proponents of HFT in the futures markets have argued that the rise of HFT has tended to increase market liquidity and narrow bid-ask spreads, thereby reducing transaction costs. Similar concerns have been raised in futures markets about fairness in trading and market stability more generally. For instance, do hedge funds and large investment banks, which can afford the latest technology, have an advantage over small investors in futures as well as equities markets? Do institutions that serve small investors, such as mutual funds or pension funds, pay more (or receive less) for futures contracts as well as stocks because HFT traders may interpose themselves between ultimate buyers and sellers? Such concerns have percolated in the press and among market participants and regulators. Regulators at the CFTC have expressed concerns over the possible use of HFT to flood a market with wash trades , which are bids and offers launched essentially by the same market participant to create the impression of greater market activity even though the participant incurs no actual market risk. The Commodity Exchange Act prohibits wash trades. According to media reports, the CFTC is investigating whether HFT at times floods markets with such wash trades to influence prices or trading volumes for short periods of time so certain HFT traders could profit. Another issue in the futures markets, as in the equities markets, is the impact of HFT on market stability. In this context, an aforementioned joint study by the SEC and CFTC attributed the 2010 market disruption known as the Flash Crash to a single mutual fund's trading algorithm, which continued to sell after all buying interest was exhausted. More recently, on August 1, 2012, HFT firm Knight Capital Group Inc. lost about $440 million in less than an hour, and its stock plunged 73%, after a computer malfunction bombarded the stock market with errant orders. The incident further underscored concerns over the potential impacts on market stability of any HFT technical trading problems. The CFTC oversees trading, including HFT, on futures exchanges such as the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE). The SEC oversees HFT for the securities market. In addition to reportedly investigating potential wash trades related to HFT, the CFTC regularly holds meetings of its Technical Advisory Council (TAC). In February 2012, the TAC created a Subcommittee on Automated and High Frequency Trading that includes CFTC and industry participants and examines various HFT trading practices. On May 16, 2013, the CFTC issued an interpretive guidance on disruptive trading practices, which touches on issues that may involve HFT. Section 747 of the Dodd-Frank Act ( P.L. 111-203 ) amended the Commodity Exchange Act (CEA) to prohibit disruptive trading practices in futures, options, or swaps trading. Among other changes, Section 747 amended CEA Section 4c(a)(5) to outlaw spoofing—bidding or offering with the intent to cancel the bid or offer before executing a trade. One study of HFT by the Swedish financial regulatory authority in 2012 found that spoofing was associated with HFT, at least in the experiences of traders, and that market participants believed it was being used to manipulate the prices for some financial instruments. In its May 2013 guidance, the CFTC prohibited spoofing on any futures exchange or swap execution facility as long as the canceling of the bids and offers before trade execution was intentional rather than the result of reckless, negligent, or accidental behavior. On July 22, 2013, the CFTC announced its first enforcement order and settlement for spoofing under the Dodd-Frank Act's Section 747 prohibition of disruptive trading practices when it fined Panther Energy Trading LLC of Red Bank, New Jersey, and Michael J. Coscia of Rumson, New Jersey, $1.4 million for engaging in the disruptive practice of spoofing by utilizing a computer algorithm designed to illegally place and quickly cancel bids and offers in futures contracts. The CFTC guidance also prohibits a person from buying a derivatives contract on an exchange or swap execution facility "at a price that is higher than the lowest available price offered for such contract or selling a contract ... at a price that is lower than the highest available price bid." This practice is termed violating bids and offers , and the CFTC required no intentional behavior to constitute a violation. A recent major CFTC action regarding what it refers to as Automated Trading Systems (ATS)—of which HFT is a subset—was its September 12, 2013, "Concept Release on Risk Controls and System Safeguards for Automated Trading Environments." Broadly, the release asks whether existing risk controls in automated trading environments are sufficient to match current trading technologies and market risks. It does not prescribe any new rules but instead solicits feedback on 124 questions it poses regarding potential new regulatory approaches to ATS and HFT. In explaining the broader thinking behind the concept release, the CFTC observed, U.S. derivatives markets have experienced a fundamental transition from human-centered trading venues to highly automated and interconnected trading environments. The operational centers of modern markets now reside in a combination of automated trading systems … and electronic trading platforms that can execute repetitive tasks at speeds orders of magnitude greater than any human equivalent. Traditional risk controls and safeguards that relied on human judgment and speeds, and which were appropriate to manual and/or floor-based trading environments, must be reevaluated in light of new market structures…. [M]arket participants must ensure that regulatory standards and internal controls are calibrated to match both current and foreseeable market technologies and risks. The release goes on to solicit public feedback. The 124 questions the CFTC posed in the release are divided into four broad categories described below: Pre-Trade Risk Controls . These refer to policies by a firm or a CFTC-registered entity such as a swap dealer (SD), major swap participant (MSP), futures exchange, or swap execution facility (SEF) that seek to protect against the submission of a large volume of orders, trade executions, or positions over a short period of time. Specific pre-trade proposed solutions could include the following: (1) execution throttles that would impose maximum message or execution rates and associated alerts aimed at helping identify rogue algorithms and preventing entities from placing orders faster than risk systems; (2) greater volatility awareness by implementing alerts for price changes over a set period of time aimed at helping identify rogue algorithms and providing alerts when human intervention is required; (3) self-trade and self-matching, which refers to controls aimed at preventing wash trades and other potentially illicit trades; (4) price collars, which could impose certain allowable trading price ranges aimed at preventing erroneous order executions, particularly during thinly traded market regimes; (5) a maximum order size regime, which refers to protocols designed to curb large trades of certain sizes to prevent problematic trading abnormalities such as so-called fat finger (or, human) errors; and (6) trading pauses, which would entail the imposition of temporary time-outs for trading platforms when market conditions were deemed problematic. Post-Trade Risk Controls . The CFTC concept release also notes that post-trade risk controls, when used together with pre-trade controls, could yield benefits in reducing unexpected negative feedback loops or malfunctioning pre-trade risk controls. It asks for comments on a number of specific types of such post-trade controls. System Safeguards . The release broadly describes such safeguards as intended to address a number of potential operational, market abuse, and transmission risks, including those that might protect against potential abuses or disruptions unique to electronic trading. Potential new system safeguards could include the following: (1) controls related to order placement, which refers to order cancellation protocols such as "auto-cancel on disconnect" and "kill switches" that would cancel working orders under certain problematic market conditions; (2) design, testing, and supervision of ATS refers to regulatory protocols that would require firms operating ATS to undergo standardized testing and be subject to minimum standards; and (3) self-certifications and notifications, in which firms operating ATS and clearinghouses would be required to certify their adherence to CFTC requirements and notify others when "risk events" occur. Other Protections . The CFTC also requested comments on a range of other potentially significant changes, such as the type and quality of data that ATS or HFT market participants, if required to register with the CFTC, would possibly provide to the commission. In comment letters on the proposal, the Mercatus Center, a think tank, expressed criticism of the CFTC's release, commenting that the self-interest of derivative market participants to help ensure stable markets should generally be sufficient motivation for them to adopt a range of effective risk-control protocols. Mercatus also expressed the concern that "if risk control and system testing methods are standardized by regulatory intervention, they essentially become fixed and modifications will generally require either new regulations or exemptions." Other commenters engaged in HFT had more technical concerns with the CFTC release. For instance, the proprietary trading firm Citadel commented that if any mandatory minimum "resting periods" for order executions were imposed, that would harm market liquidity by exposing liquidity providers to greater risks and leading to wider bid-ask spreads. The Chicago Federal Reserve Bank challenged the belief in the voluntary adoption of risk controls as a solution. In comments to the CFTC, it observed, "[M]any industry and regulatory groups have devised best practices for HFT. Nevertheless, many firms do not fully implement these best practices because they are not required to do so. We believe it would be beneficial for the Commission [CFTC] to work with the industry to define best practices for HFT and to communicate penalties for non-compliance with those best practices." In congressional testimony on May 13, 2014, a CFTC official noted that the agency had received 43 public comments to the concept release and that commenters had widely divergent opinions regarding the need to regulate HFT more closely. For instance, commenters disagreed on the need for the CFTC to create a regulatory definition of HFT, with just over half of the parties who commented opposed to a definition and the remainder in favor. At the same hearing, MIT academic and former CFTC Chief Economist Andrei Kirilenko noted that the HFT industry is highly concentrated and dominated by a small number of fast, opaque firms (often not registered with federal regulators) that earned high and persistent returns. He advocated that the CFTC create a broad new category of "automated brokers and traders," which would include all active proprietary traders. These traders would be required to register with the CFTC and maintain records and an audit trail that regulators could examine in case of a mini-flash crash or technological malfunction, he proposed. Kirilenko also urged regulators to examine the root causes of the high level of concentration in the HFT industry to determine whether such concentration was in fact benign and why market forces were not eroding it. He suggested that automated exchanges be required to publish data on system latencies—in other words, how long of a delay exists before market information reaches participants. Such reporting should specifically include the latency for messages for submitted, canceled, modified, and executed orders.

High-frequency trading (HFT) is a broad term without a precise legal or regulatory definition. It is used to describe what many characterize as a subset of algorithmic trading that involves very rapid placement of orders, in the realm of tiny fractions of a second. Regulators have been scrutinizing HFT practices for years, but public concern about this form of trading intensified following the April 2014 publication of a book by author Michael Lewis. The Federal Bureau of Investigation (FBI), Department of Justice (DOJ), Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Office of the New York Attorney General, and Massachusetts Secretary of Commerce have begun HFT-related probes. Critics of HFT have raised several concerns about its impact. One criticism relates to its generation of so-called phantom liquidity, in which market liquidity that appears to be provided by HFT may be fleeting and transient due to the posting and then almost immediate cancellation of trading orders. Another concern is that HFT firms may engage in manipulative strategies that involve the use of quote cancellations. In addition, some observers allege that HFT firms are often involved in front-running whereby the firms trade ahead of a large order to buy or sell stocks based on nonpublic market information about an imminent trade. Another criticism is that HFT has increased the level of potential market systemic risk whereby shocks to a small number of active HFT traders could then detrimentally affect the entire market. A related concern is whether HFT could exacerbate market volatility. These concerns have percolated since the "Flash Crash" of May 6, 2010, when the Dow Jones Industrial Average (DJIA) fell by roughly 1,000 points in intraday trading—the largest one-day decline in the history of the DJIA. The crash was analyzed in an investigative report by the SEC and CFTC which, among other factors, looked at the role HFT may have played. The report determined that HFT was not the cause but may have exacerbated the crash. Another area of criticism is that HFT often involves two-tiered markets in which HFT firms pay extra for the right to access data feeds or to collocate their servers within exchanges' servers—all of which is designed to give some traders an advantage over others. HFT's supporters argue that the increased trading provided by HFT adds market liquidity and reduces market volatility. They contend that HFT is a technological innovation that is the latest evolutionary stage in a long history of securities market making and assert that HFT has reduced the bid-ask spreads in stock trading, thereby lowering trading costs. Congressional interest in HFT and the Flash Crash has manifested itself in the 113th Congress both legislatively and in the congressional oversight of the SEC and CFTC. Legislatively, S. 410 (Harkin), H.R. 880 (DeFazio), and H.R. 1579 (Ellison) would levy taxes on various financial trades, including trades conducted by HFT traders. H.R. 2292 (Markey) would require the CFTC to provide a regulatory definition of HFT in the derivatives markets it oversees and require those who do HFT to register with the CFTC. In June 2014, SEC Chairman Mary Jo White announced that in response to concerns over "aggressive, destabilizing trading strategies in vulnerable market conditions," the agency was pursuing several HFT-related reform proposals, including requiring unregistered HFT firms to register with the SEC. This report provides an overview of HFT in the equities and derivatives markets regulated by the SEC and CFTC. It also examines the Flash Crash of 2010 and the role that HFT may have played as well as recent regulatory developments.

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The Bush Administration's request for funding Energy and Water Development programs for FY2009, submitted in February 2008, totaled $31.209 billion, compared with $30.998 billion appropriated for FY2008. The House Appropriations Committee approved a bill June 25, 2008, that would have appropriated $33.811 billion for these programs. The Senate's bill, S. 3258 , reported by the Appropriations Committee July 14, 2008, would have appropriated $33.767 billion. On September 24, 2008, the House passed H.R. 2638 , the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, which continued appropriations for Energy and Water Development, among other programs, at the FY2008 level (with some exceptions) until March 6, 2009. The bill passed the Senate September 27 and was signed by the President September 30 ( P.L. 110-329 ). An extension through March 11, 2009, was signed March 6, 2009 ( P.L. 111-6 ). On February 25, 2009, the House passed an Omnibus Appropriations Act for FY2009 ( H.R. 1105 ), which includes funding for nine FY2009 appropriations bills, including Energy and Water Development (Division C). The Senate approved the funding measure on March 10, 2009, without amendment, and President Obama signed it on March 11, 2009 ( P.L. 111-8 ). Prior to that, the Congress passed, and the President signed, the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), which includes FY2009 appropriations for a number of programs funded in the Energy and Water Development appropriations bill. The House Appropriations Subcommittee on Energy and Water Development marked up its FY2009 funding bill on June 17, 2008. The full Appropriations Committee approved the bill on June 25 and released the draft report of the subcommittee, along with the text of two amendments adopted by the full committee. However, neither the bill nor the report was assigned a number until December 10, 2008, when the full committee reported out H.R. 7324 (110 th ) and accompanying report H.Rept. 110-921 . The Senate Appropriations Committee reported out S. 3258 (110 th ) on July 14. The Senate figures in this update are derived from the report on that bill, S.Rept. 110-416 . (See Table 1 .) The continuing resolution (Division A of P.L. 110-329 ) funds these programs at the FY2008 rate. Special provisions mandate a 3.9% increase in pay rates for employees (Sec. 142), and an additional $250 million for DOE's weatherization program. Sec. 104 prohibits the use of funds to initiate or resume any project or activity for which funds were not available during FY2008. This provision applies to DOE's Reliable Replacement Warhead program, for which no funding was appropriated for FY2008. DOE had requested $10 million for the program for FY2009, but both the House and the Senate bills would have eliminated the program. (For details, see " Nuclear Weapons Stockpile Stewardship ," below.) Sec. 129 of the continuing resolution appropriates $7.51 billion to implement Sec. 136 of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ), providing $25 billion in direct loans to automakers and parts suppliers to build new plants or modify existing plants to produce higher fuel efficiency vehicles and parts. Division B of P.L. 110-329 , the Disaster Relief and Recovery Supplemental Appropriations Act, 2008, appropriated $2,776.8 million for the Corps for emergencies and for southeast Louisiana projects. (See " Title I: Army Corps of Engineers .") Energy and water development funding for all of FY2009 is included in the Omnibus Appropriations Act, 2009 ( H.R. 1105 ). The bill was introduced February 23, with an "explanatory statement" printed in the Congressional Record for that day "as if it were a joint explanatory statement of a committee of conference." The House passed the measure February 25, 2009, by a vote of 245-178. It was passed by the Senate without amendment on March 10, 2009, following a cloture vote of 62-35. President Obama signed the bill March 11, 2009 ( P.L. 111-8 ). Additional FY2009 funding for some energy and water development programs is included in the economic stimulus measure, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ), signed by the President on February 17, 2009. The ARRA funding is to remain available for obligation through FY2010 (sec. 1603). The Energy and Water Development bill includes funding for civil works projects of the U.S. Army Corps of Engineers (Corps), the Department of the Interior's Central Utah Project (CUP) and Bureau of Reclamation (BOR), the Department of Energy (DOE), and a number of independent agencies, including the Nuclear Regulatory Commission (NRC) and the Appalachian Regional Commission (ARC). Table 2 includes budget totals for energy and water development appropriations enacted for FY2002 to FY2009. Table 3 lists totals for each of the bill's four titles. It also lists the total of several scorekeeping adjustments. These figures were not available for the House bill or for S. 3258 . Tables 4 through 15 provide budget details for Title I (Corps of Engineers), Title II (Department of the Interior), Title III (Department of Energy), and Title IV (independent agencies) for FY2008-FY2009. Accompanying these tables is a discussion of the key issues involved in the major programs in the four titles. Regular annual appropriations for the Corps' civil works activities have been augmented since Hurricane Katrina through supplemental appropriations and through the American Recovery and Reinvestment Act of 2009. In 2008, the agency received more than $9 billion in supplemental funds; these funds are for work related to post-Katrina repair and improvements in coastal Louisiana and for emergency flood response, including the 2008 Midwest flood and Hurricane Ike response. The American Recovery and Reinvestment Act of 2009 provided an additional $4.6 billion to the agency for FY2009. For the agency's regular annual appropriations, P.L. 111-8 provides $5.402 billion for FY2009, which is above the Bush Administration's request of $4.741 billion but below the FY2008 enacted amount of $5.587. The preliminary budget request for FY2010 is at $5.1 billion. Unlike highways and municipal water infrastructure programs, federal funds for the Corps are not distributed to states or projects based on a formula or delivered via a competitive program. Generally around 85% of the appropriations for the Corps' civil works activities is directed to specific projects. Many of these projects are identified in the budget request and others are added during congressional deliberations of the agency's appropriations. As a result, the agency's funding is often part of the debate over earmarks. Generally, appropriations are not provided to studies, projects, or activities that have not been previously authorized, typically in a Water Resources Development Act (WRDA). Estimates of the backlog of authorized projects vary from $11 billion to more than $80 billion, depending on which projects are included (e.g., those that meet Administration budget criteria, those that have received funding in recent appropriations, those that have never received appropriations). The backlog raises policy questions, such as whether there is a disconnect between the authorization and appropriations process and how to prioritize among authorized activities. The Bush Administration's approach to the backlog was to limit the number of new starts, i.e., activities not previously funded, and to focus funds on completing a limited number of activities. Congress has generally chosen to distribute the Corps appropriations across a larger set of projects and to initiate a limited number of new starts. P.L. 111-8 continues the use of restrictions and congressional oversight on the Corps' initiation of new starts via reprogramming funds during the fiscal year. The Corps is responsible for much of the repair and fortification of the hurricane protection system of coastal Louisiana, particularly in the greater New Orleans area. To date, most of the Corps' work on the region's hurricane protection system has been funded through $14.3 billion in emergency supplemental appropriations, not through the annual appropriations process. In addition to the post-hurricane emergency repairs, these funds are being used for construction of levees, floodwalls, storm surge barriers, and pump improvements to reduce the hurricane flooding risk to the New Orleans area to a 100-year level of protection (i.e., protection against a storm surge of an intensity that has 1% probability of occurring in a given year) and to restore and complete hurricane protection in surrounding areas to previously authorized levels of protection by 2011. Of the $14.3 billion, $7.3 billion was provided in supplemental appropriations acts in 2008. The Bush Administration included in its FY2009 budget a request for $5.8 billion in emergency supplemental funds to complete these construction activities and for related purposes. The request said the $7 billion in previously appropriated funds were insufficient to complete these activities because of increased costs, improved data on costs, and other factors. The Supplemental Appropriations Act of 2008 ( P.L. 110-252 ) provided the requested $5.8 billion. As proposed by the Administration and enacted in P.L. 110-252 , the State of Louisiana would be responsible for $1.3 billion as its nonfederal cost-share contribution for the work. Subsequently in the Disaster Relief and Recovery Supplemental Appropriations Act of 2008 ( P.L. 110-329 ), Congress provided $1.5 billion to cover the state's share until it is repaid over 30 years by the State of Louisiana. The Bush Administration also proposed as part of its FY2009 budget request legislative language to consolidate the authorities for Corps hurricane protection projects in the New Orleans area into a single project. Consolidation would allow for the hurricane protection activities funding to be managed systematically, rather than on a project-by-project basis. Although neither P.L. 110-252 nor P.L. 110-329 provides this authority, they provide for flexibility in the expenditure and reprogramming of the funds for southeast Louisiana activities. Corps officials have continued to request coastal Louisiana reprogramming flexibility in order to meet the 2011 goal. The Corps plays a significant coordination role in the restoration of the Central and Southern Florida ecosystem. In addition to funding for Corps activities through Energy and Water Development appropriations, federal activities in the Everglades also are funded through Department of the Interior appropriations bills. Concerns regarding the level of appropriations across the federal agencies and the State of Florida and progress in the restoration effort are discussed in CRS Report RS20702, South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan , by [author name scrubbed] and [author name scrubbed]. The Bush Administration requested $185 million for FY2009; P.L. 111-8 provides $123 million. The primary cause of the difference is that P.L. 111-8 provides no Corps funding for the Modified Waters Deliveries Project (Mod Waters), instead of the $50 million requested. P.L. 111-8 instead funds the project through Department of Interior appropriations, which had been the process until recent years. Other components of the Everglades restoration effort receive lower appropriations in P.L. 111-8 than requested; these projects, however, may receive stimulus funds in FY2009, so it is unknown what the total FY2009 appropriations for the Everglades will be. P.L. 111-8 provides $91.6 million for Central and Southern Florida Project ($100 million requested), $28.4 million for Kissimmee River Restoration Project ($31 million requested), and $3.5 million for Everglades and South Florida Restoration Projects ($4 million requested). The Inland Waterway Trust Fund (IWTF) has a looming deficit due to the amount of ongoing work that it funds relative to the collections for the fund. Expenses associated with construction and major rehabilitation of inland waterways is a federal responsibility (i.e., no local cost-share), with 50% of the federal monies coming from the IWTF and 50% from the federal general revenue fund. The IWTF monies derive from a fuel tax imposed on vessels engaged in commercial waterway transportation on designated waterways, plus investment interest on the balance. The collections have been roughly $100 million, and the outlays more than $200 million. The Bush Administration proposed replacing the fuel tax with a lockage fee for each barge. P.L. 111-8 neither adopted this proposal nor made other changes to existing law to address the IWTF balance. Instead it funds some projects with IWTF funds; other projects it funds using only general revenue funds and directs that they be brought to a logical stopping point and future work deferred until the IWTF revenue stream is enhanced. The use of general funds for projects that are intended to be cost shared by those benefiting from them raises fiscal equity issues among some stakeholders. In contrast, the Harbor Maintenance Trust Fund (HMTF) has a $4.7 billion growing balance. Navigation stakeholders argue that this balance poses the opposite side of the equity concern. The Department of the Interior requested that Congress reduce funding for the Central Utah Project (CUP) Completion Account and also for the Bureau of Reclamation (Reclamation) for FY2009. The total request for Title II funding was originally $961.3 million—$189.6 million (16%) below FY2008 funding levels. However, President Bush submitted a budget amendment in June 2008 rescinding another $175 million from Reclamation's budget. The revised total request for Title II is $786.3 million, 32% below FY2008 appropriations. P.L. 111-8 provides $1.1 billion for Title II; $33.1 million less than enacted for FY2008, but $331.5 million more than requested for FY2009. The Bush Administration requested $42.0 million for the CUP Completion Account. The amended FY2009 request for Reclamation totals $744.3 million in gross current budget authority. This amount is $363.6 million less than enacted for FY2008. The FY2009 request included "offsets" of $48.3 million for the Central Valley Project (CVP) Restoration Fund (Congress does not list this line item as an offset), as well as a $175.0 million rescission proposed in a budget amendment submitted by President Bush, yielding a "net" current authority of $696.0 million for Reclamation. The total amended budget request for Title II funding—Central Utah Project and Reclamation—is $786.3 million. The House Committee on Appropriations recommended $42 million, the amount requested, for CUP funding for FY2009. The Committee's recommendation for Reclamation programs was $915.5 million, $171.2 million more than the President's amended FY2009 request. The Committee recommended a $120.0 million rescission, $55.0 million lower than the Bush Administration request. The Senate Committee on Appropriations also recommended $42 million for FY2009 CUP funding. The Committee's recommendation for the remaining Title II programs was $1,084.8 million, $340.5 million more than the amended FY2009 request, and $169.3 million more than recommended by House appropriators. The Senate did not include a rescission in its recommendations. P.L. 111-8 includes $42 million for CUP funding; $1 million less than enacted for FY2008. Reclamation's single largest account, Water and Related Resources, encompasses the agency's traditional programs and projects, including construction, operations and maintenance, the Dam Safety Program, Water and Energy Management Development, and Fish and Wildlife Management and Development, among others. The Bush Administration requested $779.3 million for the Water and Related Resources Account for FY2009. This amount is $170.6 million (18%) less than enacted for FY2008. The House Committee on Appropriations recommended a total of $888.0 million for the Water and Related Resources account, $108.7 million above the FY2009 request of $779.3 million. The Senate Committee on Appropriations recommended $927.3 million for Water and Related Resources, $39.3 million more than the House recommendation. P.L. 111-8 provides $920.3 million for the Water and Related Resources Account; $29.6 million less than enacted in FY2008. There are a number of programs whose funding recommendations differ between House and Senate appropriators; however, the single largest difference appears to be for the Pick-Sloan Missouri Basin's Garrison Diversion Unit. For this line item the Senate committee recommended $64.4 million and the House panel recommended $18.5 million—a difference of $45.9 million. P.L. 111-8 provides $64.4 million, the same as recommended by the Senate. Most of the large dams and water diversion structures in the West were built by, or with the assistance of, Reclamation. Whereas the Army Corps of Engineers built hundreds of flood control and navigation projects, Reclamation's mission was to develop water supplies, primarily for irrigation to reclaim arid lands in the West. Today, Reclamation manages hundreds of dams and diversion projects, including more than 300 storage reservoirs in 17 western states. These projects provide water to approximately 10 million acres of farmland and 31 million people. Reclamation is the largest wholesale supplier of water in the 17 western states and the second-largest hydroelectric power producer in the nation. Reclamation facilities also provide substantial flood control, recreation, and fish and wildlife benefits. At the same time, operations of Reclamation facilities are often controversial, particularly for their effect on fish and wildlife species and conflicts among competing water users. The Bush Administration requested $32.0 million for the California Bay-Delta Restoration Account (Bay-Delta, or CALFED) for FY2009. This request is nearly identical to Reclamation's FY2008 request of $31.8 million, and is approximately $8.0 million less than the $40.1 million enacted for FY2008. The bulk of the requested funds is targeted at four program areas: the environmental water account, the storage program, water quality, and conveyance. The remainder of the request is allocated for science, planning and management, and ecosystem restoration. The House Committee on Appropriations recommended $37.0 million for CALFED in FY2009. The increase of $5.0 million in this account matched a $5.0 million decrease recommended by the Committee for Reclamation's Policy and Administration account. The Senate Committee on Appropriations recommended $42.0 million for CALFED funding in FY2009. This recommendation is $10.0 million more than the President's request, and a $5.0 million increase over the House recommendation. P.L. 111-8 provides $40.0 million for the CALFED program. (For more information on CALFED, see CRS Report RL31975, CALFED Bay-Delta Program: Overview of Institutional and Water Use Issues , by [author name scrubbed] and [author name scrubbed].) Reclamation proposed an allocation of $17.3 million to the San Joaquin River Restoration Fund in FY2009. The Fund would be authorized by the enactment of Title X of S. 22 (previously H.R. 4074 ), the San Joaquin River Restoration Settlement Act. The Fund would implement provisions of the Stipulation of Settlement for the Natural Resources Defense Council et al. v. Rodgers lawsuit and would be funded through the combination of a reallocation of $7.5 million in receipts from the Friant Division water users and other federal and non-federal sources. In its FY2008 budget request, Reclamation also planned for the redirection of $7.5 million in receipts from the Friant Division water users; however, authorizing legislation was not enacted, and the $7.5 million planned for the Fund was reallocated to other Central Valley Project (CVP) Restoration Fund programs. For FY2009, House appropriators originally stated that Congress had not enacted legislation authorizing the $7.5 million proposal for the new San Joaquin River Restoration Fund and directed Reclamation to expend the $7.5 million in anticipated transferred receipts within its anadromous fish screening program under the CVP Restoration Fund. The Senate Committee on Appropriations had also noted that authorizing legislation for a transfer of $7.5 million to the new San Joaquin River Restoration Fund had not been enacted and included language to allow the use of the $7.5 million under Reclamation's existing authorities in the event that the legislative proposal was not enacted. Explanatory text accompanying P.L. 111-8 directs Reclamation to use the $7.5 million on activities within existing authorities "until such time as the proposed legislation is enacted." (For more information on the San Joaquin River Restoration Fund, see CRS Report R40125, Title X of H.R. 146: San Joaquin River Restoration , by [author name scrubbed] and [author name scrubbed], and CRS Report RL34237, San Joaquin River Restoration Settlement , coordinated by [author name scrubbed] and [author name scrubbed].) Under Reclamation's Water and Related Resources account, the Administration requested $29.0 million for site security for FY2009, a decrease of $6.5 million compared with that requested for FY2007. The bulk of the request is for facility operations/security. Funding covers activities such as administration of the security program (e.g., surveillance and law enforcement), antiterrorism activities, and physical emergency security upgrades. (For more information, see CRS Report RL32189, Terrorism and Security Issues Facing the Water Infrastructure Sector , by [author name scrubbed].) The FY2009 request assumes that annual costs for guard and patrol activities will be treated as project O&M costs, and hence reimbursable based on project cost allocations. These costs were estimated to be $20.1 million in FY2009, of which $12.2 million would be in up-front funding from power customers and $7.9 million would be appropriated funds, which are reimbursed by irrigation, municipal, and industrial users and other customers. The House and Senate Committees on Appropriations each recommended $29.0 million for site security in FY2009, matching the amount requested by the President. P.L. 111-8 includes $28 million for site security. Reclamation proposed funding a new program for FY2009. The Water for America Initiative, part of Reclamation's Water and Related Resources budget account, would be a partnership between Reclamation and the U.S. Geological Survey (USGS). Reclamation indicated that the Water for America Initiative was meant to address increased demand, aging infrastructure, and decreased or changed water availability—factors that Reclamation had identified as threats to its ability to continue to provide water to the West. The initiative would subsume two existing Reclamation programs: Water 2025 and the Water Conservation Field Services program. Reclamation's funding request for its portion of the program was $31.9 million ($19 million appears under a Water for America line item, and the remaining $12.9 million is included in specific programs for endangered species and other programs). These funds would be used to address two of the program's three strategies: "Plan for Our Nation's Water Future," and "Expand, Protect, and Conserve Our Nation's Water Resources." The third strategic thrust of the initiative, to be addressed by USGS, was "Enhance Our Nation's Water Knowledge." Reclamation proposed to apply $8.0 million in FY2009 toward activities that fall under the "Plan for Our Nation's Water Future" thrust. This funding would be divided equally between basin studies (two or three comprehensive water supply and demand studies) and investigations (with a focus on analyzing and developing new water supplies). The balance of Reclamation's funding request for this initiative, $23.9 million, would be devoted to the "Expand, Protect, and Conserve Our Nation's Water Resources" effort. Within this subset of funding was $11.0 million for challenge grants, $4.0 million for the Water Conservation Field Services program, and $8.9 million for endangered species recovery activities. The House and Senate Committees on Appropriations both recommend the amount requested, $19.0 million, for the Water for America Initiative line item in FY2009. The total request for the Water for America Initiative was $31.9 million and it is unclear if the $12.9 million balance of the program is funded. Within Reclamation's budget, $19.0 million appears under a Water for America line item, while the remaining $12.9 million is included in programs for endangered species and other activities. House and Senate appropriators fully funded an FY2009 request of $22.0 million for Endangered Species Recovery Implementation, which may include the endangered species component of Water for America. P.L. 111-8 provides $15.1 million for the Water for America Initiative line item for FY2009; $20.1 million is included for Endangered Species Recovery Implementation, although it is not clear how much of this funding may include the endangered species component of Water for America. The Energy and Water Development bill has funded all DOE's programs since FY2005. Major DOE activities historically funded by the Energy and Water bill include research and development on renewable energy and nuclear power, general science, environmental cleanup, and nuclear weapons programs, and the bill now includes programs for fossil fuels, energy efficiency, the Strategic Petroleum Reserve, and energy statistics, which formerly had been included in the Interior and Related Agencies appropriations bill. The Bush Administration's FY2009 request for DOE programs was $25.9179 billion, compared with $24.3780 billion appropriated for FY2008. The House Appropriations Committee recommended $27.2174 billion, and the Senate Appropriations Committee recommended $27.0417 billion. P.L. 111-8 funds these programs at $26.9670 billion. DOE administers a wide variety of programs with different functions and missions. In the following pages, the most important programs are described and major issues are identified, in approximately the order in which they appear in Table 7 . President Bush's 2008 State of the Union address set out goals to strengthen energy security and confront global climate change, and stated that "... the best way to meet these goals is for America to continue leading the way toward the development of cleaner and more energy-efficient technology." As part of that effort, the Bush Administration proposed to continue its support for the Advanced Energy Initiative (AEI, an element of the American Competitiveness Initiative), which aimed to reduce America's dependence on imported energy sources. The AEI included hydrogen, biofuels, and solar energy initiatives that were supported by programs in EERE. According to the FY2009 budget document, the Hydrogen Initiative has a long-term aim of developing hydrogen technology, and to "enable industry to commercialize a hydrogen infrastructure and fuel cell vehicles by 2020." The Biofuels Initiative seeks to make cellulosic ethanol cost competitive by 2012 using a wide array of regionally available biomass sources. The Solar America Initiative aims to "... accelerate the market competitiveness of photovoltaic systems using several industry-led consortia which are focused on lowering the cost of solar energy through manufacturing and efficiency improvements." Further, the proposed FY2009 federal budget set a goal of making solar power "cost-competitive with conventional [sources of] electricity by 2015." DOE's FY2009 request contained $1,255.4 million for the EERE programs. Compared with the FY2008 appropriation, the FY2009 request would have reduced EERE funding by $467.0 million, or 27.1%. Three proposed cuts would comprise most of this reduction. First, the request would have eliminated $186.7 million in congressionally directed assistance. Second, it would have reduced Facilities construction spending by $57.3 million. Third, the request would have cut $227.2 million in funding to terminate the Weatherization Assistance Program, citing a higher benefit-cost ratio for technology development programs. In contrast to the Administration's request, the House Appropriations Committee recommended $2,531.1 million for DOE's EERE programs in FY2009. This would have been an $808.7 million (47%) increase over the FY2008 appropriation and a $1,275.7 million (102%) increase over the DOE request. Compared with the request, the Committee recommendation would have embraced a $381.5 million increase for R&D programs. Further, the Committee would have provided $259.2 million more for energy assistance programs, of which $250.0 million would have gone to the Weatherization Program—in sharp contrast to DOE's proposal to eliminate it. Also, the Committee recommended $500.0 million for new assistance programs authorized by the Energy Independence and Security Act (EISA, P.L. 110-140 ). As a major initiative, the Committee recommended $500.0 million as an "initial program investment" for several new programs authorized by EISA. The Energy Efficiency and Conservation Block Grant Program (EISA, §541-548) would have received $295.0 million in start-up funding. The Renewable Fuel Infrastructure Program (EISA §244) would have received $25.0 million to begin grant-giving operations. The Advanced Technology Vehicles Manufacturing Program (EISA §136[b]) would have received $30.0 million for grants to help convert factories to produce more efficient vehicles. Also, $1 billion in loan authority would be provided for the Advanced Technology Vehicles Manufacturing Incentive Program (EISA §136[d]). Aside from the $500.0 million initiative, some additional EISA-related funding would have been provided under the technology programs. The most notable examples were $25 million for the production of advanced biofuels (EISA §207) under the Biomass and Biorefinery Program and $33 million for zero net energy commercial buildings (EISA §422) under the Buildings Program. The Committee recommended $134.7 million for Congressionally Directed Assistance. In addition to providing funding recommendations, the House Appropriations Committee report included three policy directives for DOE. First, DOE would be required to report annually on the return on investment for each of the major EERE program funding accounts. Second, DOE would be directed to make up to $20 million of EERE funds available for "projects at the local level capable of reducing electricity demand." Each project would involve multiple technologies and public-private partnerships. Priority would go to projects that have a substantial local cost-share, help reduce water use, or curb greenhouse gas emissions. Third, DOE would be required to implement "an aggressive program" of minority outreach at Historically Black Colleges and Universities and at Hispanic Serving Institutions to deepen the recruiting pool of scientific and technical persons available to support the growing renewable energy marketplace. The Senate Appropriations Committee recommended $1,928.3 million for EERE, which is $205.9 million (12.0%) more than the FY2008 appropriation and $672.9 million (53.6%) more than the request. Compared with the House Appropriations Committee report, the Senate Appropriations Committee recommended $602.8 million, or 23.8%, less for EERE programs. The main difference ($450.0 million) was that the House Appropriations Committee proposed an increase of $500.0 million for a new EISA Federal Assistance Program, while the Senate Appropriations Committee proposed an increase of $50.0 million for a new Local Government/Tribal Technology Demonstration Program. Further, the Senate report recommended less funding than the House report for several technology programs. Relative to the House Committee report figures, the Senate Committee report's proposed decreases for renewable energy R&D included Geothermal (-$20.0 million), Bioenergy (-$15.0 million), and Water Energy (-$10.0 million). The major decreases for energy efficiency included Weatherization (-$48.8 million), Industrial Technologies (-$34.9) million, and Vehicle Technologies (-$24.5 million). The Senate Appropriations Committee recommended $124.2 million for Congressionally Directed Projects. In general, both committee reports recommended higher funding levels than the Bush Administration's request. In particular, each included more than $200 million for the Weatherization Program. Both committees disagreed with the DOE request to fund the Asia Pacific Partnership, and neither committee recommended funding it. Both committees called for the Biomass program to emphasize the use of non-food sources for the development of biofuels. The Senate Committee report further stressed R&D efforts to focus on algae as a biofuels source. The continuing resolution (Division A of P.L. 110-329 ) funded these programs at the FY2008 rate. Special provisions mandated an additional $250 million for DOE's weatherization program and $7.5 billion to leverage a one-time $25 billion loan to help U.S. automakers retool facilities to produce advanced technology energy-efficient vehicles. The FY2009 Bush Administration request included $134.0 million for the Office of Electricity Delivery and Energy Reliability (OE). The House Appropriations Committee recommended $149.3 million, which would have been $15.3 million more than the request. The Senate Appropriations Committee recommended $166.9 million, which would have been $17.7 million more than the House Appropriations Committee recommended. For OE congressionally directed projects, the House Committee report called for $5.3 million, while the Senate Committee report sought $12.9 million. The law provides $16.8 billion for several program accounts under EERE, which must be obligated during FY2009 and FY2010. In particular, it provides $2.5 billion for the R&D programs, including $800 million for the Biomass Program, and $400 million for the Geothermal Program. Further, it provides $5.0 billion for the Weatherization Grants Program, $3.1 billion for the State Energy Program, and $3.2 billion for the Energy Efficiency and Conservation Block Grant Program—a new program authorized by Title V of the Energy Independence and Security Act of 2007 (EISA). Also, the law provides $4.5 billion to the Office of Electricity Delivery and Energy Reliability for grid modernization and related technologies, such as electricity storage. That amount includes funds for the smart grid and grid modernization provisions in EISA (Title 13). P.L. 111-8 appropriates $1.93 billion for EERE programs. That total amount is nearly identical to the Senate Appropriations Committee's recommendation. However, the amounts for individual programs differ significantly in many cases. Of the $1.93 billion total, $228.8 million is for congressionally directed projects. One highlight of the bill is that it provides $33 million under the Buildings Program to support the Commercial High Performance Buildings Program, which was authorized by EISA. Also, P.L. 111-8 provides $137.0 million for OE programs. Of that total, $19.7 million is for congressionally-directed projects. For nuclear energy research and development—including advanced reactors, fuel cycle technology, nuclear hydrogen production, and infrastructure support— P.L. 111-8 provides $870.8 million, including $78.8 million allocated to DOE defense activities. The total nuclear energy funding is $61.6 million below the comparable request by the Bush Administration. The House Appropriations Committee had recommended $1.317 billion for FY2009. DOE had requested $1.419 billion, about 40% higher than the FY2008 appropriation of $1.033 billion. Those totals are significantly higher than the P.L. 111-8 levels because they include DOE's mixed-oxide (MOX) fuel fabrication facility to make fuel from surplus weapons plutonium. The FY2009 request included an 80% increase in assistance for new commercial reactor orders (Nuclear Power 2010), a 70% increase for nuclear spent fuel reprocessing R&D (the Advanced Fuel Cycle Initiative), and a 75% boost for the MOX project. Those activities are funded by various appropriations accounts through DOE's Office of Nuclear Energy. The Senate Appropriations Committee had voted to fully fund the MOX project at the Administration's request of $487.0 million but place it under the National Nuclear Security Administration's Office of Defense Nuclear Nonproliferation. As a result, the Senate panel's funding total for the Office of Nuclear Energy was $803.0 million, $50.6 million below the comparable request and $120.1 million above the comparable FY2008 level. According to DOE's FY2009 budget justification, the nuclear energy R&D program is intended "to develop new nuclear energy generation technologies to meet energy and climate goals." However, opponents have criticized DOE's nuclear research program as providing wasteful subsidies to an industry that they believe should be phased out as unacceptably hazardous and economically uncompetitive. The increased funding sought by the Bush Administration for the Advanced Fuel Cycle Initiative (AFCI) was intended to help implement the Administration's Global Nuclear Energy Partnership (GNEP). GNEP was established to develop technologies for recycling uranium and plutonium from spent nuclear fuel without creating pure plutonium that could be readily used for nuclear weapons. According to DOE's budget justification, such technologies could allow greater expansion of nuclear power throughout the world "with reduced risk of nuclear weapons proliferation." But nuclear opponents dispute DOE's contention that nuclear recycling technology can be made sufficiently proliferation-resistant for widespread use. The House Appropriations Committee sharply criticized GNEP as "rushed, poorly-defined, expansive, and expensive," and eliminated all funding for the program. On the other hand, the House panel dramatically boosted funding for advanced nuclear reactors, which the Administration had proposed cutting. The Senate Appropriations Committee did not mention GNEP, but provided $50.3 million of the Administration's proposed $122.1 million increase for AFCI. The House Appropriations Committee's summary of the Energy and Water portion of P.L. 111-8 describes GNEP as being "zeroed out," although funding for AFCI would be continued. President Bush's specific mention of "emissions-free nuclear power" in his 2008 State of the Union address reiterated his Administration's interest in encouraging construction of new commercial reactors—for which there have been no U.S. orders since 1978. DOE's efforts to restart the nuclear construction pipeline have been focused on the Nuclear Power 2010 Program, which will pay up to half of the nuclear industry's costs of seeking regulatory approval for new reactor sites, applying for new reactor licenses, and preparing detailed plant designs. The Nuclear Power 2010 Program, which includes the Standby Support Program authorized by the Energy Policy Act of 2005 ( P.L. 109-58 ) to pay for regulatory delays, is intended to encourage near-term orders for advanced versions of existing commercial nuclear plants. Two industry consortia are receiving DOE assistance over the next several years to design and license new nuclear power plants. DOE awarded the first funding to the consortia in 2004. DOE requested $241.6 million for Nuclear Power 2010 for FY2009, an increase of $107.8 million from the FY2008 funding level. According to DOE's budget justification, the additional funding would be used to accelerate the first-of-a-kind design activities for the two reactors being planned by the two industry consortia, the Westinghouse AP1000 reactor and the General Electric Economic Simplified Boiling Water Reactor (ESBWR). The House Appropriations Committee recommended holding the program's FY2009 funding level to $157.3 million, which the panel said was DOE's previous planning level. The Senate Appropriations Committee recommended the full request. P.L. 111-8 provides $177.5 million, $84.1 million below the request but $43.7 million above the FY2008 level. The nuclear license applications under the Nuclear Power 2010 program are intended to test the "one-step" licensing process established by the Energy Policy Act of 1992 ( P.L. 102-486 ). Under the process, the Nuclear Regulatory Commission (NRC) may grant a combined construction permit and operating license (COL) that allows a completed plant to begin operation if all construction criteria have been met. Even if the licenses are granted by NRC, the industry consortia funded by DOE have not committed to building new reactors. Two consortia are receiving Nuclear Power 2010 assistance: A consortium led by Dominion Resources that is preparing a COL for the GE ESBWR. The proposed reactor would be located at Dominion's existing North Anna plant in Virginia, where the company received an NRC early-site permit with DOE assistance. Dominion Energy submitted a COL application for a new unit at North Anna on November 27, 2007. A consortium called NuStart Energy Development, which includes Exelon and several other major nuclear utilities. NuStart announced on September 22, 2005, that it would seek a COL for two Westinghouse AP1000 reactors at the site of TVA's uncompleted Bellefonte nuclear plant in Alabama and for an ESBWR at the Grand Gulf plant in Mississippi. The Nuclear Power 2010 Program is providing funding for review and approval of the Bellefonte COL, which was submitted to NRC on October 30, 2007. Advanced commercial reactor technologies that are not yet close to deployment are the focus of DOE's Generation IV Nuclear Energy Systems Initiative, for which $70.0 million was requested for FY2009. The request was $44.9 million below the FY2008 funding level of $114.9 million, which was nearly triple the Administration's FY2008 budget request of $36.1 million. The House Appropriations Committee had recommended an increase to $200.0 million, while the Senate panel had recommended the requested level. P.L. 111-8 provides $177.5 million. Most of the FY2009 request—$59.5 million—was for Next Generation Nuclear Plant (NGNP) research and development, which received an FY2008 appropriation of $114.1 million. Under DOE's current plans, NGNP will use Very High Temperature Reactor (VHTR) technology, which features helium as a coolant and coated-particle fuel that can withstand temperatures up to 1,600 degrees celsius. Phase I research on the NGNP is to continue until 2011, when a decision will be made on moving to the Phase II design and construction stage, according to the FY2009 DOE budget justification. The House Appropriations Committee provided $196.0 million "to accelerate work" on NGNP—all but $4.0 million of the Committee's total funding level for the Generation IV program. P.L. 111-8 allocates $169.0 million of Generation IV funding for NGNP. The Energy Policy Act of 2005 authorizes $1.25 billion through FY2015 for NGNP development and construction (Title VI, Subtitle C). The authorization requires that NGNP be based on research conducted by the Generation IV program and be capable of producing electricity, hydrogen, or both. According to the DOE budget justification, AFCI is intended to develop and demonstrate nuclear fuel cycles that could reduce the long-term hazard of spent nuclear fuel and recover additional energy. Such technologies would involve separation of plutonium, uranium, and other long-lived radioactive materials from spent fuel for reuse in a nuclear reactor or for transmutation in a particle accelerator. Much of the program's research is planned to focus on a separations technology called UREX+, in which uranium and other elements are chemically removed from dissolved spent fuel, leaving a mixture of plutonium and other highly radioactive elements. The FY2009 AFCI funding request was $301.5 million, nearly 70% above the FY2008 appropriation of $179.4 million but below the FY2008 request of $395.0 million. AFCI, the primary technology component of the GNEP program, includes R&D on reprocessing technology and fast reactors that could use reprocessed plutonium. The House Appropriations Committee had recommended cutting AFCI to $90.0 million in FY2009, eliminating all funding for GNEP. The remaining funds would be used for research on advanced fuel cycle technology, but none could be used for design or construction of new facilities. The Committee urged DOE to continue coordinating its fuel cycle research with other countries that already have spent fuel recycling capability, but not with "countries aspiring to have nuclear capabilities." The Senate Appropriations Committee had recommended $229.7 million for AFCI, focusing on advanced fuel separation and fuel fabrication. P.L. 111-8 provides $145.0 million for the program and eliminate GNEP funding. FY2009 funding of $10.4 million was requested for conceptual design work on an Advanced Fuel Cycle Facility (AFCF) to provide an engineering-scale demonstration of AFCI technologies, according to the budget justification. The FY2008 Consolidated Appropriations act rejected funding for development of AFCF, as did the House Appropriations Committee for FY2009. Removing uranium from spent fuel would eliminate most of the volume of spent nuclear fuel that would otherwise require disposal in a deep geologic repository, which DOE is developing at Yucca Mountain, Nevada. The UREX+ process also could reduce the heat generated by nuclear waste—the major limit on the repository's capacity—by removing cesium and strontium for separate storage and decay over several hundred years. Plutonium and other long-lived elements would be fissioned in accelerators or fast reactors to reduce the long-term hazard of nuclear waste. Even if technically feasible, however, the economic viability of such waste processing has yet to be determined, and it still faces significant opposition on nuclear nonproliferation grounds. Nevertheless, proponents believe the process is proliferation-resistant, because further purification would be required to make the plutonium useable for weapons and because the high radioactivity of the plutonium mixtures would make the material difficult to divert or work with. Under the Administration's GNEP initiative, plutonium partially separated from the highly radioactive spent fuel from nuclear reactors would be recycled into new fuel to expand the future supply of nuclear fuel and potentially reduce the amount of radioactive waste to be disposed of in a permanent repository. Under the initial concept for GNEP, the United States and other advanced nuclear nations would lease new fuel to other nations that agreed to forgo uranium enrichment, spent fuel recycling (also called reprocessing), and other fuel cycle facilities that could be used to produce nuclear weapons materials. The leased fuel would then be returned to supplier nations for reprocessing. Solidified high-level reprocessing waste would be sent back to the nation that had used the leased fuel, along with supplies of fresh nuclear fuel. The Nuclear Nonproliferation Treaty guarantees the right of all participants to develop fuel cycle facilities, and a GNEP Statement of Principles signed by the United States and 15 other countries on September 16, 2007, preserves that right, while encouraging the establishment of a "viable alternative to acquisition of sensitive fuel cycle technologies." The National Academy of Sciences in October 2007 strongly criticized DOE's "aggressive" deployment schedule for GNEP and recommended that the program instead focus on research and development. As part of GNEP, AFCI has been conducting R&D on an Advanced Burner Reactor (ABR) that could destroy recycled plutonium and other long-lived radioactive elements. DOE requested $18.0 million for the ABR program for FY2009, up from $11.7 million in FY2008. The program is expected to focus on developing a sodium-cooled fast reactor (SFR). The House Appropriations Committee had recommended no FY2009 funding for the ABR, although it is not directly mentioned in the H.R. 1105 explanatory statement. (For more information about GNEP and reprocessing, see CRS Report RL34579, Advanced Nuclear Power and Fuel Cycle Technologies: Outlook and Policy Options , by [author name scrubbed].) In support of President Bush's program to develop hydrogen-fueled vehicles, DOE requested $16.6 million for FY2009 for the Nuclear Hydrogen Initiative, about 67% above the FY2008 funding level but below the FY2007 appropriation. The House Appropriations Committee had provided the full FY2009 request, while the Senate panel had recommended $10.0 million—slightly above the FY2008 level. P.L. 111-8 provides $7.5 million. According to DOE's FY2009 budget justification, the program will continue laboratory-scale experiments to allow selection by 2011 of a hydrogen-production technology for pilot-scale demonstration by 2013. DOE requested $487.0 million for the Mixed Oxide Fuel Fabrication Facility at the Savannah River Site in South Carolina—a 75% increase from the FY2008 funding level. The multi-billion-dollar facility is intended to convert surplus weapons plutonium into oxide form and then blend it with uranium oxide to produce fuel for nuclear power plants. The FY2008 Consolidated Appropriations act shifted funding for the project to the DOE nuclear energy program from the Defense Nuclear Nonproliferation account. For FY2009, DOE proposed to shift the program's funding to the Other Defense Activities account. The House Appropriations Committee had provided the full request, but recommended that the funding remain under the nuclear energy account. The Senate Appropriations Committee also recommended the full request but transferred the project back to the nuclear nonproliferation program. (For more details, see Nuclear Weapons Stockpile Stewardship, below.) The Senate Appropriations Committee recommended the establishment of an Integrated University Program to support university research in the nuclear field and to provide grants to help maintain university nuclear science and engineering programs. Under the Committee recommendation, $15.0 million each would be appropriated to the Office of Nuclear Energy, the Office of Defense Nuclear Nonproliferation, and the Nuclear Regulatory Commission, for a total of $45.0 million. P.L. 111-8 provides the entire $15.0 million to the Nuclear Regulatory Commission. The Bush Administration requested $765.3 million for the Fossil Energy Research and Development budget in FY2009, to be offset by use of $11.3 million in prior-year balances (resulting in a requested appropriation of $754 million). The administration requested $149 million deferred as unobligated balances to FY2009, and $166 million in uncommitted balances to be transferred from Clean Coal Technology to Fossil Energy R&D (FutureGen). The total request represented a 33% increase over the FY2008 request of $566.8. Under the FY2009 request, programs in Natural Gas Technology, Petroleum-Oil Technology, and Cooperative R&D would be left unfunded. DOE had proposed terminating programs in Natural Gas Technology and Petroleum-Oil Technology in FY2008. OMB rated both programs as ineffective based on its Program Assessment Rating Tool. Nor had DOE requested funding for Plant and Capital Equipment or the Cooperative Research and Development program. (Contending that research-center-sponsored work can seek Fossil Energy funding through the competitive solicitation process, DOE had not requested funding in FY2007 or FY2008.) Congress reinstated the funding of these programs in FY2008. The former FutureGen project was intended to demonstrate clean coal-based Integrated Gasification Combined Cycle (IGCC) power generation with capture and sequestration of CO 2 emissions. In early 2008, after cost estimates for the project escalated to $1.8 billion, DOE announced that it would restructure the program to focus exclusively on commercial application of Carbon Capture and Storage (CCS) technologies for IGCC or other advanced clean coal-based power generation technology. Under the "Restructured FutureGen" program, DOE proposed a cost-shared collaboration with industry and anticipated making a number of awards ranging from $100 million-$600 million (DOE share). The House Appropriations Committee directed DOE to merge FutureGen and the Clean Coal Power Initiative into a single solicitation for a Carbon Capture Demonstration Initiative and established it as new appropriations control level. The House Appropriations Committee then recommended $853.6 million for Fossil Energy Research and Development Programs, a 13.8% increase over the request, of which $149 million would be derived by transfer from prior-year unobligated Clean Coal Technology balances (deferred earlier by the Consolidated Appropriations Act of 2008, P.L. 110-161 ), and $11.3 million in prior-year balances from completed or cancelled construction projects. Major funding categories include the newly created Carbon Capture Demonstration Initiative ($241 million), which consolidates the former Clean Coal Power Initiative and the FutureGen project; Carbon Sequestration ($220 million); Fuels and Power Systems ($220.6 million); Petroleum-Oil Technologies ($3 million); Natural Gas Technologies ($25 million); Liquefied Natural Gas Report; Program Direction ($126.3 million); Other ($15.4 million); and Congressionally Directed Projects ($13.7 million). The Senate Committee on Appropriations, in its report accompanying S. 3258 , recommended increasing the President's budget request by $122.7 billion to accelerate Carbon Sequestration development for a total of $876.7 billion. The Committee recommended spending $232.3 million on the Clean Coal Power Initiative; no funding of the FutureGen account; $412.1 million on Fuels and Power Systems; $20 million on Natural Gas Technologies; $5 million on Oil Technologies; $152.8 million on Program Direction; $9.7 million on Other Programs, and $32.7 million on congressionally directed programs. Under P.L. 111-8 , $876.3 million is appropriated for fossil energy research and development, of which $149.0 million is to be derived by transfer from Clean Coal Technology. Of that total, $288.2 million is available for the Clean Coal Power Initiative Round III solicitation. Furthermore, $43.9 million of the appropriated amount is to be used for projects specified as Congressionally Directed Fossil Energy Projects. An additional $3.4 billion was appropriated for DOE fossil energy programs in FY2009 by the American Recovery and Investment Act of 2009 ( P.L. 111-5 ). Funds under this heading include $1.0 billion for fossil energy research and development programs; $800.0 million for additional amounts for the Clean Coal Power Initiative Round III Funding Opportunity Announcement; $1.52 billion for a competitive solicitation for a range of industrial carbon capture and energy efficiency improvement projects, including a small allocation for innovative concepts for beneficial CO2 reuse; $50.0 million for a competitive solicitation for site characterization activities in geologic formations; $20.0 million for geologic sequestration training and research grants; and $10.0 million for program direction. The Strategic Petroleum Reserve (SPR), authorized by the Energy Policy and Conservation Act ( P.L. 94-163 ) in 1975, consists of caverns formed out of naturally occurring salt domes in Louisiana and Texas in which nearly 700 million barrels of crude oil are stored. Its current capacity is 727 million barrels, and it is authorized at 1 billion barrels. The purpose of the SPR is to provide an emergency source of crude oil that may be tapped in the event of a presidential finding that an interruption in oil supply, or an interruption threatening adverse economic effects, warrants a drawdown from the reserve. A Northeast Heating Oil Reserve (NHOR) was established during the Clinton Administration. The NHOR houses 2 million barrels of home heating oil in above-ground facilities in Connecticut, New Jersey, and Rhode Island. Appropriations for the purchase of oil for the SPR ceased in the mid-1990s. Beginning in FY1999, any fill of the SPR was with deliveries of royalty-in-kind (RIK) oil to the SPR, in lieu of cash royalties on offshore production paid to the federal government. Through FY2007, royalty-in-kind deliveries to the SPR totaled roughly 140 million barrels and forgone receipts to the Department of the Interior were estimated at $4.6 billion. DOE estimated that deliveries of RIK oil during FY2008 would be roughly 19.1 million barrels and $1.170 billion in forgone revenues. However, on May 13, 2008, the House and Senate passed H.R. 6022 , suspending RIK fill. President Bush signed the legislation into law ( P.L. 110-232 ) on May 19. A few days earlier, on May 16, DOE announced it would not accept bids for an additional 13 million barrels of RIK oil that had been intended for delivery during the second half of 2008. The Bush Administration request for FY2009 for the SPR was $346.9 million. As in its FY2008 request, the Administration was seeking funding to expand the capacity of the SPR to 1 billion barrels by (1) adding 115 million barrels of capacity at three existing sites; and (2) establishing a new site, in Richton, Mississippi, where 160 million barrels of capacity would be created. The request included $169.7 million for expansion activities. Included as well in the request was $13.5 million to initiate the National Environmental Policy Act (NEPA) environmental review process for expansion of the SPR to 1.5 billion barrels, a level not yet authorized by Congress but strongly supported by the Administration. Congress approved nearly $25 million in the FY2008 budget for land acquisition at the Richton site but otherwise expressed opposition to funding expansion. Congress approved funding of $186.8 million for FY2008; the Administration had requested $331.6 million. In its report on the FY2008 appropriations bill, the House Committee on Appropriations noted an estimate that it would cost $10 billion to create additional capacity and $105 billion to fill it, and that expansion would not be completed until 2027. The Committee indicated that the benefits of doubling the size of the Reserve were not "commensurate with this enormous cost." For FY2009, the Committee did not alter its position. The Committee recommended funding for FY2009 at $172.6 million, including the use of $2.9 million of prior year balances. The recommendation is $171.4 million less than the Administration request. The Senate Committee on Appropriations recommended $205 million for FY2009, including $31.5 million "to initiate new site expansion activities and support beyond land acquisition." This would include further work at the Richton site to prepare for the creation of storage capacity. The Bush Administration requested $9.8 million for the NHOR in FY2009, a reduction of $2.5 million from the FY2008 enactment, principally due to a reduction in the need for funds for repurchasing heating oil that was sold during FY2007 to finance new storage contracts. Both House and Senate committees agreed to the Administration request. P.L. 111-8 sets spending for the SPR at the levels recommended by the Senate, as well as providing $9.8 million for the NHOR, as requested. The DOE Office of Science conducts basic research in six program areas: basic energy sciences, high-energy physics, biological and environmental research, nuclear physics, fusion energy sciences, and advanced scientific computing research. Through these programs, DOE is the third-largest federal funder of basic research and the largest federal funder of research in the physical sciences. The America COMPETES Act ( P.L. 110-69 ) authorized the establishment of a new Advanced Research Projects Agency—Energy (ARPA-E), separate from the Office of Science, to support transformational energy technology research projects. For FY2009, DOE requested $4.722 billion for Science, an increase of 18% from the FY2008 amount of $4.018 billion. This unusually large increase reflects the American Competitiveness Initiative (ACI), which President Bush had announced in January 2006. Over 10 years, the ACI would double the combined R&D funding of the DOE Office of Science and two other agencies. In the 110 th Congress, the House Appropriations Committee recommended $4.862 billion for Science, and the Senate panel recommended $4.640 billion. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) appropriated $1.6 billion for the Office of Science for FY2009 (with no allocation specified to particular programs) and $400 million for the newly established ARPA-E. P.L. 111-8 provides $4.773 billion for Science, including $15 million for ARPA-E and the remainder for the Office of Science. The requested funding for the largest Office of Science program, basic energy sciences, was $1.568 billion, up 23% from FY2008. Increases included $153 million for a new program of Energy Frontier Research Centers, $66 million to initiate construction of the National Synchrotron Light Source II (NSLS-II) at Brookhaven National Laboratory, and $73 million to expand facility operating time. The House and Senate appropriations reports for FY2006 both called for an increase for facility operating time. Increases were proposed in the FY2007 and FY2008 budget requests and funded in the House and Senate appropriations bills for those years, but were not ultimately included in either the FY2007 or the FY2008 appropriations. (The request also included increases to expand facility operating time in some of the other Office of Science research programs.) In the 110 th Congress, the House committee recommended $1.600 billion, including increases of $17 million for a facility at the Stanford Linear Accelerator Center and $14.5 million for the NSLS-II, and the Senate committee recommended $1.415 billion, including a transfer of $59 million of basic solar research to the Energy Efficiency and Renewable Energy account and an unspecified reduction of $93 million. P.L. 111-8 provides $1.572 billion, including an increase of about $9 million for the Experimental Program to Stimulate Competitive Research (EPSCoR). For high-energy physics, the request was $805 million, up 17% from FY2008. Included were increases for three programs whose funding Congress sharply reduced in the final FY2008 appropriation: $37 million (up from $6 million) for construction of the NOνA detector at Fermilab, $25 million (up from $5 million) for superconducting radiofrequency R&D, and $35 million (up from $15 million) for R&D related to the proposed International Linear Collider. The request included $10 million for the DOE/NASA Joint Dark Energy Mission (JDEM). Responding to appropriations report language in FY2008, NASA included its portion of JDEM in its FY2009 request. In the 110 th Congress, the House and Senate committees both recommended the requested amount for high-energy physics. P.L. 111-8 provides $796 million. The request for biological and environmental research was $569 million, up 4%. The bulk of the requested increase was for climate change modeling. In the 110 th Congress, the House committee recommended $579 million, including increases of $5 million each for biological research and climate change research, and the Senate committee recommended $599 million, including increases of $20 million for climate change research and $10 million for nuclear medicine. P.L. 111-8 provides $602 million, including increases of $23 million for climate change research and $10 million for nuclear medicine. For nuclear physics, the request was $510 million, up 18% from FY2008. Included were $20 million for isotope production and applications (transferred from the Office of Nuclear Energy) and $15 million to begin construction of an upgrade at the Continuous Electron Beam Accelerator Facility (CEBAF). Most other nuclear physics activities would also receive increases. In the 110 th Congress, the House committee recommended $517 million, including an increase of $7 million to accelerate the CEBAF upgrade, and the Senate committee recommended the requested amount. P.L. 111-8 provides $512 million. The request for fusion energy sciences was $493 million, up 72%. Almost the entire increase ($204 million) was for the U.S. share of the International Thermonuclear Experimental Reactor (ITER), a fusion facility now under construction in France. For FY2008, although the House and Senate bills both provided the requested amount for ITER, the final appropriation eliminated all except $10 million for related R&D. According to press reports, the lack of U.S. funds in FY2008 had no immediate impact on the project's planned 2008 start, but "what the other ITER partners now want from the United States is clarity" about its plans. The ITER partners are China, the European Union, India, Japan, Russia, South Korea, and the United States. Under an agreement signed in 2006, the U.S. share of ITER's construction cost is 9.1%. That share is now expected to be between $1.45 billion and $2.2 billion, with a completion date between FY2014 and FY2017. A preliminary estimate of $1.122 billion through FY2014 was revised upwards in December 2007. In the 110 th Congress, the House committee recommended $499 million, including a $6 million increase above the request to "help revitalize the domestic fusion energy sciences program," and the Senate committee recommended the requested amount. P.L. 111-8 provides $403 million, including $90 million less than the request for ITER and no funding for National Compact Stellarator Experiment (NCSX) project, which is currently under construction at Princeton Plasma Physics Laboratory. The request for the smallest of the Office of Science research programs, advanced scientific computing research, was $369 million, up 5% from FY2008. The majority of the requested increase would fund establishment of a new Applied Mathematics-Computer Science Institute. In the 110 th Congress, the House committee recommended $379 million, an increase of $10 million, and the Senate committee recommended the requested amount. P.L. 111-8 provides the requested amount. The request for laboratory infrastructure was $110 million, up 65% from FY2008. An Infrastructure Modernization Initiative, to be funded in FY2009 by transfers from the research programs, accounts for $33 million of the requested increase. In the 110 th Congress, the House committee recommended $146 million, including increases for excess facilities disposition, laboratory facility modernization, and building construction, and the Senate committee recommended the requested amount. P.L. 111-8 provides $145 million. In the 110 th Congress, the House committee recommended $15 million for ARPA-E as part of the Science appropriation; the Senate committee did not mention ARPA-E. The American Recovery and Reinvestment Act of 2009 provided $400 million as a separate appropriations account. P.L. 111-8 provides $15 million as part of the Science appropriation. DOE's Office of Civilian Radioactive Waste Management (OCRWM) is responsible for developing a nuclear waste repository at Yucca Mountain, Nevada, for disposal of nuclear reactor spent fuel and defense-related high-level radioactive waste. The FY2009 OCRWM request was $494.7 million; the House Appropriations Committee had approved the full amount, and the Senate Appropriations Committee had recommended $388.4 million. P.L. 111-8 cuts the program's budget to $288.4 million—$206 million below the Bush Administration request and $98.1 million below the FY2008 level. The FY2009 request was 28% above the FY2008 appropriation of $386.4 million, but the FY2008 level is about $50 million below the FY2007 level and more than $100 million below the Administration's FY2008 request. The FY2008 funding reductions required OCRWM to reduce its workforce by about 900, according to the program's director, and DOE pushed back its most optimistic date for opening the Yucca Mountain repository from 2017 to 2020. Despite the reduced funding and staff, OCRWM achieved a major milestone by submitting a license application for the proposed repository to the Nuclear Regulatory Commission on June 3, 2008. The deep funding cut in P.L. 111-8 for FY2009 appears to reflect the Obama Administration's budget outline for FY2010, in which DOE's nuclear waste funding would be "scaled back to those costs necessary to answer inquiries from the Nuclear Regulatory Commission" during its consideration of the Yucca Mountain license application. Funding for the nuclear waste program is provided under two appropriations accounts. The Administration requested $247.4 million from the Nuclear Waste Fund, which holds fees paid by nuclear utilities. An additional $247.4 million was requested in the Defense Nuclear Waste Disposal account, which pays for disposal of high-level waste from the nuclear weapons program in the planned Yucca Mountain repository. The House Appropriations Committee had recommended the full amount for both accounts, while the Senate panel had recommended $195.4 million from the Waste Disposal account and $193.0 million from the defense account. P.L. 111-8 provides $145.4 million from the Nuclear Waste Fund and $143 million from the defense account. The Nuclear Waste Policy Act of 1982 (NWPA, P.L. 97-425 ), as amended, names Yucca Mountain as the sole candidate site for a national geologic repository. Congress passed an approval resolution in July 2002 ( H.J.Res. 87 , P.L. 107-200 ) that authorized the Yucca Mountain project to proceed to the licensing phase. NWPA required DOE to begin taking waste from nuclear plant sites by January 31, 1998. Nuclear utilities, upset over DOE's failure to meet that deadline, have won two federal court decisions upholding the department's obligation to meet the deadline and to compensate utilities for any resulting damages. Utilities have also won several cases in the U.S. Court of Federal Claims. DOE estimates that liability payments will total $11 billion if Yucca Mountain begins receiving waste by 2020. (For more information, see CRS Report R40202, Nuclear Waste Disposal: Alternatives to Yucca Mountain , by [author name scrubbed], and CRS Report RL33461, Civilian Nuclear Waste Disposal , by [author name scrubbed].) Congress established the DOE Innovative Technology Loan Guarantee Program in the Energy Policy Act of 2005. The act authorized loan guarantees for energy projects using "new or significantly improved technologies" to reduce greenhouse gas emissions. The FY2008 consolidated appropriations act allowed DOE to guarantee repayment of up to $38.5 billion in loans for energy projects during FY2008 and FY2009. Of that amount, $18.5 billion was for nuclear power plants, $6 billion was for coal projects that incorporate carbon capture and sequestration, $2 billion was for advanced coal gasification, $10 billion was for renewable energy and energy efficiency projects, and $2 billion for uranium enrichment and other "front end" nuclear fuel cycle facilities. DOE must submit an implementation plan to the House and Senate Appropriations Committees at least 45 days before issuing the loan guarantees. DOE's FY2009 budget request proposed to extend the previously approved $38.5 billion in loan guarantee authority. Under the request, $20 billion would be available through FY2010 for technologies other than nuclear power plants, while the remaining $18.5 billion for nuclear power plants would be available through FY2011. In addition to the $38.5 billion in loan guarantee authority that must be used by FY2010 and FY2011, the FY2007 DOE appropriation (included in P.L. 110-5 ) provided $4 billion in loan guarantee authority with no expiration date or specified technology. To administer the loan guarantee program, DOE requested an appropriation of $19.9 million for FY2009, an amount that is to be entirely offset by fees imposed on project sponsors. The House Appropriations Committee had recommended an increase in DOE's loan guarantee authority to $47 billion, all to be available through FY2011, in addition to the previously authorized $4 billion. Of the $47 billion, $18.5 billion was for nuclear power, $18.5 was for energy efficiency and renewables, $6 billion was for coal, $2 billion was for carbon capture and sequestration, and $2 billion was for uranium enrichment. The House panel provided the full $19.9 million administrative funding request, to be offset by fees. The Senate Appropriations Committee did not increase the $38.5 billion in loan guarantees authorized in the FY2008 funding act, but recommended that the time limits be removed entirely. P.L. 111-8 adopts the House Committee level of $47 billion, in addition to the previously approved $4 billion. Allocations among technologies are the same as the House Committee recommendation. As in the Senate recommendation, the time limits on the loan guarantee authority are eliminated. Administrative funding of $19.9 million is provided. Because of Congressional Budget Office scoring requirements, the House panel provided $465 million in budget authority (including $25 million in advance appropriations from FY2008) to cover possible future government costs resulting from the loan guarantees. The Senate Appropriations Committee included $355 million for that purpose. P.L. 111-8 adopts the House Committee level. An additional $60 billion in loan guarantees for renewable energy and electric transmission projects was provided by the economic stimulus legislation ( P.L. 111-5 ). Unlike under the annual appropriations bills, project sponsors under P.L. 111-5 will not have to pay up-front fees to cover potential loan defaults; instead, $6 billion was appropriated to cover such potential costs. In addition, P.L. 111-5 provided $10 million for administrative expenses for DOE loans to the U.S. auto industry for advanced vehicle manufacturing. Congress established the Stockpile Stewardship Program in the FY1994 National Defense Authorization Act ( P.L. 103-160 ) "to ensure the preservation of the core intellectual and technical competencies of the United States in nuclear weapons." The program is operated by the National Nuclear Security Administration (NNSA), a semiautonomous agency within DOE that Congress established in the FY2000 National Defense Authorization Act ( P.L. 106-65 , Title XXXII). It seeks to maintain the safety and reliability of the U.S. nuclear stockpile. Stockpile stewardship consists of all activities in NNSA's Weapons Activities account: three main programs—Directed Stockpile Work, Campaigns, and Readiness in Technical Base and Facilities—as well as several smaller ones. All are described below. Table 10 presents their funding. NNSA manages two programs outside of Weapons Activities: Defense Nuclear Nonproliferation, discussed later in this report, and Naval Reactors. Most stewardship activities take place at the nuclear weapons complex, which consists of three laboratories (Los Alamos National Laboratory, NM; Lawrence Livermore National Laboratory, CA; and Sandia National Laboratories, NM and CA); four production sites (Kansas City Plant, MO; Pantex Plant, TX; Savannah River Site, SC; and Y-12 Plant, TN); and the Nevada Test Site. NNSA manages and sets policy for the complex; contractors to NNSA operate the eight sites. The FY2009 request document includes data from NNSA's Future Years Nuclear Security Program (FYNSP), which projects the budget and components through FY2013 (see Table 11 ). Although the nuclear weapons complex (the "Complex") currently consists of the eight sites noted above, it was much larger during the Cold War in terms of number of sites, budgets, and personnel. Despite the post-Cold War reduction, many in Congress have for years wanted the Complex to change further, in various ways: fewer personnel, lower cost, greater efficiency, smaller footprint at each site, increased security, and the like. (For congressional action on FY2005-FY2008 appropriations, see CRS Report RL34009, Energy and Water Development: FY2008 Appropriations , by [author name scrubbed] et al.) In response, in January 2007 NNSA submitted a report to Congress on its plan for transforming the Complex, "Complex 2030." The House Appropriations Committee, in its FY2008 report, expressed displeasure with this plan and demanded "a comprehensive nuclear defense and nonproliferation strategy," a detailed description translating that strategy into a "specific nuclear stockpile," and "a comprehensive, long-term expenditure plan, from FY2008 through FY2030 ... " before considering further funding for Complex 2030 and a nuclear weapon program, the Reliable Replacement Warhead (RRW, discussed below). It stated that "NNSA continues to pursue a policy of rebuilding and modernizing the entire complex in situ without any thought given to a sensible strategy for long-term efficiency and consolidation." Similarly, the Senate Appropriations Committee expressed concern with NNSA's plans for the Complex. It saw an inadequate linkage between warheads, the Complex, and strategy, and "rejects the Department's premature deployment of the NNSA Complex 2030 consolidation effort." The joint explanatory statement accompanying the consolidated appropriations bill said, "The Congress agrees to the direction contained in the House and Senate reports requiring the Administration ... to develop and submit to the Congress a comprehensive nuclear weapons strategy for the 21 st century." On December 18, 2007, NNSA announced its plan, Complex Transformation, a name change from Complex 2030. It would retain existing sites, reduce the weapons program footprint by as much as one-third, close or transfer from weapons activities about 600 structures, reduce the number of weapons workers by 20-30%, dismantle weapons more rapidly, and build several major new facilities, such as a Uranium Processing Facility at Y-12 Plant, a Weapons Surveillance Facility at Pantex Plant, and a Chemistry and Metallurgy Research Replacement Nuclear Facility at Los Alamos National Laboratory. This plan is more fully described in a Draft Complex Transformation Supplemental Programmatic Environmental Impact Statement released in January 2008. The House Appropriations Committee reiterated its FY2008 views in its FY2009 report: Before the Committee will consider funding for most new programs, substantial changes to the existing nuclear weapons complex, or funding for the RRW, the Committee insists that the following sequence be completed: (1) replacement of Cold War strategies with a 21 st Century nuclear deterrent strategy sharply focused on today's and tomorrow's threats, and capable of serving the national security needs of future Administrations and future Congresses without need for nuclear testing; (2) determination of the size and nature of the nuclear stockpile sufficient to serve that strategy; (3) determination of the size and nature of the nuclear weapons complex needed to support that future stockpile. In keeping with this approach, the committee recommended eliminating funds for RRW and for several programs described below. P.L. 111-8 provided no funds for RRW. In its FY2009 report, the Senate Appropriations Committee recommended eliminating funds for RRW and made various changes to individual programs. It did not provide general comments on Complex transformation. This program involves work directly on nuclear weapons in the stockpile, such as monitoring their condition; maintaining them through repairs, refurbishment, life extension, and modifications; R&D in support of specific warheads; and dismantlement. Specific items under DSW include the following: Life Extension Programs (LEPs). These programs aim to extend the life of existing warheads by 20 to 30 years through design, certification, manufacture, and replacement of components. Two LEPs are underway. One for the B61 mods 7 and 11 bombs will complete actions needed to close out the program in FY2009; its FY2008 budget was $61.9 million, and the FY2009 request was $2.2 million. The other LEP is for the W76 warhead for the Trident II submarine-launched ballistic missile. Its FY2008 budget was $172.2 million, while its FY2009 request was $209.2 million. Work in FY2008 involved preparation for manufacture with a goal of making the first production unit. NNSA plans to ramp to full production in FY2009, and the first life-extended W76 entered the stockpile in February 2009. P.L. 111-8 provided $205.0 million. Stockpile Systems. This program involves routine maintenance, replacement of limited-life components, ongoing assessment, and the like for all weapon types in the stockpile. The FY2008 budget was $340.1 million; the FY2009 request was $338.7 million. Of the eight warhead types listed, the two largest programs under stockpile systems are for the B61 and W76. P.L. 111-8 provided $328.5 million. Weapons Dismantlement and Disposition (WDD). The President and Congress have agreed on the desirability of reducing the stockpile to the lowest level consistent with national security, and numbers of warheads have fallen sharply since the end of the Cold War. According to NNSA, "Reducing the total number of U.S. nuclear weapons sends a clear message to the world that critical modernization programs do not signal a return to the arms race of the Cold War." WDD involves interim storage of warheads to be dismantled, dismantlement, and disposition, i.e., storing or eliminating warhead components and materials. The FY2008 budget was $134.7 million; the FY2009 request was $183.7 million. P.L. 111-8 provided $190.2 million. Within WDD, the major activity is the Pit Disassembly and Conversion Facility (PDCF). The "pit" is the fissile component (usually plutonium) of a nuclear warhead that initiates a thermonuclear explosion. As warheads are dismantled, pits may be stored, but for permanent disposition PDCF would convert the plutonium in pits to plutonium oxide for use in a Mixed Oxide Fuel Fabrication Facility (MFFF), where it would become fuel for commercial light-water nuclear reactors. The project also includes a Waste Solidification Building (WSB) to convert liquid wastes from PDCF and MFFF into solids for disposal off-site. (In FY2008, MFFF was transferred from NNSA to DOE's Office of Nuclear Energy. The FY2009 budget request would transfer the project to Other Defense Activities.) In FY2009, NNSA plans to begin construction of WSB and to continue design and technology development for PDCF. Stockpile Services. This category includes Production Support; R&D Support; R&D Certification and Safety; Management, Technology, and Production; Pit Manufacturing; and Pit Manufacturing Capability. Under Pit Manufacturing, NNSA plans to manufacture stockpile-quality pits for the W88 warhead at Los Alamos National Laboratory. NNSA established a capacity of 10 pits per year in FY2007, a figure it plans to increase to 50 to 80 pits per year. Closely related is Pit Manufacturing Capability, which develops processes to manufacture pits other than for the W88. The budget for Stockpile Services was $692.4 million for FY2008; $931.9 million was requested for FY2009. P.L. 111-8 provided $866.4 million. Reliable Replacement Warhead (RRW). This program seeks to develop a warhead initially to replace W76 warheads. The design would trade characteristics important during the Cold War, notably high warhead yield per unit of warhead weight, for features deemed more important now, such as ease of manufacture, enhanced use denial, reduced cost, and ease of certification without nuclear testing. Supporters assert RRW can meet these goals; critics raise technical concerns, argue that it could spur nuclear proliferation, and hold that the Life Extension Program can maintain existing warheads. Congress eliminated FY2008 funds for developing this warhead. For FY2009, NNSA requested $10.0 million to address certain questions on certifying RRW and to document work completed through FY2007. P.L. 111-8 provided no funds for RRW. (See CRS Report RL32929, The Reliable Replacement Warhead Program: Background and Current Developments , by Jonathan Medalia , and CRS Report RL33748, Nuclear Warheads: The Reliable Replacement Warhead Program and the Life Extension Program , by Jonathan Medalia.) In its report on FY2009 energy-water appropriations, the House Appropriations Committee recommended providing the requested funds for Life Extension Programs and Stockpile Systems. It recommended increasing Weapons Dismantlement and Disposition funds by $6.0 million, mainly to examine a capability with which an existing facility at Nevada Test Site could dismantle "small numbers of troublesome individual warheads" without interfering with large-scale dismantlement at Pantex. It recommended reducing Stockpile Services by $273.1 million to the level that the House passed for FY2008. It recommended eliminating RRW funds: The Committee supports trading off Cold War high yield [in nuclear warheads] for improved reliability, in order to move to a smaller stockpile requiring a smaller and cheaper weapons complex with no need for nuclear testing. That said, the Committee remains to be convinced that a new warhead design will lead to these benefits. The Committee will not spend the taxpayers' money for a new generation of warheads promoted as leading to nuclear reductions absent a specified glide path to a specified, much smaller force of nuclear weapons. In its FY2009 report, the Senate Appropriations Committee recommended full funding for Life Extension Programs and Stockpile Systems, eliminating funds for RRW, increasing funds for Weapons Dismantlement by $22.0 million, and reducing funds for Stockpile Services by $43.6 million. The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009, P.L. 110-329 , provides no NNSA funds for RRW. Section 104 states, "No appropriation or funds made available or authority granted pursuant to section 101 shall be used to initiate or resume any project or activity for which appropriations, funds, or other authority were not available during fiscal year 2008." Section 101 appropriates [s]uch amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2008 and under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this joint resolution, that were conducted in fiscal year 2008, and for which appropriations, funds, or other authority were made available in the following appropriations Acts: divisions A, B, C, D, F, G, H, J, and K of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ). In turn, Division C of P.L. 110-161 , which provided appropriations for energy and water development, provided no NNSA funds for RRW. As noted, P.L. 111-8 provided no funds for RRW. These are "multi-year, multi-functional efforts" that "provide specialized scientific knowledge and technical support to the directed stockpile work on the nuclear weapons stockpile." Many items within Campaigns have significance for policy decisions. For example, the Science Campaign's goals include improving the ability to assess warhead performance without nuclear testing, improving readiness to conduct nuclear tests should the need arise, and maintaining the scientific infrastructure of the nuclear weapons laboratories. Campaigns also fund some large experimental facilities, such as the National Ignition Facility at Lawrence Livermore National Laboratory, the Dual-Axis Radiographic Hydrotest Facility at Los Alamos National Laboratory, and the Microsystems and Engineering Sciences Applications Complex at Sandia National Laboratories. The FY2009 request included five Campaigns: Science Campaign. This campaign pursues the science underlying nuclear weapons performance and aging in an effort to better maintain confidence in the U.S. nuclear stockpile. Further, NNSA calls it "the principal mechanism for supporting the science required to maintain the technical vitality of the national nuclear weapons laboratories." Through it, NNSA seeks "a predictive capability for the entire nuclear explosive package by 2020." Congress established a component of this campaign, Advanced Certification, to improve the ability to certify warheads without testing despite changes to nuclear components. Another component of the Science Campaign is Test Readiness, the ability to conduct nuclear testing should that be deemed necessary. In FY2007, NNSA had achieved the ability to conduct a test within 24 months of an order to do so; because of budgetary pressures, that schedule increased to 24 to 36 months. The FY2008 budget for the Science Campaign was $287.6 million. For FY2009, the request was $323.1 million. P.L. 111-8 provided $318.7 million, including $5.4 million for test readiness. The House Appropriations Committee "commends NNSA for its outstanding Stockpile Stewardship program, which has performed better than expected and has created a technically superior alternative to nuclear testing." Further, "the Committee finds no evidence that nuclear testing would add a useful increment to the immense and expanding body of weapons knowledge arising from Stockpile Stewardship." It called nuclear testing "a non-executable mission." For these and other reasons, it recommended eliminating the $10.4 million requested for nuclear test readiness. The Senate Appropriations Committee recommended $331.1 million for this campaign, with an increase of $8.0 million to support subcritical and other experiments. The committee expressed its support for the Advanced Certification program "to increase the confidence in changes to warhead design to increase the safety and reliability margins of the stockpile without underground testing"; these were goals of the RRW program. The committee recommended reducing nuclear test readiness to $5.4 million. Engineering Campaign. This campaign develops capabilities to assess and improve nonnuclear components of nuclear warheads. It provides technologies to improve surety, which includes such nuclear weapon characteristics as safety, security, and use control; develops means to assess weapons design, manufacturing, and certification; provides the means to qualify components to meet requirements for high-radiation environments, such as from missile defenses; and develops capabilities to detect and assess stockpile aging at an early stage. The FY2008 budget for this campaign was $169.5 million. For FY2009, the request was $142.7 million and P.L. 111-8 provided $150.0 million. Within this campaign, the request for advanced surety was $35.6 million; the committee provided $70.0 million and barred use of the funds for RRW. The Senate Appropriations Committee recommended an increase of $20.0 million. It stated that this campaign "offers the best opportunity to explore, develop and deploy state-of-the-art use control and surety devices to our stockpile." These were also goals of the RRW program. The committee expressed its support for weapons surveillance sensors and encouraged NNSA to examine "broad applications beyond on-weapons controls" for these sensors. Inertial Confinement Fusion Ignition and High Yield Campaign. This campaign is developing the tools to create extremely high temperatures and pressures in the laboratory—approaching those of a nuclear explosion—to support weapons-related research and to attract scientific talent to the Stockpile Stewardship Program. The centerpiece of this campaign is the National Ignition Facility (NIF), the world's largest laser. While NIF was controversial in Congress for many years and had significant cost growth and technical problems, completion is expected in 2009, so the controversy over NIF has waned. The FY2008 budget for this campaign was $470.2 million. The FY2009 request was $421.2 million, which included no funds for NIF construction. P.L. 111-8 provided $436.9 million. The Senate Appropriations Committee recommended $453.2 million, an increase of $32.0 million, of which $30.0 million was mainly for operation of NIF and another facility. Advanced Simulation and Computing Campaign. This campaign develops computation-based models of nuclear weapons, which integrate data from other campaigns, past test data, laboratory experiments, and elsewhere to create what NNSA calls "the computational surrogate for nuclear testing," thereby enabling "comprehensive understanding of the entire weapons lifecycle from design to safe processes for dismantlement." It includes funds for hardware and operations as well as for software. Its FY2008 budget was $574.5 million. The FY2009 request was $561.7 million. P.L. 111-8 provided $556.1 million. The report on the bill stated, "The budget submitted by NNSA has a striking lack of detail regarding the NNSA's computing strategy … This raises the concern that the acquisition strategy for new [computing] platforms will not fit within the available budget." Accordingly, the report directed NNSA to provide a report on its computing strategy. The Senate Appropriations Committee recommended $573.7 million, but stated that it "is frustrated by the lack of information regarding the computing strategy for the NNSA laboratories in this budget," and accordingly requested NNSA to prepare a report on its shared computing strategy. The committee also expressed its concern "about the declining NNSA investment in computing platforms needed to sustain the computing capability at each of the three national security labs." Readiness Campaign. This campaign develops technologies and techniques to improve the safety and efficiency of manufacturing and reduce its costs. Subprograms focus on production of high explosives, nonnuclear components, and weapons components with special materials. Another subprogram, Tritium Readiness, "reestablishes and operates the Departmental capability for producing tritium." (Tritium, an isotope of hydrogen, is used to increase the explosive force of the first stage of a nuclear weapon.) The FY2008 budget for this campaign was $158.1 million. The FY2009 request was $183.0 million. P.L. 111-8 provided $160.6 million. The Senate Appropriations Committee recommended a reduction of $25.0 million, of which $11.0 million was from tritium readiness activities "due to unobligated balances in this account." This program funds infrastructure and operations at nuclear weapons complex sites. The FY2008 budget was $1,637.4 million. For FY2009, the request was $1,720.5 million and P.L. 111-8 provided $1,674.4 million. RTBF has six subprograms. By far the largest is Operations of Facilities (FY2008 budget, $1,154.5 million; FY2009 request, $1,212.9 million). Others include Program Readiness, which supports activities occurring at multiple sites or in multiple programs (FY2008 budget, $70.1 million; FY2009 request, $73.8 million); Material Recycle and Recovery, which recovers plutonium, enriched uranium, and tritium from weapons production and disassembly (FY2008 budget, $71.6 million; FY2009 request, $72.5 million); and Construction (FY2008 budget, $285.0 million; FY2009 request, $308.5 million). The most costly and controversial item in Construction is the Chemistry and Metallurgy Research Building Replacement (CMRR) Project at Los Alamos National Laboratory (FY2008 budget, $74.1 million; FY2009 request, $100.2 million). CMRR would replace a building about 50 years old that, among other things, houses research into plutonium and supports pit production at Los Alamos. In considering the FY2008 budget, the House Appropriations Committee stated, "Proceeding with the CMRR project as currently designed will strongly prejudice any nuclear complex transformation plan. The CMRR facility has no coherent mission to justify it unless the decision is made to begin an aggressive new nuclear warhead design and pit production mission at Los Alamos National Laboratory." P.L. 111-8 provided $97.2 million for CMRR. In contrast, the Senate Appropriations Committee stated, "The current authorization basis for the existing CMR [facility] lasts only through 2010, as it does not provide adequate worker safety or containment precautions. However, deep spending cuts ... will likely result in delays that will require the laboratory to continue operations in the existing CMR facility." In its FY2009 report, the House Appropriations Committee stated, regarding CMRR and the Radioactive Liquid Waste Treatment Facility, "In the absence of critical decisions on the nature and size of the stockpile, which in turn generate requirements for the nature and capacity of the nuclear weapons complex, it is impossible to determine the capacity required of either of these facilities. It would be imprudent to design and construct on the basis of a guess at their required capacity." Accordingly, the committee recommended no funds for either project. It also recommended no funds for two other projects, stating, "Each is a new start in the absence of a strategy defining the requirements for the facility." The Senate Appropriations Committee recommended $1,703.7 million for RTBF, a reduction of $21.8 million. It recommended $16.4 million (in two accounts) for the TA-55 Reinvestment Project. It recommended reducing funds for the Uranium Processing Facility at the Y-12 Plant by $57.6 million, to $38.6 million, on grounds of inadequate justification. It recommended $125.0 million, an increase of $24.8 million, for CMRR "to make up for [previous] funding shortfalls." Weapons Activities includes several smaller programs in addition to DSW, Campaigns, and RTBF. Among them: Nuclear Weapons Incident Response: provides for use of DOE assets to manage and respond to a nuclear or radiological emergency within the United States or abroad. The FY2008 budget was $158.7 million. The FY2009 request was $221.9 million. The Senate Appropriations Committee recommended the same amount. P.L. 111-8 provided $215.3 million. Facilities and Infrastructure Recapitalization Program (FIRP): "applies new direct appropriations to address an integrated, prioritized series of repair and infrastructure projects focusing on elimination of legacy deferred maintenance that significantly increases the operational efficiency and effectiveness of the NNSA nuclear weapons complex," according to NNSA. Its FY2008 budget was $180.0 million. The FY2009 request was $169.5 million. The Senate Appropriations Committee recommended a reduction of $6.0 million. P.L. 111-8 provided $147.4 million. Environmental Projects and Operations: seeks to reduce environmental and health risks at NNSA facilities and surrounding areas by operating and maintaining certain environmental cleanup systems and by conducting long-term environmental monitoring. Its FY2008 budget was $8.6 million. For FY2009, the request was $40.6 million. The Senate Appropriations Committee recommended a reduction of $12.3 million. P.L. 111-8 provided $38.6 million. Transformation Disposition: eliminates excess NNSA facilities through demolition, transfer, or sale in order to reduce the area (gross square feet) these facilities occupy, thereby reducing costs. It had no funds for FY2008. For FY2009, the request was $77.4 million and the House Appropriations Committee recommended that amount. The committee provided this amount "notwithstanding that it is a new start in the absence of the required overall strategy, because it is a strategy-independent commendable step toward reducing the cost of operating the complex." The Senate Appropriations Committee recommended eliminating the entire request. It "agrees with the goals of the new program," but noted its frustration with DOE and the Office of Management and Budget (OMB) for funding this program while reducing by hundreds of millions of dollars decommissioning and demolition (D&D) of radiologically contaminated buildings under the control of DOE's Office of Environmental Management. "On balance, the Committee does not see the logic in DOE and OMB's priorities between these two programs D&D activities." P.L. 111-8 provided no funds for this program. Safeguards and Security consists of three elements. (1) Secure Transportation Asset provides for the transport of nuclear weapons, components, and materials safely and securely. It includes special vehicles used for this purpose, communications and other supporting infrastructure, and threat response. The FY2008 budget was $211.5 million. For FY2009, the request was $221.1 million and the Senate Appropriations Committee recommended the same amount. P.L. 111-8 provided $214.4 million. (2) Defense Nuclear Security provides operations, maintenance, and construction funds for protective forces, physical security systems, personnel security, and the like. The FY2008 budget is $765.2 million (after deducting $34.0 million for security work for others). For FY2009, the request was $737.3 million. The Senate Appropriations Committee recommended the requested amount, and P.L. 111-8 provided $735.2 million. (3) Cyber Security. For FY2008, the budget was $100.3 million. The FY2009 request was $122.5 million, and the Senate Appropriations Committee recommended that amount. P.L. 111-8 provided $121.3 million. The Senate Appropriations Committee recommended $3.5 million for congressionally directed projects. P.L. 111-8 provided $22.8 million for that purpose. The cost of Safeguards and Security is a major concern for Congress and NNSA. In the wake of 9/11, the relevant threats and the Design Basis Threat changed. Ambassador Linton Brooks, then Administrator of NNSA, stated in 2005, "We must now consider the distinct possibility of well-armed and competent terrorist suicide teams seeking to gain access to a warhead in order to detonate it in place. This has driven our site security posture from one of 'containment and recovery' of stolen warheads to one of 'denial of any access' to warheads. This change has dramatically increased security costs for 'gates, guns, guards' at our nuclear weapons sites." In response, many changes have been proposed to reduce security costs, such as reducing the area to be guarded by reducing the footprint of several sites and by consolidating uranium and plutonium at fewer sites. DOE's nonproliferation and national security programs provide technical capabilities to support U.S. efforts to prevent, detect, and counter the spread of nuclear weapons worldwide. These nonproliferation and national security programs are included in the National Nuclear Security Administration (NNSA). Funding for these programs in FY2008 was $1.336 billion, compared with the FY2007 level of $1.683 billion. The reduction reflected moving two major construction projects, the Mixed-Oxide (MOX) plant and the Pit Disassembly plant, from the Fissile Materials Disposition program to other parts of DOE. (See below.) For FY2009, the Administration agreed to move those projects out of the Nonproliferation program, and requested $1.247 billion. The House bill recommended $1.530 billion. The Senate bill would appropriate $1.422 billion, and would also return the Mixed Oxide plant project from Nuclear Power programs to Defense Nonproliferation, adding $487 million for a total of $1.909 billion. The Nonproliferation and Verification R&D program was funded at $387.2 million for FY2008. The request for FY2009 was $275.1 million. The House bill recommended $276.0 million. S. 3258 would have appropriated $350.1 million. P.L. 111-8 would appropriate $364 million. Nonproliferation and International Security programs include international safeguards, export controls, and treaties and agreements. The FY2009 request for these programs was $140.5 million, compared with $150.0 million appropriated for FY2008. The House Appropriations Committee recommended $165.3 million. The Committee "explicitly denied" funding under this program for Global Nuclear Energy Partnership (GNEP) activities. (See " Nuclear Power 2010 " section, above.) The Senate bill would have appropriated $175.5 million, but the Senate report did not mention GNEP. P.L. 111-8 appropriates $150 million. International Materials Protection, Control and Accounting (MPC&A), which is concerned with reducing the threat posed by unsecured Russian weapons and weapons-usable material, was funded at $624.5 million in FY2008; the FY2009 request was $429.7 million. The House bill recommended $509.4 million; the Senate bill recommended the requested amount, $429.7 million. P.L. 111-8 appropriatse $400 million. The goal of the Fissile Materials Disposition program is disposal of U.S. surplus weapons plutonium by converting it into fuel for commercial power reactors, including construction of a facility to convert the plutonium to "mixed-oxide" (MOX) reactor fuel at Savannah River, South Carolina, and a similar program in Russia. However, funding for the U.S. side of the program has been controversial for several years, because of lack of progress on the program to dispose of Russian plutonium. For FY2008 the Administration requested $609.5 million for Fissile Materials Disposition, including $393.8 million for construction. The House Appropriations Committee, noting that Russia had decided in 2006 not to pursue plutonium disposition in light water MOX reactors but to build fast breeder reactors instead, declared the bilateral agreement a failure and asserted that the $1.7 billion previously appropriated for facilities to be used in the U.S. side of the plutonium disposal agreement was "without any nuclear nonproliferation benefit accrued to the U.S. taxpayer." The committee recommended transferring the MOX plant and another project, the Pit Disassembly and Conversion Facility (PDCF), both at Savannah River, SC, to the nuclear energy program and NNSA's weapons program respectively. The FY2008 omnibus funding act adopted the House position, transferring the MOX plant and PDCF to other programs. The net appropriation for the NNSA's Fissile Materials Disposition program was reduced to $66.2 million. For FY2009, the Bush Administration requested $41.8 million. The House and Senate bill recommended the same amount, but the Senate bill would have returned the MOX plant to the Nonproliferation program. P.L. 111-8 appropriates $41.8 million. The adequacy of funding to address human health and environmental risks resulting from the past production of nuclear weapons is a longstanding issue. In 1989, DOE established what is now the Office of Environmental Management to consolidate its efforts to administer the cleanup of former nuclear weapons sites. These "cleanup" efforts are expansive in scope, involving the disposal of substantial volumes of radioactive and other hazardous wastes, management and disposal of surplus nuclear materials, the remediation of soil and groundwater contamination, and the decontamination and decommissioning of excess buildings and facilities. Through this office, DOE also administers the disposal of wastes and remediation of contamination at sites where the federal government conducted civilian nuclear energy research. Altogether, over 100 federal facilities across the United States were involved in the production of nuclear weapons and nuclear energy research. The total land area of these facilities encompasses over 2 million acres, approximately the size of the states of Rhode Island and Delaware combined. Although cleanup is complete at over 80 of these facilities, DOE expects cleanup to continue at some facilities for many years, even decades at the larger and more complex facilities where substantial volumes of wastes are stored and contamination is more severe. DOE estimates that total outstanding costs to complete cleanup at all of the remaining facilities could range between $205.43 billion and $260.53 billion, and that the last facility, Hanford, in the state of Washington, may not be cleaned up until as late as 2062. DOE expects additional funds to be needed for long-term operation, maintenance, and monitoring activities at many facilities for additional decades after the initial cleanup work is completed to ensure protection of human health and the environment. All of these needs combined represent a substantial financial liability to the United States for many years into the future. Some of the facilities historically administered under the Office of Environmental Management have been transferred to other offices within DOE and to the Army Corps of Engineers. In 1997, Congress directed the Office of Environmental Management to transfer responsibility for the cleanup of smaller, less contaminated facilities under the Formerly Utilized Sites Remedial Action Program (FUSRAP) to the Corps. Once cleanup of a FUSRAP site is complete, the Corps is responsible for any long-term activities that may be needed only for the first two years after the initial cleanup work is completed. After that time, jurisdiction over the site is transferred to DOE's Office of Legacy Management to administer these activities. The Office of Legacy Management also administers any long-term activities that may be needed at facilities cleaned up under the Office of Environmental Management. FY2009 appropriations for each of these DOE offices and the FUSRAP program of the Corps are discussed below, including emergency supplemental appropriations provided in the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 , H.R. 1 ), as signed into law on February 17, 2009. P.L. 111-8 provides a total of $5.99 billion for the three accounts that fund DOE's Office of Environmental Management. These accounts include the Defense Environmental Cleanup account, the Non-Defense Environmental Cleanup account, and the Uranium Enrichment Decontamination and Decommissioning (D&D) Fund account. The $5.99 billion in P.L. 111-8 is the total for these three accounts combined, after accounting for the offset for federal payment to the Uranium Enrichment D&D Fund from the Defense Environmental Cleanup account. The $5.99 billion is a $297 million increase above the $5.70 billion that Congress enacted for FY2008. The Bush Administration had proposed $5.53 billion for the Office of Environmental Management in its FY2009 budget request, submitted in February 2008. P.L. 111-5 provided $6.00 billion in FY2009 emergency supplemental appropriations for the Office of Environmental Management. This funding is in addition to the $5.99 billion in regular (i.e., non-emergency) appropriations in P.L. 111-8 , in effect more than doubling the funding that the Office has received in annual appropriations in recent years. The emergency supplemental funds are intended to stimulate the economy through the hiring of workers by private contractors that would carry out cleanup projects funded by DOE. (Contractors actually perform the work at cleanup sites with administration and oversight of the contracts by DOE personnel.) DOE is responsible for allocating the $6.00 billion in supplemental funds among individual projects, based on certain timing limitations and other conditions specified in P.L. 111-5 . For example, the funding must be obligated by the end of FY2010 (September 30, 2010), to speed the availability of these monies for individual projects. In contrast, regular appropriations for the Office of Environmental Management typically remain available until expended. DOE could face an administrative challenge in obligating such a substantial sum in less than two years. The time limit also raises questions about how the competitiveness of contracts may be affected if contract awards must be made more quickly before the funding authority expires. The adequacy of funding for the Office of Environmental Management to ensure compliance with cleanup "milestones" (i.e., deadlines) has been a prominent issue in the overall funding debate for FY2009. In presenting its FY2009 budget request in the 110 th Congress, the Bush Administration had acknowledged a $900 million shortfall for the Office of Environmental Management that could have resulted in missed milestones. Cleanup milestones can be critical in gauging efforts to address potential risks at individual facilities, as these milestones establish time frames for the completion of specific actions or steps within the cleanup process. Cleanup milestones are identified in written agreements among DOE, the Environmental Protection Agency (EPA), and state regulatory agencies. Although cleanup milestones are legally binding, the ability to meet specified deadlines depends upon the availability of funding to carry out necessary actions, the technical feasibility of those actions, and, in some cases, the resolution of other regulatory issues upon which a milestone may be based. Consequently, it should be noted that the availability of funds is not the sole factor that determines whether DOE can meet a cleanup deadline. Of the facilities still in need of cleanup, Hanford, noted above, is the largest and most complex facility administered under the Office of Environmental Management. This facility alone receives about one-third of the funding for the entire Office. P.L. 111-8 provides a total of $1.98 billion for Hanford in FY2009, including the Office of River Protection at Hanford that administers the cleanup of contamination and disposal of wastes along the Columbia River. The House amount is an increase above the Bush request of $1.83 billion, and the $1.86 billion enacted for FY2008. The adequacy of funding for Hanford has been particularly controversial for many reasons, including potential risks from radionuclides migrating through groundwater into the Columbia River. Related to this issue is the delayed construction of the Waste Treatment and Immobilization Plant. This plant is a key element in DOE's plans to treat the substantial volume of high-level radioactive waste to be removed from the underground tanks at Hanford, and to solidify that waste for permanent disposal in a geologic repository. This task is one of the more costly cleanup challenges facing DOE. Some of the tanks at Hanford are known or suspected to have leaked wastes that have migrated through groundwater that eventually discharges into the Columbia River. Similar high-level radioactive wastes also are in need of treatment and disposal at the Idaho National Laboratory and at the Savannah River facility in South Carolina, but the volume of these wastes is not as great as those at Hanford. The vast majority of the FY2009 emergency supplemental funds for the Office of Environmental Management were for defense facilities, such as Hanford. Considering the funding needs, DOE could allocate a relatively large portion of those funds to defense cleanup projects at Hanford, increasing the total amount available for FY2009 beyond the omnibus amount for the facility. Table 13 presents appropriations for the Office of Environmental Management enacted for FY2008, compared with President Bush's FY2009 budget request, FY2009 emergency supplemental appropriations enacted in P.L. 111-5 , and FY2009 omnibus appropriations in P.L. 111-8 . The table presents these respective amounts for the three statutory accounts that fund the Office of Environmental Management. A breakout of funds is provided for selected facilities and activities in which there has been broad congressional interest, with the exception of the emergency supplemental appropriations enacted in P.L. 111-5 . These supplemental funds were not broken out by individual facilities and activities within the three statutory accounts. As noted above, DOE is responsible for allocating the emergency supplemental funds within each account, based on certain timing limitations and other conditions specified in P.L. 111-5 . The FUSRAP program addresses the cleanup of sites contaminated with low-level radiation that resulted from the processing and storage of uranium and thorium ores during the early years of the U.S. nuclear weapons program. Private companies owned and operated the majority of these facilities from the 1940s to the 1960s under contract with DOE's predecessors, the Atomic Energy Commission and the Manhattan Engineer District. The Atomic Energy Commission originally established FUSRAP in 1974 under authorities provided in the Atomic Energy Act. DOE later incorporated FUSRAP into the Office of Environmental Management when that Office was established in 1989. As discussed earlier, Congress directed DOE to transfer FUSRAP to the Army Corps of Engineers in 1997 to clean up the remaining facilities, and then to transfer the facilities back to DOE's Office of Legacy Management for any long-term activities that may be needed to ensure the effectiveness of cleanup actions into the future. Congress currently appropriates funding for FUSRAP under a dedicated account within the civil works accounts of the Corps. P.L. 111-8 provides $140 million for FUSRAP for FY2009, the same as enacted for FY2008 prior to rescissions. The Bush Administration had requested $130 million for FY2009. P.L. 111-5 provided $100 million in FY2009 emergency supplemental appropriations for FUSRAP. These funds are in addition to the $140 million in regular appropriations in P.L. 111-8 , substantially increasing the funding typically appropriated in a single fiscal year. Similar to the supplemental funds for DOE's Office of Environmental Management also provided in P.L. 111-5 , the $100 million for FUSRAP is intended to help stimulate the economy through the hiring of workers to carry out cleanup projects funded by the Corps. As with DOE, the Corps is responsible for allocating these supplemental funds among individual projects, based on certain timing limitations and other conditions specified in P.L. 111-5 . In addition to obligating the funds by the end of FY2010, the Corps is restricted to using the funds only for projects that can be completed with the $100 million and would not require additional budget authority to complete. The Corps also is required to submit quarterly reports to the House and Senate Appropriations Committees within 45 days of enactment, indicating the allocation, obligation, and expenditure of the funds. The $6.00 billion in supplemental funds for the Office of Environmental Management does not appear to be subject to these reporting requirements. Table 14 compares the FY2008 enacted appropriations for the FUSRAP program to President Bush's FY2009 budget request, FY2009 emergency supplemental appropriations enacted in P.L. 111-5 , and FY2009 omnibus appropriations in P.L. 111-8 . As explained earlier, once a facility is cleaned up under DOE's Office of Environmental Management or the FUSRAP program of the Corps, responsibility for any necessary long-term operation, maintenance, and monitoring activities is transferred to DOE's Office of Legacy Management. This Office also manages the payment of pensions and post-retirement benefits of former contractor personnel who worked at these sites. As indicated in Table 15 , P.L. 111-8 provides $186.0 million for the Office of Legacy Management in FY2009, the same as President Bush had requested, but $2.9 million less than the $188.9 million enacted for FY2008. No emergency supplemental appropriations were provided for the Office of Legacy Management in P.L. 111-5 . In FY2009, all facilities administered under the Office of Legacy Management are to be funded under the "Other Defense Activities" account of DOE. The majority of these facilities were involved in the U.S. nuclear weapons program. Prior to FY2009, Congress had appropriated funding in a separate account for the relatively small number of non-defense facilities administered under the Office of Legacy Management. Funding for both types of facilities are combined into one account for FY2009. Although the appropriations for FY2009 are a slight decrease from the amount enacted for FY2008, the funding needs for the Office of Legacy Management are likely to grow significantly in future years, as more sites are transferred from the Office of Environmental Management and the FUSRAP program to perform long-term operation, maintenance, and monitoring activities after the initial cleanup work is completed. DOE's four Power Marketing Administrations (PMAs)—Bonneville Power Administration (BPA), Southeastern Power Administration (SEPA), Southwestern Power Administration (SWPA), and Western Area Power Administration (WAPA)—were established to sell the power generated by the dams operated by the Bureau of Reclamation and the Army Corps of Engineers. In many cases, conservation and management of water resources—including irrigation, flood control, recreation or other objectives—were the primary purpose of federal projects. (For more information, see CRS Report RS22564, Power Marketing Administrations: Background and Current Issues , by [author name scrubbed].) Priority for PMA power is extended to "preference customers," which include municipal utilities, cooperatives, and other "public" bodies. The PMAs sell power to these entities "at the lowest possible rates" consistent with what they describe as "sound business practice." The PMAs are responsible for covering their expenses and for repaying debt and the federal investment in the generating facilities. The Bush Administration's FY2009 request for the PMAs was $232.1 million. This is an overall reduction of $8.3 million (3.5%) compared with the FY2008 request. The individual requests for each PMA are: SEPA, $7.4 million; SWPA, $28.4 million; and WAPA, $193.3 million. In addition, $3.0 million was requested for Falcon and Amistad operations and maintenance. In FY2008 WAPA, SEPA, and SWPA proposed to assign "Agency Rates" to new obligations. The Agency Rate is the rate at which federal corporations and BPA borrow. This proposal was not enacted in FY2008 and was not included in the FY2009 request. BPA is a self-funded agency under authority granted by P.L. 93-454 (16 U.S.C. §838), the Federal Columbia River Transmission System Act of 1974, and receives no appropriations. However, it funds some of its activities from permanent borrowing authority, which was increased in FY2003 from $3.75 billion to $4.45 billion (a $700 million increase). BPA expects to use a net $269 million of borrowing authority in FY2008 ($510 million gross capital requirement minus $241 million in bond repayment) and estimates that it will use a net of $301 million ($560 million offset by $259 million in bond repayment) in FY2009. Any third-party funding agreements for capital projects may further restrict the agency's use of borrowing authority. BPA included no administrative proposals in the FY2009 budget request. In FY2008, BPA proposed to use secondary net revenues beyond $500 million to make advance amortization payments to the Treasury on BPA's bond obligations. The Appropriations Committees opposed that proposal and indicated that it hoped the Administration would not pursue a similar proposal in FY2009. The House Committee on Appropriations recommended funds at the requested level for FY2009 for each of the PMAs. Additionally, the Committee recommended no new borrowing authority for BPA in FY2009. The Senate Committee on Appropriations also recommended meeting the funding request for SEPA and SWPA, and concurred with the House regarding any additional BPA borrowing authority. However, the Senate panel recommended $218.3 million for WAPA, an increase of $25 million over the President's request and the House recommendation. The Senate Committee on Appropriations expressed concern that the President's request for WAPA relied too heavily on alternative financing methods—such as direct customer financing—for its Construction, Rehabilitation, Operations and Maintenance budget, which the Committee indicated may reduce WAPA transmission system reliability. The Committee also noted that drought and increased power prices may contribute to an increase in WAPA's funding requirements for Purchase Power and Wheeling. Independent agencies that receive funding from the Energy and Water Development bill include the Nuclear Regulatory Commission (NRC), the Appalachian Regional Commission (ARC), and the Denali Commission. The Nuclear Regulatory Commission (NRC) requested $1.017 billion for FY2009 (including $9.0 million for the inspector general's office), an increase of $90.9 million from the FY2008 funding level. Major activities conducted by NRC include safety regulation and licensing of commercial nuclear reactors, licensing of nuclear waste facilities, and oversight of nuclear materials users. The House Appropriations Committee recommended boosting NRC's total funding to $1.070 billion, while the Senate panel recommended $1.032 billion. P.L. 111-8 provides a total funding level of $1.046 billion, including $10.0 million for the inspector general. The NRC budget request included $237.5 million for new reactor activities, largely to handle anticipated new nuclear power plant license applications. Until recently, no commercial reactor license applications had been submitted to NRC since the 1970s, but higher fossil fuel prices and incentives provided by the Energy Policy Act of 2005 ( P.L. 109-58 ) prompted electric utilities to announce plans for more than 30 reactor license applications over the next few years, with the first new application submitted September 20, 2007. NRC predicts that 21 reactor license applications will be submitted through the end of FY2009. NRC's proposed FY2009 budget also included $37.3 million for licensing DOE's planned Yucca Mountain nuclear waste repository, with the expectation that DOE would submit a repository license application in FY2008; the application was submitted June 3, 2008. The House panel boosted funding for NRC's review of the Yucca Mountain application to $73.3 million, and added $15.0 million for scholarships and $1.8 million for the NRC inspector general. The Senate Appropriations Committee added $15 million to the NRC request for a new Integrated University Program to be coordinated with DOE. P.L. 111-8 provides $49.0 million for Yucca Mountain licensing. For reactor oversight and incident response, NRC's FY2009 budget request included $279.0 million. Those activities include reactor safety inspections, collection and analysis of reactor performance data, and oversight of security exercises. (For more information on protecting licensed nuclear facilities, see CRS Report RL34331, Nuclear Power Plant Security and Vulnerabilities , by [author name scrubbed] and [author name scrubbed].) The Energy Policy Act of 2005 permanently extended a requirement that 90% of NRC's budget be offset by fees on licensees. Not subject to the offset are expenditures from the Nuclear Waste Fund to pay for waste repository licensing, spending on general homeland security, and DOE defense waste oversight. The offsets in the FY2009 request would have resulted in a net appropriation of $161.5 million. The House Appropriations Committee had recommended a net appropriation of $199.2 million, and the Senate panel would have provided a net level of $163.1 million. Net appropriations for NRC in P.L. 111-8 total $174.9 million, including the inspector general's office. CRS Report RL31975, CALFED Bay-Delta Program: Overview of Institutional and Water Use Issues , by [author name scrubbed] and [author name scrubbed]. CRS Report RL33504, Water Resources Development Act (WRDA) of 2007: Corps of Engineers Project Authorization Issues , coordinated by [author name scrubbed]. CRS Report RL32064, Army Corps of Engineers Water Resources Projects: Authorization and Appropriations , by [author name scrubbed] and [author name scrubbed], CRS Report RS20866, The Civil Works Program of the Army Corps of Engineers: A Primer , by [author name scrubbed] and [author name scrubbed]. CRS Report RS21331, Everglades Restoration: Modified Water Deliveries Project , by [author name scrubbed] (pdf). CRS Report RL31098, Klamath River Basin Issues: An Overview of Water Use Conflicts , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] (pdf). CRS Report RL32131, Phosphorus Mitigation in the Everglades , by [author name scrubbed] and [author name scrubbed]. CRS Report RS21442, Hydrogen and Fuel Cell Vehicle R&D: FreedomCAR and the President ' s Hydrogen Fuel Initiative , by [author name scrubbed]. CRS Report RL33558, Nuclear Energy Policy , by [author name scrubbed]. CRS Report RL34331, Nuclear Power Plant Security and Vulnerabilities , by [author name scrubbed] and [author name scrubbed]. CRS Report RL33461, Civilian Nuclear Waste Disposal , by [author name scrubbed]. CRS Report RL32163, Radioactive Waste Streams: Waste Classification for Disposal , by [author name scrubbed] (pdf). CRS Report RL34579, Advanced Nuclear Power and Fuel Cycle Technologies: Outlook and Policy Options , by [author name scrubbed]. CRS Report R40202, Nuclear Waste Disposal: Alternatives to Yucca Mountain , by [author name scrubbed].

The Energy and Water Development appropriations bill provides funding for civil works projects of the Army Corps of Engineers (Corps), the Department of the Interior's Bureau of Reclamation (BOR), the Department of Energy (DOE), and a number of independent agencies. Key budgetary issues for FY2009 involving these programs included the distribution of Corps appropriations across the agency's authorized planning, construction, and maintenance activities (Title I); support of major ecosystem restoration initiatives, such as Florida Everglades (Title I) and California "Bay-Delta" (CALFED) (Title II); a proposal by the Bush Administration to eliminate funding for DOE's Weatherization program for low income homes (Title III, Energy Efficiency and Renewable Energy); the Bush Administration's request for funding of DOE's Reliable Replacement Warhead (RRW) nuclear weapons program, which Congress had declined to fund for FY2008 (Title III, Nuclear Weapons Stockpile Stewardship); funding for the proposed national nuclear waste repository at Yucca Mountain, Nevada (Title III: Nuclear Waste Disposal); and the Bush Administration's Global Nuclear Energy Partnership to supply plutonium-based fuel to other nations (Title III: Nuclear Energy). In considering the FY2009 budget, both the House and the Senate Appropriations Committees voted to report out an Energy and Water Development appropriations bill. However, neither bill reached the floor in either house. On September 24, 2008, the House passed H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, which continued appropriations for Energy and Water Development, among other programs, at the FY2008 level (with some exceptions) until March 6, 2009. The bill passed the Senate September 27 and was signed by the President September 30 (P.L. 110-329). An extension through March 11, 2009, was signed March 6, 2009 (P.L. 111-6). Energy and Water Development funding for all of FY2009 is included in the Omnibus Appropriations Act, 2009 (H.R. 1105/111th Congress). The House passed the measure February 25, 2009, by a vote of 245-178. It was passed by the Senate without amendment on March 10, 2009, following a cloture vote of 62-35. President Obama signed the bill March 11, 2009 (P.L. 111-8).

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On August 9, 2007, liquidity abruptly dried up for many financial firms and securities markets. Suddenly some firms were able to borrow and investors were able to sell certain securities only at prohibitive rates and prices, if at all. The "liquidity crunch" was most extreme for firms and securities with links to subprime mortgages, but it also spread rapidly into seemingly unrelated areas. The Federal Reserve (Fed) was drawn into the liquidity crunch from the start. On August 9, it injected unusually large quantities of reserves into the banking system to prevent the federal funds rate from exceeding its target. In a series of steps between September 2007 and December 2008, the Fed reduced the federal funds rate from 5.25% to a target range of 0% to 0.25%. It has been observed that the most unusual aspect of the crisis is its persistence over time. Over that time, the Fed has aggressively reduced the federal funds rate and the discount rate in an attempt to calm the waters. When this proved not to be enough, the Fed greatly expanded its direct lending to the financial sector through several new lending programs, some of which can be seen as adaptations of traditional tools and others which can be seen as more fundamental departures from the status quo. The Fed's decision to assist specific troubled financial institutions sparked controversy. In March 2008, the Fed helped the investment bank Bear Stearns avoid bankruptcy, even though Bear Stearns was not a member bank of the Federal Reserve system (because it was not a depository institution), and, therefore, not part of the regulatory regime that accompanies membership. At the same time, it created two lending facilities for other non-bank primary dealers. In September, the investment bank Lehman Brothers filed for bankruptcy (it did not receive emergency government assistance), and the financial firm American International Group (AIG), which was also not a member bank, received a credit line from the Fed in order to meet its obligations. (Additional aid to AIG was extended on three subsequent occasions.) The Fed then began directly assisting the markets for commercial paper and asset-backed securities. More recently, the Fed and federal government has guaranteed losses on assets owned by Citigroup. This marked the first time in more than 70 years that the Fed had lent to non-members, and it did so using emergency statutory authority (Section 13(3) of the Federal Reserve Act). The Dodd-Frank Wall Street Reform and Consumer Protection Act ( H.R. 4173 ) adds conditions to the Fed's emergency lending authority. H.R. 4173 was signed into law on July 21, 2010, as P.L. 111-203 . In September 2008, the housing government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were taken into conservatorship by the government. On November 25, 2008, the Fed announced that it would make large-scale purchases of the direct obligations and mortgage-backed securities (MBS) issued by the housing GSEs. As financial conditions have improved in 2009, the Fed's focus, in turn, has shifted from stabilizing financial markets to stabilizing the housing market. As fewer financial firms have accessed Fed lending facilities, direct assistance has been replaced on the Fed's balance sheet by purchases of debt and MBS issued by the housing GSEs. This has kept relatively constant the overall amount of liquidity the Fed has provided to the economy. The Fed purchased about $175 billion of GSE debt and $1.25 trillion of MBS by the spring of 2010. Most emergency facilities were allowed to expire in February 2010, but the central bank liquidity swap lines were reopened in May 2010 to provide dollar liquidity to foreign countries needed as a result of the economic crisis in Greece. One of the original purposes of the Federal Reserve Act, enacted in 1913, was to prevent the recurrence of financial panics. To that end, the Fed has been given broad authority over monetary policy and the payments system, including the issuance of federal reserve notes as the national currency. Because this authority is delegated from Congress, the Fed's actions are subject to congressional oversight. Although the Fed has broad authority to independently execute monetary policy on a day-to-day basis, the Fed's actions in the crisis have raised fundamental questions about the Fed's proper role, and what role Congress should play in assessing those issues. S. 896 , which was signed into law on May 20, 2009 ( P.L. 111-22 ), allows Government Accountability Office (GAO) audits of a limited subset of Fed emergency activities. H.R. 4173 removes most GAO audit restrictions, calls for a GAO audit of emergency actions, and requires disclosure of the identities of borrowers with a delay. H.R. 4173 also made comprehensive changes to the financial regulatory system. The Fed's role in prudential regulation, consumer protection regulation, payment system regulation, and systemic risk regulation was modified by this legislation. CRS Report R40877, Financial Regulatory Reform: Systemic Risk and the Federal Reserve , analyzes the effects of this legislation on the Fed's role in the regulatory system. This report reviews the Fed's actions since August 2007 and analyzes the policy issues raised by those actions. The Fed, the nation's central bank, was established in 1913 by the Federal Reserve Act (38 Stat. 251). Today, its primary duty is the execution of monetary policy through open market operations to fulfill its mandate to promote price stability and maximum employment. Besides the conduct of monetary policy, the Federal Reserve has a number of other duties: it regulates financial institutions and consumer financial products, issues paper currency, clears checks, collects economic data, and carries out economic research. Prominent in the current debate is one particular responsibility: to act as a lender of last resort to the financial system when capital cannot be raised in private markets to prevent financial panics. The next two sections explain the Fed's traditional tools, open market operations and discount window lending, and summarize its recent use of those tools. Open market operations are carried out through the purchase and sale of U.S. Treasury securities in the secondary market to alter the reserves of the banking system. By altering bank reserves, the Fed can influence short-term interest rates, and hence overall credit conditions. The Fed's target for open market operations is the federal funds rate, the rate at which banks lend to one another on an overnight basis. The federal funds rate is market determined, meaning the rate fluctuates as supply and demand for bank reserves change. The Fed announces a target for the federal funds rate and pushes the market rate toward the target by altering the supply of reserves in the market through the purchase and sale of Treasury securities. More reserves increase the liquidity in the banking system and, in theory, should make banks more willing to lend, spreading greater liquidity throughout the financial system. When the Fed wants to stimulate economic activity, it lowers the federal funds target, in what is referred to as expansionary policy. Lower interest rates stimulate economic activity by stimulating interest-sensitive spending, which includes physical capital investment (e.g., plant and equipment) by firms, residential investment (housing construction), and consumer durable spending (e.g., automobiles and appliances) by households. Lower rates would also be expected to lead to a lower value of the dollar, all else equal. A depreciated dollar would stimulate exports and the output of U.S. import-competing firms. To reduce spending in the economy (called contractionary policy), the Fed raises interest rates, and the process works in reverse. The Fed's actions with regards to open market operations have taken two forms in the crisis. First, a loss of liquidity in the interbank lending market has forced the Fed to inject unusually large volumes of reserves into the market on several occasions since August 2007. These actions have been necessary to maintain the availability of reserves at the existing federal funds target. Second, the Fed has reduced the federal funds target on numerous occasions over the course of the crisis. On September 18, 2007, the Fed reduced the federal funds target rate by 0.5 percentage points to 4.75%, stating that the change was "intended to forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets." Since then, the Fed has aggressively lowered interest rates several times. The Fed decides whether to change its target for the federal funds rate at meetings scheduled every six weeks. In normal conditions, the Fed would typically leave the target unchanged or change it by 0.25 percentage points. From September 2007 to March 2008, the Fed lowered the target at each regularly scheduled meeting, by an increment larger than 0.25 percentage points at most of these meetings. It also lowered the target by 0.75 percentage points at an unscheduled meeting on January 21, 2008. Although financial conditions had not returned to normal, the Fed kept the federal funds rate steady from April 30, 2008, until October 9, 2008, when it again reduced the federal funds rate, this time by 0.5 percentage points, to 1.5%. Unusually, this rate reduction was coordinated with several foreign central banks. On December 16, 2008, the Fed established a target range of 0% to 0.25% for the federal funds rate. Even before December 2008, the Fed began supplying the federal funds market with a greater quantity of bank reserves than needed to reach the federal funds target, a policy that has been described as "quantitative easing." Because the Fed has only one tool, it cannot meet more than one target at once. As long as the Fed was willing to create liquidity on demand, the federal funds rate was unlikely to meet its target. Therefore, after the Fed began focusing on meeting the financial sector's liquidity needs in September, the federal funds rate began undershooting the Fed's target on a regular basis. In December 2008, the Fed began providing so much liquidity that the interest rate target often fell close to zero. The target range of 0% to 0.25% set in December can be seen as an acknowledgment by the Fed that targeting interest rates had been subordinated to the goal of providing ample liquidity to the financial system for the time being. Initially, quantitative easing was implemented through direct lending, but even after that liquidity was no longer sought by financial firms through the Fed's lending facilities, quantitative easing was continued through large purchases of Treasury securities, Agency securities, and Agency mortgage-backed securities in an attempt to continue stimulating the economy. According to one estimate, the Fed purchased 22% of the entire available stock of these assets. The Fed can also provide liquidity to member banks (depository institutions that are members of the Federal Reserve system) directly through discount window lending. Discount window lending dates back to the early days of the Fed, and was originally the Fed's main policy tool. (The Fed's main policy tool shifted from the discount window to open market operations several decades ago.) Loans made at the discount window are backed by collateral in excess of the loan value. A wide array of assets can be used as collateral; loans and asset-backed securities are the most frequently posted collateral. Although not all collateral has a credit rating, those that are rated typically have the highest rating. Most discount window lending is done on an overnight basis. Unlike the federal funds rate, the Fed sets the discount rate directly through fiat. During normal market conditions, the Fed discouraged banks from borrowing at the discount window on a routine basis, believing that banks should be able to meet their normal reserve needs through the market. In 2003, the Fed made that policy explicit in its pricing by changing the discount rate from 0.5 percentage points below to 1 percentage point above the federal funds rate. A majority of member banks do not access the discount window in a typical year. Thus, the discount window has played a secondary role in policymaking to open market operations. On August 17, 2007, the Fed began reducing the discount rate—about a month before it first reduced the federal funds rate. Since then, the discount rate has been lowered several times, typically at the same time as the federal funds rate. Over that period, the Fed has reduced the spread between the federal funds rate and the discount rate, but kept the spread positive. When the federal funds rate was allowed to fall to zero beginning in December 2008, the discount rate was set at 0.5%. From 1959 to 2007, discount window lending outstanding never surpassed $8 billion, and was usually well below $1 billion. Discount window lending (in the primary credit category) increased from a daily average of $45 million outstanding in July 2007 to $1,345 million in September 2007. Lending continued to increase to more than $10 billion outstanding per day from May 2008, and peaked at $111 billion in October 2008, but was superseded in economic significance by the creation of the " Term Auction Facility " in December 2007. Discount window lending fell steadily throughout 2009, and by mid-2010, it had returned to pre-crisis levels. The Fed's traditional tools are aimed at the commercial banking system, but current financial turmoil has occurred outside of the banking system as well. The inability of traditional tools to calm financial markets since August 2007 has led the Fed to develop several new tools to fill perceived gaps between open market operations and the discount window. Traditionally, the lender of last resort function has focused on the banking system, and the Fed's relationship with the banking system, encompassing costs and privileges, is prescribed in detail by the Federal Reserve Act. Many of the new facilities are aimed at other parts of the financial system, however, and the Federal Reserve Act is largely silent on the Fed's authority outside the banking system. One exception is the broad emergency authority under Section 13(3) of the Federal Reserve Act, which the Fed has frequently invoked since the financial crisis began. A stigma is thought to be attached to borrowing from the discount window. In good times, discount window lending has traditionally been discouraged on the grounds that banks should meet their reserve requirements through the marketplace (the federal funds market) rather than the Fed. Borrowing from the Fed was therefore seen as a sign of weakness, as it implied that market participants were unwilling to lend to the bank because of fears of insolvency. In the current turmoil, this perception of weakness could be particularly damaging since a bank could be undermined by a run based on unfounded, but self-fulfilling fears. Ironically, this meant that although the Fed encourages discount window borrowing so that banks can avoid liquidity problems, at first banks were hesitant to turn to the Fed because of fears that doing so would spark a crisis of confidence. To overcome these problems, the Fed created the supplementary Term Auction Facility (TAF) in December 2007. Discount window lending is initiated at the behest of the requesting institution—the Fed has no control over how many requests for loans it receives. The TAF allows the Fed to determine the amount of reserves it wishes to make available to banks, based on market conditions. The auction process determines the rate at which those funds will be lent, with all bidders receiving the lowest winning bid rate. The winning bid may not be lower than the prevailing federal funds rate. Determining the rate by bid provides the Fed with additional information on how much demand for reserves exists. Any depository institution eligible for discount window lending can participate in the TAF, and hundreds have accessed it or the discount window at a time since its inception. Auctions through the TAF have been held twice a month beginning in December 2007. The amounts auctioned have greatly exceeded discount window lending, which averages in the hundreds of millions of dollars outstanding daily in normal times and more than $10 billion outstanding since May 2008. The TAF initially auctioned up to $20 billion every two weeks, but this amount was increased on several occasions to as much as $150 billion (and currently up to $125 billion) every two weeks. Loans outstanding under the facility peaked at $493 billion in March 2009, and have fallen steadily since. Like discount window lending, TAF loans must be fully collateralized with the same qualifying collateral. Loans and asset-backed securities are the most frequently posted collateral. Although not all collateral has a credit rating, those that are rated typically have the highest rating. As with discount window lending, the Fed faces the risk that the value of collateral would fall below the loan amount in the event that the loan was not repaid. For that reason, the amount lent diminishes as the quality of the collateral diminishes. Most borrowers borrow much less than the posted collateral. Loans mature in 28 days—far longer than overnight loans in the federal funds market or the typical discount window loan. (In July 2008, the Fed began making some TAF loans that matured in 84 days.) Another motivation for the TAF may have been an attempt to reduce the unusually large divergence that had emerged between the federal funds rate and interbank lending rates for longer maturities. This divergence, which can be seen as a sign of how much liquidity had deteriorated in spite of the Fed's previous efforts, became much smaller after December 2007. In subsequent periods of market stress, such as September 2008, the divergence reemerged. The evidence on the effectiveness of the TAF in reducing this divergence is mixed. The TAF program was announced as a temporary program (with no fixed expiration date) that could be made permanent after assessment. Given that the discount rate is set higher than the federal funds rate to discourage its use in normal market conditions, it is unclear what role a permanent TAF would fill, unless the funds auctioned were minimal in normal market conditions. A permanent TAF would seem to run counter to the philosophy governing the discount window that financial institutions, if possible, should rely on the private sector to meet their short-term reserve needs during normal market conditions. The Fed has not held a TAF auction since March 2010. For many years, the Fed has allowed primary dealers (see box for definition) to swap Treasuries of different maturities or attributes with the Fed on an overnight basis through a program called the System Open Market Account Securities Lending Program to help meet the dealers' liquidity needs. (While all Treasury securities are backed by the full faith and credit of the federal government, some securities are more liquid than others, mainly because of differences in availability.) Securities lending has no effect on general interest rates or the money supply because it does not involve cash, but can affect the liquidity premium of the securities traded. Because the loans were overnight and collateralized with other Treasury securities, there was very little risk for the Fed. On March 11, 2008, the Fed set up a more expansive securities lending program for the primary dealers called the Term Securities Lending Facility (TSLF) using emergency authority under Section 13(3) of the Federal Reserve Act. Under this program, up to $75 billion (previously up to $200 billion) of Treasury securities could be lent for 28 days instead of overnight. Loans could be collateralized with private-label MBS with an AAA/Aaa rating, agency commercial mortgage-backed securities, and agency collateralized mortgage obligations. On September 14, 2008, the Fed expanded acceptable collateral to include all investment-grade debt securities. Given the recent drop in MBS and other asset prices, this made the new lending program considerably more risky than the old one. But the scope for losses is limited by the fact that the loans are fully collateralized with a "haircut" (i.e., less money is loaned than the value of the collateral), and if the collateral loses value before the loan is due, the Fed can call for substitute collateral. In addition, most of the collateral that has been posted received a high rating from a credit rating agency. The first auction on March 27 involved $75 billion of securities. In August 2008, the program was expanded to allow the primary dealers to purchase up to $50 billion of options (with prices set by auction) to swap for Treasuries through the TSLF. The TSLF was announced as a temporary facility. In July 2009, the Fed announced that primary dealers could also swap their assets for the Fed's Agency debt securities. Securities lent through all programs peaked at $260 billion on October 1, 2008. Since August 2009, no securities have been borrowed through this facility. The facility expired at the end of January 2010. By allowing the primary dealers to temporarily swap illiquid assets for highly liquid assets such as Treasuries, "[t]he TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally," according to the Fed. According to research from the New York Fed, the spreads between repos backed by GSE debt and MBS and repos backed by Treasuries fell from over 1 percentage point before the first TSLF auction to less than 0.2 percentage points by April 2008. Given the timing of the announcement—less than a week before the failure of one of its primary dealers, Bear Stearns—critics have alleged that the program was created, in effect, in an attempt to rescue Bear Stearns from its liquidity problems. As will be discussed below, the Fed would take much larger steps to aid Bear Stearns later the same week. On March 16—a day too late to help Bear Stearns—the Fed announced the creation of the Primary Dealer Credit Facility (PDCF), a new direct lending program for primary dealers very similar to the discount window program for depository institutions. Loans are made through the PDCF on an overnight basis at the discount rate, limiting their riskiness. Acceptable collateral initially included Treasuries, government agency debt, and investment grade corporate, mortgage-backed, asset-backed, and municipal securities. On September 14, 2008, the Fed expanded acceptable collateral to include certain classes of equities. Many of the classes of eligible assets can and have fluctuated significantly in value. Fees will be charged to frequent users. The program was announced as lasting six months, or longer if events warrant. The program is authorized under paragraph 3 of Section 13 of the Federal Reserve Act. The facility was subsequently extended, but allowed to expire at the end of January 2010. Borrowing from the facility has been sporadic, with average daily borrowing outstanding above $10 billion in the first three months, and falling to zero in August 2008. Much of this initial borrowing was done by Bear Stearns, before its merger with J.P. Morgan Chase had been completed. Loans outstanding through the PDCF peaked at $148 billion during the week of October 1, 2008. Since May 2009, outstanding loans through the PDCF have been zero, because of improvement in the financial system and because the largest investment banks converted into or were acquired by bank holding companies in late 2008, making them eligible to access other Fed lending facilities. Although the program shares some characteristics with the discount window, the fact that the program was authorized under paragraph 3 of Section 13 of the Federal Reserve Act suggests that there is a fundamental difference between this program and the Fed's normal operations. The Fed is referred to as the nation's central bank because it is at the center of the banking system—providing reserves and credit, and acting as a regulator, clearinghouse, and lender of last resort to the banking system. The privileges for banks that come from belonging to the Federal Reserve system—access to Fed credit—come with the costs of regulation to ensure that banks do not take excessive risks. Although the primary dealers are subject to certain capital requirements, they are not necessarily part of the banking system, and do not fall under the same "safety and soundness" regulatory structure as banks. In November 2008, the Fed created the Term Asset-Backed Securities Loan Facility (TALF) in response to problems in the market for asset-backed securities (ABS). According to the Fed, "new issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums." Data support the Fed's view: issuance of non-mortgage asset backed securities fell from more than $175 billion per quarter from 2005 through the second quarter of 2007 to $5 billion in the fourth quarter of 2008, according to the Securities Industry and Financial Markets Association (SIFMA). The Fed fears that if lenders cannot securitize these types of loans, less credit will be extended to consumers, and eventually households will be forced to reduce consumption spending, which would exacerbate the economic downturn. The TALF is intended to stimulate the issuance of new securities backed by pools of the following assets: auto loans or leases, including motorcycles, recreational vehicles (including boats), and commercial, rental, and government fleets; credit cards, consumer and corporate; student loans, private and government guaranteed; SBA-guaranteed small business loans; business equipment loans, including retail and leases; floorplan loans for inventories, including auto dealers; mortgage servicing advances; commercial mortgages; and insurance premium finance loans. In May 2009, the Fed began accepting legacy commercial mortgage-backed securities (CMBSs). The Fed announced that the TALF may later be expanded to other classes of ABS. In March 2009, the Treasury announced that TALF may be expanded in the future to include private-label residential MBS, and collateralized debt and loan obligations. To date, most TALF loans have been backed by auto, credit card, and student loans. Rather than purchase ABS directly, the Fed will make non-recourse loans to any private U.S. company or subsidiary with a relationship with a primary dealer to purchase recently issued ABS receiving the highest credit rating, using the ABS as collateral. The minimum loan size will be $10 million. If the ABS lose value, the losses will be borne by the Fed and the Treasury (through the TARP program) instead of by the borrower—an unusual feature for a Fed lending facility. The Fed will lend less than the current value of the collateral, so the Fed would not bear losses on the loan until losses exceed the value of the "haircut" (different ABS receive different haircuts). The loans will have a term of up to three years for most types of assets (and up to five years for some types of assets), but can be renewed. Interest rates will be set at a markup over different maturities of LIBOR or the federal funds rate, depending on the type of loan and underlying collateral. If the loans are not repaid, the Treasury will bear the first $20 billion in total losses on the underlying collateral, and the Fed will bear any additional losses. Treasury will receive interest in return for bearing this risk. The Treasury's losses will be financed through the Troubled Asset Relief Program (TARP), authorized by P.L. 110-343 . In addition, TARP has already loaned the TALF program $100 million to finance initial administrative costs. It was originally proposed that ABS issuers would be subject to TARP's executive compensation restrictions. Subsequently, in a letter to the Special Inspector General for TARP, the General Counsel of the Treasury reasoned that the Fed, not the TALF loan recipients nor the ABS issuers, is the recipient of TARP funds, and so executive compensation restrictions do not apply to TALF. TALF has some similarities to TARP as it was originally envisioned, with the primary differences being that the Fed is lending to purchase rather than directly purchasing assets, and the assets backing the loans are mostly newly or recently issued as opposed to "troubled" existing assets. Because the Treasury's funds will finance loan losses rather than asset purchases, the $20 billion will support a much larger volume of assets than would be possible through direct purchase via TARP. In March 2009, Treasury announced a new Public-Private Partnership Investment Program (PPIP) within TARP. Under this program, private investors will receive matching capital from TARP to purchase up to $500 billion to $1 trillion of legacy loans and securities. These legacy securities are defined as existing ABS backed by mortgages and other assets. Treasury has announced that private partners will be able to use loans from TALF (and other sources) to finance the purchase of these legacy securities. In May 2009, the Fed began accepting legacy commercial mortgage-backed securities (CMBSs) as the first class of legacy securities eligible for TALF. PPIP has also turned out to be much smaller than envisioned—as of May 2010, Treasury had pledged a maximum of $30 billion for PPIP-Securities. The Fed originally announced TALF as a $200 billion program, and Treasury expressed the desire to see it increased to $1 trillion. As it turns out, TALF lending grew slowly after inception, and peaked at $48 billion on March 17, 2010. The low lending totals seem less indicative of the unpopularity of TALF, and more indicative of the continued depressed state of the private securitization market. According to data from SIFMA, non-mortgage ABS issuance rose to $52 billion per quarter in the first two full quarters that TALF was in operation, but fell to $32 billion per quarter in the next two quarters—a far cry from issuance of more than $175 billion per quarter before the crisis. Nevertheless, a review of the program by the Federal Reserve Bank of Dallas argues that TALF should be credited with a decline in ABS spreads against Treasury bonds and a rise in ABS issuance. The facility expired at the end of June 2010 for loans against newly issued CMBS and March 2010 for loans against other assets. Many large firms routinely issue commercial paper, which is short-term debt purchased directly by investors that matures in less than 270 days, with an average maturity of 30 days. There are three broad categories of commercial paper issuers: financial firms, non-financial firms, and pass-through entities that issue paper backed by assets. The commercial paper issued directly by firms tends not to be backed by collateral, as these firms are viewed as large and creditworthy and the paper matures quickly. Individual investors are major purchasers of commercial paper through money market mutual funds and money market accounts. The Securities and Exchange Commission regulates the holdings of money market mutual funds, limiting their holdings to highly rated, short-term debt; thus, investors widely perceived money market mutual funds as safe and low risk. On September 16, 2008, a money market mutual fund called the Reserve Fund "broke the buck," meaning that the value of its shares had fallen below face value. This occurred because of losses it had taken on short-term debt issued by Lehman Brothers, which filed for bankruptcy on September 15. Money market investors had perceived "breaking the buck" to be highly unlikely, and its occurrence set off a run on money market funds, as investors simultaneously attempted to withdraw an estimated $250 billion of their investments—even from funds without exposure to Lehman. This run greatly decreased the demand for new commercial paper. Firms rely on the ability to issue new debt to roll over maturing debt to meet their liquidity needs. Fearing that disruption in the commercial paper markets could make overall problems in financial markets more severe, the Fed announced on September 19 that it would create the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF). This facility would make non-recourse loans to banks to purchase asset-backed commercial paper. Because the loans were non-recourse, the banks would have no further liability to repay any losses on the commercial paper collateralizing the loan. On October 1, 2008, daily loans outstanding peaked at $152 billion. The AMLF would soon be superseded in importance by the creation of the Commercial Paper Funding Facility, and lending fell to zero in October 2009. The temporary facility was authorized under Section 13(3) of the Federal Reserve Act, and was subsequently extended until the end of January 2010. Although the creation of the AMLF and the Treasury's temporary guarantee of money market mutual fund deposits had eased conditions in the commercial paper market, the market remained strained. For example, commercial paper outstanding fell from more than $2 trillion outstanding in August 2007 to $1.8 trillion on September 7, 2008, to $1.6 trillion on October 1, 2008. The yield on 30-day, AA-rated asset-backed commercial paper rose from 2.7% on September 8, 2008, to 5.5% on October 7, 2008. Because of the importance of commercial paper for meeting firms' liquidity needs, the Fed decided to take stronger action to ensure that the market was not disrupted. On October 7, it announced the creation of the Commercial Paper Funding Facility (CPFF), a special purpose vehicle (SPV) that would borrow from the Fed to purchase all types of three-month, highly rated U.S. commercial paper, secured and unsecured, from issuers. The Fed argued that the assurance that firms will be able to roll over commercial paper at the CPFF will encourage private investors to buy commercial paper again. The interest rate charged by the CPFF was set at the three month overnight index swap plus 1 percentage point for secured corporate debt, 2 percentage points for unsecured corporate debt, and 3 percentage points for asset-backed paper. The CPFF can buy as much commercial paper from any individual issuer as that issuer had outstanding in the year to date. Any losses borne by the CPFF would ultimately be borne by the Fed. The Fed has hired the private company PIMCO to manage the SPV's assets. The facility is authorized under Section 13(3) of the Federal Reserve Act, and was subsequently extended until the end of January 2010. At its peak in January 2009, the CPFF held $351 billion of commercial paper, and has fallen steadily since. Goldman Sachs reports that conditions in commercial paper markets improved significantly after the creation of the CPFF (although they remained worse than before the crisis), and in January 2009, the CPFF was holding far more commercial paper than the total that had been issued since its inception. The CPFF is notable on several grounds. First, it is the first Fed standing facility in modern times with an ongoing commitment to purchase assets, as opposed to lending against assets. Technically, the Fed is lending against the assets of the SPV, but the SPV was created by the Fed and is controlled by the Fed. Second, in the case of non-financial commercial paper, it is the first time in 50 years that the Fed is providing financial assistance to non-financial firms. (In practice, the Fed has bought very little commercial paper issued by non-financial firms. ) Third, in the case of commercial paper that is not asset backed, it is unusual for the Fed (through the SPV) to purchase uncollateralized debt. Indeed, the Federal Reserve Act would seem to rule out the direct purchase of uncollateralized debt. On October 21, 2008, the Fed announced the creation of the Money Market Investor Funding Facility (MMIFF), and pledged to lend it up to $540 billion. The MMIFF will lend to private sector SPVs that invest in commercial paper issued by highly rated financial institutions. Each SPV will be owned by a group of financial firms and can only purchase commercial paper issued by that group. These SPVs can purchase commercial paper from money market mutual funds and similar entities facing redemption requests to help avoid runs such as the run on the Reserve Fund. The facility expired at the end of October 2009 without ever being used. The Fed's director of the Division of Monetary Affairs reported that money market funds were unwilling to use it because "investors would recognize that leverage would ... intensify their incentive to run." In July 2008, the stock prices of Fannie Mae and Freddie Mac, the housing GSEs, came under increasing pressure, leading to fears that they would be unable to roll over debt and become illiquid. On July 13, 2008, the Fed authorized lending to the housing GSEs, but this authority was not used at that point. On September 7, 2008, Treasury placed the two housing GSEs into conservatorship. On September 19, 2008, the Fed announced that it would purchase debt obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks through open market operations. On November 25, 2008, the Fed announced it would purchase up to $100 billion of direct obligations (e.g., bonds) issued by these institutions and up to $500 billion of MBS guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae, a government agency. GSE obligations will be purchased through auctions and MBS will be purchased on the Fed's behalf by private investment managers. Adjustable rate MBS, collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and mortgage derivatives would not be eligible for purchase under the program. Assets purchased under these programs will be held passively and long-term. On March 18, 2009 the Fed announced an increase in the purchase commitment of up to $1.25 trillion in MBS and $200 billion of GSE obligations. In September 2009, the Fed announced that it would complete these purchases by the end of the first quarter of 2010. In November 2009, the Fed announced that it would purchase only $175 billion of Agency debt securities due to limited availability. The Fed argued that these programs would "reduce the cost and increase the availability of credit for the purchase of houses." Support to mortgage markets through these programs can be seen as indirect and selective, however. The Fed is not providing or purchasing mortgages directly, nor is it purchasing newly issued MBS. By purchasing existing MBS from the secondary market, the price should rise, and that may induce more MBS to be issued. If more MBS are issued, then the increased availability of credit to mortgage markets would be expected to cause mortgage rates to fall. Further, the Fed is accepting MBS issued by GSEs but not by private firms, even though the GSEs have issued more MBS in 2008 than before the crisis started, while private-label issuance has dried up almost entirely, according to data from the Securities Industry and Financial Markets Association. Further, overall mortgage rates have been low during the crisis, but access has been limited to highly qualified lenders. Increasing the demand for GSE-issued MBS and GSE debt would be expected to primarily reduce already low mortgage rates, and increase borrower access only indirectly, at best. Mortgage rates fell noticeably after the Fed announced that the programs had begun, although the amounts of securities purchased by the Fed at that point were small. Subsequently, mortgage rates rose despite the Fed's purchases, presumably because of the economy's improvement. One concern is that mortgage rates could rise after the Fed's purchases are complete, and the housing market will not have recovered by then. These programs did not require the use of Section 13(3) emergency authority. Transactions involving agency debt are authorized under Section 13(13) and 14b of the Federal Reserve Act. The Fed's programs are similar to two Treasury programs, the GSE MBS Purchase Program and the GSE Credit Facility, already in place. Since the Treasury programs were authorized to provide the GSEs with unlimited financial assistance through the end of 2009, it is not clear why the Fed felt that the Treasury programs needed to be supplemented. In December 2007, the Fed announced the creation of temporary reciprocal currency agreements, known as swap lines, with the European Central Bank and the Swiss central bank. These agreements let the Fed swap dollars for euros or Swiss francs for a fixed period of time. Since September 2008, the Fed has extended similar swap lines to central banks in several other countries. To date, most of the swaps outstanding have been with the European Central Bank and Bank of Japan. In October 2008, it made the swap lines with certain countries unlimited in size. Interest is paid to the Fed on a swap outstanding at the rate the foreign central bank charges to its dollar borrowers. The temporary swaps are repaid at the exchange rate at the time of the original swap, meaning that there is no downside risk for the Fed if the dollar appreciates in the meantime (although the Fed also does not enjoy upside gain if the dollar depreciates). The swap lines are currently authorized through the end of January 2010. Except in the unlikely event that the borrowing country's currency becomes unconvertible in foreign exchange markets, there is no credit risk involved for the Fed. Swaps outstanding peaked at $583 billion in December 2008, and have fallen steadily since. The swap lines are intended to provide liquidity to banks in non-domestic denominations. For example, many European banks have borrowed in dollars to finance dollar-denominated transactions, such as the purchase of U.S. assets. Normally, foreign banks could finance their dollar-denominated borrowing through the private inter-bank lending market. As banks have become reluctant to lend to each other through this market, central banks at home and abroad have taken a much larger role in providing banks with liquidity directly. But normally banks can only borrow from their home central bank, and central banks can only provide liquidity in their own currency. The swap lines allow foreign central banks to provide needed liquidity in dollars. As such, the swap lines directly benefit foreign borrowers who need access to dollars. But the swap lines indirectly benefit the United States by promoting the use of the dollar as the "reserve" currency, which results in more seigniorage (earnings from currency) for the United States, as well as intangible benefits. Initially, the swap lines were designed to allow foreign central banks to acquire U.S. dollars. In April 2009, the swap lines were modified so that the Fed could access foreign currency to provide to its banks as well; to date, the Fed has not accessed foreign currency through these lines. The swap lines were ended in February 2010, but reopened with five countries in May 2010 in response to the crisis in Greece. To date, their use in 2010 was much more limited than in 2008 to 2009. Banks hold some assets in the form of cash reserves stored in their vaults or in accounts at the Fed to meet daily cash-flow needs and required ratios imposed by the Fed. At times before the federal funds target was reduced to zero in December 2008, the Fed faced conflicting goals—it sought to ensure that banks have enough reserves to remain liquid, but it also sought to maintain its target for the federal funds rate to meet its economic goals. The federal funds rate is the market rate in the private market where a bank with excess reserves lends them overnight to other banks. At times, ensuring that all banks have adequate reserves has resulted in an overall level of reserves in the market that has pushed the federal funds rate below its target. In other words, the only way for the Fed to make sure that each bank has enough reserves has been to oversupply the banking system as a whole with liquidity at the given federal funds target. To avoid this problem, Congress authorized the Fed to pay interest on bank reserves in the Emergency Economic Stabilization Act of 2008 ( H.R. 1424 / P.L. 110-343 ). By setting an interest rate on bank reserves close to the federal funds rate, the Fed would in effect place a floor on the rate. In theory, the federal funds rate would not fall below the interest rate on reserves because banks would rather hold excess reserves to earn interest than lend them out to other banks at a lower interest rate. Paying interest on reserves may also encourage banks to hold more reserves overall, which may somewhat reduce the likelihood that banks will have liquidity problems in the future. Paying interest on reserves does not encourage banks to increase overall lending to firms and households, however, because it increases the attractiveness of holding reserves. Thus, it is not a policy that stimulates the economy, at least in any direct sense; on the contrary, it prevents the increase in liquidity to banks from stimulating the economy by preventing the federal funds rate from falling. The interest rate on excess reserves was initially set at 0.75 percentage points less than the federal funds rate. In the short term, paying interest on reserves did not succeed in placing a floor under the federal funds target. Immediately after the Fed began paying interest, the federal funds rate was still falling below the target, and some days was even below the interest rate on reserves. In response, the Fed subsequently reduced the spread between the interest rate on reserves and the federal funds rate, but the actual federal funds rate continued to fall below the target rate. When the Fed reduced the federal funds rate target to a range of 0% to 0.25% in December 2008, it set the interest rate paid on reserves to 0.25%, the high end of the target range. At that point, paying interest on reserves could no longer place a floor under the federal funds rate, the stated rationale for its authorization. P.L. 110-343 gave the Fed permanent authority to pay interest on reserves. Once financial conditions return to normal, the liquidity benefits from paying interest will be less important (since banks will again be able to meet reserve needs through the federal funds market), and the primary remaining benefit would be a reduction in the volatility of the federal funds rate. The Fed previously intervened in the federal funds market on a daily basis to keep the market rate close to the target, sometimes unsuccessfully. The volatility partly resulted from banks devoting resources to activities that minimize reserves, such as "sweep accounts." Paying interest on reserves reduces the Fed's profits, and thus reduces its remittances to the Treasury, thereby increasing the budget deficit, all else equal. It can be viewed as a transfer from the federal government to the banks, although in the long run, competition makes it likely that the banks will pass on the benefit to depositors in the form of higher interest paid on deposits. From Congress's perspective, the benefit of a less volatile target rate and less resources spent minimizing reserves would have to be weighed against the lost federal revenue, over time. The decision to pay interest on required, as well as excess, reserves also increases the cost of the policy without any additional benefit to liquidity or reduced volatility (because banks must keep required reserves even if no incentive is offered). The growth in the Fed's balance sheet has raised concerns about the future implications for inflation. The Fed has argued that paying interest on reserves can help prevent its balance sheet growth from becoming inflationary. It approved "term deposits" of up to six months for bank reserves in April 2010. The interest rate paid by term deposits will be determined by auction. Over the course of the year, several financial firms that were deemed "too big to fail" received financial assistance from the Fed in the form of loans, troubled asset purchases, and asset guarantees. This assistance went beyond its traditional role of acting as a lender of last resort by providing loans to illiquid but solvent firms. In a joint announcement in March 2009, the Treasury and Fed stated a desire in the long run to transfer assets acquired by the Fed (via the Maiden Lane LLCs) from Bear Stearns and the American International Group (AIG) to the Treasury, but to date have not taken any steps to do so. H.R. 4173 alters Section 13(3) authority in an attempt to prevent assistance to individual firms in the future. The investment bank Bear Stearns came under severe liquidity pressures in early March 2008, in what many observers have coined a non-bank run. On Friday, March 14, 2008, JPMorgan Chase announced that, in conjunction with the Federal Reserve, it had agreed to provide secured funding to Bear Stearns, as necessary. Through its discount window, the Fed agreed to provide $13 billion of back-to-back financing to Bear Stearns via JPMorgan Chase. It was a non-recourse loan, meaning that the Fed had no general claim against JPMorgan Chase in the event that the loan was not repaid and the outstanding balance exceeded the value of the collateral. Bear Stearns could not access the discount window directly because, at that point, only member banks could borrow directly from the Fed. This loan was superseded by the events of March 16, and the loan was repaid in full on March 17, 2008. On Sunday, March 16, after negotiations between the two companies, the Fed and the Treasury, JPMorgan Chase agreed to acquire Bear Stearns. The Fed agreed to purchase up to $30 billion of Bear Stearns' assets through Maiden Lane I, a new Limited Liability Corporation (LLC) based in Delaware that it created and controls. After the merger was completed, the loan was finalized on June 26, 2008. Two loans were made to the LLC: the Fed lent the LLC $28.82 billion, and JPMorgan Chase made a subordinate loan to the LLC worth $1.15 billion, based on assets initially valued at $29.97 billion. The Fed's loan will be made at an interest rate set equal to the discount rate (2.5% when the terms were announced, but fluctuating over time) for a term of 10 years, renewable by the Fed. JPMorgan Chase's loan will have an interest rate 4.5 percentage points above the discount rate. Using the proceeds from that loan, the LLC purchased assets from Bear Stearns worth $29.97 billion at marked to market prices by Bear Stearns on March 14, 2008. On its website, the New York Fed gives information on the current fair market value of the assets by type of asset, credit rating of the assets, and geographical location of the underlying assets. At the end of 2008, 44% of the portfolio consisted of agency collateralized mortgage obligations (CMOs), 6% was non-agency CMOs, 18% was commercial loans, 3% was residential loans, 8% was swap contracts, 7% was TBA commitments, and 8% was cash or cash equivalents. More than half of the non-agency CMOs had a credit rating of AAA; about one-fifth had a junk rating. (Agency CMOs are guaranteed by the GSE that issued them, and the Treasury has pledged to maintain the GSE's solvency.) The CEO of JPMorgan Chase testified that JPMorgan Chase "kept the riskier and more complex securities in the Bear Stearns portfolio.... We did not cherry pick the assets in the collateral pool (for the LLC)." These assets are owned by the LLC, which will eventually liquidate them to pay back the principal and interest owed to the Fed and JPMorgan Chase. The LLC's assets (purchased from Bear Stearns) are the collateral backing the loans from the Fed and JPMorgan Chase. A private company, BlackRock Financial Management, has been hired to manage the portfolio. Neither Bear Stearns nor JPMorgan Chase owes the Fed any principal or interest, nor are they liable if the LLC is unable to pay back the money the Fed lent it. The New York Fed explained that the LLC was created to "ease administration of the portfolio and will remove constraints on the money manager that might arise from retaining the assets on the books of Bear Stearns." JPMorgan Chase and Bear Stearns did not receive the $28.82 billion from the LLC until the merger was completed. It was announced that the Fed is planning to begin liquidating the assets after two years. The assets will be sold off gradually, "to minimize disruption to financial markets and maximize recovery value." As the assets are liquidated, interest will continue to accrue on the remaining amount of the loan outstanding. Thus, in order for the principal and interest to be paid off, the assets will need to appreciate enough or generate enough income so that the rate of return on the assets exceeds the weighted interest rate on the loans (plus the operating costs of the LLC). Table 1 shows how the funds raised through the liquidation will be used. Any difference between the proceeds and the amount of the loans is profit or loss for the Fed, not JPMorgan Chase. Because JPMorgan Chase's $1.15 billion loan was subordinate to the Fed's $28.82 billion loan, if there are losses on the total assets, the first $1.15 billion of losses will be borne, in effect, by JPMorgan Chase, however. The interest on the loan will be repaid out of the asset sales, not by JPMorgan Chase. At the end of 2009, the value of the assets had already been written down by over $3.5 billion, exceeding the maximum losses borne by JPMorgan Chase. The CEO of JPMorgan Chase testified that "we could not and would not have assumed the substantial risks of acquiring Bear Stearns without the $30 billion facility provided by the Fed" (emphasis in original). The primary risk was presumably that the value of mortgage-related assets would continue to decline. Had the transaction been crafted as a typical discount window loan directly to JPMorgan Chase, JPMorgan Chase would have been required to pay back the principal and interest, and it (rather than the Fed) would have borne the full risk of any depreciation in value of Bear Stearns' assets. The Fed's statutory authority for its role in both Bear Stearns transactions comes from paragraph 3 of Section 13 of the Federal Reserve Act. In his testimony, Timothy Geithner, New York Fed president at the time, stated that the Fed did not have authority to acquire an equity interest in Bear Stearns or JPMorgan Chase. Yet the LLC controlled by the Fed acquired assets from Bear Stearns, and the profits or losses from that acquisition will ultimately accrue to the Fed. It is unclear why the Fed decided to create and lend to a LLC to complete the transaction, rather than engaging in the transaction directly. Although the Fed did not buy Bear Stearns' assets directly, there are certainly important policy questions raised by the Fed's creation and financing of an LLC in order to buy Bear Stearns' assets. Typically, the Fed lends money to institutions and receives collateral in return to reduce the risk of suffering a loss. When the loan is repaid, the collateral is returned to the institution. In this case, the Fed made a loan, but to a LLC they created and controlled, not to a financial institution. From the perspective of JPMorgan Chase or Bear Stearns, the transaction was a sale (to the LLC), not a loan, regardless of whether the Fed or the LLC was the principal. On September 16, 2008, the Fed announced, after consultation with the Treasury Department, that it would lend up to $85 billion to the financial institution American International Group. AIG had experienced a significant decline in its stock price and was facing immediate demands for $14 billion to $15 billion in collateral payments due to recent downgrades by credit rating agencies, according to press reports. The Fed and Treasury feared that AIG was also "too big to fail" because of the potential for widespread disruption to financial markets that would result. The Fed announced that AIG could borrow up to $85 billion from the Fed over the next two years. On September 18, the Fed announced that it had initially lent $28 billion to AIG. The interest rate on the funds drawn is 8.5 percentage points above the London Interbank Offered Rate (LIBOR), a rate that banks charge to lend to each other. A lower interest rate is charged on any funds that it is does not draw from the facility. In return, the government agreed to receive warrants that, if exercised, would give the government a 79.9% ownership stake in AIG. The Fed named three independent trustees to oversee the firm for the duration of the loan. The lending facility is backed by the assets of AIG's non-regulated subsidiaries (but not the assets of its insurance company). In other words, the Fed can seize AIG's assets if the firm fails to honor the terms of the loan. This reduces the risk that the Fed (and ultimately, taxpayers) will suffer a loss. The risk still remains that if AIG turned out to be insolvent, its assets would be insufficient to cover the amount it had borrowed from the Fed. Since AIG has been identified as too big to fail, it is unclear how its assets could be seized in the event of non-payment without precipitating failure. On October 8, 2008, the Fed announced that it was expanding its assistance to AIG and swapping cash for up to $37.8 billion of AIG's investment-grade, fixed-income securities. These securities, belonging to AIG's insurance subsidiaries, had been previously lent out and unavailable as collateral at the time of the original agreement. It has been reported that as AIG's loans matured, AIG realized losses on investments it had made with the collateral and some counterparties stopped participating in the lending program. As a result, AIG needed liquidity from the Fed to cover these losses and counterparty withdrawals. Although this assistance resembles a typical collateralized loan (the Fed receives assets as collateral, and the borrower receives cash), the Fed characterized the agreement as a loan of securities from AIG to the Fed in exchange for cash collateral. It appears the arrangement was structured this way because New York insurance law prevents AIG from using the securities as collateral in a loan. On November 10, 2008, the Federal Reserve and the U.S. Treasury announced a restructuring of the federal intervention to support AIG. As evidenced by the additional borrowing after the September 16 loan, AIG had continued to see cash flow out of the company, particularly to post collateral for the credit default swaps that were arguably the primary cause of the financial problems in the company. The revised agreement points to the tension between making the terms of the assistance undesirable enough to deter other firms from seeking government assistance in the future, compared to making the terms of assistance so punitive that it exacerbates the financial problems of the recipient firm. It also points to the fact that once a firm has been identified as too big to fail, government assistance to the firm can become open-ended, as the original amounts offered were quickly revised upward. The November 10 restructuring eased the payment terms for AIG and had three primary parts: (1) a $40 billion direct capital injection, (2) restructuring of the $85 billion loan, and (3) a $52.5 billion purchase of troubled assets. The initial $85 billion loan facility from the Federal Reserve was reduced to $60 billion, for a time period extended to five years, and the financial terms are eased considerably. Specifically, the interest rate on the amount outstanding is reduced by 5.5 percentage points (to Libor plus 3%) and the fee on undrawn funds is reduced by 7.75 percentage points (to 0.75%). While P.L. 110-343 provided for the government purchase of troubled assets, the purchases related to AIG are being done by LLCs created and controlled by the Federal Reserve. This structure is similar to that created by the Federal Reserve to facilitate the purchase of Bear Stearns by JPMorgan Chase in March 2008. There are two LLCs set up for AIG—one for residential mortgage-backed securities (RMBS) and one for collateralized debt obligations (CDO). The agreement called for the RMBS LLC (Maiden Lane II) to be lent up to $22.5 billion by the Federal Reserve and $1 billion from AIG to purchase RMBS from AIG's securities lending portfolio. The AIG loan is subordinated and AIG will bear the first $1 billion in losses should there be future losses on these securities. AIG and the Federal Reserve will "share" in any future gains, with five-sixths of future profits accruing to the Fed and one-sixth accruing to AIG. As of March 2009, the assets had lost nearly $3 billion in value, more than AIG's total loss exposure. The previous $37.8 billion loan securities lending loan facility is to be repaid and terminated with the proceeds from this LLC plus additional AIG funds if necessary. At the end of 2008, about half of the RMBS purchased were backed by subprime mortgages, and about one quarter were backed by Alt-A mortgages. Thirteen percent of the portfolio's holdings had a credit rating of AAA and 65% had a junk rating. At the end of 2009, the Maiden Lane II assets had lost $1.1 billion in value, slightly exceeding the AIG's maximum loss sharing. The agreement called for the CDO LLC (Maiden Lane III) to be lent up to $30 billion from the Federal Reserve and $5 billion from AIG to purchase CDOs on which AIG has written credit default swaps. The $5 billion loan from AIG is subordinated and AIG will bear the first $5 billion in future losses on these securities. As of March 2009, the assets had lost nearly $8.5 billion in value, more than AIG's total loss exposure. AIG and the Federal Reserve will "share" in any future gains, with five-sixths of future profits accruing to the Fed and one-sixth accruing to AIG. The Federal Reserve also indicates that the credit default swaps will be unwound at the same time that the CDOs are purchased. Many credit default swaps, however, are purchased by entities not holding the underlying CDOs; it is unclear how, or if, such credit default swaps written by AIG will be addressed. At the end of March 2009, 16% of the portfolio's holdings had a credit rating of AAA, and 72% had a junk rating. At the end of 2009, the Maiden Lane III assets had lost $0.9 billion in value, resulting in no losses to date for the Fed. Through the TARP, the Treasury purchased $40 billion in preferred shares of AIG. In addition to $40 billion in preferred shares, the Treasury also receives warrants for common shares equal to 2% of the outstanding AIG shares. AIG was the first announced non-bank to receive TARP funds. The $40 billion in preferred AIG shares now held by the Treasury are slated to pay a 10% dividend per annum, accrued quarterly. Participation in TARP triggers restrictions on executive pay as required by Congress, including a restriction on "golden parachutes" and a requirement for clawbacks on previously provided bonuses in the case of accounting irregularities. According to the November 10, 2008, AIG filings with the Securities and Exchange Commission, the amount of shares held in trust for the benefit of the U.S. Treasury will be reduced by the shares and warrants purchased under TARP, so the total equity interest currently held by the U.S. government equals 77.9% plus warrants to purchase another 2%. The warrants equal to 77.9% of AIG equity were exercised and transferred to the government on March 4, 2009. On March 2, 2009, the Treasury and Fed announced another revision of the financial assistance to AIG. On the same day, AIG announced a loss of more than $60 billion in the fourth quarter of 2008. In response to the poor results and ongoing financial turmoil, the ratings agencies were reportedly considering further downgrading AIG, which would most likely have resulted in further significant cash demands due to collateral calls. According to the Treasury, AIG "continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year and continued turbulence in the markets generally." The revised assistance is intended to "enhance the company's capital and liquidity in order to facilitate the orderly completion of the company's global divestiture program." The revised assistance includes the following: Exchange of the existing $40 billion in preferred shares purchased through the TARP program for preferred shares that "more closely resemble common equity," thus improving AIG's financial position. Dividends paid on these new shares will remain at 10%, but will be non-cumulative and only be paid as declared by AIG's board of directors. Should dividends not be paid for four consecutive quarters, the government has the right to appoint at least two new directors to the board. Commitment of up to $30 billion in additional preferred share purchases from TARP. As of October 2009, AIG had issued $3.2 billion of these shares. Reduction of interest rate on the existing Fed loan facility by removing the current floor of 3.5% over the LIBOR portion of the rate. The rate will now simply be three month LIBOR plus 3%, which is approximately 4.25%. Limit on Fed revolving credit facility will be reduced from $60 billion to $25 billion. Up to $33.5 billion of the approximately $38 billion outstanding on the Fed credit facility will be repaid by asset transfers from AIG to the Fed. Specifically, (1) $8.5 billion in ongoing life insurance cash flows will be securitized by AIG and transferred to the Fed; and (2) $25 billion in preferred interests in two of AIG's large life insurance subsidiaries will be issued to the Fed. The transfer of the preferred interest in the life insurance subsidiaries was finalized in December 2009. This effectively transfers a majority stake in these companies to the Fed, but the companies will still be managed by AIG. Assistance through the end of 2009 is summarized in Table 2 . In addition to the new assistance, AIG announced that it was forming a new holding company to include its primary property/casualty insurance subsidiaries. Since the first assistance in September 2008, AIG has sought to sell subsidiaries, including those whose equity has been transferred to the Fed, to repay the loans and reduce its holdings to a core property/casualty business. Such sales have been difficult during the ongoing financial turmoil. By effectively transferring the two life insurance subsidiaries to the Fed and gathering property casualty subsidiaries in a new holding company, AIG is arguably progressing toward this goal. CBO estimates that most of the expected government losses from assistance to AIG will accrue to TARP, in part because those claims are junior to the Fed's. In addition, CBO did not expect losses from the Maiden Lane asset purchases at the time of purchase because the Fed reported the assets were bought at current market value. It is unclear why it was necessary for the Fed to acquire the assets if they could have been sold at the same price in the private market, however. While billions of dollars in government assistance have gone to AIG, in many cases, it can be argued that AIG has essentially acted as an intermediary for this assistance. In short order after drawing on government assistance, substantial funds have flowed out of AIG to entities on the other side of AIG's financial transactions, such as securities lending or credit default swaps. If AIG had been allowed to fail and had entered bankruptcy, as was the case with Lehman Brothers, then these counterparties in many cases would have been treated as unsecured creditors and seen their claims reduced. Seen from this view, the true beneficiaries of the billions in federal assistance that have flowed to AIG has not been AIG itself, but these counterparties. On March 15, 2009, AIG released information detailing the counterparties to many of its transactions. The released information detailed $52.0 billion of direct support to AIG that went to AIGFP related transactions, $29.6 billion in Maiden Lane III CDS-related transactions, and $43.7 billion in payments to securities lending counterparties. All Fed assistance to AIG is authorized under Section 13(3) of the Federal Reserve Act, the same emergency authorization used for Bear Stearns. This authorization was needed because the Fed cannot normally lend to a financial firm that is neither primarily a depository institution (although it owns a small thrift) nor a primary dealer. Similar to Bear Stearns and AIG, Citigroup faced a sudden drop in its stock price in late 2008. Its stock price fell from $23 per share on October 1, 2008, to $3.77 on November 21, 2008, amidst investor concern about its losses. Stepping in before a potential run began, the Federal Reserve and federal government announced on November 23 that they would purchase an additional $20 billion of Citigroup preferred shares through TARP and guarantee a pool of up to $306 billion of Citigroup's assets. (The assets were valued at $301 billion when the agreement was finalized on January 16, 2009.) Citigroup announced that the assets guaranteed include mortgages, consumer loans, corporate loans, asset backed securities, and unfunded lending commitments. The guarantee was to be in place for 10 years for residential assets and five years for non-residential assets. Citigroup would exclusively bear up to the first $29 billion of losses on the pool. Any additional losses would be split between Citigroup and the government, with Citigroup bearing 10% of the losses and the government bearing 90%. The first $5 billion of any government losses would be borne by the Treasury using TARP funds; the next $10 billion would be borne by the FDIC; any further losses would be borne by the Fed through a non-recourse loan. Citigroup will pay the federal government a fee for the guarantee in the form of $7 billion in preferred stock with an 8% dividend rate and warrants to purchase common stock that were worth $2.7 billion at the time of the agreement. The assets will remain on Citigroup's balance sheet, and Citigroup will receive the income stream generated by the assets and any future capital gains. In December 2009, Citigroup and the Treasury reached an agreement to repay the outstanding $20 billion in preferred securities and to cancel the asset guarantee. As part of this agreement, Citigroup paid a termination fee of $50 million and Treasury agreed to cancel $1.8 billion worth of the trust preferred securities originally paid as a fee for the guarantee. While the asset guarantee was in place, no losses were claimed and no federal funds paid out. In the cases of Bear Stearns and AIG, management was replaced and shareholders equity was diluted to limit moral hazard problems associated with receiving government assistance. Similar steps were not taken in the case of Citigroup. On January 16, 2009, the federal government and the Federal Reserve announced that that they would purchase an additional $20 billion of Bank of America preferred shares through TARP and guarantee a pool of up to $37 billion of Bank of America's assets and derivatives with maximum potential future losses of up to $81 billion. The guarantee would remain in place for 10 years for residential mortgage-related assets and five years for all other assets. Bank of America will bear up to the first $10 billion of losses on the assets, with any subsequent losses split 90% by the government and 10% by Bank of America. The government's share of the next $10 billion of losses will be borne jointly by the FDIC and the Treasury, and any further losses will be borne by the Fed. It was announced that the assets being guaranteed were largely acquired during Bank of America's acquisition of Merrill Lynch. Bank of America will pay the federal government a fee for the guarantee in the form of $4 billion in preferred stock with an 8% dividend rate and warrants to purchase common stock worth $2.4 billion at the time of the agreement. As part of the agreement, Bank of America was prohibited from paying dividends on common stock for three years. The assets will remain on Bank of America's balance sheet, and Bank of America will receive the income stream generated by the assets and any future capital gains. Bank of America can further limit its cost and the benefit to the government by opting out of the guarantee early at its discretion. In the cases of Bear Stearns and AIG, management was replaced and shareholders equity was diluted to limit moral hazard problems associated with receiving government assistance. Similar steps were not taken in the case of Bank of America. On the other hand, the government has tried to encourage healthy financial firms to merge with troubled firms, and it may have felt that harsh terms on an agreement to guarantee assets that were in part acquired from Bank of America's takeover of Merrill Lynch would have discouraged future mergers. It has been reported that the asset guarantees to Bank of America were motivated by a desire to prevent them from withdrawing from their uncompleted merger agreement with Merrill Lynch. The agreement to guarantee Bank of America's assets was never finalized, and on September 22, 2009, it was announced that Bank of America would pay $425 million to exit the agreement. Although Bank of America never formally received government protection of its assets, an exit fee could be justified on the grounds that Bank of America benefited from the implicit support that the negotiations provided. Unlike all other institutions, currency (Federal Reserve notes) is the Fed's primary liability. Along with its holdings of Treasury securities, its assets are the loans it makes (through the discount window and the new programs detailed above) and the private assets it buys directly or holds through LLCs (e.g., for AIG and the Bear Stearns takeover). It earns profits on its assets that are largely remitted to the Treasury. Its loans and asset purchases are financed by increasing its liabilities (Federal Reserve notes), and the financing does not necessarily result in any inherent cost for the Treasury. Indeed, if the loans are repaid, they would increase the profits of the Fed, which in turn would increase the Fed's remittances to the Treasury. Even if the loans are not repaid, most are fully collateralized (usually over-collateralized), so the Fed would not suffer losses unless the collateral had lost value. In addition, most of its loans are made with recourse, which means that borrowers are still liable if the collateral loses value. The Fed had net income of $38.8 billion and remitted $34.9 billion to the Treasury in 2008. Net income increased to $52.4 billion and remittances to the Treasury rose to $47.4 billion in 2009. In the past, most of the Fed's net income has derived from the interest on its Treasury securities holdings, not its loans. By the end of 2008, its loans and private assets holdings were much larger than its Treasury holdings (see Table 4 ). The earnings and any losses the Fed took on its loans would increase or reduce its net income, respectively. If loan losses caused an overall net loss, the Fed's capital (the excess of its assets compared with its liabilities) would be reduced. The Fed had capital equal to about $52 billion at end of 2009, half of which was paid-in capital of member banks and the other half of which was surplus. The Fed has not had an annual net operating loss since 1915. However, the Fed's balance sheet became more risky in 2008, due to the shift in composition of its assets from U.S. Treasuries to direct loans and private securities and due to the increase in its liabilities relative to its capital. For example, at the end of 2008, the Fed's capital would be depleted if its realized net losses were equal in value to 1.9% of its holdings of financial assets (U.S. Treasuries, loans, and other private securities). Thus, any potential losses on loans to the Fed would not involve taxpayer dollars flowing to the Fed unless the losses exceeded the sum of its other earnings and its capital and the Treasury decided it did not want the Fed to operate as technically insolvent. However, even if the losses did not result in insolvency, any losses could result in a smaller remittance of earnings to the Treasury than would have occurred had the Fed not made the loans. Therefore, the ultimate cost to the government is the same whether loans to the financial sector are made through the Fed or the Treasury. The Fed has reported to Congress that it does not expect there to be losses on any of the actions it has undertaken under its emergency authorities (including the Maiden Lane LLCs, two of which had unrealized capital losses at the end of 2009), but it has not provided details as to how it reached that conclusion. Some analysts are concerned that a future increase in interest rates could result in losses on the Fed's asset holdings, but these losses would be realized only if the Fed were forced to sell those assets. To date, all of the Fed's lending programs have earned income for the Fed, except for Maiden Lanes I and II, whose assets have accrued unrealized capital losses. In 2009, the Fed's loan programs earned $5.5 billion, the Maiden Lane assets had fallen in value by a combined $2.3 billion, and the Fed's other assets had earned $48.8 billion, as seen in Table 3 . (The Maiden Lane losses will not be realized until the assets are sold, and the Fed has stated that it intends to hold the assets long term.) In the aggregate, the Fed earned higher profits and increased its remittances to the Treasury. The Fed could generate positive income from its programs but still operate those programs at a subsidy to the recipients. Subsidies would occur when the interest rates charged for loans or prices paid for assets are not high enough to fully compensate for the risks borne by the Fed in undertaking those transactions. In other words, the subsidy is equal to the difference between the price or interest rate the Fed received and what could have been received if the transaction had been made privately. CBO has estimated subsidies for each of the Fed's emergency programs, presented in Table 3 . In evaluating the program, that subsidy would need to be compared with the benefits to the broader economy from the program, which CBO does not attempt to do. CBO estimated that lending programs with high collateral requirements and done on a recourse basis (Term Auction Facility, repurchase agreements, central bank currency swaps, Primary Dealer Credit Facility, Term Securities Lending Facility) generated no subsidies. CBO also concluded that all asset purchases involved no subsidy, either because the purchases were made in the open market (e.g., purchases of Treasury and GSE-related securities) or because the Fed reported that purchases were made at market value (e.g., the Maiden Lane assets). The assumption that Maiden Lane assets were bought at prevailing market prices can be questioned because the rationale for the Fed's purchase was that these assets could not be sold in private markets at the time. CBO finds subsidies for loan facilities without recourse (the two commercial paper facilities and TALF) and for special assistance to systemically significant firms (AIG, Citigroup, and Bank of America). In total, CBO estimates that the Fed's emergency actions were done at a subsidy of $21 billion. This estimate would likely be smaller if re-estimated today, based on current information. For example, CBO finds a subsidy of $13 billion for TALF because TALF was expected to make loans of $200 billion; in reality, loans peaked at $48 billion. CBO also estimates subsidies on the asset guarantees to Citigroup and Bank of America, although those programs were ended with payments to the government and no payouts by the government. Although the Fed has taken steps to minimize the risk that recent activities will result in losses, Members of Congress have raised the question of whether taxpayers should be exposed to additional fiscal risks without congressional approval, particularly because some of the Fed's actions have similarities to those authorized under TARP. H.R. 4173 requires the Fed to issue policies and procedures for emergency lending that, among other things, ensure that "the security for emergency loans is sufficient to protect taxpayers from losses" by assigning a lendable value to collateral that is "consistent with sound risk management practices;" and prohibit lending to borrowers that are insolvent or establishing a lending program or facility for the purpose of helping a single and specific company to avoid bankruptcy. As a result of the Fed's new facilities and activities, its balance sheet has increased significantly, from $874 billion on August 1, 2007, a date shortly before the financial system first experienced turmoil, to $2,312 billion at its peak on December 17, 2008, an increase of 165%. Table 4 shows the increase in the balance sheet by category over that period. Since the size of the balance sheet peaked in December 2008, the overall size of the balance sheet has remained relatively steady, but there have been large changes in the composition of the balance sheet. For example, there has been a significant increase in the Fed's holdings of mortgage backed securities and GSE debt, and a significant decrease in lending to primary dealers, holdings of commercial paper, and swaps with central banks. The Fed also began lending through the TALF in March 2009. When the Fed makes loans or purchases assets, the asset side of its balance sheet expands; this must be matched by an increase in its liabilities. As direct loans from the Fed multiplied, some observers questioned at what point the Fed's lending power will be exhausted. The Fed cannot "run out of money" to buy assets and extend loans because it controls its liabilities, the monetary base (federal reserve notes and bank reserves), through which it expands or contracts the amount of money outstanding. There are no statutory limits on the size of the money supply or currency outstanding and, thus, how much it can loan; the ultimate constraint on the Fed's willingness to expand the monetary base in order to expand its activities comes from the part of its congressional mandate requiring stable prices (i.e., a low and stable rate of price inflation). If the Fed allows the money supply to grow too rapidly, then price inflation will become uncomfortably high (discussed in the section below on " Stagflation? "). Earlier in the financial crisis, the Fed was concerned about inflation rising. For example, in the 12 months ending in August 2008, inflation (as measured by the consumer price index) had risen to 5.4%—significantly higher than the Fed's self-identified "comfort zone." To address that concern, the Fed initially sought to keep its balance sheet from growing in order to offset the effects of its activities on the money supply. One way to keep its balance sheet from growing would be by reducing its other assets. For example, it could "sterilize" its new loans or asset purchases through contractionary open market operations, namely, the sale of Treasury securities. In practice, before September 2008, the Fed kept the monetary base relatively constant by selling enough Treasury securities to offset the additional loans it made. (When the Fed sells Treasury securities, it removes the money it receives in the sale from circulation.) Thus, as loans outstanding rose, the Fed's holdings of Treasury securities initially declined, by $340 billion through December 17, 2008. In September 2007, 88% of its assets were Treasury securities held outright and less than 1% were loans to the financial system. On December 17, 2008, 28% of its assets were Treasury securities, 32% were loans, 17% were private securities (mostly commercial paper), and 25% were currency swaps with foreign central banks. If sterilization through the sale of Treasury securities had continued, the Fed would eventually have held too few Treasury securities to be able to conduct open market operations. As seen in Table 4 , the overall increase in the Fed's balance sheet at its peak was $1.4 trillion, more than the Treasury securities it held before the crisis started ($816 billion) or in September 2008 ($475 billion). The Treasury announced the Supplementary Financing Program on September 17, 2008 as an alternative method for the Fed to increase its assistance to the financial sector without increasing the amount of money in circulation. Under this program, the Treasury has temporarily auctioned more new securities than it needs to finance government operations and deposited the proceeds at the Fed. (The increase in the money supply does not affect inflation because the money received by the Treasury is held at the Fed and not allowed to circulate in the economy.) Ultimately, the program will not affect the Treasury's fiscal position, however, because it will increase the profits of the Fed, which are then remitted to the Treasury. By December 17, 2008, the Treasury had borrowed and increased its deposits at the Fed by $475 billion. From January to September 2009, Treasury deposits were between $200 billion and $300 billion, and were no longer large enough to offset the growth in the asset side of the Fed's balance sheet. Congress authorized this borrowing only indirectly by raising the statutory debt limit, in P.L. 110-343 and other subsequent legislation. In late 2009, Treasury withdrew its supplementary deposits at the Fed in order to finance government spending as the debt approached the statutory limit. Once the debt limit was increased, the Treasury increased its deposits back to around $200 billion. The fact that the Fed has been "sterilizing" the stimulative effects of its loans on the money supply (entirely until September 2008, and partially after then) limits the effects of those loans on financial conditions. In essence, the Fed has two methods for providing the financial system with liquidity—open market operations or direct loans. The Fed increased the role of direct loans to directly meet individual financial institutions' liquidity needs. But the Fed was offsetting the effects of the direct loans on the money supply to meet its goals for inflation. Thus, the loans did not provide additional overall monetary stimulus to the economy when sterilized. Since the Fed was sterilizing the loans because of its concerns with inflation, the utility of sterilization was fundamentally a question of whether the Fed had achieved the proper balance between stabilizing the financial sector and providing price stability, two topics that are discussed below. As commodity prices fell later in 2008, the inflation rate also fell. The Fed became less concerned about inflation rising, and more concerned about the further deterioration in financial and economic conditions. After September 2008, the Fed further increased its direct assistance to the financial system, but no longer fully sterilized those activities. As a result, the Fed's balance sheet and the monetary base have expanded rapidly, as demonstrated in Table 4 . The monetary base doubled from August to December 2008—an unprecedented rise. Because this increase went beyond what was needed to target the federal funds rate, it has been referred to as "quantitative easing." Normally, this would trigger a rapid increase in inflation. The main force preventing such an increase is the rapid increase in excess bank reserves held at the Fed during that period. Bank reserves increased from $44 billion in August 2008 to $802 billion on December 17, 2008, as banks preferred to hold the additional reserves created by the Fed's actions in order to shore up their balance sheets to avoid runs. In normal financial conditions, banks would lend out money they received from the Fed, and through a process referred to by economists as the "money multiplier," a $1 increase in the monetary base would lead to a much larger increase in the overall money supply. But if banks hold the money received from the Fed in bank reserves instead of lending it out, the money multiplier process will not occur, so the growth in the overall money supply will be smaller. Data from the Fed show that almost all of the increase in reserves has been through excess reserves, rather than required reserves, which is consistent with banks holding most of the increase in reserves instead of lending them out. Thus, the large increase in the monetary base since September 2008 has not been matched by a corresponding increase in the overall money supply. Initially, the balance sheet grew because of high private demand for borrowing from the Fed, and asset purchases were not needed. But between the weeks of December 17, 2008, and March 25, 2009, the Fed's direct lending to the financial sector decreased from a weekly average of $976 billion to $848 billion. The pattern of decline was steady over that period, and presumably stemmed from the fact that as financial conditions improved, there was less financial sector demand for Fed lending. With declining loan balances, the balance sheet would have shrunk, unless other assets were added to offset the fall in direct lending. On March 18, 2009, the Fed announced a commitment to purchase $300 billion of Treasury securities, $200 billion of Agency debt (later revised to $175 billion), and $1.25 trillion of Agency mortgage-backed securities. Since then, direct lending has continued to gradually decline, while the Fed's holdings of Treasury and Agency securities have steadily increased, as seen in Table 5 . The Fed's planned purchases of Treasury securities were completed by the fall of 2009 and planned Agency purchases were completed by the spring of 2010. By April 2010, direct lending outside of TALF and AIG was modest. Because other assets on the Fed's balance sheet (most notably, liquidity swaps with foreign central banks) have also declined over that period, the net result of these purchases has been to keep the overall size of the balance sheet relatively constant. Thus, the Fed's asset purchases have prevented liquidity from being removed from the financial system as Fed lending fell. But since the fall in lending was spurred by less demand among financial institutions, critics question if the level of liquidity needed in the crisis is still needed today. Purchases of Treasury securities could also stimulate the economy if private interest rates fall in response; a similar effect could occur with purchases of MBS, although those purchases should also more directly stimulate residential investment by reducing mortgage rates. Whether these purchases were more stimulative than the direct lending they replaced depends on their relative effects on financial conditions and interest rates. Once the financial outlook improves, banks may decide to use their reserve holdings to rapidly increase their lending. At that point, if the Fed found itself fighting inflationary pressures, it would have to find a way to prevent banks from lending those reserves in order to prevent a rapid increase in the money supply. The most straightforward method to achieve this would be to withdraw those reserves from the banking system, which would require the Fed to reduce both its assets and liabilities through asset sales. Some of the Fed's outstanding assets can be sold relatively quickly in theory, although there could be political resistance in reality. By April 2010, the Fed's balance sheet consisted predominantly of securities that could be sold in secondary markets. But the Fed has pledged to hold these assets long term. Given the Fed's concerns about the fragility of housing markets, it is not clear how these holdings could be reduced quickly if the Fed became concerned about rising inflation. (About $100 billion to $200 billion per year could be reduced by not replacing maturing assets, according to Chairman Bernanke. ) Another option would be to give banks incentives not to lend out reserves by raising the interest rate that the Fed pays on reserves, although it remains to be seen how interest-sensitive bank reserves are. To better prevent these reserves from being lent out if necessary, the Fed began offering "term deposits" with a one to six month maturity for bank reserves. The interest rate on these term deposits would be set through auction; banks would presumably be willing to bid for term deposits only if the interest rate exceeded the rate paid by the Fed on normal reserves. The Fed could also attempt to reduce liquidity by lending its assets out through "reverse repos." This would change the composition of liabilities on the Fed's balance sheet, replacing Federal Reserve notes or bank reserves with reverse repos. It is unlikely that reverse repos operations could be large enough to remove most of the new liquidity, however. Cash balances held at the Fed through the Treasury Supplemental Financing Program could also be used to tie up liquidity, but the size of this program is constrained by the statutory debt limit (since Treasury needs to borrow to acquire cash), and would be insufficient to significantly reduce liquidity without a large increase in the debt limit. With an eye to the potential long-run inflationary effects of the growth in the Fed's balance sheet, the Fed and Treasury announced in March 2009 that they would seek "legislative action to provide additional tools the Federal Reserve can use to sterilize the effects of its lending or securities purchases on the supply of bank reserves." Many analysts interpreted this statement to express the desire for the Fed to gain authority to issue its own bonds. Returning to the balance sheet in Table 4 , the Fed must match an increase in assets with an increase in liabilities. The only liability it can currently issue are federal reserve notes that increase the monetary base. If the Fed were granted new authority to issue bonds, they could then expand their liabilities without increasing the monetary base and increasing inflationary pressures. Then, there would no longer be any statutory limit or check on the Fed's ability to directly allocate credit, provided it met the broad guidelines of Section 13(3). To date, legislation to allow the Fed to do so has not been considered. With a federal funds rate of zero, unsterilized purchases of long-term assets could help further stimulate the economy by adding needed liquidity to the financial system reducing long-term interest rates (flattening the yield curve). But once the Fed decides to start raising rates, economic theory casts some doubt on the economic usefulness of maintaining a large balance sheet, but sterilizing its effects on the economy by paying interest on reserves, reverse repos, the Treasury Supplemental Program, or issuing Fed bonds. The large balance sheet has no positive effect on liquidity if it is offset by any of these actions that drain liquidity from the economy. And if investors have rational expectations, it is not clear how a large balance sheet could flatten the yield curve in the face of sterilization since the long end of the yield curve should be determined primarily by expectations of future interest rates, and sterilized purchases of assets in the present should not change those expectations, all else equal. Previous experience suggests that sterilized attempts to flatten the yield curve have failed to stimulate the economy. For example, a study by Ben Bernanke (before he was Fed Chairman) and other economists concluded that a similar policy in the 1960s called "Operation Twist" is "widely viewed today as having been a failure." Some commentators have interpreted the Fed's decision to make large scale purchases of Treasury securities as a signal that the Fed intends to "monetize the federal deficit," which is projected this fiscal year to reach its highest share of GDP since World War II. Monetizing the deficit occurs when the budget deficit is financed by money creation rather than by selling bonds to private investors. Hyperinflation in foreign countries has consistently resulted from governments' decisions to monetize large deficits. According to this definition, the deficit has not been monetized. Section 14 of the Federal Reserve Act legally forbids the Fed from buying newly issued securities directly from the Treasury, and all Treasury securities purchased by the Fed to date have been purchased on the secondary market, from private investors. Moreover, the size of the Fed's purchases of Treasury securities thus far is small relative to the overall deficit, which was $1.4 trillion in 2009. The Fed has announced and completed purchases of $300 billion thus far, although that amount can be altered at its discretion. Nonetheless, the effect of the Fed's purchase of Treasury securities on the federal budget is similar regardless of whether the Fed buys the securities on the secondary market or directly from Treasury. When the Fed holds Treasury securities, Treasury must pay interest to the Fed, just as it would pay interest to a private investor. These interest payments, after expenses, become profits to the Fed. The Fed, in turn, remits about 95% of its profits to the Treasury, where they are added to general revenues. In essence, the Fed has made an interest-free loan to the Treasury, because almost all of the interest paid by Treasury to the Fed is subsequently sent back to Treasury. The Fed could increase its profits and remittances to Treasury by printing more money to purchase more Treasury bonds (or any other asset). The Fed's profits are the incidental side effect of its open market operations in pursuit of its statutory mandate (to keep prices stable and unemployment low). If the Fed chose instead to buy assets with a goal of increasing its profits and remittances, it would be unlikely to meet its statutory mandate. The Fed's actions since 2007 have been primarily focused on restoring liquidity to the financial system—lending to financial firms to convert their illiquid assets into cash or U.S. Treasury securities. But as financial conditions deteriorated in spite of increasing Fed intervention, it became apparent that the problems facing financial firms were not exclusively related to liquidity. The crux of the firms' problem in the fall of 2008 stemmed from the large losses on some of their assets, particularly mortgage-related assets. This caused a number of problems for the firms related to capital adequacy , which is the difference between the value of their assets and the value of their liabilities. First, losses and write-downs associated with those assets have reduced the firms' existing capital. Second, in the current environment, investors and creditors are demanding that firms hold more capital relative to assets than before so that firms can better withstand any future losses. Third, at the peak of the crisis, firms were unable to raise enough new capital. Firms can raise new capital through retained earnings, which had been greatly reduced for many firms by the poor performance of their assets, or by issuing new capital (equity) and selling it to new investors. But during the crisis, investors were reluctant to inject new capital into struggling firms. Part of the explanation for this is that losses made the firms less profitable. But another part of the reason was that investors feared that there would be further losses in the future that would reduce the value of their investment, and perhaps even cause the firm to become insolvent. Uncertainty about future losses was partly caused by the opacity surrounding the assets that have been declining in value, which makes it hard for investors to determine which assets remain overvalued and which are undervalued. The result for companies such as Bear Stearns, Lehman Brothers, AIG, Washington Mutual, and Wachovia was a downward spiral in their stock price, which had two self-reinforcing characteristics. First, there was little demand for existing stock since its worth would either have been diluted by new capital (raised privately or through government intervention) or lost in insolvency. Second, new capital could not be attracted because the fall in stock value had left the market capitalization of the firms so low. If a firm's capital is completely depleted, there is no longer a buffer between its assets and liabilities, and it becomes insolvent. In 2009, financial firms were again able to issue capital to private investors, and many did so successfully. Many large financial firms, including the firms that have failed, are heavily dependent on short-term borrowing to meet their current obligations. As financial conditions worsened, some of the firms that had the problems described above had problems accessing short-term borrowing markets that in normal conditions could be taken for granted. In an atmosphere where creditors cannot perceive which firms have insufficient capital, they become unwilling to lend for even short intervals. This is the essence of the liquidity problem—although the firms' assets may exceed their liabilities, without access to short-term borrowing, the firm cannot meet its current obligations because it cannot convert its assets into cash quickly enough (at least not if it wishes to avoid "fire sale" prices). The Fed has always been the "lender of last resort" in order for banks to avoid liquidity problems during financial turmoil. To borrow from the Fed, a financial firm must post collateral. In essence, this allows the firm to temporarily convert its illiquid assets into cash, enabling the firm to meet its short-term obligations without sacrificing its assets. The Fed has always lent to commercial banks (depository institutions) through the discount window. As discussed above, it has extended liquidity to non-bank financial firms since 2008 through new lending facilities. Borrowing from the Fed increases liquidity but it does not change a firm's capital buffer since it now has a liability outstanding to the Fed. So borrowing from the Fed cannot solve the problems of undercapitalization that some firms faced. Indeed, the Fed will generally not lend to firms that are not creditworthy because it wants to provide liquidity only to firms that are solvent, and thus able to repay. H.R. 1424 , which was signed into law on October 3, 2008 ( P.L. 110-343 ), created the Troubled Asset Relief Program. The Treasury initially used TARP funds to address the capital adequacy problem directly by providing $250 billion in capital to banks directly through preferred share purchases by TARP. Some have asked whether there is any way the Fed could have addressed the financial firms' capital adequacy problems. All of the Fed's standing lending facilities involve collateralized lending, and as discussed above, any program involving collateralized lending would not change a firm's capital position. According to one legal analysis, there is no express statutory authority for the Fed to purchase corporate bonds, mortgages, or equity. But the Fed's assistance through the three Maiden Lane LLCs it has created has some similarities to TARP. In the case of Bear Stearns, the Fed created a limited liability corporation called Maiden Lane I, and lent Maiden Lane $28.82 billion. Maiden Lane I used the proceeds of that loan and another loan from JPMorgan Chase to purchase mortgage-related assets from Bear Stearns. (A similar arrangement with AIG led to the creation of Maiden Lane II and Maiden Lane III.) Thus, although the Fed created and controlled the Maiden Lanes, the assets were purchased and held by the Maiden Lanes, not the Fed. The Fed plans to hold the Maiden Lane assets until markets recover, and then sell the assets to repay its loans. The Maiden Lanes were created under the Fed's Section 13(3) emergency authority. H.R. 4173 forbids "a program or facility that is structured to remove assets from the balance sheet of a single and specific company." The Fed was presumably granted broad emergency powers under Section 13(3) so that it had the flexibility to deal with unforeseen circumstances. Nonetheless, too broad of a reading of its powers could provoke displeasure in Congress or legal challenges. Creating TARP within the Treasury through legislation rather than the Fed through emergency powers avoided the argument of whether such a program extended beyond the Fed's intended role. Since its early days, one of the Fed's main roles has been to act as a lender of last resort to the banking system when private sources of credit become unavailable. It does so by lending through the discount window and its new lending facilities. The lender of last resort function can be seen from the perspective of an individual institution or the financial system as a whole. From the perspective of the individual institution, discount window lending is meant to provide funds to institutions that are illiquid (cannot meet current obligations out of current cash flow) but still solvent (assets exceed liabilities) when they cannot access funds from the private market. Discount window lending was unable to end bank runs, however—bank runs did not cease until the creation of federal deposit insurance. The experience of the Great Depression suggested that bank runs placed intolerably high costs on the financial system as a whole, as they led to widespread bank failures. Fed lending is not meant to help insolvent institutions, with one exception explained below. Access to Fed lending facilities and deposit insurance creates moral hazard for financial institutions—they can take on more risk than the market would otherwise permit because of the government safety net. To limit moral hazard, institutions with depository insurance and access to the discount window are subject to a safety and soundness regulatory regime that includes capital requirements, reserve requirements, bank examinations, and so on. The exception to the rule that insolvent institutions cannot access Fed lending facilities is when the institution is deemed "too big to fail." Institutions that are too big to fail are ones that are deemed to be big enough that their failure could create systemic risk , the risk that the financial system as a whole would cease to function smoothly. For example, failure could lead to systemic instability through "contagion" effects where the losses to creditors and counterparties imposed by the bankruptcy system drove those creditors and counterparties into insolvency. A systemic risk episode could impose heavy costs on the overall economy, as the bank panics of the Great Depression demonstrated. Although too big to fail institutions are not offered explicit guarantees, it can be argued that they have implicit guarantees since the government would not be willing to allow a systemic risk episode. This accentuates the moral hazard problem described above. There is no official governmental classification of which financial institutions are too big to fail, presumably since maintaining uncertainty over which institutions are too big to fail could help reduce the moral hazard problem. But the lack of official designation arguably creates a vacuum in terms of policy preparedness. (Making the problem more complex, as one report described the situation, "Officials grimly concluded that while Bear Stearns isn't too big to fail, it was too interconnected to be allowed to fail in just one day." It is unclear how to judge which institutions are too interconnected to fail.) As the cases of Bear Stearns, Fannie Mae and Freddie Mac, and AIG illustrate, some of the modern-day financial institutions that are too big to fail are not depository institutions that fall under the strict regulatory umbrella that accompanies membership in the Federal Reserve system. Nevertheless, all received direct or indirect assistance from the Fed. This highlights the shift in financial activity from a bank-dominated financial system at the time of the Fed's creation to a system whose health now depends on many types of institutions. The Fed was set up to be a lender of last resort to only the banking system. In the current crisis, it has been able to extend its lender of last resort functions to non-bank financial institutions only because of its Section 13(3) emergency powers. A policy issue going forward is whether the extension of these functions should be made permanent, and if so, what types of regulatory safeguards should accompany it. Because Section 13(3) of the Federal Reserve Act is intended for responding to unanticipated emergencies, it grants authority that is broader and more open-ended than the Fed's normal authority. It is possible that part of the reason these institutions failed is because they took on excessive risks in the belief that they were too big to fail. Although that theory can be debated, it is clearer that the precedent of the Fed's role in the Bear Stearns acquisition may strengthen the perception of other institutions and investors that any financial firm, regardless of whether it is a depository institution, will be bailed out in the future if it is too big to fail, or merely too interconnected to fail. If so, it could be argued that the Bear Stearns episode may have increased moral hazard going forward. The government's decision not to intervene to prevent the failure of the investment bank Lehman Brothers in September 2008, but to subsequently assist AIG, Citigroup, and Bank of America may have created further market uncertainty regarding which institutions the government views as too big to fail. Lehman Brothers was larger than Bear Stearns and involved in similar business activities. Others have argued that the failure of Lehman Brothers set off a wave of unrest in money markets (see above), interbank lending markets, and the market for credit default swaps that would make the government unlikely to allow any large institution to fail in the future. The government assistance to Bear Stearns, Fannie Mae and Freddie Mac, and AIG all include clauses that significantly reduced the value of existing shareholder equity. This was partly justified in terms of reducing moral hazard—investors would be reluctant to buy equity in too big to fail companies that were taking excessive risks if the government demanded a reduction in existing shareholder value. But government assistance in all of these cases made creditors and other counterparties whole. In these cases, the moral hazard problem manifests itself in a willingness of creditors to lend to, and counterparties to transact with, a firm they know to be taking excessive risks, thereby potentially allowing the firm to take more risks. More recent government assistance to Citigroup and Bank of America was provided without similar measures to replace management or dilute shareholders. (Warrants to purchase some common stock were issued but have not yet been exercised.) Market participants may view this decision as a signal that the government is no longer placing emphasis on avoiding moral hazard. The current situation raises three broad points about systemic risk. First, risk is at the foundation of all financial intermediation. Policymakers may wish to curb excessive risk taking when it leads to systemic risk, but too little financial risk would also be counterproductive for the economy. (Indeed, some would argue that part of the underlying problem for the financial system as a whole at present is that investors are currently too risk averse.) Second, many analysts have argued that part of the reason that so much financial intermediation has left the commercial banking system is to avoid the costs of regulation. This point applies to future regulatory changes as well. An attempt to increase regulation on banks could lead more business to move to hedge funds, for example. Third, financial markets have become significantly more complex and fast-moving in recent years. Many of the financial instruments with which Bear Stearns, Lehman Brothers, and AIG were involved did not exist until recently. For regulation to be effective in this environment, it faces the challenge of trying to keep up with innovation. If used prudently, many of these innovations can reduce risk for individual investors. Yet the Bear Stearns example implies that innovation may also lead to more interconnectivity, which increases systemic risk. Going forward, policymakers must determine whether new regulation is needed to limit moral hazard because there may be no credible way to maintain a policy that prohibits the rescue of future institutions that are too big to fail even if such a policy were desired. The financial crisis has led to the passage of comprehensive regulatory reform in the House and Senate that address the "too big to fail" problem and the Fed's role as a regulator and lender of last resort. CRS Report R40877, Financial Regulatory Reform: Systemic Risk and the Federal Reserve , analyzes the effects of this legislation on the Fed and the "too big to fail" issue. Because profits and losses borne by the Fed ultimately get passed on to taxpayers (see " Cost to the Treasury "), some Members of Congress have argued that more information about the Fed's emergency activities should be made available to the public. The Fed has not been subject to many of the oversight and reporting requirements applied to the TARP, although the amount of direct assistance outstanding from the Fed at its peak exceeded the authorized size of TARP. Nonetheless, the Fed has publicly released a significant amount of information on its emergency actions. The Fed's financial statements are published weekly and audited by private sector auditors, with the results published in the Fed's annual report. The Fed has provided detailed information to the public on the general terms and eligibility of its borrowers and collateral by class for each crisis-response program. It has also provided a rationale for why each crisis program has been created, and an explanation of the goals the program is meant to accomplish. The Emergency Economic Stabilization Act ( P.L. 110-343 ) requires the Fed to report to the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee on its justification for exercising Section 13(3), the terms of the assistance provided, and regular updates on the status of the loan. Beginning in June 2009, the Fed began releasing a monthly report that listed the number of and concentration among borrowers by type, the value and credit-worthiness of collateral held by type, and the interest income earned for each of its facilities. Contracts with private vendors to purchase or manage assets are also posted on the New York Fed's website. But the Fed has kept confidential the identity of the borrowers from its facilities, the collateral posted in specific transactions, the terms of specific transactions, and the results of specific transactions (i.e., whether they resulted in profits or losses). As historical precedent, the Fed has had a longstanding policy of keeping the identity of banks that borrow from its discount window confidential. Those calling for more disclosure note that the new Fed programs place the Fed in a more expansive role and are potentially riskier than the discount window, and, unlike the discount window, were not explicitly endorsed by legislation (many were authorized under its emergency authority). The Fed has argued that allowing the public to know which firms are accessing its facilities could undermine investor confidence in the institutions receiving aid because of a perception that recipients were weak or unsound. A loss of investor confidence could potentially lead to destabilizing runs on the institution's deposits, debt, or equity. If institutions feared that this would occur, the Fed argues, then the institutions would be wary of participating in the Fed's programs, which, in the aggregate, would retard economic recovery. A historical example supporting the Fed's argument would be the Reconstruction Finance Corporation (RFC) in the Great Depression. When the RFC publicized to which banks it had given loans, those banks typically experienced depositor runs. A more recent example provides mixed evidence—disclosure of TARP fund recipients. At first, TARP funds were widely disbursed, and recipients included all the major banks. At that point, there was no perceived stigma to TARP participation. More recently, many banks have repaid TARP shares at the first opportunity, and remaining participants have expressed concern that if they did not repay soon, investors would perceive them as weak. Arguments about investor confidence are arguably less compelling when applied to publicly disclosing collateral held by the Fed. There are several different approaches to expanding disclosure or oversight: Congress could remove the Government Accountability Office's (GAO's) restrictions on conducting investigations of the Fed for Congress. While GAO has had longstanding authority to audit the Fed's non-monetary policy functions, the Federal Banking Agency Audit Act of 1978 (31 USC 714(b)) restricts GAO from auditing certain Fed activities: (1) transactions with foreign central banks or governments; (2) "deliberations, decisions, or actions on monetary matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;" and (3) "transactions made under the direction of the Federal Open Market Committee." While the act does not specifically mention activities taken under the Fed's emergency authority, those activities have been interpreted as falling under the restrictions. Also included in the Federal Banking Audit Act of 1978 are restrictions on GAO disclosure of confidential information about the financial firms subject to the Fed's policies. Thus, if audit restrictions were removed but these disclosure restrictions remained in place, GAO audits would not necessarily accomplish some policymakers' goal of disclosing the identities of borrowers from Fed lending facilities. S. 896 , which was signed into law on May 20, 2009 ( P.L. 111-22 ), allows GAO audits of "any action taken by the Board under ... Section 13(3) of the Federal Reserve Act with respect to a single and specific partnership or corporation." This would allow GAO audits of the Maiden Lane facilities and the asset guarantees of Citigroup and Bank of America, but would maintain audit restrictions on non-emergency activities and broadly-accessed emergency lending facilities, such as the Primary Dealer Credit Facility or the commercial paper facilities. In performing the audit under S. 896 , GAO must maintain the confidentiality of the private documents it accesses, but cannot withhold any information requested by Members of Congress on the committees of jurisdiction. H.R. 4173 allows GAO to audit emergency actions, discount window lending, and open market operations for operational integrity, accounting financial reporting, internal controls, collateral policies, favoritism, and third-party contracting policies. With the exception of the Maiden Lane facilities, GAO would be prohibited from releasing confidential information to Congress or the public about the transactions until the information was released by the Fed. H.R. 4173 also requires a GAO audit, according to the criteria listed above, of all lending between December 2007 and the date of enactment. It also requires a separate GAO audit to determine whether the selection of Federal Reserve regional bank presidents meets the criteria under Section 4 of the Federal Reserve Act, whether there are actual or potential conflicts of interest created by member banks choosing Fed regional bank directors, to examine the role regional banks played in the Fed's response to the crisis, and to propose reforms to regional bank governance. Congress could require the Fed to disclose more information on the identities of borrowers, the collateral accepted, or the terms and results of transactions. Congress requires the Fed to make some general policy reports, but does not typically require the Fed to disclose this type of specific information. Indeed, much of the information about monetary policy that the Fed currently makes public is done so on a voluntarily basis. H.R. 4173 requires the Fed to disclose the identities of borrowers and terms of borrowing to the committees of jurisdiction within seven days of a loan and allows for the information to be kept confidential if desired. It requires that the identities of borrowers and terms of borrowing be released to the public with up to a two year delay for the discount window and a one year delay after a facility has been terminated for other lending. It requires that the identities of counterparties and terms of sale be released to the public with up to a two year delay for open market operations. It requires that the identities of borrowers and borrowing terms be released to the public by December 1, 2010, for actions taken during the financial crisis. Congress could create specific oversight boards or committees that focus on the Federal Reserve. Currently, regular congressional oversight of the Fed is done at a general level through semi-annual hearings with the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee, as well as ad hoc hearings on more focused topics. There is no routine, specific oversight of the Fed's crisis-response actions, and no group with monetary policy expertise tasked with evaluating the Fed's actions for Congress. Greater disclosure and outside evaluation could potentially help Congress perform its oversight duties more effectively. The main argument against increasing Fed oversight would be that it could be perceived to reduce the Fed's operational independence from Congress. Chairman Bernanke has argued that "The general repeal of (the audit) exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed." Most economists believe that the Fed's independence to carry out day-to-day decisions about monetary policy without congressional input strengthens the Fed's credibility in the eyes of the private sector that it will follow policies that maximize price and economic stability. Greater credibility is perceived to strengthen the effectiveness of monetary policy on the economy. This independence is seen as consistent with the democratic process because the Fed's mandate to pursue price and economic stability has been given to it by Congress, and choosing the interest rate policies best able to achieve these goals is viewed as relatively technocratic and non-political in nature. The Fed's unprecedented response to the financial crisis moves it into new policy areas involving decisions that are arguably more political in nature, such as deciding which financial actors should be eligible to access Fed credit. While few policymakers argue for total independence or total disclosure and oversight, the policy challenge is to strike the right balance between the two. In February 2010 testimony, Chairman Bernanke has also advocated striking such a balance: we understand that the unusual nature of (the emergency credit and liquidity) facilities creates a special obligation to assure the Congress and the public of the integrity of their operation. Accordingly, we would welcome a review by the GAO of the Federal Reserve's management of all facilities created under emergency authorities. In particular, we would support legislation authorizing the GAO to audit the operational integrity, collateral policies, use of third-party contractors, accounting, financial reporting, and internal controls of these special credit and liquidity facilities…. We are also prepared to support legislation that would require the release of the identities of the firms that participated in each special facility after an appropriate delay. It is important that the release occur after a lag that is sufficiently long that investors will not view an institution's use of one of the facilities as a possible indication of ongoing financial problems, thereby undermining market confidence in the institution or discouraging use of any future facility that might become necessary to protect the U.S. economy. In normal conditions, the Fed primarily influences economic conditions through the purchase and sale of U.S. Treasury securities on the secondary market. This enables the Fed to influence overall economic conditions without favoring any particular financial firm or asset, thus minimizing its effect on the market allocation of capital. As the Fed has shifted to an increasing reliance on more direct intervention in the financial system since 2008, its actions have had growing consequences for the allocation of private capital. Its actions can affect the allocation of capital by favoring certain classes or types of assets over others or by favoring certain financial firms or types of firms over others. As discussed above, assisting Bear Stearns and AIG after their mistakes may encourage inefficiently high risk taking by other firms that are deemed "too big to fail." Punitive conditions attached to the assistance mitigate but do not eliminate these effects. Allowing primary dealers to temporarily swap their illiquid assets for Treasuries protects those who invested poorly. The Fed has attempted to push down yields on certain assets that it feels have become inefficiently high (e.g., through the Term Asset Backed Securities Lending Facility), but it may be that at the height of the boom yields on these assets had become inefficiently low because investors underestimated their riskiness. The Fed's efforts could eventually reintroduce inefficient underpricing of risk. By purchasing commercial paper, the Fed has increased the relative demand for those assets, which confers an advantage to those firms that can access that market, which are generally large and have high credit ratings. Likewise, the Fed is purchasing GSE obligations and GSE-guaranteed MBS, but not similar securities issued by private firms. This increases the GSEs' funding advantage over private competitors. In a time when liquidity is scarce, access to Fed borrowing confers an advantage on banks and primary dealers over other types of institutions. It may also arguably retard the process of weeding out bad institutions, since reputation is needed to access private liquidity, but not Fed liquidity. On the other hand, during a panic both good and bad firms can be shut out of credit markets. Liquidity has positive externalities that means it would be underprovided by the private sector if it were not provided by the government. When financial markets are not functioning, credit allocation is an incidental but unavoidable side effect of liquidity provision. But some of the Fed's efforts, such as paying interest on bank reserves or possibly seeking to issue its own bonds, could be interpreted as signaling that the Fed intends to go beyond allocating credit for the sole purpose of providing liquidity because these initiatives allow the Fed to extend more credit than is needed for liquidity purposes. The Fed's short-term goal is to avoid the downward spiral in conditions that could lead to a panic, causing serious disruptions to the credit intermediation process for all firms, prudent or otherwise. But in the long run, once financial stability has been restored, these distortions to the market allocation of capital could result in economic inefficiencies. There is also a risk that the Fed's activities could "crowd out" private lenders and investors in specific markets, such as the markets for bank reserves, private-label MBS, and commercial paper, leading to less robust private markets. This risk seems greater since the Fed has suggested methods to keep its balance sheet large (such as paying interest on bank reserves or issuing "Fed bonds") even after the economy has returned to normal. As demand for Fed lending facilities has fallen as financial conditions have improved, the Fed has already decided to purchase more GSE debt and MBS, rather than scale back its balance sheet. Even if some of the Fed's current programs are allowed to expire, if investors believed that they would be revived during the next downturn, capital allocation and incentives would remain altered. Although monetary policy is credited with having contributed to an unusual degree of economic stability since at least the mid-1980s, some economists argue that it has been rendered ineffective by the current outlook. The argument is that lower interest rates will not boost spending because the economy is stuck in a credit crunch in which financial institutions are unwilling to lend to creditworthy borrowers because of balance sheet concerns. Borrower demand may increase in response to lower rates, but as long as institutions are trying to rebuild their balance sheets, they will remain reluctant to extend credit. Following September 2008, banks greatly increased their holdings of excess reserves, which could potentially be a troubling sign that banks currently prefer extremely safe, liquid assets over lending. Further, the Fed has already reduced the federal funds rate to near zero, and cannot reduce it further. By some measures, the recession was deep enough that zero interest rates are not stimulative enough to move the economy back to full employment quickly. A scenario where monetary stimulus has no effect on the economy is sometimes referred to as a "liquidity trap." Liquidity traps are rare in modern times, but the decade of economic stagnation suffered by Japan in the 1990s after the bursting of its financial bubble is cited as an example. Interest rates were lowered to almost zero in Japan, and the economy still did not recover quickly. There are some problems with this line of reasoning at present. First, liquidity traps are most likely to occur when overall prices of goods and services are falling (called deflation ). When prices are falling, real interest rates are higher than nominal interest rates, so it is more likely that a very low nominal interest rate would still be too high in real terms to stimulate economic activity. Although prices fell at the end of 2008, they have been rising modestly since. Inflation would not be expected to be steady were the economy in a liquidity trap. Second, monetary policy always suffers lags between a reduction in interest rates and corresponding increases in economic activity. Most importantly, it would be wrong to conclude that the Fed has had no further policy options available to stimulate the economy since December 2008, when the Fed reduced the federal funds rate target to a range of 0% to 0.25%. At this point, the potential for further stimulus via traditional monetary policy channels had been exhausted, since the federal funds rate cannot be reduced below zero. But in a 2004 study, Ben Bernanke (a Fed governor at the time) and co-authors laid out policy options for how the Fed could further stimulate the economy once interest rates reached zero. In that study, the authors note that "nothing prevents the central bank from adding liquidity to the system beyond what is needed to achieve a policy rate of zero, a policy that is known as quantitative easing." By that definition, the Fed has engaged in "quantitative easing" since September 2008—instead of adjusting the monetary base to meet the interest rate target, the Fed has adjusted the monetary base to meet the financial sector's liquidity needs. But many different levels of Fed direct lending (and of the corresponding monetary base) are compatible with a zero federal funds rate. Once the federal funds rate hits zero, there is nothing stopping the Fed from further increases in lending that would have further expansionary effects on the economy. It could also engage in quantitative easing without direct lending by purchasing securities. From March 2009 to March 2010, the Fed purchased about $300 billion of longer-term Treasury securities, $1.25 trillion in MBS, and $175 billion of GSE obligations. Fed Vice Chairman Donald Kohn, while acknowledging great uncertainties, estimated that quantitative easing could increase nominal GDP by as much as $1 trillion over the next several years relative to a baseline forecast. The large increase in excess bank reserves casts doubt on the effectiveness of quantitative easing. Since the Fed has increased its balance sheet, excess reserves have averaged between $643 billion and $1,162 billion per month, compared with less than $2 billion before August 2007. The Fed can supply banks with unlimited liquidity, but if banks hold that liquidity at the Fed, the added liquidity will not stimulate economic activity. Even so, the Fed's actions may help bring down other interest rates in the economy, but this will be stimulative only if interest-sensitive spending is responsive to lower interest rates. This would occur through a flattening of the yield curve (i.e., pushing down long interest rates relative to short rates). Some economists argue that reductions in long-term rates are more stimulative than equivalent reductions in short-term rates. But past experience with the efficacy of this method is mixed. Research by the New York Fed concludes that the recent purchases were effective in lowering interest rates based on the immediate response of rates to official announcements about the purchases, although this research could be questioned on the grounds that the rate reductions must be long-lasting to be stimulative, and for some of the maturities in question, interest rates over the entire period rose, on balance. Interpreting the overall effect on interest rates during the life of the asset purchase program is clouded by the fact that other changes in economic conditions also influence interest rates. The authors also use time-series evidence to estimate that the purchase program reduced the yield on ten-year securities relative to short-term securities by 0.38 to 0.82 percentage points. This evidence may suffer from omitted variable bias, however—namely, the change in the risk-premium associated with MBS over the period in question, given the uncertainty prior to the purchase program caused by GSE conservatorship and the financial crisis. Another study by outside economists found small effects of the Fed's MBS purchases on interest rates after adjusting for prepayment and default risk, with the effect mainly occurring at the time the program was announced—before purchases had begun. Although a liquidity trap cannot be ruled out, it is premature to conclude the economy is stuck in one at this point in time. Liquidity traps are a threat when monetary policy has been kept too tight, but the Fed has eased monetary policy aggressively since the crisis began. Other critics have argued that the Fed has created the opposite problem of a liquidity trap—rising inflation due to excessive liquidity. They argue that the economy will enter a period of stagflation, where falling or negative economic growth is accompanied by high or rising inflation. Typically, one would expect an economic slowdown to be accompanied by a decline in the inflation rate. Excess capacity in the capital stock and rising unemployment would force firms and workers to lower their prices and wage demands, respectively. But critics believe the economy is in a situation where a modest but persistent increase in inflation in recent years has led individuals to come to expect higher inflation, and factor that expectation into their price and wage demands. Further driving up inflationary expectations, critics believe that individuals will observe the large increase in the budget deficit and monetary base and conclude that the government will inflate its way out of the crisis. Couple those higher inflation expectations with rising commodity prices, and critics argue that inflation will rise even if the economy slows. They point to the experience of the 1970s, when inflationary expectations became so ingrained that inflation continued to rise despite a fairly deep recession, as a potential parallel to the current situation. Data suggest that the fear of stagflation is premature—inflation remains relatively low at present. There is a consensus among economists that in the long run inflation is primarily a monetary phenomenon, and if the Fed's recent monetary stance were maintained for too long, it would not be consistent with stable inflation. But in the near term, a large amount of unemployment and excess capacity has removed most inflationary pressure. This can be seen in the example of Japan, where the Bank of Japan allowed the monetary base to increase by more than 10% per year after 2001, without inflation ever reaching high levels because of economic sluggishness. Furthermore, commodity prices fell in the second half of 2008, leading to a brief period of falling prices. Since then, inflation has been stable. Ironically, if the Fed's actions succeed in reviving the economy, then the probability that its actions would boost inflation would increase. Under normal conditions, the doubling of the monetary base between August and December 2008 would have led to a sharp increase in inflation, but this did not occur because of the even greater increase in bank reserves held at the Fed that led to only a moderate increase in broader measures of the money supply. If banks responded to improved economic conditions by lending out the reserves they are now holding, the money supply and inflation would rise rapidly. The key to maintaining a stable inflation rate is finding the proper balance between the disinflationary pressures of the slowdown and the inflationary pressures of quantitative easing. The large amounts of liquidity that the Fed has added to the system must be removed soon enough that inflation does not rise, but not so soon that a nascent economic recovery is stubbed out. Removing all of the liquidity is complicated by the fact that the Fed has created some of it by buying assets it has pledged to hold long term. Given the uncertainty facing policymakers at present, finding the proper balance is extremely difficult. While turmoil plagues financial markets periodically, the current episode is notable for its breadth, depth, and persistence. It is difficult to make the case that the Fed has not responded to the current turmoil with alacrity and creativity. The slow financial and economic recovery is not necessarily a sign that the Fed's policy decisions have been wrongheaded—the Fed has provided the financial sector with unprecedented liquidity, but it cannot force institutions to use that liquidity to expand their lending or investing. The Fed's response has raised statutory issues that Congress may wish to consider in its oversight capacity. Namely, the Fed's role in the Bear Stearns acquisition, the assistance to AIG, Citigroup, and Bank of America, the creation of the Primary Dealer Credit Facility (a sort of discount window for a group of non-member banks), and its intervention in the commercial paper market involved emergency authorities that had not been used in more than 70 years. This authority was needed because the actions involved financial institutions that were not member banks of the Federal Reserve System (i.e., depository institutions). But because the authority is broad and open-ended, the Fed's actions under this authority are subject to few legal parameters. The authority allows lending to non-member banks, but some of the loans in the Bear Stearns and AIG agreements were to LLCs that the Fed created and controls, and have been used to purchase Bear Stearns' and AIG's assets. These actions raise an important issue—if financial institutions can receive some of the benefits of Fed protection, in some cases because they are "too big to fail," should they also be subject to the costs that member banks bear in terms of safety and soundness regulations, imposed to limit the moral hazard that results from Fed and FDIC protections? H.R. 4173 attempts to limit future emergency lending to broadly available, collateralized facilities to avoid assistance to failing firms. Some policymakers have questioned whether an institution largely independent from the elected branches of government should be able to (indirectly) place significant taxpayer funds at risk by providing the financial sector with hundreds of billions of dollars of assistance through use of its emergency powers. This raises the policy issue of how to balance the needs for congressional transparency and oversight against the economic benefits of Fed independence. H.R. 4173 removes most GAO audit restrictions and requires disclosure of the identities of borrowers with a delay. Furthermore, without congressional input, hundreds of billions of dollars of borrowing by the Treasury (through the Treasury Supplementary Financing Program) has allowed the Fed to increase its lending capacity without detrimental effects on inflation. But as long as there is no government program to systematically manage financial difficulties at too big to fail institutions, the Fed is the only institution that can step in quickly enough to cope with problems on a case-by-case basis. While some had believed TARP provided the type of systemic approach that would allow the Fed to return to a more traditional role, the Fed's subsequent creation of lending facilities to support the commercial paper market, mortgage market, and asset-backed securities market suggests that TARP cannot cover all unforeseen contingencies. Furthermore, TARP is scheduled to expire in October 2010 and is limited in size, although Fed and TARP money have been coupled in order for TARP to have an impact beyond the $700 billion authorized by Congress. The Fed's actions have resulted in an unprecedented expansion in its balance sheet and the portion of the money supply it controls. Normally, this would be highly inflationary, but inflation has remained low because of the financial crisis. As the economy improves, the Fed will need to contain this monetary expansion to prevent inflation from rising, but not so fast that it causes the financial system to destabilize again. The increase in the balance sheet could have already been automatically reversed by the decline in the Fed's direct lending, but the Fed has chosen to offset it through large-scale purchases of assets to maintain a high level of liquidity in the economy. The Fed views paying interest on bank reserves (authorized by P.L. 110-343 ) as an effective way to prevent inflation from rising.

The Federal Reserve (Fed) has been central in the policy response to the financial turmoil that began in August 2007. It has sharply increased reserves to the banking system through open market operations and lowered the federal funds rate and discount rate on several occasions. Since December 2008, it has allowed the federal funds rate to fall close to zero. As the crisis deepened, the Fed's focus shifted to providing liquidity directly to the financial system through new policy tools. Through new credit facilities, the Fed first expanded the scale of its lending to the banking system and then extended direct lending to non-bank financial firms. The latter marked the first time since the Great Depression that firms that are not banks or members of the Federal Reserve System have been allowed to borrow directly from the Fed. After the crisis worsened in September 2008, the Fed began providing credit directly to markets for commercial paper and asset-backed securities. All of these emergency facilities had expired by the end of June 2010, but central bank liquidity swap lines were reopened in May 2010 in response to the crisis in Greece. The Fed also provided emergency assistance to Bear Stearns, AIG, and Citigroup over the course of the crisis; the Fed still holds assets from and loans to AIG and assets from Bear Stearns. These programs resulted in an increase in the Fed's balance sheet of $1.4 trillion at its peak in December 2008, staying relatively steady since then. The Fed's authority and capacity to lend is bound only by fears of the inflationary consequences, which have been partly offset by additional debt issuance by the Treasury. High inflation has not materialized yet because most of the liquidity created by the Fed is being held by banks as excess reserves, but after the economy stabilizes, the Fed may have to scale back its balance sheet rapidly to avoid it. Asset sales could be disruptive, but the Fed has argued that it can contain inflationary pressures through the payment of interest on bank reserves, which it was authorized by Congress to do in 2008. The statutory authority for most of the Fed's recent actions is based on a clause in the Federal Reserve Act to be used in "unusual or exigent circumstances." All loans are backed by collateral that reduces the risk of losses. Any losses borne by the Fed from its loans or asset purchases would reduce the income it remits to the Treasury, making the effect on the federal budget similar to if the loans were made directly by Treasury. It is highly unlikely that losses would exceed its other income and capital, and require revenues to be transferred to the Fed from the Treasury. To date, the Fed's crisis activities have increased its net income. Two policy issues raised by the Fed's actions are issues of systemic risk and moral hazard. Moral hazard refers to the phenomenon where actors take on more risk because they are protected. The Fed's involvement in stabilizing Bear Stearns, AIG, and Citigroup stemmed from the fear of systemic risk (that the financial system as a whole would cease to function) if they were allowed to fail. In other words, the firms were seen as "too big (or too interconnected) to fail." The Fed regulates member banks to mitigate the moral hazard that stems from access to government protections. Yet Bear Stearns and AIG were not under the Fed's regulatory oversight because they were not member banks. Some Members of Congress have expressed concern that certain details of the Fed's lending activities are kept confidential. H.R. 4173 (P.L. 111-203) adds conditions to the Fed's emergency lending authority, removes most GAO audit restrictions, and requires disclosure of the identities of borrowers with a delay. It also changes the Fed's role in the financial regulatory system (see CRS Report R40877, Financial Regulatory Reform: Systemic Risk and the Federal Reserve).

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The 110 th Congress is grappling with a broad range of issues regarding the use of private contractors to provide security for people and property in Iraq and elsewhere. The United States has gradually increased the types of tasks and roles for which it contracts private companies in military operations. Congress has generally accepted the concept of using unarmed private contractors to carry out support functions in military operations, such as providing food and laundry services, although not without concerns regarding the costs of contracts and alleged favoritism in issuing them. But for the Department of State and the military, Iraq is, in some ways, an atypical situation. There, the United States is relying heavily, apparently for the first time in an unstable environment, on private firms to supply a wide variety of security services. Especially given a shortage of Diplomatic Security agents and U.S. troops, private security contractors are widely viewed as vital to U.S. efforts to protect many Iraqi and U.S. government officials, general contractors working to stabilize and reconstruct Iraq, and government facilities. Nevertheless, many Members are concerned about transparency, accountability, and legal and symbolic issues raised by the use of armed civilians to perform security tasks formerly performed by the military and federal employees, as well as possible long-term effects on these organizations. This report first summarizes available information on the private contractors providing security services under U.S. government contracts in Iraq. It then provides information on relevant U.S., international, and Iraqi law, and legal issues involved in the use of armed contractors. It concludes with a discussion of issues involving the need for and suitability of private contractors, costs, oversight, and control, as well as potential foreign policy implications. The United States is just one of many entities—including other governments, international organizations, and private industry—that employ private security contractors in Iraq. In recent years, the United States and many other nations and organizations, including the United Nations, have increasingly turned to private contractors to provide security, as well as a variety of other functions in support of stabilization and reconstruction efforts. This increased reliance on contractors has fueled the growth of the private security industry. There is some debate as to what constitutes a private security contractor. Some commentators define private security as any activity directly related to protecting a person, place, or thing. Others may use a broader definition that includes such activities as providing intelligence analysis, operational coordination, or security training. The National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 Sec. 864) defines private security functions as the guarding of personnel, facilities, or properties, and any other activity for which personnel are required to be armed. In addition to armed security, many private security contractors also offer a variety of unarmed services, which in a number of cases may represent 50% or more of the company's revenues. As such, the services provided by private security companies operating in Iraq can be divided into two major categories: armed services and unarmed services. Armed services include static security—protecting fixed or static sites, such as housing areas, reconstruction work sites, or government buildings; convoy security—protecting convoys traveling in Iraq; security escorts—protecting individuals traveling in unsecured areas in Iraq; and personal security details—providing protective security to high-ranking individuals. Unarmed security services include operational coordination—establishing and managing command, control, and communications operations centers; intelligence analysis—gathering information and developing threat analysis; and security training—providing training to Iraqi security forces. It is estimated that some 50 private security contractors employing more than 30,000 employees are working in Iraq for an array of clients, including governments, private industry, and international organizations such as the United Nations. Peter Singer of the Brookings Institution estimates that citizens of some 30 countries are employed by private security companies in Iraq. Many PSC employees are security professionals from western countries—such as the United States or British Commonwealth countries—with experience in the military or law enforcement. Others are third-country nationals, coming from such countries as Chile, Fiji, Nepal, and Nigeria. A third category of PSC employees consists of local Iraqis. Most of those working in Iraq as private security contractors are Iraqi, according to Doug Brooks of the International Peace Operations Association (IPOA), an industry group. Some of the third-country nationals and local Iraqis working for PSCs have extensive military training and experience. Some 20 different PSCs, employing 10,000 people, are working directly for the U.S. government, primarily for DOD and the Department of State. These security contractors are providing an array of armed and unarmed security services, including static security, personal security details, intelligence analysis, and operational coordination. The United States also has an indirect contractual relationship with many PSCs. For example, reconstruction contractors working for the United States Agency for International Development (USAID) have in turn subcontracted with PSCs to acquire security services. The total direct cost to the U.S. government for acquiring security services in Iraq is not known. The U.S. Congressional Budget Office (CBO) recently estimated that between 2003-2007 the U.S. government obligated between $3 billion and $4 billion to PSCs to acquire security services. In 2005, the U.S. Government Accountability Office (GAO) reported that as of December 31, 2004, U.S. agencies had already obligated over $450 million to acquire security. CBO has estimated that starting in 2005, agencies have spent between $500 million and $1.2 billion annually on security services. The total cost to the U.S. government for private security services acquired by government contractors in Iraq is also unknown. CBO recently estimated that between 2003-2007, U.S.-funded contractors spent between $3 billion and $6 billion to acquire security services. In 2007, House Oversight and Government Reform Committee Chairman Henry Waxman stated at the committee's February hearings on Iraq reconstruction that almost $4 billion "has been paid for private security services in the reconstruction effort alone." The amount of money spent by government contractors on security represents a significant portion of available reconstruction funds. In 2005, a GAO report surveying 15 U.S. government reconstruction contracts found that on more than half of the contracts security costs exceeded 15% of total billings; on four of the contracts security costs exceeded 25% of total billings. A 2006 report by the Special Inspector General for Iraq Reconstruction (SIGIR) surveying nine major U.S. contractors found costs to range from a low of 7.6% to a high of 16.7%, whereas the State Department in 2005 estimated such security costs as 16%-22%. There has been much debate as to whether the use of private security contractors by the U.S. government is cost-effective. According to the CBO, the costs associated with using private security contractors in Iraq "did not differ greatly form the costs of having a comparable military unit performing similar functions. During peacetime, however, the military unit would remain in the force structure and continue to accrue costs at a peacetime rate, whereas the private security contract would not have to be renewed." Agencies generally have not conducted comprehensive cost-benefit analyses comparing the costs of using private security companies with the costs of using in-house security resources. Pay scales for these contractors reportedly vary depending on their experience, their nationality, and the U.S. government's perceptions of danger involved. When the hiring of such contractors first became controversial, the news media reported (in April 2004) a pay range of $500 to $1,500 per day. Since the earlier days of the conflict, experts suggest that the pay scale has decreased and is on average lower globally as the supply of those desiring such work has risen. The highest amounts are paid to highly trained and experienced former military personnel from the United States and British Commonwealth, with lower amounts paid to personnel from developing countries such as Chile and Nepal, and the lowest amounts going to locally hired Iraqis. Like soldiers, private security contractors incur the risk of death and injury from insurgents in Iraq. For example, all three contractors working for the Department of State under the Worldwide Personal Protective Services contract have had employees killed and wounded while providing security services. According to the private security contractor Blackwater Worldwide, 32 employees have been killed and more than 46 wounded while providing security in Iraq since March 1, 2004. Convoy-related deaths appear to be a significant portion of total private contractor deaths. U.S. Army Corps of Engineers data reportedly show that registered supply convoys have come under frequent attack. Of those involved in the 12,860 Corps-registered convoys that transported supplies in Iraq from August 2004 through May 10, 2007, some 132 "security employees and drivers" were killed and 416 were wounded, according to a report on that data. Recent reports indicate that violence in Iraq has significantly diminished. For example, according to media reports, the rate of attacks on convoys has dropped markedly: only about 1.5% of convoys were attacked in the first six months of 2008 compared with about 20% being attached in late 2006 and early 2007. While attacks on convoys and other targets have been on the decline, private security contractors remain at risk of being killed or wounded. In the first years of Operation Iraqi Freedom, little information was available on State Department and DOD contracts for private security services in Iraq. The State Department and DOD have since made available the names of the companies holding its primary contracts for security services and the numbers of security personnel serving directly and indirectly under those contracts. Within the Department of Defense, the office of the Assistant Deputy Undersecretary of Defense (Program Support) is responsible for all contractor oversight, including private security contractors, in forward areas of operation. The office was established in response to section 854 of the National Defense Authorization Act of 2007 ( H.R. 5122 / P.L. 109-364 ). Nearly 1,500 special agents of the State Department's Bureau of Diplomatic Security (DS) serve in the United States at 285 U.S. offices, and overseas posts and missions. DS special agents are law enforcement officers involved in deterring visa and passport fraud, overseeing worldwide training and assistance programs in anti-terrorism, providing a courier service for the Department, and providing a wide range of protective services for the Secretary of State, the U.S. Ambassador to the United Nations, and foreign dignitaries visiting the United States. DS is also responsible for the security of U.S. embassies and consulates around the world, the personnel and the homes of those who staff those facilities, and the U.S. dignitaries who visit those countries. The State Department has increasingly employed private security contractors for more than 20 years to provide protection to both overseas posts and missions and the personnel and their families who staff them in an increasingly dangerous world. Starting in 1983 after the U.S. embassy bombing in Beirut, Lebanon, the State Department resorted to using contractors to provide perimeter security to U.S. diplomatic and consular posts around the world. The State Department's Bureau of Diplomatic Security first used PSCs in 1994 when MVM, Inc. was hired to help protect Haitian President Jean-Bertrand Aristide as he returned to Haiti. This was followed with the use of PSCs in Bosnia, Israel, Afghanistan, and most recently, Iraq. In 2004, when the United States opened its embassy in Baghdad, DS took over the responsibility from the military of providing security for what was fast becoming the U.S.'s largest embassy. It became clear, however, that DS did not have sufficient personnel to take on this responsibility while continuing to accomplish its other duties around the world. To meet the shortfall, DS signed Blackwater USA (now Blackwater Worldwide), to a one-year sole-source contract to provide security services for the new Baghdad embassy and its staff. The State Department said it chose Blackwater because the company was already in-country, having operated there under a previous DOD contract to provide security for the Coalition Provisional Authority (CPA). In the Summer of 2005, the State Department opened the Worldwide Personal Protective Services II (WPPS II) contract for bids. The WPPS II contract for Iraq is a five-year (one-year base and four optional years) $1.2 billion "Indefinite Delivery-Indefinite Quantity" (ID/IQ) contract with task orders to be competed on a firm fixed-price basis. The contract was awarded on a best value basis, meaning its award was based on what was most advantageous to the federal government. The WPPS II considered technical merit more important than cost. WPPS II contracts are used to provide bodyguards and static guards (i.e., guards for buildings and other infrastructure) in Baghdad and other areas throughout Iraq. Three private security companies were eventually hired under the WPPS-II umbrella contract. These companies were Blackwater Worldwide, DynCorp, International, LLC, and Triple Canopy, Inc. Triple Canopy also holds a separate State Department contract to provide local guard services for the U.S. Embassy and other sites in the Baghdad Green Zone, which are under Chief of Mission control. Blackwater Worldwide , founded in 1997 as Blackwater USA and headquartered in Moyock, North Carolina, has provided a variety of protective services in Iraq. It was one of the original companies providing protection for CPA chief Paul Bremer as well as other CPA employees and visiting dignitaries. The Blackwater staff includes former military, intelligence, and law enforcement personnel. According to news reports and its website, Blackwater, founded by former Navy SEAL Erik Prince, has the largest private training center in the United States. The center consists of various training ranges including those that simulate urban combat; the country's largest, multi-surface, multi-level tactical driving track; and an artificial lake built for conducting simulations of boarding a hostile ship. The company also has extensive technology design and manufacturing capabilities that have produced remotely piloted airships and IED-safe armored personnel carriers. Under the WPPS contract, Blackwater's primary area of operation is the Baghdad area. On April 5, 2008, the Department of State renewed Blackwater's WPPS contract for a fifth year. The Department explained that the FBI investigation into the September 16, 2007, Nisoor Square shooting in which Blackwater employees protecting a diplomatic convoy fired upon and killed 17 Iraqis, is ongoing, and the current contract was to expire in May 2008. After the conclusion of the FBI investigation, the Department is to examine the FBI findings to determine whether the Blackwater contract should continue. DynCorp International LLC, based in Falls Church, Virginia, evolved, according to its website, from a company formed in 1946 that provided support and services to U.S. military aircraft and weapons systems under Air Force contracts. Named DynCorp since 1987, it was acquired in 2003 by Computer Sciences Corporation (CSC) and now has nearly 14,000 employees in 30 countries. Under the WPPS contract, DynCorp operates primarily in the northern Kurdish area of Iraq. Besides the WPPS contract, DynCorp also holds another State Department contract, under the Bureau of International Narcotics and Law Enforcement, to provide police training and related services in Iraq. Triple Canopy, Inc. , founded in September 2003 and based in Herndon, Virginia, bills its operational leadership as "comprised of former operators from tier-one special operations units...." Its two founders and co-chairs both served with the U.S. Army Special Forces, one with Special Forces' Delta Force. Under the WPPS contract, Triple Canopy operates primarily in southern Iraq. PSCs provide a wide variety of security services to the Department of Defense. For example, one company, EOD Technologies, Inc., provides static perimeter and internal security throughout Victory Base Complex in Baghdad. Another company, Aegis Defence Services Limited, coordinates the movement of all DOD, Department of State, and other participating PSCs throughout Iraq. The company also continuously gathers, interprets, and disseminates information on the security situation throughout Iraq. Other companies provide security for convoys or officials traveling throughout Iraq. DOD uses both American and foreign PSCs. For example, Aegis Defence Services Limited, Erinys International, and ArmorGroup Services Ltd. are British companies. The number of PSC employees working for DOD fluctuates significantly, depending on a variety of factors, including troop strength and operational need. For example, as of December 31, 2007, DOD had contracts with 32 different PSCs employing almost 10,000 individuals to provide security services to the government. By contrast, as of March 31, 2008, DOD had contracts with 18 different PSCs employing more than 7,000 individuals to provide security services to the government (see Table 2 ). DOD officials have stated that they anticipate the number of PSC employees operating in Iraq to increase again in the near future to support military efforts. Some government officials and industry experts also attribute part of the drop in the number of PSC employees working in Iraq to DOD's improved ability to accurately track PSCs. Generally, private security contractors constitute a relatively small portion—approximately 4-6%—of the over 160,000 strong contractor workforce working for DOD in Iraq. DOD was unable to provide data on how much was being spent on PSCs in Iraq. Aegis Defence Services Limited, founded in 2002 and based in London, is a privately owned company with offices in Afghanistan, Bahrain, Iraq, and the United States. It bills itself as a security and risk management company. The company's founder and CEO, Tim Spicer, is a retired British lieutenant colonel. The company won an initial $293 million contract with the U.S. Army in 2004 and was subsequently awarded a $475 million contract, the largest PSC contract in Iraq awarded by DOD as of the date of the award. The contract award came under significant criticism as a result of the alleged role that founder Tim Spicer played in the late 1990s putting down a rebellion in Papua New Guinea and selling weapons to Sierra Leone in violation of a U.N. arms embargo. ArmorGroup International plc, founded in 1981 and based in London, has approximately 8,500 employees worldwide, with 38 offices in 27 countries. The company bills itself as offering five security-related services: protective security; risk management consultancy; security training; development, humanitarian, and construction support; and weapons reduction and mine action services. ArmorGroup provides security training to more than 5,000 security professionals, government officials, and corporate executives and their families worldwide. EOD Technologies, Inc., founded in 1987 and based in Lenoir City, Tennessee, is an employee-owned firm with offices in the United States, Afghanistan, Iraq, and Kuwait. The company bills itself as having three principal business units: munitions response, security services, and critical mission support. Its security services include armed security, guard force and reaction force training, surveillance and surveillance detection, counter IED response services, and security consulting. Public awareness of the extent to which private contractors were being used for security purposes was highlighted by the deaths of four Blackwater guards in Fallujah on March 31, 2004. The guards were three former Army Rangers and a former Navy SEAL. They were killed while escorting trucks carrying supplies for a private company that provided food services to U.S. military dining facilities in Iraq, and their bodies were then dragged through the streets and hung for display. Days later, Blackwater personnel again hit the news as they reportedly fought a prolonged gun battle in Najaf on April 4, 2004, allegedly defending the U.S. government headquarters there. These events sparked congressional debate over the role of private contractors in U.S. military operations, the desirability of using such contractors, and the appropriate legal and contractual framework to control them. Congress has taken a renewed interest in questions about management, accountability, and transparency of PSCs. In November 2006, news reports about a lawsuit filed in Fairfax County [VA] Circuit Court brought to light allegations that a Triple Canopy employee in Iraq twice had wantonly fired at Iraqi civilians in the summer of 2005 and possibly killed one person. The two Triple Canopy employees filing the lawsuit state that they were fired for reporting that their supervisor had committed the act. The Company stated that while it does not have any evidence that any persons were harmed as a result of the alleged weapons firing incidents, the employees were terminated a result of their failure to immediately report the weapons firings incidents. According to a news report, the Triple Canopy employee was operating at the time under a KBR subcontract when the shootings occurred. More recently, Blackwater has been in the news because of its involvement in several shooting incidents in which Iraqi civilians were wounded or killed. On September 16, 2007, Blackwater guards, escorting a U.S. diplomatic convoy, wounded or killed 17 Iraqi civilians at a Baghdad traffic circle in Nisoor Square. According to news reports, the Blackwater guards felt threatened by an oncoming car that did not stop as the convoy was going through the circle. Blackwater officials insisted that the guards were ambushed but many witnesses state that Blackwater's actions were unprovoked. Many military officials reportedly also expressed concerns that the security contractors were trigger happy and "out-of-control cowboys who alienated the same Iraqis the military is trying to cultivate." Defense Secretary Gates said that the contractors were at "cross purposes" with the military goals, and he suggested they be put under his authority. News reporting on these incidents also raised concerns regarding charges of cultural insensitivity, Blackwater's sense of impunity in dealing with Iraqis, and whether the company was appropriately following the Department of State's guidelines for PSCs on the use of force. A Majority Staff hearing memorandum prepared for the October 2, 2007, House Committee on Oversight and Government Reform hearing regarding Blackwater and its involvement in shooting incidents in Iraq, describes Blackwater's record on the use of force to be "frequent and extensive resulting in significant casualties and property damage." The report states that between January 1, 2005, through September 12, 2007, Blackwater employees were involved in 195 incidents of firearms discharges. In 32 incidents, Blackwater personnel returned fire after an attack, while on 163 occasions, Blackwater fired first, according to the Majority Staff memorandum. Members of Congress have also raised questions about the State Department's oversight of its protective service contractors' activities in Iraq. They accuse the State Department of not only failing to supervise contractor performance adequately but also of failing to properly investigate alleged killings by PSCs. PSCs' use of deadly force, the actual and alleged killing of innocent Iraqi civilians by PSC employees, and the State Department's alleged lack of concern about accountability, many believe, have undermined U.S. foreign policy and specifically U.S. standing in Iraq. Many in the military reportedly expressed concerns that Blackwater's actions that day and over time could alter and degrade relationships that the military is seeking to build with Iraqis. Speaking prior to the September 16 killings, an Iraqi Interior Ministry official discussing Blackwater's actions in previous deadly fire incidents and the company's attitude in ignoring Iraqi law and customs, explained that Blackwater and its actions are part of the reason for the hatred of Americans. "Iraqis do not know them as Blackwater or other PSCs but only as Americans." In a broader foreign policy context, the State Department's alleged protection of Blackwater as its employees act as if they are above Iraqi law and kill Iraqis with impunity makes it difficult to advocate for such issues as the importance of the rule of law and human rights as U.S. foreign policy objectives. Advances in worldwide communications make it possible for allegations of human rights violations by those associated with the United States to be spread worldwide almost instantaneously, and may affect both the perception of the United States as a country respectful of human rights as well as the international environment in which the United States works to advance its foreign policy objectives. Representative Tom Davis, concerned over the actions of PSCs, said: Iraqis understandably resent our preaching about the rule of law when so visible an element of the U.S. presence there appears to be above the law. That is why the events of September 16 th sparked such an outcry by the Iraqi government which sees unpunished assaults on civilians as a threat to national sovereignty. The incident is also being used by those seeking to exploit accumulated resentments and draw attacks on private contractors, a force even the Iraqi government concedes is still a vital layer of security. Along with the very serious issue of killing innocent Iraqis by PSCs and the possible human rights, diplomatic, and military consequences, the Congress also examined cases of alleged sexual harassment and rape of female KBR employees in Iraq by other KBR PSCs, and the seeming lack of any judicial accountability in these cases. The House Judiciary Committee, on December 19, 2007, held a hearing on "Enforcement of Federal Criminal Law to Protect Americans Working for U.S. Contractors in Iraq"—and the Senate Committee on Foreign Relations on April 9, 2008, conducted a hearing on "Closing Legal Loopholes: Prosecuting Sexual Assaults and Other Violent Crimes Committed Overseas by American Civilians in a Combat Environment." These cases have again raised the question of the legal accountability of PSCs for their actions in Iraq but in a different context. Contractors to the coalition forces in Iraq operate under three levels of legal authority: (1) the international order of the laws and usages of war and resolutions of the United Nations Security Council; (2) U.S. law; and (3) Iraqi law, including orders of the CPA that have not been superceded. Under the authority of international law, contractors and other civilians working with the military are civilian non-combatants whose conduct may be attributable to the United States or may implicate the duty to promote the welfare and security of the Iraqi people. Iraqi courts do not currently have jurisdiction to prosecute them for conduct related to their contractual responsibilities without the permission of the Sending State. Some contractors, particularly U.S. nationals, may be prosecuted in U.S. federal courts or military courts under certain circumstances. The international law of armed conflict, particularly those parts relating to belligerent occupation (at least for conduct that occurred prior to the handover of sovereignty on June 28, 2004) and non-international armed conflict, appears to be relevant in Iraq. The status of armed contract personnel in such circumstances falls into a grey area. While civilians accompanying the Armed Forces in the field are generally entitled to treatment as prisoners of war (POW) if captured by an enemy State during an international armed conflict, they are considered civilians (non-combatants) who are not authorized to take a direct part in hostilities. A critical question appears to be whether the duties of contractors amount to "taking an active part in hostilities." In an international armed conflict or occupation, only members of regular armed forces and paramilitary groups that come under military command and meet certain criteria (carry their weapons openly, distinguish themselves from civilians, and generally obey the laws of war) qualify as combatants. Because contract employees fall outside the military chain of command, even those who appear to meet the criteria as combatants could be at risk of losing their right to be treated as POWs if captured by the enemy. The Geneva Conventions and other laws of war do not appear to forbid the use of civilian contractors in a civil police role in occupied territory, in which case contractors might be authorized to use force when absolutely necessary to defend persons or property. Given the fluid nature of the current security situation in Iraq, it may sometimes be difficult to discern whether civilian security guards are performing law-enforcement duties or are engaged in combat. If their activity amounts to combat, they would become lawful targets for enemy forces during the fighting, and, if captured by an enemy government (if one should emerge), could potentially be prosecuted as criminals for their hostile acts. Contract personnel who intentionally kill or injure civilians could be liable for such conduct regardless of their combatant status. On the other hand, if the conflict in Iraq is a non-international armed conflict within the meaning of Common Article 3 of the Geneva Conventions (CA3), customary international law would no longer distinguish between "unlawful" and "lawful combatants." Contractors captured by enemy forces who had engaged in hostilities would be entitled to the minimum set of standards set forth in CA3, but their right to engage in hostilities in the first place would likely be determined in accordance with the prevailing local law. In this case, Iraqi law, including CPA orders that have not been rescinded, apply. Mercenaries are persons who are not members of the armed forces of a party to the conflict but participate in combat for personal gain. They may be authorized to fight by a party to the conflict, but their allegiance to that party is conditioned on monetary payment rather than obedience and loyalty. For this reason, mercenaries are sometimes treated as "unlawful combatants" or "unprivileged belligerents," even though their employment is not strictly prohibited by international law. As discussed above, they may not qualify for POW treatment under the Geneva Convention Relative to the Treatment of Prisoners of War (GPW), and those meeting the definition of "mercenary" under the 1977 Protocol I to the Geneva Conventions are explicitly denied combatant status. Because mercenaries are not entitled to combat immunity, they may be tried, and if found guilty, punished for their hostile actions (including by the death penalty), even if such actions would be lawful under the law of war if committed by a soldier. Soldiers with a nationality other than that of the party on whose side they fight are not automatically considered mercenaries. Article 47 of Protocol I defines a mercenary as follows: 2. A mercenary is any person who: (a) Is specially recruited locally or abroad in order to fight in an armed conflict; (b) Does, in fact, take a direct part in the hostilities; (c) Is motivated to take part in the hostilities essentially by the desire for private gain and, in fact, is promised, by or on behalf of a Party to the conflict, material compensation substantially in excess of that promised or paid to combatants of similar ranks and functions in the armed forces of that Party; (d) Is neither a national of a Party to the conflict nor a resident of territory controlled by a Party to the conflict; (e) Is not a member of the armed forces of a Party to the conflict; and (f) Has not been sent by a State which is not a Party to the conflict on official duty as a member of its armed forces. Under this definition, it appears that contractor personnel who are not U.S. nationals, the nationals of other coalition allies or Iraqi nationals, and who were hired to—and in fact do—take part in hostilities might be considered to be mercenaries, assuming the definition in Protocol I applies as customary international law in the context of the current hostilities in Iraq. On the other hand, it is not altogether clear what constitutes "direct participation in an armed conflict," and some of the other requirements are inherently difficult to prove, particularly the element of motivation. There is no distinction based on the offensive or defensive nature of the participation in combat. Contractors to U.S. agencies or any of the multinational forces or diplomatic entities in Iraq operate under the law of the government of Iraq, which includes orders issued by the CPA prior to the hand-over of sovereignty to the Iraqi Interim Government that have not been rescinded or superceded. Under CPA Order Number 17, as revised June 27, 2004, contractors are exempt from Iraqi laws for acts related to their contracts. That order provides that "[c]ontractors shall not be subject to Iraqi laws or regulations in matters relating to the terms and conditions of their Contracts...," but that they are subject to all relevant regulations with respect to any other business they conduct in Iraq (section 4(2)). Contractors are also immune from Iraqi legal processes for acts performed under the contracts (section 4(3)). Iraqi legal processes could commence against contract personnel without the written permission of the Sending State, but that State's certification as to whether conduct at issue in a legal proceeding was related to the terms and conditions of the relevant contract serves as conclusive evidence of that fact in Iraqi courts (section 4(7)). CPA Order Number 3, as revised on December 31, 2003, governs the use of weapons. It restricts the authority to carry weapons to members of Iraqi security forces and Coalition forces, and "groups and individuals who have been authorized to carry weapons in the course of their duties by the CPA or Commander, Coalition Forces or their duly authorized delegates," (section 3). It further provides that "private security firms may be licensed by the Ministry of the Interior to possess and use licensed Firearms and Military Weapons, excluding Special Category Weapons, in the course of their duties, including in public places." Id . All others must apply to the Iraqi Ministry of the Interior for a license in order to possess a weapon. The unauthorized use or possession of weapons is subject to penalty. CPA Memorandum Number 17 provides for the registration and regulation of private security companies (PSC) operating in Iraq. Two annexes to the Memorandum provide for binding Rules for the Use of Force (Annex A) and a Code of Conduct (Annex B) that all PSC employees must follow. Section 9 prohibits PSC employees from conducting law enforcement activities; however, section 5 of Annex A permits PSC employees to stop, detain, search, and disarm civilians where the employees' safety requires it or if such functions are specified in the contract. Section 6 prohibits PSC employees from joining Coalition or Multi-national Forces in "combat operations except in self-defense or in defense of persons as specified in [their] contracts." Section 9 makes PSC subject to all "applicable criminal, administrative, commercial and civil laws and regulations," and provides that their "officers and employees may be held liable under applicable criminal and civil legal codes," except as otherwise provided by law. U.S. contractor personnel and other U.S. civilian employees in Iraq may be subject to prosecution in U.S. courts. Additionally, persons who are "employed by or accompanying the armed forces" overseas may be prosecuted under the Military Extraterritorial Jurisdiction Act of 2000 (MEJA) or, in some cases, the Uniform Code of Military Justice (UCMJ). However, some contractor personnel who commit crimes might not fall within the statutory definitions described below, and thus might fall outside the jurisdiction of U.S. criminal law, even though the United States is responsible for their conduct as a matter of state responsibility under international law and despite that such conduct might interfere with the ability of the Multi-National Forces in Iraq to carry out its U.N. mandate. U.S. contractor personnel and other U.S. civilian employees in Iraq are subject to prosecution in U.S. courts under a number of circumstances. Jurisdiction of certain federal statutes extends to U.S. nationals at U.S. facilities overseas that qualify as part of the special maritime and territorial jurisdiction (SMTJ) of the United States. For crimes involving a U.S. national as a perpetrator or a victim, the SMTJ includes: (A) the premises of United States diplomatic, consular, military or other United States Government missions or entities in foreign States, including the buildings, parts of buildings, and land appurtenant or ancillary thereto or used for purposes of those missions or entities, irrespective of ownership; and (B) residences in foreign States and the land appurtenant or ancillary thereto, irrespective of ownership, used for purposes of those missions or entities or used by United States personnel assigned to those missions or entities. Criminal statutes that apply within the SMTJ include maiming, assault, kidnapping, sexual abuse, assault or contact, murder and manslaughter. The Department of Justice (DOJ) is responsible for prosecuting crimes in this category. A CIA contractor was convicted under this provision in 2007 for the assault of a detainee in Afghanistan. In addition, many federal statutes prescribe criminal sanctions for offenses committed by or against U.S. nationals overseas, including the War Crimes Act of 1996. The federal prohibition on torture applies to acts outside the United States regardless of the nationality of the perpetrator (non-U.S. nationals need only be "found" in the United States to be prosecuted). The War Crimes Act, as amended by the Military Commissions Act of 2006, prohibits "grave breaches" of Common Article 3, which are defined to include torture, cruel or inhuman treatment, performing biological experiments, murder of an individual not taking part in hostilities, mutilation or maiming, intentionally causing serious bodily injury, rape, sexual assault or abuse, and taking hostages. Federal jurisdiction is established for these crimes when they are committed by or against U.S. nationals or U.S. servicemembers. It does not appear to cover foreign nationals who commit war crimes in Iraq, even if they are employed by the U.S. government or U.S. government contractors. Other criminal proscriptions with extraterritorial reach include assaulting, killing or kidnapping an internationally protected person, or threatening to do so. Jurisdiction exists over these offenses if the victim or offender is a U.S. national, or if the offender is afterwards found in the United States. The federal prohibition on torture applies to acts outside the United States regardless of the nationality of the perpetrator (non-U.S. nationals need only be "found" in the United States to be prosecuted). There is extraterritorial jurisdiction over murder where both the perpetrator and victim are U.S. nationals, but prosecution requires that the Attorney General or his designee give approval, which requires that the foreign country where the murder took place has not prosecuted the suspect for the same conduct and that the suspect is no longer present in that country and the country lacks the ability to lawfully secure the person's return. Extraterritorial jurisdiction may be found to be implied in statute, especially where the statute's main purpose is to protect federal officers, employees and property, or to prevent the obstruction or corruption of the overseas activities of federal departments and agencies. Some statutes apply to conduct where foreign commerce is affected, although that jurisdictional basis alone may be insufficient to demonstrate that Congress meant to reach conduct overseas. Crimes involving only foreign nationals as either perpetrator or victim, even where one or more are employed by the U.S. government or a government contractor, may fall outside the jurisdiction of U.S. courts. Persons who are "employed by or accompanying the armed forces" overseas may be prosecuted under the Military Extraterritorial Jurisdiction Act (MEJA) of 2000 for any offense that would be punishable by imprisonment for more than one year if committed within the special maritime and territorial jurisdiction of the United States. Persons "[e]mployed by the armed forces" is defined to include civilian employees of the Department of Defense (DOD) as well as DOD contractors and their employees (including subcontractors at any tier), and, after October 8, 2004, civilian contractors and employees from other federal agencies and "any provisional authority," to the extent that their employment is related to the support of the DOD mission overseas. Depending on how broadly DOD's mission is construed, MEJA does not appear to cover civilian and contract employees of agencies engaged in their own operations overseas. It also does not cover nationals of or persons ordinarily residing in the host nation. While it appears to cover other foreign nationals working under covered contracts, it does not appear to extend federal jurisdiction over crimes not expressly defined as covering conduct occurring within the SMTJ. For example, it might not be available as a jurisdictional basis to prosecute non-U.S. national contractors for war crimes under 18 U.S.C. § 2441. However, under DOD's interpretation of the statute, MEJA is available to prosecute federal crimes that are prohibited everywhere within the United States, including areas that are not part of the SMTJ. DOD issued regulations for implementing MEJA in 2005. DOD Instruction 5525.11, Criminal Jurisdiction Over Civilians Employed By or Accompanying the Armed Forces Outside the United States, Certain Service Members, and Former Service Members , March 3, 2005, implements policies and procedures pursuant to MEJA. Under the Instruction, the DOD Inspector General (IG) has the responsibility to inform the Attorney General whenever he or she has reasonable suspicion that a federal crime has been committed. The DOD IG is also responsible for "implementing investigative policies" to carry MEJA into effect. The Instruction notes that the Domestic Security Section of the DOJ Criminal Division has agreed to "provide preliminary liaison" with DOD and other federal entities and to designate the appropriate U.S. Attorney's Office to handle a case. The Department of Justice has reported that 12 persons have been charged under MEJA since its passage in 2000, with several investigations underway that may result in charges. Very few successful prosecutions involving DOD contractors in Iraq under MEJA have been reported. A contractor working in Baghdad pleaded guilty to possession of child pornography in February 2007. Another contract employee was prosecuted for abusive sexual contact involving a female soldier that occurred at Talil Air Force Base in 2004. A contract employee was indicted for assaulting another contractor with a knife in 2007. In addition, a former U.S. soldier is being prosecuted under MEJA for the rape and murder of an Iraqi girl and the murder of her family while the defendant served on active duty in Iraq. The House of Representatives passed legislation on October 4, 2007, to expand MEJA coverage during contingency operations ( H.R. 2740 ) (for information on H.R. 2740 , the Military Extraterritorial Jurisdiction Act (MEJA) Expansion and Enforcement Act of 2007, see section on " Selected Legislation in the 110 th Congress " below). Contract personnel may be subject to military prosecution under the Uniform Code of Military Justice (UCMJ) for conduct that takes place during hostilities in Iraq in some circumstances, although any trial of a civilian contractor by court-martial is likely to be challenged on constitutional grounds. Article 2(a)(10), UCMJ, as amended by § 552 of the John Warner National Defense Authorization Act for Fiscal Year 2007 ( P.L. 109-364 ) ("FY07 NDAA"), extends military jurisdiction in "time of declared war or a contingency operation," to "persons serving with or accompanying an armed force in the field." There is one reported use of the amendment; an interpreter with dual Canadian-Iraqi citizenship pleaded guilty in connection with the stabbing of another contractor. Additionally, if offenses by contract personnel can be characterized as violations of the law of war, the UCMJ may extend jurisdiction to try suspects by court-martial or by military commission. Prior to the FY2007 NDAA, the UCMJ covered civilians serving with the Armed Forces in the field only in "time of war." As a reflection of the constitutional issues that arise whenever civilians are tried in military tribunals, as reaffirmed by a series of Supreme Court cases beginning in 1957 with Reid v. Covert , courts have interpreted the phrase "in time of war" to mean only wars declared by Congress. In Covert , a plurality of the Supreme Court rejected the proposition that Congress's power to regulate the land and naval forces justifies the trial of civilians without according the full panoply of due process standards guaranteed by the Bill of Rights. The Supreme Court has also found that former servicemembers who have severed all ties to the military cannot be tried by court-martial for crimes they committed while on active duty. The trial of civilian contractors by courts-martial will likely be subject to challenge on constitutional grounds. Congress's authority to "make Rules for the Government and Regulation of the land and naval Forces" empowers it to prescribe rules for courts-martial that vary from civilian trials and are not restricted by all of the constitutional requirements applicable to Article III courts. In addition to the express exception in the Fifth Amendment regarding the right to presentment and indictment in "cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger," the Supreme Court has found implicit exceptions to other fundamental rights as they pertain to servicemembers. Statutes relating to courts-martial have withstood objections based on due process. While the UCMJ offers soldiers procedural protections similar to and sometimes arguably superior to those in civilian courts, courts have been reluctant to extend military jurisdiction to civilians. On the other hand, the Covert Court distinguished the peacetime courts-martial of civilian spouses at issue from Madsen v. Kinsella , in which a military spouse was tried by military commission in occupied Europe, on the basis that [that case] concerned trials in enemy territory which had been conquered and held by force of arms and which was being governed at the time by our military forces. In such areas the Army commander can establish military or civilian commissions as an arm of the occupation to try everyone in the occupied area, whether they are connected with Army or not. If Madsen remains valid, if and for so long as the United States is considered an "occupying power" in Iraq, it may be acceptable under the Constitution to subject DOD contractors there to military jurisdiction. Further, the Covert plurality held open the possibility that civilians who were part of the armed services could be tried by court-martial during wartime. While the Court has suggested in dicta that courts-martial are never proper for the trial of civilians, it has never expressly stated that the Constitution forbids military jurisdiction over civilians who might properly be said to be "in" the Armed Forces during war. Lower courts addressed the issue during World War II, and upheld courts-martial of civilian employees of the U.S. Army in Eritrea. Merchant seamen were sometimes tried by court-martial by the Navy. One such conviction was overturned by a federal court on habeas corpus review because the offense charged, striking a superior officer, was essentially a military charge. However, another court upheld the conviction of a merchant seaman for the military charge of desertion. Assuming the Constitution permits the trial of civilians accompanying the Armed Forces in wartime, a particular case will also have to satisfy the statutory requirements of the UCMJ. To determine whether a civilian contractor who is suspected of having committed an offense is subject to prosecution under the UCMJ, it will be necessary to determine whether he is "serving with or accompanying an armed force" that is operating "in the field." The phrase "serving with or accompanying" the forces was historically construed to require that the civilian's "presence [must be] not merely incidental to, but directly connected with or dependent upon, the activities of the armed forces or their personnel." Courts have found that military jurisdiction over a civilian "cannot be claimed merely on the basis of convenience, necessity, or the non-availability of civil courts." The phrase "in the field" means serving "in an area of actual fighting" at or near the "battlefront" where "actual hostilities are under way." Whether an armed force is "in the field" is "determined by the activity in which it may be engaged at any particular time, not the locality where it is found." Therefore, it appears that contractors will not be subject to military jurisdiction merely because of their employment in Iraq. They might, however, be subject to jurisdiction even if the conduct occurs outside of Iraq, so long as it occurs away from a permanent garrison and there is sufficient connection to military operations ongoing in Iraq or elsewhere. Other likely issues include whether civilian contractors may be prosecuted for military crimes, such as disrespect of an officer or failure to obey a lawful command, or whether non-judicial punishment will be available to discipline contract employees. Some of the standard punishments courts-martial ordinarily adjudge would not be available in the case of civilians, such as a dishonorable discharge or reduction in rank, and possibly forfeiture of pay. Appellate review over civilian cases may be effectively restricted by these sentencing consideration. For example, the government may appeal an adverse ruling (not amounting to a finding of not guilty) on an interlocutory basis only in cases in which a punitive discharge may be adjudged. On the other hand, there does not appear to be a means of compelling continued employment in order for a civilian to undergo court-martial proceedings; if misconduct by a contract employee results in his or her immediate dismissal by the contractor, military jurisdiction may also cease. DOD recently issued guidance for implementing the new law. Secretary Gates, citing "a particular need for clarity regarding the legal framework that should govern a command response to any illegal activities by Department of Defense civilian employees and DoD contractor personnel overseas with our Armed Forces," instructed the Secretaries of the Military Departments, the Chairman of the Joint Chiefs of Staff, and the commanders of the regional combatant commands that the exercise of jurisdiction over civilians must be based on military necessity and supported by circumstances that meet the interests of justice. Such circumstances include those where U.S. federal criminal jurisdiction does not otherwise apply or is not being pursued, or where the conduct in question is adverse to a significant military interest of the United States. For conduct that occurs within the United States, or in cases where the offender was not at all pertinent times outside the United States, the Secretary of Defense is the sole authority for convening a court-martial or initiating non-judicial punishment. For covered civilians outside the United States, commanders of geographic combatant commands may initiate disciplinary proceedings or delegate such authority to subordinate commanders who possess general court-martial convening authority. These convening authorities are required, prior to initiating court-martial or non-judicial proceedings, to follow the notification procedures outlined in DOD Instruction 5525.11 (MEJA implementation) to give the Department of Justice the opportunity to take action. The memorandum gives the Justice Department fourteen calendar days (or longer, if DOJ determines that extraordinary circumstances warrant more time to complete its determination) to advise DOD as to whether it intends to exercise jurisdiction. If the period of review passes without an indication that DOJ intends to exercise jurisdiction, DOD may notify DOJ that it intends to authorize the appropriate commander to initiate disciplinary action, at his or her command discretion. If DOJ elects to exercise jurisdiction, the commanders are not authorized to initiate disciplinary action, unless U.S. federal criminal jurisdiction of the case is later terminated. Military commanders are authorized to investigate and exercise other law enforcement authorities with respect to violations by civilians while DOJ makes its determination in order to be prepared to take appropriate action if DOJ declines jurisdiction. The use of private contractors in personal security and military operations raises many questions regarding the appropriateness and practicality of entrusting private companies with duties that have been traditionally reserved for military and civilian federal personnel. Several issues are particularly sensitive when nations hire private contractors for potentially hostile situations. Some are even more sensitive when State-hired contractors carry arms, even on a strictly defensive basis. These issues, as related to contractors as a whole and to private security contractors in particular, are briefly discussed below. One question that arises whenever a federal agency hires private persons or entities to perform services is whether the duties to be performed under the contract are "inherently governmental" in nature and therefore ought to be performed by public officials. Congress defined "inherently governmental function" in the Federal Activities Inventory Reform (FAIR) Act of 1998 to mean a function that is "so intimately related to the public interest as to require performance by Federal Government employees." Under the FAIR Act, the term "includes activities that require either the exercise of discretion in applying Federal Government authority or the making of value judgments in making decisions for the Federal Government...." It involves functions that can "determine, protect, and advance United States economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal justice proceedings," contract management, and functions that can "significantly affect the life, liberty, or property of private persons...." Infrequently, Congress has provided by statute that a function is "inherently governmental." Congress may also directly forbid or limit the use of contractors for certain functions or forbid the contracting of certain kinds of employees, where the functions or employment may be considered inherently unsuitable for association with the government. The Federal Acquisition Regulations (FAR) list examples of inherently governmental functions. The Office of Management and Budget sets forth in Circular A-76 the guidelines and procedures that executive agencies should take into account when determining whether an activity should be performed by government personnel or can be performed by the private sector. Executive agencies may also take into account legislation when making such a determination. Circular A-76, as revised in 2003, states that using contractors to provide certain types of protective services—guard services, convoy protection services, plant protection services, pass and identification services, and the operation of prison or detention facilities, all whether performed by unarmed or armed personnel—is not prohibited. Nevertheless, Circular A-76 also stipulates that executive agencies should take into account whether circumstances exist where the provider's authority to take action...will significantly and directly affect the life, liberty, or property of individual members of the public, including the likelihood of the provider's need to resort to force in support of a police or judicial activity; whether the provider is more likely to use force, especially deadly force, and the degree to which force may have to be exercised in public or relatively uncontrolled areas. DOD implementation of the FAR, known as the Defense Federal Acquisition Regulation Supplement (DFARS), does not prohibit the use of contract personnel for security, but it limits the extent to which contract personnel may be hired to guard military installations and provides mandatory contractual provisions for contractors who are accompanying U.S. Armed Forces deployed overseas. Such contractors are considered civilians accompanying the U.S. Armed Forces during contingency operations and are not authorized to use deadly force against enemy armed forces other than in self-defense. However, in June, 2006, DOD published a rule amending the DFARS to create an exception for private security contractors, who are authorized to use deadly force "only when necessary to execute their security mission to protect assets/persons, consistent with the mission statement contained in their contract." The rule explained that it is the responsibility of the combatant commander to ensure that the private security contract mission statements do not authorize the performance of any inherently Governmental military functions, such as preemptive attacks, or any other types of attacks. Otherwise, civilians who accompany the U.S. Armed Forces lose their law of war protections from direct attack if and for such time as they take a direct part in hostilities. Further, the DFARS-mandated clause for contractors accompanying the armed forces limits the provision of military security for DOD contractors providing other services in the theater of operations to cases where, as determined by the Combatant Commander, the contractor cannot obtain effective security services at a reasonable cost or "threat conditions necessitate security through military means." In the event a contractor hires a subcontractor to provide security services for its workers and property, that contract must incorporate the substance of the required clause. A recent decision by the Comptroller General may shed additional light on the current thinking regarding the nature of private security services. A contractor protested the terms of a pair of solicitations for contracts involving cargo transportation in Iraq on the basis that they included requirements for armed security escorts. The prospective bidder challenged the security requirements as running afoul of the Anti-Pinkerton Act as well as relevant DOD instructions regarding contractors accompanying the U.S. Armed Forces overseas. Specifically, the protestor contended that the statements of work (SOW) required performance of security services that would constitute the provision of "quasi-military armed forces for hire" and require civilian contractors to engage in combat. The Comptroller General denied the protest, relying on an earlier interpretation that "a company which provides guard or protective services does not thereby become a 'quasi-military armed force,' even if the individual guards are armed...." With respect to the charge that the work involved the "uniquely governmental" function of engaging in combat, the decision noted DOD regulations and DFARS provisions that would permit the contracting of armed security services but prohibit such contractors from engaging in direct combat or offensive operations. It appears that neither the Department of Defense nor the Government Accountability Office (GAO) regards the government use of armed security escorts in Iraq as violating any restrictions on government contracting. However, the Anti-Pinkerton Act might be construed to bar the hiring of any particular contractor who is found to operate as a "quasi-military armed force," at least if it acted as a strikebreaker during a labor dispute. Neither the State Department acquisition regulations nor the U.S. Agency for International Development regulations specifically addresses contractors overseas during war or contingency operations. However, a recent amendment to the FAR imposes new requirements for government contracts that entail contractor personnel working in designated operation areas or at certain diplomatic or consular missions outside the United States for agencies other than the Department of Defense. Over the past two decades, the State Department and the Department of Defense have increasingly turned to private security contractors to provide protective and other services for the two departments. Both State and DOD report significant benefits from the use of private security contractors. For the State Department, the use of PSCs in Iraq offers a surge capability to meet an extraordinary but time-limited need. For the U.S. military, contractors are considered part of the total force and private security contractors contribute a small, but significant portion of the force multiplier effect of using private contractors to achieve mission success. Analysts, however, also note drawbacks in the use of private contractors. To meet various surge requirements, the Department of State argues that PSCs allow Diplomatic Security (DS) to rapidly expand its capability to meet security needs without a delay in recruiting and training direct-hire DS personnel. DS has stated that contractors can be recruited, vetted, hired, trained, and deployed in 90 to 120 days. DS special agents, on the other hand, are college-educated law enforcement officers, trained in the full range of the work of DS agents, including personal security. DS states that it takes two years to recruit, hire, and train a DS agent. DS also states that the use of PSCs allows the fielding of an already trained, experienced cadre of security professionals whose required skills can be designated in the contract. When the surge need is gone, just as the State Department could rapidly expand its force, it can also reduce its security force when requirements change. Even if one considers the current demands for PSCs an anomaly because of Iraq, it appears to be the intention of the State Department to continue to use PSCs in meeting future personnel and perimeter security requirements. It is for policy makers to determine whether this flexibility is an appropriate long-term position for the use of PSCs, better suited as a short-term response to current needs, or whether the State Department should increase the number of full-time DS agents and security specialists and provide sufficient appropriations to do so instead of relying on PSCs. Many defense analysts view private contractors as an indispensable force multiplier, especially needed over the past decade to ease the strain on a downsized military. By supplementing overstretched active duty personnel, beginning in the early 1990s, with contractors for jobs that do not require military expertise such as feeding, housing, and otherwise caring for soldiers' basic needs, policy makers hoped to meet the demands on the force while minimizing an increase in the number of military personnel and repeated call-ups of reserve units. The U.S. government's subsequent turn to private contractors for assistance with a wide variety of security needs served the same purposes. In Iraq, particularly, the use of private contractors may serve a variety of other interests. As Iraqis constitute a significant percentage of private security contractors, the use of private contractors provides a cultural and linguistic advantage over the use of U.S. soldiers and ameliorates much potential friction with the local populations, according to one expert. They may also forestall possible criticism from U.S. taxpayers for using U.S. soldiers to protect the profit-making companies that carry out U.S. reconstruction efforts. Without private contractors, the U.S. military would not have sufficient capabilities to carry out an operation of the scale of Iraq, according to many analysts. If the United States wishes to engage in and contribute to sizable stabilization and reconstruction operations without contractor support to the U.S. military, policy makers would probably need to contemplate increasing the number of U.S. troops, perhaps also increasing incentives to attract volunteers or re-instituting the draft. On the other hand, some analysts point out that private security contractors are but a small part of the contractor workforce supporting the military in Iraq. Some analysts also question whether the use of private security providers in Iraq and elsewhere is beneficial to the U.S. military in the long run. Although contracting private sector firms for guard duties may help alleviate the current shortage of military personnel, analysts point to potential downsides to the force multiplier argument. One important area of concern is whether the use of PSCs is detrimental to military force structure; has a deleterious potential effect on the military mission, is flexible, and are of an appropriate quality for personnel. Analysts for the 1995 Commission on Roles and Missions (CORM) found that reliance on contractors could prove detrimental to military capabilities in a number of ways, the first of which was that it could keep the United States "from building and maintaining capacity needed for strategic or other important missions." Anecdotal reports that private security firms have been hiring away military personnel, particularly special forces personnel, with high salaries seem to illustrate the possibility that a competing private sector could deplete the military of highly trained personnel in needed specialties. Proponents of the use of private sector security providers discount such concerns, stating that the numbers employed by private security companies are too low to have a significant effect on U.S. capabilities. Quantifiable evidence of a detrimental effect is lacking. A 2005 GAO analysis shows that the average attrition rates for military occupational specialities preferred by private security providers were lower in FY2004 (when demand for such providers in Iraq was high) than in fiscal years 2000 and 2001. (These specialities were Army and Navy enlisted and officer special operations forces, Army infantry, and military police from all four services.) In the particular case of Army Special Forces enlisted personnel, however, attrition was somewhat higher in 2004 than in 2000 and 2001. The GAO pointed out that a variety of factors could play into an individual's decision to leave the armed services. Recent reports also point to possible complications for military commanders with the use of private security guards. Many analysts point out that the primary mission of private security personnel is to ensure the security of the individuals, the transport convoys, and the property they are hired to protect. News reports from Iraq indicate that this may have led in some cases to a disregard of the sensitivities of and consequences for the Iraqi public. For a U.S. commander in Iraq whose mission may well include winning "hearts and minds," such a disregard is problematic, some analysts argue. These reports, however, generally discuss incidents involving contractors who are American, not Iraqi or other foreign nationals; as noted above, proponents argue that a sizable presence of Iraqis among those providing security under U.S. contracts overall reduces the possible friction that the use of U.S. soldiers in these positions would entail. Some analysts also contend that military forces have additional benefits in hostile situations. Although some state that private contractors can be deployed more quickly than military forces, others argue that military commanders can respond more quickly to changing situations when military forces rather than contractors are used. Commanders do not exercise command and control over private contractors, nor do they have the authority to amend contracts in the midst of an operation to reallocate contract employees to perform necessary tasks that fall outside the terms of the contract. Proponents of the use of private security contractors discount such concerns, however, arguing that they are not employed on the battlefield, where such flexibility is a needed. The larger companies, particularly, have reputations for supplying high-quality personnel. Some have wondered, however, if these companies can maintain that standard as demand for their services increases. Although U.S. companies have generally hired former U.S. professional military personnel with established careers, who may still possess the discipline, professionalism, and esprit de corps that the U.S. Armed Forces seeks to instill in its soldiers, the increasing use of private personnel may reduce the quality of contractor recruits. On the other hand, some analysts point out that private companies can maintain top quality people in the field indefinitely, whereas the military is required to rotate soldiers regularly. Those who favor the use of such contractors also contend that private companies can maintain standards because they can draw from a larger and more competitive pool of personnel than the U.S. military does, including former military personnel from elite forces of other countries and former police personnel. Some critics are also concerned about the high number of non-U.S. citizens hired under U.S. government contracts, especially third-country nationals from lesser-developed countries who might be more difficult to screen. A GAO official noted in June 2006 testimony that (1) private security companies and DOD "have difficulty completing comprehensive criminal background screenings for U.S. and foreign nationals when data are missing or inaccessible," and (2) "[n]o U.S. or international standards exist for establishing private security providers and employee qualifications." Companies engaged in the private security business have incentives and opportunities to control quality, proponents say. Companies employing individual contractors have opportunities to observe their behavior and performance during training sessions and, according to analysts, can screen out potential misfits at that stage. U.S. government agencies establish baseline standards in contracts, by specifying performance standards, experience requirements, and/or precise qualifications to be met. U.S. government agencies have mandated changes—under threat of penalties—when contracted personnel are perceived as not up to standard, according to Doug Brooks, President of the International Peace Operations Association (IPOA). In addition, according to Brooks, there are many examples of companies that act proactively to address client complaints. For example, an industry association has instituted a system to review complaints concerning its members and to sanction those found to have violated the Association's Code of Conduct. IPOA members include some of companies listed above (i.e., ArmorGroup, DynCorp International, Erinys International, and EOD Technologies, Inc.). In addition, PSC officials have stated that they fire or discipline employees for an array of inappropriate behavior, including insubordination and drinking alcohol in violation of established policy. In testimony before the House Committee on Oversight and Government Reform, Ambassador David Satterfield stated, "Insofar as the State Department's security contractors in Iraq are concerned, we demand high standards and professionalism. Those standards include relevant prior experience, strict vetting, specified pre-deployment training, and in-country supervision." Possible employees of PSCs undergo an initial screening process by their employer/contractor before the PSC employer submits the application of the proposed employees to the State Department. The Department performs a background check on American citizen applicants who must qualify for an appropriate level of a security clearance. A similar process for foreign national is also required and they must also qualify to receive an appropriate level of clearance. All applicants must have at least one year of experience in protective security assignments, law enforcement, or military service. After being approved by the Department for employment, before the PSC employee is deployed, he or she receives 164 hours of DS-approved training. Supporters of the use of private security contractors point out that while objectionable contractor actions in Iraq have been highlighted recently, the employees themselves and their work should be kept in perspective. They point out that from January 1 to September 18, 2007, PSC contractors conducted 3,073 missions in which American diplomats or visitors were escorted outside of the secured Green Zone in Baghdad. Of those missions, there were 77 incidents involving PSC personnel using weapons. While over 30 Blackwater employees have been killed while performing their security duties, supporters state that no American diplomat or visitor has been killed or seriously injured while being escorted by Blackwater. Ambassador David M. Satterfield, former Deputy Chief of Mission at the U.S. Embassy in Baghdad from May 2005 to July 2006, said that he had "personally benefitted from Blackwater and other private security details ... and witnessed first hand their professionalism." If PSCs continue to be used in the long term, the adequacy of the selection and vetting process and the training received should be a matter of continual review. For instance, it has only been since the end of October 2007, following the September 16 Blackwater firing incident at Nisoor Square in Baghdad that human rights and cultural sensitivity training has become a part of the pre-deployment training for PSC employees along with the more standard Terrorist Operations, Organization of a Protective Detail, Protective Services Formation and Standard Operating Procedures, and Defensive Driver Training. A former Blackwater employee expressed his belief that training such as in cultural sensitivity was not necessary in that Blackwater's mission was different from the military and the State Department. He said, "We're not paid to go out and find and eliminate the insurgents. Our job is to keep people alive and safe, and do what we need to do." Proponents of the use of private security contractors argue that they are as responsible as serving military personnel because many are former soldiers or individuals equally dedicated to the national mission. Skeptics voice concerns that individual contractors may be less reliable in some situations as they probably bear lesser costs than military personnel if they refuse to perform a particular task. According to a 2003 GAO report, The DOD recognized the risk that contractors might not be available in crisis or hostile situations. Nevertheless, proponents argue that private security contractors working for the U.S. government, as well as other contractors, have been "remarkably robust in terms of reliability." There is little evidence to the contrary. Many analysts claim that the U.S. government is unable to adequately oversee and control or coordinate the performance of military contractors in general and private security contractors in particular. Members are concerned with transparency issues that impede oversight by Congress, as well as control and coordination in the field. Some Members have been concerned with the dearth of information made available to Congress by the Administration and to the public on U.S. government contracts with contractors in general and private security contractors in particular. As oversight hearings have demonstrated, the executive branch either has not kept sufficient records to produce or has been unwilling to present basic, accurate information on the companies employed under U.S. government contracts and subcontracts in Iraq. The lack of contracting personnel, discussed below, may be responsible at least in part for this problem. In response to calls for greater transparency, DOD and the State Department have been providing additional information to Congress. For example, DOD now submits a quarterly report that includes information on the number of active PSC contracts, the number of employees working under these contracts, and an analysis of the contractor workforce (i.e., number of contractors that are armed versus unarmed, number of contracts that are American, Iraqi, or third-country nationals). One industry professional described the oversight situation in the early years of Operation Iraqi Freedom as "a nightmare" and stated that the better companies would prefer closer oversight. Some U.S. government officials believed that U.S. agencies did not adequately supervise contracts. At the field level, the problem is often attributed by many, including U.S. government personnel, to a lack of qualified contracting oversight personnel, including contracting officer's representatives (CORs), who are responsible for supervising the contracted work. Arguing for an increase in such personnel, they state that over the years, the number of such representatives has been cut sharply in the Departments of Defense and State, while the number of contractors has escalated. According to officials at the Department of Defense, the Blackwater shooting incident that took place at Nisoor Square on September 16, 2007, was a watershed event that highlighted the need for improved management and oversight of all U.S. government private security contractors operating in Iraq. According to these officials, DOD initiated a number of steps to improve contractor oversight, including establishing an Armed Contractor Oversight Division and significantly increasing the number of Defense Contracting Management Agency personnel performing contractor oversight in Iraq. In addition, MNC-I has consolidated the rules and regulations regarding private security companies and issued mandatory guidance on the management and oversight of PSCs. Many observers of developments in Iraq point to the important role that CORs can play and the possible results when contracting agencies have insufficient or the wrong staff to do this important work. Recognizing the important role of CORs in managing PSCs, DOD recently issues an order which states that contracting office representatives should be appointed who possess the appropriate rank given the contract oversight responsibilities, and that oversight should be the primary—and not an ancillary—responsibility of the COR. It is for Congress, in the end, to determine whether sufficient staff has been requested by the Administration, and if the Administration fills the slots provided in the various contracting bureaus of the government. Further, through the power of the purse, Congress could make sure that the government's CORs have sufficient resources and training to do their work. In its formal structure, the DS Regional Security Officer (RSO) at post provides general oversight and manages the operation of security contractors. The DS High Threat Protection Program personnel in Washington meets weekly with contractor management and conducts periodic program management/contract compliance reviews of task order operations at posts. The WPPS II base contracts require that PSCs follow the mission firearms policy of the post to which they are assigned. In the case of the U.S. Embassy in Baghdad, the mission firearms policy is defensive in nature and utilizes a seven-step escalation of force continuum that ends with the use of deadly force when no safe alternative is available to protect the diplomat or dignitary being guarded. There are levels of incident reporting requirements to the RSO when weapons are discharged, or there are attacks, serious injury or death. Contractors are also required to report any incident that would reflect negatively on the United States, the Department, the Embassy, or the contractor. While oversight and management of PSC procedures seem to be in place in Iraq, many news reports relate embassy officials rebuffing Iraqi complaints about Blackwater employees' alleged involvement in Iraqi deaths or firing on Iraqi civilians, actions by PSC employees as being arrogant, and the State Department allowing Blackwater to ignore Iraqi law such as operating without an Interior Ministry license, even after the requirement became a standard part of Defense Department requirements for its security contractors. Many in Iraq have come to see Blackwater as untouchable because they have a sponsor, the State Department, who would defend the company at every turn regardless of what the company does. After the September 16, 2007, shooting in Baghdad's Nisoor Square, several studies were conducted to investigate the shooting and the embassy's actions. Among these, Secretary of State Rice formed a review panel led by Ambassador Patrick Kennedy to examine the shooting incident in terms of management and policy. The Federal Bureau of Investigation sent a separate team to investigate the shootings and, in particular, Blackwater's compliance with U.S. policy. Through an October 4 Interim Report and an October 23, 2007 Final Report, Ambassador Kennedy's panel made 19 recommendations. Among its findings, the panel stated the following: The Department's security operations in Iraq have been highly effective in ensuring the safety of mission personnel. Improvements are necessary to address shortcomings in coordination and oversight that have undermined confidence in the operation of the security program on the part of the U.S. military command and the Iraqi government and public. The U.S. military in Iraq does not consider it feasible or desirable under existing conditions in Iraq for the Department of Defense to take on responsibility for provision of Personal Protective Service support to the Embassy. The drawdown of the U.S. military in Iraq is likely to create increased requirements for personal protective services. The Diplomatic Security Service does not have sufficient special agents worldwide to take on all personal service operations in Iraq and meet requirements in other countries. Following Ambassador Kennedy's reports and recommendations, the Secretary ordered new measures to increase State Department oversight of contractors' activities in Baghdad. From among the recommendations made by the Kennedy panel, Secretary Rice ordered the following: DS Special Agents, serving as the Officer in Charge, accompany all State Department personal security details leaving the Green Zone in Baghdad for other parts of the city. Additional agents from other DS posts were ordered to Baghdad to assure sufficient personnel to cover all of the Blackwater convoys. DS mount video cameras on security vehicles and begin taking and archiving electronic video information regarding reported incidents. DS monitor and record radio transmissions of PSCs while they are operating outside the Green Zone to increase the Department's capability to review material after an incident. State amend the WPPS II contracts to require (1) contractors to employ a limited number of Arabic language staff for convoy movements; (2) PSC employees to take predeployment training in cultural awareness and sensitivity, and the diplomatic and military environment in which they will be operating; (3) tightening of the rules on the use of deadly force to ensure greater parallelism with USCENTCOM rules; and (4) revision of the embassy's U.S. Mission Firearms Policy to specify that if an authorized employee must fire his/her weapon, he/she must fire only aimed shots; fire with due regard to the safety of innocent bystanders, and make every effort to avoid civilian casualties. A "Go Team" of embassy security officials be established to quickly proceed to the scene of any weapons discharge involving State Department PSCs to gather information and material and provide an analysis of what happened, why, and report on the incident. An Embassy Joint Incident Review Board be established, made up of embassy diplomatic and security officials, a U.S. military officer, and another U.S. government official other than State or Justice, to review all incidents involving contractor use of deadly force, and recommend to the recommend to the ambassador whether the use of force was justified, and if not, whether the case should be referred to the Department of Justice. A permanent working group be established between the Regional Security Office and Multi-National Force-Iraq to develop commonly agreed operational procedures, establish a robust liaison element, exchange information ensure optimal situational awareness, and ensure that any issues are discussed and quickly resolved. To address the growing concerns in both the executive and legislative branches regarding perceived insufficient management of PSCs in Iraq and the negative impact their actions can have on U.S. efforts in the region, Deputy Secretary of State John Negroponte and Deputy Secretary of Defense Gordon England signed a Memorandum of Agreement (MOA) for their departments on December 5, 2007, regarding PSCs. The MOA defined the authority and the responsibility for accountability and operations of U.S. PSCs in Iraq. Under the categories of responsibilities and standards, the Departments agreed on the following: The Secretary of Defense and the Combatant Commanders (COCOM) are responsible for the security of all DOD elements and personnel under operational control of COCOM. The Secretary of State is responsible for the security of U.S. government personnel on official duty in Iraq, other than those under the command of an area military commander. The Secretary of State and the Secretary of Defense will jointly develop, implement, and follow core standards, policies, and procedures for the accountability, oversight, and discipline of PSCs. The core standards would, at a minimum, include 1) management of PSC personnel; 2) coordination of PSC operations outside secure base and U.S. diplomatic property; 3) clear legal basis for holding private security contractor employees accountable under U.S. law; 4) recognition of investigative jurisdictions and coordination of joint investigations where conduct of PSC personnel are to be investigated. The Chief of Mission and the COCOM would make every effort to consult and coordinate responses to common threats. The MOA also outlines a process for dispute resolution between the two departments, and a requirement for the two secretaries to designate their Washington representatives regarding the MOA to meet as frequently as necessary but not less than every quarter. Further, the departments agreed to an ANNEX A: Deliverables As Part of the MOA. The annex, to be jointly completed by the U.S. Embassy in Baghdad and the Multi-National Force—Iraq (MNF-I), stated the details of how the MOA would actually operate on the ground. Other elements to be included in the Annex were still to be developed, such as a common graduated warning system for PSCs to use when they felt threatened so that the threatening individual/force could withdraw. Some of the elements of the MOA/Deliverables are as follows: Common definitions for Defense of Self or Others, Imminent Threat, Hostile Act, Hostile Intent. The Use of Deadly Force. The authority to possess and carry firearms and the minimum requirements that must be met for a person to have such authority. The coordination and control of PSC details outside of secure areas, which include advance notification to MNC-I of time, route, destination, and convoy composition outside the Green Zone or a military base, and the right of MNC-I to recommend that the route or time be altered or PSC mission be cancelled. The steps to be taken by the embassy and MNF-I as an immediate response to any serious incident involving PSCs. The steps include securing the area for investigation of the incident, determining who has jurisdiction to conduct the investigation, notifying the Government of Iraq, and providing condolence payments to Iraqi families. An agreement for State and DOD to work together to develop a common database for the purpose of increasing PSC accountability and visibility. The GAO has issued several reports regarding DOD contracting in Iraq that address issues regarding the use of private security contractors, several of which mention control and coordination issues. As pointed out above, military commanders do not have a command and control relationship with contractors, and thus must know how to secure cooperation from contractors to promote order in the theater of operations. In June 2006 testimony before Congress, a GAO official cited two major related problems: (1) that private security providers did not coordinate with the U.S. military when they entered the "battle space" in Iraq and (2) that military units were not trained prior to deployment on (a) private security provider operating procedures and (b) the role of the Reconstruction Operations Center (ROC) (The ROC was charged with coordination between military and private security personnel. Coordination is now managed by Contractor Operations Cells, as discussed below). In March 2007, DOD set forth a new requirement that companies enter data on their personnel, before deployment, into a new "Synchronized Predeployment and Operational Tracker" (SPOT). In April 2007, testimony the Comptroller General stated that GAO continued "to find little evidence that DOD has improved training for military personnel on the use of contractors prior to deployment." As a result of the December 5, 2007, Memorandum of Agreement between DOD and the Department of State, the agencies have worked to coordinate the movement of PSCs throughout Iraq, taking such steps as giving advance notification to MNC-I of time, routes, destination, and convoy composition of PSC details operating outside the Green Zone or a military base, and the right of MNC-I to recommend that the route or time be altered or PSC mission be cancelled. In addition, the State Department and USAID now require their contractors to coordinate PSC movements with MNC-I. MNC-I manages and coordinates the movement of PSCs in Iraq through Contractor Operations Cells that are co-located with the tactical operations centers of MNC-I's five division operating in Iraq. Since the institution of measures to manage PSCs better, the Department of Defense reports that incidences where weapons were fired by PSCs have decreased by about 67%. DOD and Department of State officials have stated that while they believe their efforts to improve management have contributed to the improved performance of PSCs, they cannot determine to what degree the reduction in shooting incidents is the result of their efforts, the general decrease in violence in Iraq, or the military surge. A recent report issued by the Government Accountability Office found that since the September 16, Nisoor Square Blackwater incident, both DOD and the State Department have taken steps to increase staffing, oversight, and coordination over PSC, and that these steps may help reduce the number of PSC incidents in Iraq. The report also stated that DOD and the State Department have improved coordination related to PSCs in Iraq and points to several steps taken as an illustration of the point. Further the report states that the State Department and DOD have improved their coordination with the Government of Iraq. However, the report expressed concerns regarding DOD's ability to sustain its staffing and training efforts in managing its PSCs in Iraq, as well as pointing to steps that the State Department still has to take in implementing the Kennedy Group recommendation. Through its oversight responsibilities, Congress might use a variety of measures to determine whether the management and coordination taken by the State Department and DOD are adequate in controlling the actions of PSCs in Iraq or whether additional steps are still needed. Changes in the number of weapons discharge by PSCs may serve as an indicator that the issue of PSC oversight and management may need to be revisited. Another measure may be the number and veracity of complaints lodged by the Iraqi people, Iraqi government, or U.S. government personnel against PSCs. Also, if PSCs continue to play an important role in the protection of U.S. personnel and dignitaries abroad, which seems likely, will agencies take the lessons learned in Iraq and apply those lessons to other locations where the U.S. government will call upon PSCs to provide security. CRS is unaware of comprehensive agency-conducted analyses comparing the use of private security companies, U.S. servicemembers, and State Department Diplomatic Security Agents. Both proponents and opponents of the use of contractors have made cost comparisons but usually have not elaborated on what factors were involved in the assumptions underlying the cost comparisons, and whether those factors were comparable. The relative direct cost advantage of contractors can vary, and may diminish or disappear altogether, depending on the circumstances and contract conditions. Apart from the direct cost of salaries, which will vary according to the mix of countries of origin of employed personnel offered, the costs to the U.S. government of private security contracts can depend on any benefits provided and the terms negotiated in a contract or a subcontract. For instance, the U.S. government does not pay for benefits such as health insurance or incur long-term liabilities such as disability compensation and pensions when private security contractors are employed. On the other hand, some analysts contend that the total costs of private security contracts have been underestimated because they do not include the subsidy that the U.S. government in effect provides contracting companies, including when former U.S. soldiers, trained at taxpayer expense, are employed. Proponents of the use of private security contractors have said that private security contractors are less expensive than using U.S. military forces because private companies can employ locals and third-country nationals whose earnings are a fraction of U.S. servicemembers. Private contractors can incur much lower costs by using local hires extensively, as they do not have to transport them, house or feed them, and can pay wages that are relatively low compared to those paid to U.S. servicemembers. Private security contractors in Iraq keep total costs low by employing many Iraqis, according to proponents. One recent congressional analysis, however, found that in the case of personnel provided by one company (i.e., Blackwater Worldwide), the total cost of private security personnel was "significantly higher than the direct costs that would-be incurred by the [U.S.] military" because of markups and other costs charged the U.S. government. From a State Department perspective, in testimony before the House Committee on Oversight and Government Reform, Deputy Assistant Secretary of State for Logistics Management testified that considering a fully loaded cost analysis, it costs around $400,000 for an American diplomat or a DS agent to serve in a regular mission around the world. To have an American diplomat or a DS agent serve in Iraq, by comparison, costs around $1 million. Part of that amount, such as transportation and shipping of goods, does not appear in the employee's salary. In August, 2008, CBO issued a report that compared the costs of a particular security contract between Blackwater and the State Department to the cost of an equivalent U.S. military force. The report estimated that the costs of PSCs did not differ significantly from the costs of a comparable military unit. The report pointed out that in peacetime there would be carrying costs for maintaining the military unit whereas a contract with a PSC could be terminated. The desire to entrust the capability to use force legally on behalf of the United States to private companies, including those employing non-U.S. citizens has foreign policy implications for the United States. Although many analysts perceive the officially sanctioned private use of force as significantly eroding the modern state's monopoly on the use of force, whether this erosion is beneficial or detrimental to U.S. foreign policy and to the international order is a matter of dispute. To the extent that private companies are perceived as participating in combat operations, it may be difficult for the United States to persuade other states to recognize contractors' rights to protection under the Geneva Conventions. On a symbolic level, the use of private companies may be perceived by some observers as signaling a lesser U.S. commitment than would the use of national military forces. Subtitles D and F of P.L. 110-181 address contracting in Iraq and Afghanistan. Subtitle A, which addresses acquisition of services, also contains provisions that may affect private security contracts. Section 808, for example, requires an independent management review of contracts for services, including an assessment of their use to contract for services related to inherently governmental functions. Section 841 of P.L. 110-181 provides for the establishment of a special Commission on Wartime Contracting to investigate and report to Congress on federal agency contracting for the reconstruction of Iraq and Afghanistan, the logistical support of coalition forces and the performance of security and intelligence functions in Operation Iraqi Freedom and Operation Enduring Freedom. It requires the Commission to assess the extent and impact of reliance on contractors, the extent of waste, fraud, abuse, or mismanagement under such contracts, and the appropriateness of the organizational structure, policies, and practices of the Departments of Defense and State for handling contingency contract management and support. An interim report from the Commission is due March 1, 2009, and a final report is due no later than two years after the date of appointment of all Commission members. Section 862 requires the Secretary of Defense to prescribe, within 120 days of enactment, regulations on the selection, training, equipping, and conduct of personnel performing private security functions under a covered contract or covered subcontract in a combat area. These include processes for (1) registering, processing, and accounting for such personnel; (2) authorizing and accounting for their weapons; (3) investigating the death and injury of such personnel and their discharge of weapons; (4) investigating the injury, death, or damage of property caused by the actions of such personnel; and (5) incidents of alleged misconduct. The regulations also provide guidance to commanders of combatant commands on orders, directives, and instructions to contractors and subcontractors performing private security functions relating to force protection, security, health, safety, relations and interaction with locals, and rules of engagement. Section 861 requires the Secretary of Defense, the Secretary of State, and the Administrator of USAID to enter into a memorandum of understanding (MOU) no later than July 1, 2008, regarding contracting in Iraq and Afghanistan, including matters related to authorizing the carrying of weapons, establishing minimum qualifications for personnel carrying weapons, and setting rules regarding the use of deadly force. The MOU is to delineate responsibilities for investigating and referring possible violations of MEJA by contractor personnel. The MOU is also to identify a common database to house information on all contracts in Iraq and Afghanistan. Section 862 calls for the revision of relevant Federal Acquisition Regulations to require all contracts and subcontracts for such personnel to conform with these regulations. Vetoed forerunner to H.R. 4986 is H.R. 1585 , which was introduced March 20, 2007. H.R. 1585 was referred to the House Armed Services Committee. Referred to HASC subcommittees April 10, 2007. Subcommittee mark-ups were held May 2-8, 2007. Committee consideration and mark-up was held May 9, 2007. Reported (amended) May 11, 2007 ( H.Rept. 110-146 ). A supplemental report was filed May 14, 2007 ( H.Rept. 110-146 , part 2). The House passed a substitute amendment in lieu on May 17, 2007. H.R. 1585 , as passed by the House, was placed on Senate calendar, June 5, 2007; laid before the Senate by unanimous consent, June 28, 2007. H.R. 185 was passed by the Senate with amendments, October 1, 2007. The Conference Report filed December 6, 2007 ( H.Rept. 110-47 . The Conference recommendations were agreed to in the House on December 12, 2007, and in the Senate on December 14, 2007. President Bush vetoed H.R. 1585 , as agreed to by the House and Senate, on December 28, 2007, based on objections to provisions not germane to this report. A modified H.R. 1585 was reintroduced as H.R. 4986 and passed by the House on January 16, 2008, and by Senate January 22, 2008. President Bush signed H.R. 4985 on January 28, 2008, as P.L. 110-181 . Section 864 defines private security functions as guarding personnel, facilities, or property, or any other activity that requires contractors to be armed to perform their duties. While not addressed in law, the joint explanatory statement of the managers of the conference version ( H.Rept. 110-434 ) of H.R. 3222 states that the DOD "lacks accountability and management of its contracted services." It states that additional funding totaling $48 million has been provided to the Defense Contract Audit Agency ($10 million), the Defense Contract Management Agency ($14 million), and the Defense Inspector General ($24 million) "to provide more robust staffing of contractor management and oversight personnel. It calls on the DOD to improve its management of contract services "by instituting clear accountability mechanisms; instituting unambiguous and short chains of command to the most-senior decision makers; and improving the tracking and reporting of contract service costs and management of contract service performance." The conferees directed the Secretary of Defense to develop, within 90 days of enactment, uniform minimum personnel standards for contracted personnel and a compliance mechanism that specifies penalties for noncompliance with personnel standards "including fines, denial of contractual obligations or contract rescission." The Secretary is also directed to establish "a clear set of rules of engagement for all contracted security personnel operating in the Iraq and Afghanistan theaters of operations." House Committee on Appropriations introduced an original measures, H.R. 3222 , on July 230, 2007 with an accompanying Committee Report, H.Rept. 110-279 . H.R. 3222 was passed by the House August 5, 2007, and by the Senate October 3, 2007. The House and Senate approved the conference report ( H.Rept. 110-434 ) on November 8, 2007. President Bush signed the legislation and it was enacted as P.L. 110-116 . Section 322 of H.R. 5658 would mandate that development of a single government-wide definition for "inherently governmental functions." Section 824 would bar the Department of Defense from allowing contractors to perform inherently governmental functions in a combat area. The section would also require the Secretary of Defense to list those functions that should not be performed by private security contractors. Section 847 would require PSCs working for the U.S. government in a combat area to report whenever a weapon is discharged against a private security contractor, and whenever a private security contractor takes active, non-lethal countermeasures. On May 22, 2008, the House passed the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 ( H.R. 5658 ). Section 841 of S. 3001 would mandate that private security contractors not be authorized to perform inherently governmental functions in an area of combat operations. The section defines "inherently governmental" as protecting people, information, equipment, and supplies in non-permissive environments where deadly force is likely to be initiated by security personnel in public places or where security personnel are expected to make real-time decisions that could affect the private individuals or U.S. interests. Section 842 would require the establishment of mechanisms to ensure that contractors are required to report specified offenses that are alleged to have been committed by or against contractor personnel. Section 1036 would require that the Federal Acquisition Regulations to prohibit contractors from interrogating prisoners during or after the cessation of hostilities. On August 1, 2008, with a Cloture motion failing to receive sufficient votes, the Senate proceeded to consider S. 3001 on the Floor. S. 2147 would expand the coverage of the Military Extraterritorial Jurisdiction Act (MEJA) to include all persons "while employed under a contract (or subcontract at any tier) awarded by any department or agency of the United States, where the work under such contract is carried out in a region outside the United States in which the Armed Forces are conducting a contingency operation." The bill would mandate that the Federal Bureau of Investigation (FBI) establish a "Theater Investigative Unit" for each contingency operation in which contract personnel are working to investigate suspected misconduct. The FBI and other agencies or departments affected by the bill would have 90 days to implement to the provision, and the Department of Justice Inspector General would be required to report to Congress within 30 days of enactment on the investigation of abuses alleged to have been committed by contract personnel. Introduced October 4, 2007. (Similar to H.R. 2740 ). Referred to the Committee on the Judiciary. H.R. 2740 , passed as amended by the House of Representatives, would extend the coverage of the Military Extraterritorial Jurisdiction Act (MEJA) to include all persons "while employed under a contract (or subcontract at any tier) awarded by any department or agency of the United States, where the work under such contract is carried out in a region outside the United Sates in which the Armed Forces are conducting a contingency operation." Currently, MEJA covers contractors only if employed by "the Armed Forces outside the United States," or if employed by other federal agencies or "provisional authority," to the extent their employment is related to the support of the DOD mission overseas. The bill would mandate that the Federal Bureau of Investigation (FBI) establish a "Theater Investigative Unit" for each contingency operation in which covered contract personnel are working to investigate suspected misconduct. It would also require that the Department of Justice Inspector General report to Congress within 30 days of enactment on the investigation of abuses alleged to have been committed by contract personnel. Introduced June 15, 2007. Referred to the House Judiciary Committee. Referred to the Subcommittee on Crime, Terrorism, and Homeland Security. Full Committee consideration and mark-up, July 24, 2007. Ordered to be reported August 2, 2007. Reported (amended) September 27, 2007, H.Rept. 110-352 . House passed an amendment in the nature of a substitute, October 4, 2007, 389-30. The amended version includes a new section, which provides that "[n]othing in this Act shall be construed to affect intelligence activities that are otherwise permissible prior to the enactment of this Act." (Sec. 6). Section 6 was added in response to the Administration's concerns that the bill "would have unintended and intolerable consequences for crucial and necessary national security activities and operations." Ordered placed on the Senate Legislative Calendar under General Orders October 5, 2007. S. 674 would require the Secretaries of Defense, State, and the Interior; the Administrator of the U.S. Agency for International Development; and the Director of National Intelligence to provide information to the Congress within 90 days of enactment on U.S. government contractors and subcontractors working in Afghanistan and Iraq, with particularly detailed requirements for information on private security contractors. This information would include the number of persons performing work in Iraq and Afghanistan under contracts and subcontracts; the companies awarded such contracts and subcontracts; the total cost of these contracts; and a method for tracking the number of persons killed and wounded while serving under such contracts. Also contains provisions intended to improve coordination between the U.S. Armed Forces and contractors performing private security functions, and to clarify the legal status of contract personnel by expanding MEJA (similar to H.R. 369 , H.R. 2740 and S. 2147 ). Introduced February 16, 2007. Referred to the Senate Armed Services Committee. H.R. 369 would require the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development to prescribe minimum hiring standards and issue equipment guidance for contracts regarding private security contractors and would require contractors to provide specified information on costs and personnel and update it during the period of contract performance. Also contains provisions intended to improve coordination between the U.S. Armed Forces and contractors performing private security functions, and to clarify and extend the Military Extraterritorial Jurisdiction Act (MEJA). Would extend MEJA to cover contractors "while employed under a contract (or subcontract at any tier) awarded by any department or agency of the United States, where the work under such contract is carried out in a region outside the United Sates in which the Armed Forces are conducting a contingency operation." MEJA covers contractors only if employed by "the Armed Forces outside the United States," or if employed by other federal agencies or provisional authority, to the extent their employment is related to the support of the DOD mission overseas. (This last provision is also included in H.R. 2740 , below.) Introduced January 10, 2007. (Similar to S. 674 .) Referred to the House Armed Services Committee (HAS) and the Judiciary Committee. Referred to the HAS Subcommittee on Readiness, February 1, 2007. Referred to the Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security, February 2, 2007. The subcommittee held hearings on June 19, 2007. H.R. 3695 would prohibit the DOD and the Department of State from increasing the number of private security contractors it uses to perform security functions in Iraq. Introduced September 27, 2007. Referred to the Committees on Foreign Affairs and Armed Services. H.R. 4102 and S. 2398 would require that only U.S. federal government personnel provide security to all personnel at any U.S. diplomatic or consular mission in Iraq within six months after enactment. It also would require that the President report to specified congressional committees on "the status of planning for the transition away from the use of private contractors for mission critical or emergency essential functions by January 1, 2009, in all conflict zones in which Congress has authorized the use of force." Contracts with the federal government requiring personnel to perform mission critical or emergency essential functions may be renewed after that date only if the President reports to those committees that the relevant agency does not have adequate personnel to perform the duties stipulated in the contract. The President must also certify that all contract employees meet set standards, including having undergone background checks to ensure they do not have criminal records and have not been accused of human rights abuses, and that they would remain in the custody of the United States if they are accused of crimes by the host country. It also would provide for Congressional access to contracts under certain conditions and reports to Congress on Iraq and Afghanistan contracts. H.R. 4102 was introduced on November 7, 2007. It was referred to the Committees on Foreign Affairs, Armed Services, and Intelligence. S. 2398 was introduced on November 16, 2007, and was referred to the Committee on Homeland Security and Governmental Affairs. H.Res. 97 would resolve that the Department of Defense Inspector General and the Special Inspector General for Iraq Reconstruction should report to Congress on the expenditure of military and reconstruction funds in Iraq and on the types and terms of U.S. contracts there. It would resolves that Congress should create a "Truman Commission" to conduct an ongoing investigation of the award and implementation of U.S. contracts with regard to Operation Iraqi Freedom. Introduced January 24, 2007. Referred to the House Armed Services and Foreign Affairs Committees. House Foreign Affairs Committee hearing held March 20, 2007.

The United States is relying heavily on private firms to supply a wide variety of services in Iraq, including security. From publicly available information, this is apparently the first time that the United States has depended so extensively on contractors to provide security in a hostile environment, although it has previously contracted for more limited security services in Afghanistan, Bosnia, and elsewhere. In Iraq, private firms known as Private Security Contractors (PSCs) serve to protect individuals, transport convoys, forward operating bases, buildings, and other economic infrastructure, and are training Iraqi police and military personnel. By providing security for reconstruction and stabilization efforts, many analysts and policymakers say, private contractors contribute an essential service to U.S. and international efforts to bring peace to Iraq. Nonetheless, the use of armed contractors raises several concerns, including transparency and accountability. The lack of public information on the terms of the contracts, including their costs and the standards governing hiring and performance, make evaluating their efficiency difficult. The apparent lack of a practical means to hold contractors accountable under U.S. law for abuses and other transgressions, and the possibility that they could be prosecuted by foreign courts, is also a source of concern. Contractors working with the Department of State or the U.S. military (or with any of the coalition forces) in Iraq are non-combatants who have no combat immunity under international law if they engage in hostilities, and whose conduct may be attributable to the United States. Section 552 of the John Warner National Defense Authorization Act for FY2007 (P.L. 109-364) makes military contractors supporting the Armed Forces in Iraq subject to court-martial, but due to constitutional concerns, it seems more likely that contractors who commit crimes in Iraq would be prosecuted under criminal statutes that apply extraterritorially or within the special maritime and territorial jurisdiction of the United States, or by means of the Military Extraterritorial Jurisdiction Act (MEJA). Generally, Iraqi courts do not have jurisdiction to prosecute contractors without the permission of the relevant member country of the Multi-National Forces in Iraq. Some contractors, including those with the State Department, may remain outside the jurisdiction of U.S. courts, civil or military, for improper conduct in Iraq. This report summarizes what is currently known publicly about companies that provide personnel for security missions in Iraq and some sources of controversy surrounding them. A treatment of legal status and authorities follows, including an overview of relevant international law as well as Iraqi law, which currently consists primarily of Coalition Provisional Authority (CPA) orders that remain in effect until superceded. The various possible means for prosecuting contractors under U.S. law in civilian or military courts are detailed, followed by a discussion of possible issues for Congress, including whether protective services are inherently governmental functions. The report also summarizes pertinent legislative proposals. This report will be updated as events warrant.

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This report (1) summarizes provisions of several laws and regulations, including the PatentLaw, the Atomic Energy Act, International Traffic in Arms Control regulations, the USA PATRIOTAct ( P.L. 107-56 ), the Public Health Security and Bioterrorism Preparedness and Response Act of2002 ( P.L. 107-188 ), and the Homeland Security Act ( P.L. 107-296 ), that permit the federalgovernment to restrict disclosure of scientific and technical information that could harm nationalsecurity; (2) describes the development of federal controls on "sensitive but unclassified" (SBU)scientific and technical information; (3) summarizes current controversies about White House policyon "Sensitive But Unclassified Information," and "Sensitive Homeland Security Information" (SHSI)issued in March 2002; and (4) identifies controversial issues which might affect the development ofOffice of Management and Budget (OMB) and agency guidelines for sensitive unclassifiedinformation, which were expected to be released during 2003. Several laws permit the federal government to classify privately-generated scientific andtechnical information that could harm national security, even when it is not held by federal agencies. These laws deal with patent law secrecy and atomic energy restricted data. Pursuant to 35 U.S.C. 181-188, the U.S. Patent Commissioner has the right to issue patent secrecy orders to prevent disclosure of information about an invention if disclosure by granting ofa patent would be detrimental to the national security. This provision is applicable to a patent forwhich the "government has a property interest" and those privately developed inventions which thegovernment does not own. Thus, if a federal government agency has a "property interest" in theinvention, the agency head will notify the Patent Commissioner, who is to withhold the publicationof the application or the granting of a patent. If the government does not have a property interestin the patent and the Commissioner decides that the granting of a patent or publication of anapplication would be detrimental to the national security, the Patent Commissioner is required toprovide the patent application in question for inspection to the Atomic Energy Commission [nowthe Secretary of Energy], the Secretary of Defense, or the heads of other relevant agencies. If theagency head determines that publication or disclosure by the grant of patent is detrimental to thenational security, the Patent Commissioner shall order that the invention be kept secret, and "shallwithhold the grant of a patent ... for such period as the national interest requires...." The owner ofthe application may appeal the decision to the Secretary of Commerce. The invention may be keptsecret for one year, but the Commerce Secretary may renew the secrecy order for additional periodsas instructed by the agency head who initially determined the need for secrecy. (1) If a secrecy order is issued during time of war, it shall remain in effect for the duration of hostilities and for one year following cessation of hostilities. If a secrecy order is issued during anational emergency, it shall remain in effect for the duration of the emergency and six monthsthereafter. The order may be rescinded by the Patent Commissioner upon written notification of theagency head who requested the order. In addition, to prevent circumventing the law, a license must be obtained from the Patent Commissioner before a U.S. inventor files for a foreign patent application or registers a design ormodel with a foreign patent office. Penalties for violation of the law include a fine of not more than$10,000 or imprisonment for not more than two years, or both. During FY2002, 4,792 secrecyorders were in effect on patents applications; most of these were recommended by and issued tofederal agencies for their own government-owned technical information; 37 were issued to individualprivate inventors. (2) Because of potential national security implications, nongovernmental scientists who conducted atomic energy research and development at the beginning of World War II took actions to keep suchresearch secret, except for those with a need to know it. Strict governmental security during the warkept this knowledge limited, and after the war's end, the U.S. Congress passed the Atomic EnergyAct of 1946 , (3) which created the AtomicEnergy Commission and established policies for securingatomic energy-related information. Atomic energy laws, as administered first by the Atomic EnergyCommission and now the Department of Energy, allow the federal government to limit access to allatomic energy-related information, which is automatically "born classified" and is categorized uponcreation as "restricted data," (RD), even if it is developed by private researchers outside ofgovernment. At first, access to this information was allowed only for defense purposes. Subsequentmodifications in law, principally the Atomic Energy Act of 1954 , permitted certain non-governmentalpersons, such as industrialists and foreign governments, to obtain permits to access such "restricteddata," for the purposes of peaceful commercial development of atomic energy or internationalcooperative programs if they could obtain the necessary security clearances. "Restricted data," or RD, is defined as "all data concerning (1) design, manufacture, or utilization of atomic weapons; (2) the production of special nuclear material; or (3) the use of specialnuclear material in the production of energy, but shall not include data declassified or removed fromthe Restricted data category pursuant to section 142 [42 USC 2162]." (4) Current penalties forviolating the law include imprisonment for "any term of years," a fine of $100,000, or both. (5) Thedevelopment and history of these controls were explained in a document prepared in 1989 by ArvinS. Quist, a classification officer at the Oak Ridge Gaseous Diffusion Plant, Oak Ridge NationalLaboratory, which is operated on contract for the Department of Energy. Excerpts from thisdocument are included in Appendix 1 . Both the Export Administration Act (50 U.S.C. App. 2401-2420) (6) and the Arms Export ControlAct (22 U.S.C. 2751-2794) provide authority to control the dissemination to foreign nationals, bothin the United States and abroad, of scientific and technical data related to items requiring exportlicenses according to the Export Administration Regulations (EAR) or the International Traffic inArms Regulations (ITAR). Both laws regulate export of technical data. (7) ITAR control the releaseof defense articles specified on the U.S. Munitions List (22 CFR 121) and technical data directlyrelated to them. EAR, among other things, control the export of dual-use items (items that have bothcivilian and military uses) on the [Department of] Commerce Control List (15 CFR Part 774) andtechnical data related to them. Licenses are needed to export controlled items. The implementingregulations are administered by the Department of Commerce, which licenses items subject to EAR,and by the Department of State, which licenses items subject to ITAR and the Munitions List ofitems. (8) They apply to "exporters" of both privateand federally funded scientific and technicalinformation. Fundamental research is excluded from ITAR and EAR. ITAR generally treats the disclosure or transfer of technical data to a foreign national, whether in the United States or abroad as an export. (9) Someacademic researchers believe they need to beregistered with the State Department to hold conversations or meetings with foreigners in the UnitedStates about scientific developments. (10) Accordingto ITAR regulations, publicly available scientificand technical information and academic exchanges and information presented at scientific meetingsare not treated as controlled technical data. (11) Nevertheless, there has been considerable ambiguityand confusion regarding these provisions at some academic institutions because of uncertaintiesabout which research projects might not be excluded because they use space or defense articles,technologies, and defense services on the Munitions List which is used to identify technologiesrequiring export licensing. (12) The ExportAdministration regulations also categorize as "deemed"exports communications to foreign nationals about technologies characterized as "sensitive" orcountries identified as "sensitive" under EAR rules. (13) This is declaimed by some as a hindrance tointernational science and supported by others who view it as a needed national security protection. (14) Since 1999, export of information about satellites and spacecraft instruments, including technical discussions about them, has been under the jurisdiction of the State Department and ITAR. Some academic researchers have complained that these rules curtailed their presentations atmeetings, their on-campus research, and international collaborations because "research activity thatonce was subject to the fundamental research exclusion under National Security Directive 189, [Seethe next section for details] was, for the first time, formally regulated ...." (15) Reportedly, some foreignresearchers at U.S. universities had not been able to access this information and U.S. researchersbelieved they needed a license to discuss defense-related basic research information with foreigncolleagues. Universities sought clarifying rules. Under a new rule issued in March 2002, the State Department clarified language exemptingU.S. universities from obtaining ITAR licenses for export of certain (16) space-based fundamentalresearch information or articles in the public domain to certain universities and research centers incountries that are members of the North Atlantic Treaty Organization (NATO), the European Union,or the European Space Agency, or to major non-NATO allies, such as Japan and Israel. Also to bepermitted are exports of certain services and unclassified technical data for assembly of products intoscientific, research, or experimental satellites. The exemption does not permit export of technicaldata for the integration of a satellite or spacecraft to a launch vehicle or Missile Technology ControlRegime controlled defense services or technical data. A license will be needed for export ofexempted information (including discussions) and hardware to researchers from all other countries. In addition, collaborators in approved countries would have to guarantee that researchers fromnon-approved countries were not receiving restricted information. (17) Some university researchersmaintain that these rules do not go far enough in clarifying the situation and that academicresearchers will find it difficult to design and implement campus controls and to bloc access to suchinformation by students and scientists from disallowed countries. (18) Several laws and directives govern classification of federally owned or federally fundedscientific and technical research results or information. These are Executive Order (E.O.) 12958,National Security Decision Directive (NSDD) 189, and rules related to pre-publication review. Federal policy allows classification of federal information at three levels, "top secret," "secret," and "confidential." Until March 25, 2003, the most recent version of this policy was in ExecutiveOrder 12958, released on April 17, 1995. (19) Itpermitted classification of "scientific, technological,or economic matters relating to the national security" (Sec. 1.5). But Section 1.8 (b) prohibitedclassification of "basic scientific research information not related to the national security." OnMarch 25, 2003, the President issued a new Executive Order 13292 on classification, which amendedExecutive Order 12958. It changed section 1.5 by adding a new clause, permitting classification of "scientific, technological, or economic matters relating to the national security, which includesdefense against transnational terrorism" (Sec. 1.4 (e) of Executive Order 13292). (20) The amendmentalso added a new category of information which may be classified, that is information that concerns"weapons of mass destruction" (Sec. 1.4 (h)). The exemption for basic scientific research not clearlyrelated to national security remains (renumbered section 1.7). The policy embodied in Executive Order 12958 reflected prior policy expressed in National Security Decision Directive 189, NSDD 189, issued on September 21, 1985, (21) during the ReaganAdministration. It says if federally funded basic scientific and technical information produced atcolleges, universities and laboratories is to be controlled for national security reasons, it should beclassified. But fundamental research findings generally are not to be restricted. Specifically, NSDD189 states: ... to the maximum extent possible, the products of fundamental research (22) remain unrestricted. Itis also the policy of this Administration that, wherethe national security requires control, the mechanism for control of information generated duringFederally funded fundamental research in science, technology, and engineering at colleges,universities, and laboratories is classification. NSDD 189 made agencies sponsoring research responsible for determining, before the award of a research contract or grant, whether classification is appropriate and for periodically reviewinggrants and contracts for potential classification. (23) It also said that "No restriction may be placed onthe conduct or reporting of Federally funded fundamental research that has not received nationalsecurity classification, except as provided in applicable U.S. statutes." NSDD 189 is still in effect,as stated in a letter issued by National Security Advisor Condoleeza Rice on November 1, 2001. (24) The federal government exercises "pre-publication review" of some privately published scientific and technical information by current and former employees and contractors who workedfor federal agencies and who had access to classified information. For instance, the US Departmentof Agriculture issued the following guidance to employees regarding pre-publication review: In order to protect against the unauthorized disclosure of classified information, you are required to submit for security review any material intended forpublic release that might be based in any way on information you learned through your access toclassified information. This requirement covers all written materials, including technical papers,books, articles, and manuscripts. It also includes lectures, speeches, films, videotapes. It includesworks of fiction as well as non-fiction. (25) Pre-publication review controls for research and development information may be written into federal government contracts. Typically the Defense Department (DoD) includes "pre-publicationreview" clauses in government contracts for extramural research that allow DoD to review researchgenerated extramurally with federal support before it is published. (26) These controls are used ifclassified information was used in research or when the government seeks to prohibit release ofinformation deemed sensitive because of the way it is aggregated. An agreement was initiated in 1980 with the American Council on Education for all academic cryptography research to be submitted on a voluntary basis for pre-publication review to the federalgovernment's National Security Agency. (27) Relatedto this, the U.S. Government may enter intocontracts to purchase exclusive rights to commercial satellite imagery and has the ability to stop thecollection and dissemination of commercial satellite imagery for national security reasons. (28) In February 2002, DoD released a draft report, Mandatory Procedures for Research and Technology Protection Within the DOD, which would have required researchers to obtain DoDapproval to discuss or publish findings of all military-sponsored unclassified research, a departurefrom existing policy guidelines. After academic objections, the draft was withdrawn; a revised andclearer set of new regulations was planned. (29) Before the 2001 terrorist attacks, U.S. laboratories that transported "select agents," that is, about 40 dangerous biological agents and toxins, had to register with the federal government (42 CFR72.6). Pursuant to the USA PATRIOT Act, P.L. 107-56 and the Public Health Security andBioterrorism Preparedness and Response Act of 2002, P.L. 107-188 , and the AgriculturalBioterrorism Protection Act of 2002, (which is part of P.L. 107-56 ), limits were placed on publicaccess was extended to an additional 60 select agents, defined as "certain biological agents andtoxins," (30) whose misuse could pose security risks. Registration requirements were extended toinclude registration of persons who used these agents. To prohibit potential terrorists from accessto these agents, controls were placed on access by selected persons, including those who could bepotential terrorists, including criminals, illegal aliens, persons with mental defects, and or drugabusers; aliens not admitted for permanent residence from certain countries "which the Secretary ofState has made a determination (that remains in effect) that such country has repeatedly providedsupport for acts of international terrorism," (31) orpersons who have been dishonorably dischargedfrom the Armed Services. These controls will be administered by the Justice Department. (32) Pursuant to these laws, the Departments of Health and Human Services and of Agriculture, identified the new list of "select agents," which was released in the Federal Register on December13, 2002. (33) Under the interim final rule, whichwas amended on November 3, 2003, (34) thelaboratories that use such agents will need to register and control access to such agents; scientistswill have to register, submit to background checks, and obtain prior approval to use, send, or receiveselect agents used in experiments. Some say this process, while denying access to possible terrorists,might prove costly and burdensome to some researchers (estimated in an article by Malakoff at$700,000 per laboratory) (35) and has the potentialof limiting the conduct of some scientific researchthat would otherwise be performed by such persons, including some foreign researchers. In addition,privately funded scientists will be subject to the same requirements as government-fundedresearchers who need "prior approval from the DHHS ... for genetic engineering experiments thatmight make a select agent more toxic or more resistant to known drugs." (36) Civilian and criminalpenalties for noncompliance apply to universities, private companies and government laboratories. Laboratories that handle select agents were to be in compliance with the new rules by fall 2003. Over time some agencies have established procedures to identify and safeguard "sensitive butunclassified information" (SBU), also called "sensitive unclassified information." Generally, thisunclassified information is withheld from the public for a variety of reasons, but needs to beaccessible to federal agency personnel. As will be discussed next in this report, the term SBU hasbeen defined in various presidential-level directives and agency guidances, but, some critics say, onlyindirectly in statute. Agencies have given the term various meanings in their implementing rules andregulations. Some agency guidance documents have started to use interchangeably the terms "forofficial use only," "limited use," "sensitive," "sensitive but unclassified," and related terms, and havedefined SBU by referring to such statutes as Privacy Act of 1974 (5 USC 552a), (37) the Freedom ofInformation Act (FOIA) of 1966 (5 USC 552 ), the Computer Security Act of 1987 (relevantportionscodified at 15 USC 278 g-3), and other language. Agencies have discretion to define SBU in waysthat serve their particular needs to safeguard information. There is no uniformity in implementingrules throughout the government on the use of SBU. Agencies also may assign various criminal andcivilian penalties to improper release of "sensitive but unclassified" information. Official definitions of SBU were issued as early as 1977 and over the years thereafter. Telecommunications Protection Policy (PD/NSC-24) . In 1977, in one of the earliest references to SBU, a PresidentialDirective on Telecommunications Protection Policy (PD/NSC-24) mandated protectionofunclassified, but sensitive communications "that could be useful to an adversary." It did not definethe term further. (38) National Security Decision Directive 145 (NSDD-145) . In 1984, National Security Decision Directive 145 (NSDD-145) directed that "sensitive, but unclassified, government or government-derived information, the lossof which could adversely affect the national security interest ..." should be "protected in proportionto the threat of exploitation and the associated potential damage to the national security." NSDD-145 did not define the term, "sensitive, but unclassified," but explained that even unclassifiedinformation in the aggregate can "reveal highly classified and other sensitive information ..." harmfulto the national security interest. (39) The absence of a precise definition was widely criticized, especially by the General Accounting Office (GAO) (40) because of concern that the 1984definition of SBU could include nationalsecurity-related as well as possibly innocuous information needed to make policy. For instance, aGAO witness testified, "... unclassified sensitive civil agency information affecting national securityinterests could include hazardous materials information held by the Department of Transportation,flight safety information held by the Federal Aviation Administration, and monetary policyinformation held by the Federal Reserve." He recommended that the Administration "needs toclearly define the types of information that fall under the coverage of NSDD-145." (41) National Policy on Protection of Sensitive, but Unclassified Information in Federal Government Telecommunications and Automated Information Systems, NTISSP No. 2 OnOctober29, 1986, President Reagan's National Security Advisor, John Poindexter, (42) issued a document,entitled National Policy on Protection of Sensitive, but Unclassified Information in FederalGovernment Telecommunications and Automated Information Systems, NTISSP No. 2 , thatwidenedthe rationale for safeguarding "sensitive, but unclassified" information for reasons of nationalsecurity, as in NSDD-145, to include also "other government interests." Specifically, it said, Sensitive, but unclassified information is information the disclosure, loss, misuse, alteration or destruction of which could adversely affect nationalsecurity or other Federal Government interests. National security interests are those unclassifiedmatters that relate to the national defense or the foreign relations of the U.S. Government. Othergovernment interests are those related, but not limited to the wide range of government orgovernment-derived economic, human, financial, industrial, agricultural, technological, and lawenforcement information, as well as the privacy or confidentiality of personal or commercialproprietary information provided to the U.S. Government by itscitizens. This policy was to be applicable to all federal executive departments and agencies, including their contractors, which electronically transferred, stored, processed, or communicated sensitive, butunclassified information. (43) During 1986-1987, criticisms about NTISSP No. 2 focused on both the scope of information to be restricted and the responsibility given to the intelligence community over civilian informationactivities. These led to the withdrawal of both NTISSP No. 2 in 1987 (attendant to passage of theComputer Security Act of 1987) and to official use of this definition of "sensitive, butunclassified." (44) (However, as will be noted below,some agencies, notably the Department ofEnergy, still use this broad conceptualization of SBU.) The Computer Security Act of 1987 (P.L. 100-235). In the Computer Security Act of 1987 ( P.L. 100-235 , 101 Stat.1724-1730), 40 USC 1441, Congress declared: "... improving the security and privacy of sensitiveinformation in Federal computer systems is in the public interest, and hereby creates a means forestablishing minimum acceptable security practices for such systems, without limiting the scope ofsecurity measures already planned or in use" (Section 2, Purpose). The law authorized creation ofa computer standards program within the National Bureau of Standards, now called the NationalInstitute of Standards and Technology (NIST)), actions to enhance Government-wide computersecurity, and training in security matters for persons who are involved in the management, operation,and use of Federal computer systems. P.L. 100-235 also addressed some of the criticisms raised about NTISSP No. 2. It defined the term "sensitive" as any information, the loss, misuse, or unauthorized access to or modification of which could adversely affect the national interest or the conduct ofFederal programs, or the privacy to which individuals are entitled under section 552a of title 5,United States Code (the Privacy Act) , but which has not been specifically authorized under criteriaestablished by an Executive order or an Act of Congress to be kept secret in the interest of nationaldefense or foreign policy" (Section 3). (Emphasis added.) The last clause of this definition specifically limited the definition of "sensitive" to information that was not classified. Agencies were given discretion to identify information that was sensitiveand risks accompanying release of it. The report accompanying the bill said that each individualfederal agency should make a determination of which unclassified information in its systems wassensitive in accord with the definition of sensitive in the law and the purposes of the law. (45) Federalagencies were given responsibility for developing plans "commensurate with the risk and magnitudeof the harm resulting from the loss, misuse, or unauthorized access to or modification of theinformation being protected," and are responsible for protecting such "sensitive" information. (46) In 1992 the National Institute of Standards and Technology (NIST) issued guidance about agency implementation of systems to protect sensitive information pursuant to P.L. 100-235 . Itreiterated that, Interpretation of the Computer Security Act's definition of sensitive is, ultimately, an agency responsibility. Typically, protecting sensitive informationmeans providing for one or more of the following: Confidentiality : disclosure of the informationmust be restricted to designated parties; Integrity : The information must be protected from errors orunauthorized modification; Availability : The information must be available within some given timeframe (i.e., protected against destruction)." (47) The NIST document urged agency information owners to "use a risk-based approach to determine" harm of inadequate protection of information. In defining this discretionary process, it emphasized, Information 'owners,' not system operators, should determine what protection their information requires. The type and amount of protection neededdepends on the nature of the information and the environment in which it is processed. The controlsto be used will depend on the risk and magnitude of the harm resulting from the loss, misuse, orunauthorized access to or modification of the information contained in the system. (48) Because P.L. 100-235 applied to "sensitive" information that is not classified, some say, in effect, it defined "sensitive but unclassified." Computer Security in Relation to the Freedom of InformationAct. The Freedom of Information Act of 1966 (FOIA) was enacted to ensure publicaccess to certain types of information held by federal agencies. However, it permits agencies toexempt from public disclosure nine types of information: As noted above, the definition of "sensitive" in the Computer Security Act cited three reasons to categorize non-classified information as sensitive: adverse effects on the national interest, adverseeffects on the conduct of federal programs, and privacy. It included explicit provisions saying it wasnot authority to withhold information sought pursuant to "section 552 of title 5, United States Code[the Freedom of Information Act]...." (50) This wasreiterated in 1992 when the National Institute ofStandards and Technology issued guidance about agency implementation of systems to protectsensitive information pursuant to P.L. 100-235 . (51) Neither the Computer Security Act nor theaccompanying report indicated that information exempt from FOIA was to be designated as"sensitive." Also, the report accompanying the legislation said specifically, "The designation ofinformation as sensitive [or as subject to protection] under the Computer Security Act is not adetermination that the information is not subject to public disclosure." (52) However, major federal agencies started to apply the label SBU to information defined as "sensitive" in the Computer Security Act and to information exempt from disclosure under theFreedom of Information Act (especially as governed by provisions 2 and 4). In fact, some agencieshave declared that these acts define SBU, a statement which is open to debate. Introduction. Even before the terrorist attacksof September 2001 and actions taken by the White House during 2001 and 2002 to safeguard"sensitive but unclassified" information, federal agencies had implemented a variety of proceduresto safeguard information. While they have used classification categories to withhold informationclassified pursuant to Executive Order 12958, they also use a variety of administrative controlmarkings and procedures to control access to unclassified information to which public access isrestricted, such as privacy data, law enforcement information, health information, and informationexempt from disclosure under the Freedom of Information Act (FOIA), and "sensitive" information. According to a report of the Commission on Protecting and Reducing Government Secrecy, 1997 ,"... at least 52 different protective markings [are] being used on unclassified information,approximately 40 of which are used by departments and agencies that also classify information. Included among these are widely-used markings such as 'Sensitive But Unclassified,' 'LimitedOfficial Use,' 'Official Use Only,' and 'For Official Use Only.' " (53) Other notable categories areDrug Enforcement Administration (DEA) sensitive information, and DoD Unclassified ControlledNuclear Information. (54) There is no uniformity in Federal agency definitions, or rules to implement safeguards for "sensitive but unclassified" information. Over time the term "sensitive but unclassified" has cometo be used to encompass information subject to control pursuant to the Computer Security Act, aswell as information determined to be exempt from disclosure under the Freedom of Information Act,5 USC 552. This is further complicated by the fact that, as noted above, agencies were givendiscretion under the Computer Security Act of 1987 to do risk analysis to identify information to besafeguarded as sensitive. In addition , as will be described below, since the terrorist attacks of 2001, the Bush Administration has given agencies discretion to make nondisclosure decisions under FOIAin relation to homeland security and the thwarting of terrorist attacks. SBU in the State Department and U.S. Agency for InternationalDevelopment. In its Foreign Affairs Manual, issued on October 1, 1995, theDepartment of State said it would stop using the designation "limited official use," (LOU), whichit had applied to information exempt from FOIA disclosure, and in its place would use the term"sensitive but unclassified" (SBU). (55) This appearsto have been one of the earliest instances of anagency declaring that SBU applies to information exempt from disclosure under the Privacy Act aswell as under the Freedom of Information Act: a. SBU describes information which warrants a degree of protection and administrative control that meets the criteria for exemption from public disclosureset forth under Sections 552 and 552a of Title 5, United States Code: the Freedom of InformationAct and the Privacy Act. (12 FAM 540, Sensitive but Unclassified Information (SBU), (TL: DS-61;10-01-1999) 12 FAM 541 SCOPE, (TL: DS-46; 05-26-1995). The State Department declared that, b. SBU information includes, but is not limited to: (1) Medical, personnel, financial, investigatory, visa, law enforcement, or other information which, if released, could result in harm or unfair treatmentto any individual or group, or could have a negative impact upon foreign policy or relations; and (2)Information offered under conditions of confidentiality which arises in the course of a deliberativeprocess (or a civil discovery process), including attorney-client privilege or work product, andinformation arising from the advice and counsel of subordinates to policy makers. (12 FAM 540,Sensitive but Unclassified Information (SBU), (TL: DS-61; 10-01-1999) 12 FAM 541 SCOPE, (TL:DS-46; 05-26-1995). In an explanatory telegram sent to U.S. embassies, the department explained why it would use the SBU category instead of the LOU category and it declared that SBU covered information exemptfrom FOIA. It said, "Sensitive but unclassified is not a classification level for national securityinformation, but is used when it's necessary to provide a degree of protection from unauthorizeddisclosure for unclassified information as set forth in 12 FAM 540." (56) It explained that it would usethe category of SBU for two reasons: "... to keep classified material to a minimum and to be able topass-on relevant, but sensitive information to individuals (including FSNS [Foreign Service Nationalstaff]) on a need to know bases (sic)." (57) Publicaccess to "sensitive but unclassified" informationwould be limited to those with a need to know and would be subject to provisions which governdisclosure and exemptions in the Freedom of Information Act and Privacy Act; unauthorizeddisclosure would be subject to criminal penalties, including "criminal and/or civil penalties. Supervisors may take disciplinary action, as appropriate." (58) In 1995, the U.S. Agency for International Development equated "sensitive" with "sensitive but unclassified" and linked procedures needed to protect "sensitive but unclassified" to protectionsrequired by FOIA and the Computer Security Act. (59) Defense Agencies' Use of SBU. DoD's guidancefor "controlled unclassified information," issued in 1997, stated that "For Official Use Only(FOUO)" designations should be used for unclassified information that should be protected, that thisincludes "information that may be exempt from mandatory release to the public under the Freedomof Information Act (FOIA)" and "sensitive but unclassified" information that the Department of Stateformerly designated as Limited Official Use (which meets the criteria for exemption from mandatorypublic disclosure under FOIA), and "there must be a legitimate Government purpose served bywithholding it." (60) This same DoD directivelimited dissemination of information labeled "for officialuse only" including "sensitive but unclassified" information to: ... within the DoD Components and between officials of the DoD Components and DoD contractors, consultants, and grantees as necessary in the conductof official business. FOUO information may also be released to officials in other Departments andAgencies of the Executive and Judicial Branches in performance of a valid Government function. (Special restrictions may apply to information covered by the Privacy Act.) Release of FOUOinformation to Members of Congress is covered by DoD Directive 5400.4, and to the GeneralAccounting Office by DoD Directive 7650.1." (61) According to the U.S. Army, citing DoD Regulation 5200.1 and Army Regulation 25-55, SBU information is information exempted from disclosure under FOIA. Also, Army Regulation 380-19,Section 1-5, "gives some examples of SBU as information that: (a) involves intelligence activities,(b) involves cryptological activities related to national security, (c) involves command and controlof forces, (d) is contained in systems that are an integral part of weapon or a weapon system; (e) iscontained in systems that are critical to the direct fulfillment of military or intelligence missions, (f)involves processing of research, development, and engineering data." (62) The U.S. Army Materiel Command encrypts certain categories of SBU data, including "logistics, medical care, personnel management, Privacy Act data, contractual data, and "For OfficialUse Only Information." (63) Since there is no onesource for a definition of SBU, according to thissource, "Other factors such as risk management, consideration of the effects of unauthorizeddisclosure, and an examination of the timeliness of information, should be taken into account as well. Ultimately level of sensitivity of the information should be determined by owner/creator of thedata." (64) A matrix presented that guides thedefinition of SBU follows. Note that certain researchand development data are included: SBU MATRIX (65) The matrix below provides a general guide on the data categories and description of the types of data that should be considered Sensitive But Unclassified. This matrix should notbe considered authoritative or all-inclusive. Department of Energy. The Department of Energy (DOE) uses a definition of "sensitive but unclassified" which is identical to the 1986Poindexter definition that Congress had the Administration withdraw. It is: Sensitive Unclassified Information: (66) Guidance used by the DOE laboratories refers to this concept and cites, as authority, Executive Order 12958 and DOE regulations. (67) Other Agencies' Definitions of SBU, Including the General Services Administration, the Federal Aviation Administration, and the National Aeronautics andSpace Administration. Other agencies have issued directives to define andprescribe safeguards that should be taken and penalties used for releasing SBU information. Forinstance, in 2002 the General Services Administration (GSA) defined SBU to include informationthat could possibly benefit terrorists, such as equipment plans, building designs, operating plans, the locations of secure facilities or functions within GSA buildings, utility locations, and informationabout security systems or guards. (68) The FederalAviation Administration (FAA) issued regulationsto safeguard unclassified but "sensitive security information," which may be developed from securityor research and development activities and whose release, the Administration determines, could bean invasion of personal privacy, reveal private or financial information, or could "be detrimental tothe safety of passengers in transportation." (69) The National Aeronautics and Space Administration (NASA) labels nonclassified sensitive information as "administratively controlled information (ACI)," and describes procedures forcontrolling it under the same heading that it uses to describe procedures to control classified nationalsecurity information (CNSI): Such information and material, which may be exempt from disclosure by statute or is determined by a designated NASA official to be especially sensitive,shall be afforded physical protection sufficient to safeguard it from unauthorized disclosure. WithinNASA, such information has previously been designated "For Official Use Only." (70) The statutes cited as justification are the Export Administration Act of 1979, the Arms Export Control Act, and section 303 (b) of the Space Act. NASA also cited as justification the exemptioncriteria of the Freedom of Information Act, and information designated by NASA officials, such aspredecisional and not-yet-released materials relating to national space policy, pending reorganizationplans, or sensitive travel itineraries. In some agencies, the official responsible for guiding and developing agency policy and procedure for classified information also has responsibility for control and decontrol of sensitive butunclassified information. (71) By 1997, the Department of the Navy had issued guidance that said explicitly that the Computer Security Act of 1987 defined the requirements for "sensitive but unclassified" informationand further that "all business conducted within the federal government is sensitive butunclassified." (72) In 1998, the equivalence between "sensitive" and "sensitive but unclassified" was codified by DoD in administrative law in 32 CFR 149.3, relating to technical surveillance countermeasures usedby all federal agencies that process SBU. DoD defined "sensitive but unclassified" by using thedefinition of "sensitive" that appeared in the Computer Security Act of 1987. (73) In 2002, the Department of the Interior issued guidance that "... all unclassified DOI systems are considered SBU." (74) On March 19, 2002, the White House released a memo, signed by Chief of Staff Andrew Card, entitled "Action to Safeguard Information Regarding Weapons of Mass Destruction and otherSensitive Documents Related to Homeland Security." It called for agencies to reconsider currentmeasures for safeguarding information regarding weapons of mass destruction and other sensitivedocuments related to homeland security and "information that could be misused to harm the securityof our Nation and the safety of our people." Agencies were required to examine their policies andholdings in accord with an accompanying memos issued by the National Archives and RecordsAdministration's (NARA) Information Security Oversight Office (ISOO) and the Department ofJustice's Office of Information and Privacy (OIP) to determine if information should be classified,including previously unclassified or declassified information, or handled as sensitive but unclassifiedinformation and report the status of their review to the White House, via the Office of HomelandSecurity, within ninety days. (75) Agencies Instructed to Use FOIA Exemptions to Control Disclosure of Information. The accompanying ISOO and OIP memo included asection titled "sensitive but unclassified information," (SBU), which instructed agencies to safeguard"sensitive information related to America's homeland security"(SHSI), and told them to considerall applicable FOIA exemptions if FOIA requests are received for such information. (76) The memourged agencies to consider using specifically FOIA exemptions 2 and 4 when determining whetherto categorize information as "sensitive but unclassified." Exemption 2 refers to "(2) internalpersonnel rules and practices of an agency," while Exemption 4 deals with "trade secrets andcommercial or financial information obtained from a person and privileged or confidential." TheISOO/OIP memo cautioned that "The need to protect such sensitive information from inappropriatedisclosure should be carefully considered, on a case-by-case basis, together with the benefits thatresult from the open and efficient exchange of scientific, technical, and like information." See Appendix 3 for excerpts of the memo. As further justification, the memo referred agencies to guidance on FOIA that had been issued by Attorney General Ashcroft in October 2001. This memorandum expressed the Administration'sintent to comply with FOIA while, at the same time, instructing agencies, when undertakingdiscretionary disclosure determinations under FOIA, to consider protecting values and interests towhich the Bush Administration is committed, including "safeguarding our national security,enhancing the effectiveness of our law enforcement agencies, protecting sensitive businessinformation, and, not least, preserving personal privacy." (77) In explaining the intent of the memo, theDepartment of Justice said In replacing the predecessor FOIA memorandum, the Ashcroft FOIA Memorandum establishes a new "sound legal basis" standard governing theDepartment of Justice's decisions on whether to defend agency actions under the FOIA when theyare challenged in court. This differs from the "foreseeable harm" standard that was employed underthe predecessor memorandum. Under the new standard, agencies should reach the judgment thattheir use of a FOIA exemption is on sound footing, both factually and legally, whenever theywithhold requested information. In the predecessor memorandum issued by Attorney General Janet Reno in 1993, agencies wereencouraged to release documents even if the law provided a way to withhold information, if therewas no "foreseeable harm" from doing do. The October 2001 memo underscored the need to ensurethat information about agency deliberations not be made public and encouraged agencies to makedisclosure determinations under FOIA "only after full and deliberate consideration of theinstitutional, commercial, and personal privacy interests that could be implicated by disclosure ofthe information." (78) Also, referring to the need for heightened sensitivity after the September 2001 terrorist attacks, the October 2001 memo instructed agencies to utilize FOIA exemptions when making an agency"assessment of, or statement regarding, the vulnerability of ... a critical asset ..." (79) or the need toprotect critical infrastructure information, referenced in the memo as "critical systems, facilities,stockpiles, and other assets from security breaches and harm -- and in some instances from theirpotential uses weapons of mass destruction in and of themselves. Such protection efforts, of course,must at the same time include the protection of any agency information that could enable someoneto succeed in causing the feared harm." (80) The Attorney General's October 2001 memorandum instructed agencies to interpret FOIA exemption 2 broadly to permit withholding of a document, which if released would allowcircumvention of an agency rule, policy or statute, thereby impeding the agency in the conduct of itsmission. (This is generally referred to as the high profile interpretation of exemption 2.) (81) It saidthat agencies should "avail themselves of the full measure of exemption 2's protection for theircritical infrastructure information as they continued to gather more of it, and assess its heightenedsensitivity, in the wake of the September 11 terrorist attacks." (82) The memo referred to guidance thatwas issued in 1989 describing the sensitivity of vulnerability assessments and the need to exemptsuch information from disclosure under FOIA. (83) Pursuant to the Card memo, and attachments, the information to be covered by theAdministration's "sensitive but unclassified" homeland security information seems to includerecords that deal with the agency, public infrastructure the agency might regulate or monitor, someinternal databases (reports, data the agency has collected, maps, etc.), vulnerability assessments,some internal deliberations, and information provided to the government by private firms, such aschemical companies. (84) Although most of this information is not classified, it appears as if security clearances may be required for access to some SHSI and certain types of SBU information. The National Archives andRecords Administration (NARA) included in its Annual Performance Plan, FY2003, (85) a goal oftraining state and local officials in the proper handling of classified and sensitive homeland securityinformation. The document stated that this included the objectives of obtaining Top Secret securityclearances for state and local officials who need such clearances to handle classified or sensitivehomeland security information, and also of developing "a training program at the state and locallevel for the proper use and handling of classified and sensitive but unclassified homeland securityinformation for all officials with Top Secret security clearances and other officials who have accessto sensitive information. Finally ISOO will ensure that Federal agencies have the necessaryclassification authority for homeland security information." It should be noted that, on March 12, 2002, and again on June 23, 2003, the House oversight committee on FOIA, the Committee on Government Reform, called the Attorney General's October2001 memorandum into question and specifically rejected its standard to allow the withholding ofinformation sought under FOIA whenever there is merely a "sound legal basis" for doing so. (86) Thecommittee directed agencies to withhold documents only in those cases when the agency reasonablyforesees that disclosure would be harmful to an interest protected by an exemption. (87) The dilemma about balancing security and science is reflected in the Homeland Security Act, P.L. 107-296 , signed November 2, 2002. Among other things, it required that research conductedby the Department of Homeland Security (DHS) created by the law "shall be unclassified to thegreatest extent possible" (Sec. 306 (a)). Nevertheless, in a signing statement, the President reiteratedthat the executive branch had the right to implement this provision (and others) in a manner whichwould protect information "...the disclosure of which could otherwise harm the foreign relations ornational security of the United States." (88) P.L. 107-296 , also included prohibitions against disclosure under FOIA of "critical infrastructure information" regarding to the security of critical infrastructure and protected systemssubmitted voluntarily by private companies. Criminal penalties for disclosure by affected employeesinclude fines, dismissal, or imprisonment for up to a year (Section 214). (89) The statute also providedfor the preemption of state freedom of information laws regarding the public disclosure of suchinformation if it is shared with a state or local government official in the course of DHS's activities. (90) Subsequently, the Department of Defense issued a memo on March 25, 2003 which appliedprohibitions like those in P.L. 107-296 to critical infrastructure information voluntarily submittedto DoD. (91) On April 15, 2003, the Departmentof Homeland Security published interim rules in the Federal Register which implement the critical information infrastructure protection provisions of P.L. 107-296 , and which would extend the rules to other agencies by requiring them to pass similarinformation that they receive to DHS. (92) DHSpublished a final rule and to established the "ProtectedInfrastructure Information (PCII) Program on February 18, 2004. (93) The submitted information willbe withheld from public disclosure under FOIA and "Initially, the PCII Program Office will limit thesharing of PCII to IIAP [DHS's Information Analysis and Infrastructure Protection Directorate]analysts," (94) and then, if accepted as appropriateto be safeguarded pursuant to the law andregulations, to other federal agencies. Submitters are to certify, under penalty of fine orimprisonment, that the submitted information is not subject to disclosure under the rules of anotherdepartment, such as to meet health, safety, or environmental regulations. This later provision isintended to allay some of the fears of groups that suspect companies will submit to DHS informationthey do not want to be disclosed in order to hide from the public information about pollution, newfacilities, or security gaps. P.L. 107-296 also required the President to "prescribe and implement procedures" for federal agencies to, among other things, identify, safeguard, and share with appropriate federal, state, andlocal agencies "homeland security information that is sensitive but unclassified" (Sec. 892). Thisis often abbreviated SHSI. "Homeland security information" was defined as any information possessed by a Federal, State, or local agency that -- (A) relates to the threat of terrorist activity; (B) relates to the ability or prevent,interdict, or disrupt terrorist activity; (C)would improve the identification or investigation of asuspected terrorist or terrorist organization; and (D) would improve the response to a terrorist act(Sec. 892(f)(1)). The law did not define sensitive or "sensitive but unclassified." It stated that, in sharing sensitive but unclassified information with state and local persons, it is the sense of Congress thatthe procedures developed to share information that is sensitive but unclassified may includerequirements for "entering into nondisclosure agreements with appropriate State and local personnel"(Sec. 892(c)(2)(B)). On July 29, 2003, the President assigned his responsibility to provide such procedural guidance to federal agencies and most other responsibilities of sections 892 and 893 of P.L. 107-296 to theSecretary of the Department of Homeland Security (pursuant to Executive Order 13311). (95) DHS wastasked with developing such guidance; no guidance for identifying and sharing sensitive unclassifiedhomeland security information has been issued yet.. Also, DHS is drafting the report onimplementation of section 892 of P.L. 107-296 , as required by Section 893 of the law. Federal Agency Implementation Actions. After the release of the Ashcroft and Card memos some agencies started to respond to this issue in itsbroadest sense. Some issued policy statements or rules relating to SBU even before passage of P.L.107-296 or the issuance of the guidance Congress mandated in the law. Reportedly, some agencies are increasingly inserting restrictions based on the category"sensitive but unclassified" into contracts for unclassified research negotiated with some universities. This has not only raised questions about whether the term should be better defined before it is morewidely used but has caused some universities to object to such clauses and have refused to acceptfederal contract funds for unclassified research that contain them. (96) Some agencies have defined "sensitive" information that will be protected from public disclosure or might be exempt from disclosure under FOIA, and have developed procedures to sharethis information with appropriate officials in federal state and local agencies. Several federalagencies have developed guidance or regulations to define SHSI or SBU and protect it from publicrelease. The Nuclear Regulatory Commission's guidance, which it described as interim pending afinal Administration definition for SHSI, was released on April 4, 2002. It includes such things as"plan specific information, generated by NRC, our licensees, or our contractors, that would clearlyaid in planning an assault on a facility.... Physical vulnerabilities or weaknesses of nuclearfacilities.... Construction details of specific facilities.... Information which clearly would be usefulto defeat or breach key barriers at nuclear facilities," and "Information in any type of comment (e.g.plant status report, press release) that provides the current status or configuration of systems andequipment that could be used to determine facility vulnerabilities if used by an adversary." (97) The U.S. Department of Agriculture issued Regulation 3440-002 on "Control and Protection of 'Sensitive Security Information,' " on January 30, 2003. It said it applied to "...the identificationof unclassified but sensitive information as 'Sensitive Security Information,' ".... (98) The definitionapplies generally to facilities, critical infrastructure and cyber-based systems (Sec. 6). Thisinformation is to be made available only to individual who have a "need-to-know," and theregulation provided procedures to protect it (Secs. 11 and 12 of the regulation). Pursuant to the Transportation Security Regulations, (99) DHS's Transportation SecurityAdministration (TSA) has defined the types of information that are categorized as "sensitive securityinformation," (SSI) and to be protected from disclosure and be exempted from FOIA. There are alsoreports that the TSA has sought to remove unclassified congressional testimony tht was alreadypublished, "in which a government contractor described security problems at the Rochester, N.Y.airport" on the grounds that it included "sensitive security information." (100) Reportedly, the testimonywas removed from some, but not all, sources. The TSA has defined the types of of information thatare SSI and to be protected from disclosure and exempted from FOIA. Some federal agencies have withdrawn from their websites information they have categorized as SBU and that might prove to be useful to terrorists, but which would appear to be accessible tothe public under existing laws such as the Emergency Planning and Community Right-To-Know Actof 1986 (42 U.S.C. 11049), which environmental advocates often cite to obtain information. Forinstance, reportedly, the Department of Energy "removed environmental impact statements whichalerted local communities to potential dangers from nearby nuclear energy plants, as well asinformation on the transportation of hazardous materials." (101) Reportedly, some agencies may bewithholding some information that normally would be made available under FOIA requests. (102) According to one report, the Environmental Protection Agency (EPA) has removed documents fromits website and the Defense Department has removed more than 6,000 documents in response to thememo. (103) The Nuclear Regulatory Commissionis reported to have removed documents from itswebsite. (104) State governments have removeddata from public websites, including "hospital securityplans and information on energy stockpiles of pharmaceuticals" in Florida. (105) The Secretary ofDefense was reported to have said a review of information accessible on DOD websites indicatedover 1,500 instances where posted data were insufficiently reviewed for sensitivity or not adequatelyprotected. He said the trend should be reversed and he advised that " 'Thinking about what may behelpful to an adversary prior to posting any information to the web could eliminate manyvulnerabilities....' " (106) One critic said inresponse, "However, such guidance, taken by itself, woulddictate the elimination of nearly all accurate information from DoD web sites since practicallyanything could be of use to an adversary in some conceivable scenario." (107) It has been reported thatsome information which researchers have sought and that agencies removed from their websites isbeing advertised to researchers through commercial vendors on CD and hard copy. Someresearchers now fear that the deleted information, including USGS topographic map information will"become unavailable due to tighter security .... " (108) This might deny public access to suchinformation of could possibly resulting in a "commercialization of information similar to whathappened with Landsat data in the 1980s, when the satellite imagery became privatized, dramaticallyraising the cost of research." (109) Some assessments made so far of the changes to agency FOIA procedures based on the Ashcroft October 2001 guidance, which restricted discretionary disclosures under FOIA, indicate that the newpolicies appear not to have had a major impact on agency activities. Preliminary analysis issued bythe National Security Archive regarding implementation of this guidance in 35 agencies indicatedthat while a few agencies, such as NASA, EPA, and the Departments of the Interior and Navy, hadto undertook significant activities to comply, most did not. Some agencies reported that the Cardmemo, rather than the Ashcroft memo, would appear to have had more significant effects ondisclosures requested via FOIA. (110) Accordingto a GAO assessment, released in September 2003, the Ashcroft memo appears to have had only limited impact on the processing of FOIA requests. GAO reported that 48% of the FOIA officers surveyed "... did not notice a change with regard tothe likelihood of their agencies' making discretionary disclosures. About one third of the FOIAofficers reported a decreased likelihood; of these officers, 75 percent cite the new policy as a topfactor influencing the change." (111) In contrast, others have concluded that the effects are serious. For instance, the Lawyers Committee for Human Rights, in a 2003 report, described as an example, DOD refusal to releasean unclassified conference report on lessons learned from the 2001 anthrax attacks and concluded"The 'homeland security information' provision represents a sweeping new delegation of authorityto expand secrecy well beyond formal classification procedures in a manner that is likely to furtherimpair Congress' oversight responsibilities. Whether Congress will step in to try to mitigate thispotential remains uncertain." (112) Some speculate that less unclassified information will be made available since passage of Section 214 of P.L. 107-296 , relating to critical infrastructure information. This has been viewedas a controversial provision. Critics say while it would protect sensitive information submitted tothe government about dams, buildings, electric power lines, pipelines, rail transit and so forth. Others say that it "... could make government officials fearful of disclosing information aboutcorporate activities that pose risks to the public." (113) Reportedly, the American Civil Liberties Union(ACLU) was concerned "... that companies could ensure secrecy for a wide range of informationprovided to the government simply by declaring that it involves critical infrastructure and thendemanding confidentiality." (114) It also"contended that the ... law could prevent the disclosure ofpotential health risks from uranium stored at private sites or of defects in railroad tracks ... [or] ...thatthe law might discourage whistle-blowers from coming forward with revelations about corporatewrongdoing." (115) Supporters of withholdingthis kind of information cite the potential threats tohomeland security that may be incurred if such information is allowed to remain widely accessible. They say that potential terrorists could use information about critical U.S. public and privateinfrastructure to design and implement attacks that could destroy U.S. power, communications,transportation and public works networks and facilities. Access to this kind of information, they say,should be given only to those with a need to know. Acknowledging the serious potential threats from release of certain kinds of "sensitive"privately developed research information, professional scientific societies and groups haveconsidered developing ways to regulate, review, identify and deal with publication of "sensitive"journal articles. (116) Some believe that privatescientific publishers and editors will feel compelled tomodel their publications policy for sensitive papers on guidelines that the federal governmentdevelops for release of agency documents. There is considerable controversy about this issue. National Academies' Policy. The NationalAcademy of Sciences says it voluntarily deleted from a public version of a report, and put into aseparate appendix, certain information on vulnerabilities of U.S. croplands after review by the U.S.Department of Agriculture, the sponsoring agency. (117) The rationale was that terrorists might be ableto exploit information on vulnerabilities. The information is being made available "on aneed-to-know basis" to a select list of persons including "federal, state, and local governmentworkers, officials involved in homeland security, and animal and plant health scientists, but notmembers of the media or the general public. Anyone interested in the appendix has to file a writtenrequest.... Academy staff members then call applicants, ascertain their identify, and ask why theyneed the report...." (118) Reportedly, the Academycited FOIA exemption 2, "which protects matters'related solely to the internal personnel rules and practices of an agency' " in justifying thisprocedure. (119) Regarding another Academyreport, DoD's Joint Non-Lethal Weapons Directoratereportedly took several months to review a study on non-lethal weapons, finally released inNovember 2002. But there are "conflicting opinions of that review, including whether it was usedimproperly to suppress NAS' criticism of DoD's non-lethal weapons program." (120) On October 18, 2002, the three presidents of the National Academies issued a statement (121) which sought to balance security and openness in disseminating scientific information. Itsummarized the policy dilemma by saying that "Restrictions are clearly needed to safeguard strategicsecrets; but openness also is needed to accelerate the progress of technical knowledge and enhancethe nation's understanding of potential threats." The statement encouraged the government toreiterate that basic scientific research should not be classified, that nonclassified research reportingshould not be restricted, and that vague and poorly defined categories of research information, suchas sensitive but unclassified, should not be used. "Experience shows that vague criteria of this kindgenerate deep uncertainties among both scientists and officials responsible for enforcing regulations. The inevitable effect is to stifle scientific creativity and to weaken national security." The statementoutlined "action points" for both government and professional societies to consider when developinga dialogue about procedures to safeguard scientific and technical information which could possiblybe of use to potential terrorists. The National Academies held a workshop on this subject early in 2003 (122) in cooperation withthe Center for Strategic and International Studies. (123) Reportedly, during this meeting, Administrationofficials, stated the view that scientists should voluntarily craft a policy that protects sensitiveinformation and that they should assist the government "... to help it identify and censor trulysensitive findings," especially in the biological sciences. (124) One result is that the CSIS and theAcademies established a "Roundtable on Scientific Communication and National Security," aworking group composed of scientific and security leaders which will hold continuing discussionsto try to develop a workable publications policy. (125) Other Groups. Some scientists, including Dr. Ronald Atlas, President of the American Society for Microbiology, (126) have suggested that thescientific community should come together to discuss the issue of balancing secrecy in science andscientific publication in a move similar to the 1975 Asilomar conference, which helped to developguidelines for information communication and institutional review boards to monitor and controlthe development of genetically modified organisms. Some suggest that perhaps the NationalAcademy of Sciences or a committee of a relevant professional society be established to evaluatewhether parts of methodology of especially sensitive research should be published. (127) Reportedly,Dr. Anthony Fauci, Director of the NIH National Institute of Allergy and Infectious Diseases(NIAID), which is receiving the bulk of funds allocated to NIH for counterterrorism R&D, said onOctober 3, 2002, that while transparency in publication should be the norm, consideration shouldbe given to developing a "specially appointed committee to determine whether publication isappropriate." He suggested the formation of a panel to determine whether it is appropriate to pursuecertain types of biomedical research," similar to the Asilomar Conference. (128) Others have suggestedthat only certain kinds of sensitive research be restricted or classified, such as research relating tothe "weaponization of biological and toxin agents...." (129) The International Council for Science (ICSU), an international non-governmental scientific association, (130) announced that it will reviewthreats to scientific freedom, including limitations orrestrictions being placed on the conduct and communication of scientific information and thefreedom of movement of scientific materials. (131) The Council of the American Library Associationadopted a resolution at its June 2002 meeting that urged that the provisions relating to "Sensitive butUnclassified" information be dropped from the Card memorandum and that urged "governmentagencies ... ensure that public access to government information is maintained absent specificcompelling and documented national security or public safety concerns." (132) The AmericanAssociation of University Professors (AAUP) announced on September 11, 2002, that it was creatinga committee to review and analyze "post-September 11 developments which impinge on academicfreedom." (133) In January 2004, the American Physical Society (APS) Council released a statement which concluded, "Restricting exchange of scientific information based on non-statutory administrativepolicies is detrimental to scientific progress and the future health and security of our nation. TheAPS opposes any such restrictions, such as those based on the label 'sensitive but unclassified'...." (134) Professional Groups Views That Scientists Should Voluntarily"Self-Regulate" Research and Publications. Some professional scientific groups,such as the American Society for Microbiology, have called upon their members to be cautious aboutreleasing or publishing information which might be useful to potential terrorists, includingspecifically the "methodology" sections of some scientific papers, and have established publicationreview committees to evaluate the sensitivity of articles presented for publication in their journals. (135) The society has established procedures to have an editorial panel review for sensitivity manuscriptswhich deal with "select agents." So far, reportedly only one paper has been asked to be revised. (136) In February 2003, shortly after the Academies/CSIS 2003 meeting, 32 journal editors and scientists, including officials with the American Association for the Advancement of Science andthe American Society of Microbiology, issued a statement on "Statement on Scientific Publicationsand Security," published in Science , Nature and the Proceedings of the NationalAcademy ofSciences , saying that they would take security issues into account when reviewing research papersfor publication. Each scientific publication will develop its own process to review papers submittedfor publication. (137) A National Academy of Sciences report, entitled Biotechnology Research in an Age of Terrorism: Confronting the "Dual Use" Dilemma , published in 2003 and dubbed the "Fink" reportfor its chairman, called for greater self-regulation by scientists, using institutional biosafetycommittees at academic and research institutions, for research that could possibly aid terrorists. Italso urged creation of a new federal National Science Advisory Board for Biodefense to provideguidance to nongovernmental researchers. But it did not propose government control of suchresearch. (138) Partly in reaction, the American Association of University Professors (AAUP) Special Committee on Academic Freedom and National Security in a Time of Crisis, in a report issued in2003, urged a note of caution regarding self-restraint by the scientific community: "the academiccommunity must be careful not to impose on itself a regulatory burden that differs from thegovernment's only in the locus of administration." (139) Although there has been no evidence ofnegative effects on scientific research so far, " a realistic appraisal of what the scientific communityis doing to monitor its own members requires us to be aware of the possibility that researchers andjournal editors might exercise their responsibilities with too much rigor and thus inadvertently givetoo little attention to freedom's needs." (140) Policy Options. Congress has also expressed interest in this topic. Shortly after publication on July 1, 2002, in Science magazine online, of acontroversial scientific paper that described the synthesis of an infectious polio virus from mail ordercomponents, Congressman Weldon introduced H.Res. 514 (107th Congress). Itexpressed "serious concern" about the paper, which was funded by the Defense Advanced ResearchProjects Agency (DARPA), and called for tighter controls on the publication of certain scientificresearch. It also sought to have the scientific community and the executive branch ensure thatinformation that may be used by terrorists is not made widely available, or is properly classified. (141) The resolution was not reported from the committee. For additional information see CRS Report RL31695 , Balancing Scientific Publication andNational Security Concerns: Issues for Congress . As explained above, some federal agencies use the definition of "sensitive" in the Computer Security Act of 1987 as the basis for identifying information to label SBU. Other agencies haveexpanded the definition of sensitive in various ways, with some agencies including informationexempt from release under FOIA and others including other kinds of information determined to besensitive to a particular agency's activities. Following the terrorist attacks of September 11, 2001,the Administration instructed agencies to withhold more information when undertaking discretionarydisclosure deliberations under FOIA. Agencies were instructed to balance access to informationwith the needs to protect critical infrastructure information, national security, law enforcementeffectiveness, agency deliberations and decision-making, and related values and interests, and to usespecifically FOIA exemptions 2 and 4. When making such deliberations, they were also told toconsider, on a case by case basis, "benefits that result from the open and efficient exchange ofscientific, technical, and like information." These actions have raised significant policy issues, such as allegations that the terms sensitive and SBU are ambiguous because they are subject to agency interpretation. This, some say, makesit difficult to identify and safeguard such information, while raising questions about the need foruniformity in standards. Some say expanded interpretation of FOIA exemptions 2 and 4 to identifySBU divides those who want increased security of information from those who want public accessto the information now exempted in order to protect public and community oversight, civil liberties,and accountability, to promote the conduct of science, or to monitor private sector activities. Theprocedures mandated in P.L. 107-296 are intended to guide agencies toward the use of similar procedures to identify, share, and safeguard sensitive but unclassifed homeland security information. As will be discussed below, there has been considerable debate about this content of these proposedguidelines. Even before the terrorist attacks of 2001, there had been considerable controversy about the meaning and use of the term SBU. One position is that agencies should interpret the term morebroadly to categorize and safeguard more information as SBU; alternatively, others say that thiscategory is often imprecise and leads to indiscriminate withholding of information from the public. For instance, a February 28, 1994 report, Redefining Security , by the Joint Security Commission prepared for the Director of the CIA and the Secretary of Defense, which according to the Federationof American Scientists (FAS) "was the first significant post-cold war examination of governmentsecurity policies and practices," (142) estimatedthat as much as 75% of all government-held informationmay be sensitive and unclassified. It recommended that more attention should be paid to protectingsuch information and labeling it as SBU within the defense, intelligence and other sectors ofgovernment as well as "... information that, while neither classified nor government-held, is crucialto U.S. security in its broadest sense." Continuing, it said, We have in mind information about, and contained in, our air traffic control system, the social security system, the banking, credit, and stock marketsystems, the telephone and communications networks, and the power grids and pipeline networks. All of these are highly automated systems that require appropriate security measures to protectconfidentiality, integrity and availability." (143) In a contrasting position, the aforementioned Moynihan commission report, entitled Report of the Commission on Protecting and Reducing Government Secrecy, 1997 , noted that agencies oftenuse different types of mandates to justify protecting unclassified information and these range fromthe very broad to specific. This causes problems because "... [V]irtually any agency employee can decide which information is to be so regulated;" there is no oversight of this categorization and agencies controlaccess "though a need-to know process," and "... the very lack of consistency from one agency toanother contributes to confusion about why this information is to be protected and how it is to behandled. These designations sometimes are mistaken for a fourth classification levels, causingunclassified information with these markings to be treated like classifiedinformation." (144) As a result, the Commission concluded that more information is protected than is warranted. An attempt had been made in December 1994, the report said, to develop a policy to address sensitive but unclassified information, but it "met with great resistance by both the civilian side ofthe Government and industry" because the process was controlled by the Security Policy Board,which dealt largely with classified information and was controlled by the defense and intelligencecommunity. (145) The report also found thatoverzealous labeling of information as SBU could beavoided if more attention were devoted to improving the security of governmentcomputer-information systems (146) to preventunauthorized access. Critiquing the wide scope of the current DOE definition of SBU (see above under the section, "Department of Energy"), a Center for Strategic and International Studies (CSIS) commissiondealing with DOE laboratories reported in 2002: The Department's official definition is so broad as to be unusable. ...There is no ... common understanding of how to control ... [SBU] ..., no meaningfulway to control it that is consistent with its level of sensitivity, and no agreement on what significanceit has for U.S. national security. Sensitive unclassified information is causing acute problems atDOE. ... Security professionals find it difficult to design clear standards for protection. Scientistsfeel vulnerable to violating rules on categories that are ill defined. Without clear definition orstandards for protection, those who oversee implementation for the Department find it extremelydifficult to measure laboratory performance. ... Yet the Department tends to treat this information as if subject to security measures not unlike those for classified information. It is considered whendeveloping background checks for foreign visitors and when reviewing presentations that mayinvolve sensitive unclassified information. ... The lack of management discipline around sensitive unclassified information both hinders the scientific enterprise and reduces the ability of security andcounterintelligence professionals to control information wherenecessary. (147) The CSIS commission recommended that DOE avoid using the definition and label "SBU." "By avoiding these labels," it said, "the Department can depart from treating unclassified informationas if subject to national security controls. The Department should have just three classes ofinformation: (1) classified; (2) unclassified but subject to administrative controls; and (3)unclassified, publicly releasable." (148) DOEshould also avoid use of a sensitive subjects list or changeits name, since the list deals primarily with items and technology potentially subject to exportcontrol. (149) "If information is not classified butrequires administrative control," DOE shouldconsider using "the category of information designated official use only (OUO)...." "A single officewithin DOE administers OUO, which has guidelines established in law and unclassified informationcould be reviewed for applicability under the OUO statutes. Existing statutes governing certain typesof sensitive unclassified information could remain unchanged and distinct from OUO (i.e.unclassified but controlled nuclear information [UCNI]), as long as they provide sufficiently clearguidelines for control." (150) During the 107th Congress, congressional interest in this topic was reflected in a recommendation made by the congressional Joint Inquiry Into September 11, which among otherthings recommended a review encompassing the concepts of sensitive or classified information: Congress should also review the statutes, policies and procedures that govern the national security classification of intelligence information and itsprotection from unauthorized disclosure. Among other matters, Congress should consider the degreeto which excessive classification has been used in the past and the extent to which the emergingthreat environment has greatly increased the need for real-time sharing of sensitive information. TheDirector of National Intelligence, in consultation with the Secretary of Defense, the Secretary ofState, the Secretary of Homeland Security, and the Attorney General, should review and report tothe House and Senate Intelligence Committees on proposals for a new and more realistic approachto the processes and structures that have governed the designation of sensitive and classifiedinformation. The report should include proposals to protect against the use of the classificationprocess as a shield to protect agency self-interest. (151) While many observers agree with the objectives and implementation of the March 2002 Card memorandum in order to lessen potential terrorist attacks, some critics have urged caution ininterpreting it and the accompanying guidance which appears to allow agencies to widen types ofinformation to be exempt from disclosure under FOIA. It has been argued that "Several of the newrestrictions on information are not congruent with the existing legal framework defined by theFreedom of Information Act (FOIA) or with the executive order [Executive Order 12598] thatgoverns National Security classification and declassification." (152) Some have questioned the authorityof national security directives pertaining to "sensitive, but unclassified" information or say thatwhere Congress has statutorily prescribed policy contrary to information management policyprescribed in presidential directives or agency regulations, the supremacy of statutory law wouldseemingly prevail. One critic of the March 2002 White House memo cautioned that the term"sensitive but unclassified" may be "the most dangerous level of secrecy, because it was not defined[in the past] and there were no channels of appeal." (153) Similarly, others say that "... no administrativemechanisms have been developed to allow those who disagree with the decision to withholdinformation to challenge the decision or to seek some remedy to the decision. To make this policywork, the federal government needs to develop procedures that will allow citizens the ability todisagree with the conclusions of the agency denying or withholding the information." (154) Some who seek to clarify policies for controlling public or private scientific information thatis not classified believe that scientific progress and innovation, and even the fight against terrorism,will be harmed by limiting information flow. Yet these critics share the goal of trying to keeppotential terrorists from obtaining information that could be used to threaten the United States. Some have called for closer cooperation between the scientific and intelligence community to draftguidelines relating to safeguarding scientific information that might be useful to potentialterrorists. (155) These conflicting objectives raiseperplexing dilemmas for policymakers and scientistsalike. Policy options discussed below focus on several parts of this debate, including establishinguniformity in definitions and implementing guidelines; establishing an appeals process for SBUinformation; and the potential to classify or label as SBU more research information. Considerations Related to a Uniform Definition of SBU. Since agencies define the term SBU differently, various interpretations couldlead to the possibility that information that should not be released to the public because of itspotential value to terrorists might be released; that agencies might not release SBU information toother agencies, or to state or local officials; or that the public may be denied access to informationwhose release might be permitted. Questions about ambiguities in the definition of the term SBUmay raise interest about legislating, or overseeing the process of developing, uniform criteria forSBU, especially since, in P.L. 107-296 , Congress encouraged nonfederal first responders tosafeguard such information via nondisclosure agreements. (156) In order help set standards for SBU and SHSI, and to resolve policy dilemmas surrounding definitions and procedural controls, after release of the Card memorandum in March 2002, the WhiteHouse Office of Homeland Security was reported to have drafted a definition for SHSI, (157) and that"originally, there was an initiative to issue a Presidential Directive on unclassified but HomelandSecurity-sensitive information." (158) This wasnever publically released, but several agencies,including the Nuclear Regulatory Commission, utilized it when developing criteria to define SHSIas discussed in the Card and Ashcroft memos. (159) Subsequently the Office of Homeland Securityasked the White House Office of Science and Technology Policy (OSTP) and the Office ofManagement and Budget to develop guidance, which had been expected to be released in 2002 or2003. An objective of the proposed guidance was to withhold information from persons who shouldnot have access to it, but to allow such information to be shared with those who might have a needfor it, such as law enforcement and emergency response personnel. (160) OMB and OSTP met with stakeholder groups, including academics and scientists, to obtain their views about how to develop guidance. (161) During a meeting held in late August 2002, withacademic and scientific officials and others discussing the March 2002 memos, their implementation,and definitions, "[a]cademic and scientific representatives ... argued [that] basic and appliedresearch, even research performed by the government, should not be subject to [sensitive butunclassified homeland security information] SHSI guidelines and advocated following existing rulesfor the handling of sensitive information, such as the Centers for Disease Control and Prevention(CDC) guidance for the handling of select agents." (162) Academic officials reportedly left the meetingconvinced that the March memo applied only to "information that was generated and owned by thegovernment, and not university research," nor to university research funded by federal governmentgrants. (163) During hearings on ConductingResearch During the War on Terrorism: BalancingOpenness and Security, held by the House Science Committee on October 10, 2002, White HouseOffice of Science and Technology (OSTP) Director John Marburger testified that the Administrationwants "to ensure an open scientific environment" while maintaining homeland security. He saidSHSI would apply to federal intelligence, law enforcement and public health information thatgenerally is not made public, but would not necessarily include research results. (164) Several otherwitnesses endorsed this position. According to OSTP Director Marburger, SBU information related to homeland security "... may be withheld from public disclosure only when it warrants protection under one of the nineexceptions of the Freedom of Information Act." (165) The relationship between FOIA and theAdministration's homeland security information policies was the theme of a conference held by theDepartment of Justice's Office of Information and Privacy for FOIA officers during June 25, 2004. (166) The topics of the meeting were summarized in a FOIA Post article, but the discussion summarieswere not released to the public. Despite many meetings in 2002 and 2003 with various stakeholders and apparent attempts to draft policy, no SBU or SHSI policy guidance was issued. Before July 2003, the OMB/OSTP guidance had been expected to constitute the President's instructions to federal agencies to "prescribe and implement procedures" to "identify and safeguardsensitive homeland security information that is sensitive but unclassified," and to share thisinformation with other federal agencies and appropriate State and local personnel, as required bysection 892 (a) (1) (A)(B) of P.L. 107-296 . The Secretary of DHS was assigned these functionspursuant to Executive Order 13311, July 29, 2003 and the DHS Office of General Counsel was,reportedly, developing the guidelines mandated by P.L. 107-296 . It is not known which perspectiveswill be used in guidance to federal agencies -- the limited definition of sensitive as in the ComputerSecurity Act of 1987, the more expansive, but somewhat limited, conceptualization of SBU in theCard memorandum and attachments, or the broader conceptualization of SBU used by theDepartment of Energy. It is expected that the definition will extend beyond SHSI per se , that is,beyond information not routinely released to the public, such as law enforcement data, personnelinformation, and information on computer vulnerabilities, to include also a conceptualization of SBUinformation that could extend to some kinds of scientific and technical data. Some have speculated that the delay in issuing guidance is due to disagreement about whether there should be public comment -- which might involve discussions raised by critics relating toensuring allowing public access to information that could be used to continue to permit public andcommunity oversight of governmental and industrial activities. Another concern that might be raisedby the public in commenting on proposed regulations could focus on penalties for violatingnondisclosure agreements that might affect unsuspecting recipients of SBU information. (167) Otherssay the delay "... may be ... a recognition of the voluntary restraints the academic community hasimposed on itself," referring specifically to professional groups' activities in support of voluntaryself-restraint (168) for sensitive scientificinformation. Although the law does not require publiccomment, an OMB official (169) and a Departmentof Justice release had said that SHSI guidance wouldbe subject to public notice comment before the regulation was implemented. (170) It is not clearwhether the Department of Homeland Security will seek public comment now that it has been givenresponsibility to draft the regulations. (171) Over75 public groups, "representing journalists, scientists,librarians, environmental groups, privacy advocates, and others" wrote to DHS Secretary in August2003, urging that he allow public input on procedures to be prescribed and implemented foridentifying, safeguarding, and sharing the sensitive but unclassified homeland security informationreferenced in section 892. (172) Factors Agencies Might Use in Developing Nondisclosure Policyfor SBU Information. The Card and Ashcroft memos, together with section 892of P.L. 107-296 , have given agencies a basis to make decisions about restricting access to certainelectronic and hard copy information that previously may have been accessible to the public, butwhose continued distribution might be detrimental to homeland security. But it is unclear whatconceptualizations agencies and the DHS guidance will use. As noted above, agencies havediscretion to identify and withhold from the public, as sensitive or as sensitive but unclassified,information which they determine is subject to nondisclosure (pursuant to both the ComputerSecurity Act of 1987 and the Administration's interpretation of FOIA). Since the basis of thesedeterminations is subject to interpretation, both agency program managers and the public who mightseek access to such information may confront ambiguity in definitions and different kinds ofbalancing tests. There are questions about the uniformity of definitions used by different agenciesand which values or objectives should be encompassed in a risk analysis on which suchnondisclosure determinations might be based. The definition of what information is SBU, at a minimum, is likely to encompass concepts that are defined as sensitive in the Computer Security Act 1987, that is to protect information whosedisclosure "could adversely affect the national interest or the conduct of Federal programs, or theprivacy to which individuals are entitled under ... the Privacy Act." Also, it may encompass theNIST criteria for sensitive information protection: confidentiality, integrity, and availability. (173) Additionally, among the topics the Administration instructed agencies to consider when making"discretionary disclosures" of SBU homeland security-related information that could be exempt fromFOIA is the "need to protect critical systems, facilities, stockpiles, and other assets from securitybreaches and harm -- and in some instances from their potential use as weapons of massdestruction in and of themselves." (174) TheAdministration also stressed that agencies, when applyingexemption 2, should consider the needs for an informed citizenry to ensure accountability,"safeguarding our national security, enhancing the effectiveness of our law enforcement agencies,protecting sensitive business information, and not least preserving personal privacy." (175) Also to beconsidered were " ... benefits that result from the open and efficient exchange of scientific, technical,and like information." Criteria for sensitive but unclassified SHSI also are likely to reference thetypes of information P.L. 107-296 identifies as "homeland security information" -- "any informationpossessed by a Federal, state, or local agency that -- relates to the threat of terrorist activity; relatesto the ability to prevent, interdict, or disrupt terrorist activity; would improve the identification orinvestigation of a suspected terrorist or terrorist organization, or would improve the response to aterrorist act" (Sec. 892 (f)). Because of the difficulty of balancing the needs for information with security, some critics of the White House March 2002 memo have focused on the need for developing guiding principles. According to Steven Aftergood and Henry Kelly, "In deciding how to treat such information, theadministration should enunciate a clear set of principles, as well as an equitable procedure forimplementing them and appealing adverse decisions," with the appeals procedure "outside theoriginating agency." (176) They said that "Theguiding principles could be formulated as a set ofquestions, such as: Is the information otherwise available in public domain? (Or can it be readily deduced from first principles?) If the answer is yes, then there is no valid reasonto withhold it, and doing so would undercut the credibility of official information policy. Is there specific reason to believe the information could be used by terrorists? Are there countervailing considerations that would militate in favor ofdisclosure, i.e., could it be used for beneficial purposes? Documents that describe in detail howanthrax spores could be milled and coated so as to maximize their dissemination presumptively posea threat to national security and should be withdrawn from the public domain. But not everydocument that has the word "anthrax" in the title is sensitive. And even documents that are in someways sensitive might nevertheless serve to inform medical research and emergency planning andmight therefore be properly disclosed. Is there specific reason to believe the information should be public knowledge? It is in the nature of our political system that it functions in response to publicconcern and controversy. Environmental hazards, defective products, and risky corporate practicesonly tend to find their solution, if at all, following a thorough public airing. Withholdingcontroversial information from the public means short-circuiting the political process, and riskinga net loss in security. Given the contending values and factors that affect a workable definition and implementing rules, Congress may monitor the guidance that DHS develops to assist agencies in identifyingsensitive homeland security information and SBU. Because of the potential implications of theforthcoming DHS concepts for private scientific publications policy, various constituencies andscientific groups will undoubtedly seek to examine the balance between security and access toinformation in these guidelines. The Potential to Classify More Research Information. Several activities have occurred that might increase the amount ofscientific research information that is classified. As noted above, NSDD 189 and Executive Order12958 both prohibit classification of certain kinds of federal scientific research information exceptfor reasons of national security. NSDD 189 deals with basic research and Executive Order 12958applies the prohibition to fundamental, or what it defines as basic and applied, research. During2001 and 2002, the heads of several federal agencies with substantial research responsibilities, whodid not have classification authority under Executive Order 12958, the prevailing executive orderon classifying information, (177) were givenoriginal classification authority. These include theSecretaries of Health and Human Services (178) and of Agriculture, (179) and also theAdministrator of theEnvironmental Protection Agency. (180) Someof the agencies with new classification authority,especially Health and Human Services and Agriculture, support substantial amounts ofcounterterrorism research, as well as of fundamental research in a variety of scientific and technicalareas, often performed on an extramural basis by researchers in colleges and universities. (181) New Executive Order 13292, issued on March 25, 2003, amends Executive Order 12958 on classified national security information. The amendment permits classification of "scientific,technological, or economic matters relating to the national security, which includes defense againsttransnational terrorism " (new clause in italics, sec. 1.4 (e)). The amendment appears to highlightthat national security-related scientific, technological, and economic information dealing withdefense against international terrorism may be classified. Given that the definition of "nationalsecurity," in the two executive orders is not changed and that definition could have encompassedmatters related to transnational terrorism, it is unclear if the amended order widens the scope ofscientific, technological, and economic information to be classified. (182) In addition, the Department of Defense reportedly plans to reissue its guidelines relating to pre-publication review of extramural research that it funds outside of its own laboratories. Recentlyseveral university groups wrote a letter to the Director of the Office of Science and TechnologyPolicy complaining that more agency program officials are inserting pre-publication review clausesinto contracts, including for fundamental research, without explanation as to their justification. Thishas a "pernicious effects," they said, "not only with regard to the freedom to publish but also withregard to employment of foreign-born students and researchers on federally funded research projects. If the contract clauses require blanket screening of any and all foreign-born scientists, universitieswill object." (183) Agencies which were given original classification authority in the last few years are now developing implementing guidelines and appointing security officers in operating units. Given thelong-standing federal policy embodied in Executive Order 12598 and in NSDD 189 of notclassifying basic scientific research, except if release would threaten national security, the balancebetween science and security in agency guidelines will remain a topic of interest and concern. Interest in this topic may be heightened because of the recent changes made in Executive Order13292 to the definition of the kinds of scientific, technological, and economic information that maybe classified. The scientific and academic communities are expected to pay close attention to these issues. Among the questions that may be raised are: Will new controls be placed on federally funded research, including both intramural research conducted in an agency's laboratories, and on extramural research, that mightbe federally funded but conducted in nonfederal academic and industrial research laboratories? Will controls encompass both classification levels and use of designations such as sensitive and sensitive but unclassified? Will designation of a controlled research project be made before the award offunds and the start of a project, or after a project is completed and during a pre-publication reviewphase? What kinds of requirements will be placed upon nonfederal researchers tosafeguard research information? How will such controls affect the conduct of academic research for the federalgovernment? How will such controls differ from the controls on proprietary researchinformation that are deemed acceptable by most academic institutions eager to receive financialsupport from industry? Will research agencies with original classification authority modify theirlong-standing policies of encouraging publication and dissemination of federally funded researchresults? Under the expanded definition of scientific and technological informationsubject to classification in Executive Order 13292, will agencies classify information that might haveotherwise been categorized as SBU? Appeals Process for SBU Information. Anothercontinuing issue is expected to be an appeals process for designating information as SBU. StephenAftergood, with the Federation of American Scientists (FAS), suggested that " ... An appeals panelthat is outside of the originating agency and that therefore does not have [the] same bureaucraticinterests at stake would significantly enhance the credibility of the deliberative process. The efficacyof such an appeals process has been repeatedly demonstrated by an executive branch body called theInteragency Security Classification Appeals Panel (ISCAP)." (184) Another suggested approach is that"To solve disputes that develop out of the new category of 'sensitive but unclassified' information,one could allow the Information Security Oversight Office (a part of the Executive Branch) toreceive appeals to review disputes and challenges to executive agency decisions regarding the releaseof documents and reports The Office would oversee the appeals, it would have another set of eyesthat would examine the requested information and review it in a different context that the executiveagency. The ISOO might be able to work with both the agency involved and those requesting theinformation to reach a compromise that everyone could accept. It would also have the effect ofkeeping the oversight of the information in the hands of the executive branch." (185) Determination of "Tiered" Access to SBU Information. Some agencies have discussed developing procedures to permit"tiered," or selective, access to qualified and pre-screened individuals for some scientific andtechnical information, that could be categorized as SBU or SHSI. Reportedly, EPA requiresresearchers to obtain sponsorship from a senior EPA official, have their requests approved inadvance and register before using the Envirofacts database. (186) EPA also has issued instructions toutilities to submit threat or vulnerability assessments to the agency. Using a protocol issued inDecember 2002, reportedly, EPA "... will keep sensitive information in the assessments secure. Thedocuments will be kept in one location under lock and only individuals designated by EPA will haveaccess to them." (187) EPA also will release otheragency information to selected individuals only inhard copy at EPA offices and libraries throughout the nation. (188) The Federal Energy RegulatoryCommission (FERC) issued a final rule, effective April 2, 2003, which limits release of its criticalenergy infrastructure information on a selective or "tiered" basis to members of the public based ontheir need to know and the legitimacy of their need as determined by the Commission. (189) FERC saidit would not alter its responsibilities under FOIA, but appears to be broadening, or at a minimum,reinterpreting implementation of exemptions to disclosure under FOIA. (190) The U.S. GeologicalSurvey has announced that it will implement four levels of control for its information products: a. No sensitivity is determined. No restriction is required. b. Product is determined to be sensitive. Do not distribute. c. Sensitivity has beendetermined for a previously distributed product that is widely available. Withdrawal would beineffective. Continue distribution of current version. Restrict distribution of new features to updatesfor l year. d. Product is restricted according to directive from another agency with specific authorityfor public safety or national security. (191) The equity of procedures for "tiered" or selective access; the need to create public and or private panels to examine controls on the release of some information; and the need to clarify relationshipsbetween the private sector and the government with respect to safeguarding information in scientificpublications to protect the public interest are issues which may be raised in the legislative context. The development and history of atomic energy restricted data controls were explained in a document prepared in 1989 by Arvin S. Quist, a classification officer at the Oak Ridge GaseousDiffusion Plant, Oak Ridge National Laboratory, which is operated on contract for the Departmentof Energy. (192) Excerpts below from the Quistdocument explain the relevant provisions of these laws. In the ... Atomic Energy Act of 1946, Congress established a special category of information called "Restricted Data." Restricted Data was definedto encompass "all data concerning the manufacture or utilization of atomic weapons, the productionof fissionable material, or the use of fissionable material in the production of power." (193) Thus, byoperation of law, nearly all atomic (nuclear) energy information fell within the definition of RD. TheAtomic Energy Act authorized the AEC to control the dissemination of RD, specifying as aprerequisite to access to this information that an individual must have a security clearance.... ... Two particularly unique and significant aspects ofRD warrant emphasis. First, a positive action is not required to put information into the RD category.If information falls within the Act's definition of RD, it is in this category from the moment of itsorigination; that is, it is "born classified." The government has no power to determine thatinformation is RD ... only the power to declassify RD. [In practice, the Government (Departmentof Energy) determines whether information falls within the definition of Restricted Data.] ... The"born classified" concept is unique with RD. This concept assumes that newly discovered atomicenergy information might be so significant with respect to the nation's security that it requiresimmediate and absolute control. ...National Security Information is not so designated until anoriginal classifier makes a positive determination that the information falls within the definition ofNSI .... Although RD is said to be born classified, the AtomicEnergy Act does not specifically designate it as "classified" information. The Act defines RD andprescribes very strict methods for its control without stating that it is "classified" information. However, the Act does describe declassification of RD; therefore, by implication, RD is "classified." A second unique aspect of RD is that information does not have to be owned or controlled by thegovernment to be classified as RD. ... The circumstance could even arise in which an individualcould originate RD and then not be allowed to possess it because of lack of security clearance or"need to know." The Atomic Energy Act does not forbid an individual to generate RD, but, onceRD is generated, the Act prohibits its communication to persons not authorized to receive it. In 1951, Congress amended the Atomic Energy Act of 1946 to make certain atomic energy information available to other countries for purposes of weapons development, but the NationalSecurity Council had to approve these information flows. The Atomic Energy Act of 1954 amendedthe 1946 act to include "an increased emphasis on wider dissemination of atomic energy information,to make more of it accessible to U.S. industry and to the world in order to permit the developmentof nuclear reactors for commercial production of electric power ... as a consequence of PresidentEisenhower's [1953] Atoms For Peace initiative ...." The Quist document says: With respect to the control of information, the 1954 Act stated: "It shall be the policy of the Commission to control thedissemination and declassification of Restricted Data in such a manner as to assure the commondefense and security. Consistent with such policy the Commission shall be guided by the followingprinciples: (a) Until effective and enforceable international safeguards against the use of atomicenergy for destructive purposes have been established by an international arrangement, there shallbe no exchange of Restricted Data with other nations except as authorized by section 2164 of thistitle; and (b) The dissemination of scientific and technical information relating to atomic energyshould be permitted and encouraged so as to provide that free interchange of ideas and criticismwhich is essential to scientific and industrial progress and public understanding and to enlarge thefund of technical information. ...[42 U.S.C. sec. 2161.]" ... The 1954 Actadded "industrial progress," "public understanding," and "enlarge the fund of technical information"as reasons to disseminate atomic energy information. Those additions provided the basis for thesubsequent declassification or downgrading of much atomic energyinformation. ... The 1946 Act had permitted declassification of RDonly when the AEC determined that it could be published without "adversely affecting the commondefense and security .... The 1954 Act changed "adversely affecting" to "undue risk," therebyshifting the balancing test towards declassification of more information .... The increased emphasisof the 1954 Act in disseminating atomic energy information is further exemplified by a continuousreview requirement...: ... Prior to the Atomic Energy Act of 1954, privatepersons could not have access to RD for commercial purposes (e.g., development of commercialnuclear power reactors). The only reason for allowing private persons to have access to such datawas on a need-to- know basis, in connection with national defense work. Although the 1954 Actenvisioned the commercial development of nuclear energy, the Act contained no express provisionspermitting access to RD for commercial purposes. This hurdle was overcome in 1956 when the AECused its administrative powers to establish an Access Permit Program ... Under this program, apermitted is able to have access to RD "applicable to civil uses of atomic energy for use in hisbusiness, trade or profession." 12 FAM 540, SENSITIVE BUT UNCLASSIFIED INFORMATION (SBU) (TL:DS-61; 10-01-1999) 12 FAM 541 SCOPE (TL:DS-46; 05-26-1995) a. SBU describes information which warrants a degree of protection and administrativecontrol that meets the criteria for exemption from public disclosure set forth underSections 552 and 552a of Title 5, United States Code: the Freedom of Information Act andthe Privacy Act. b. SBU information includes, but is not limited to: (1) Medical, personnel, financial, investigatory, visa, law enforcement, or otherinformation which, if released, could result in harm or unfair treatment to any individualor group, or could have a negative impact upon foreign policy or relations; and (2) Information offered under conditions of confidentiality which arises in the course ofa deliberative process (or a civil discovery process), including attorney-client privilege orwork product, and information arising from the advice and counsel of subordinates topolicy makers. 12 FAM 542 IMPLEMENTATION (TL:DS-46; 05-26-1995) Previous regulations regarding LOU material are superseded and LOU becomes SBU asof the date of this publication. 12 FAM 543 ACCESS, DISSEMINATION, AND RELEASE (TL:DS-61; 10-01-1999) a. U.S. citizen direct-hire supervisory employees are responsible for access, dissemination,and release of SBU material. Employees will limit access to protect SBU information fromunintended public disclosure. b. Employees may circulate SBU material to others, including Foreign Service nationals,to carry out an official U.S. Government function if not otherwise prohibited by law,regulation, or interagency agreement. c. SBU information is not required to be marked, but should carry a distribution restrictionto make the recipient aware of specific controls. To protect SBU information stored orprocessed on automated information systems, the requirements found in 12 FAM 600(Information Security Technology) must be met. 12 FAM 544 SBU HANDLING PROCEDURES: TRANSMISSION, MAILING, SAFEGUARDING/STORAGE, AND DESTRUCTION (TL:DS-47; 06-08-1995) a. Regardless of method, transmission of SBU information should be effected throughmeans that limit the potential for unauthorized public disclosure. Since informationtransmitted over unencrypted electronic links such as telephones may be intercepted byunintended recipients, custodians of SBU information should decide whether specificinformation warrants a higher level of protection accorded by a secure fax, phone, or otherencrypted means of communication. b. SBU information may be sent via the U.S. Postal Service, APO, commercial messenger,or unclassified registered pouch, provided it is packaged in a way that does not discloseits contents or the fact that it is SBU. c. During nonduty hours, SBU information must be secured within a locked office or suite,or secured in a locked container. d. Destroy SBU documents by shredding or burning, or by other methods consistent withlaw or regulation. 12 FAM 545 RESPONSIBILITIES (TL:DS-46; 05-26-1995) Unauthorized disclosure of SBU information may result in criminal and/or civil penalties.Supervisors may take disciplinary action, as appropriate. State offices responsible for theprotection of records are outlined in 5 FAM. See 3 FAM for regulations and process ondisciplinary actions. (12 FAM 550 provisions regarding incidents/violations do not pertainto SBU.) III. Sensitive But Unclassified Information In addition to information that could reasonably be expected to assist in the development or use of weapons of mass destruction, which should beclassified or reclassified as described in Parts I and II above, departments and agencies maintain andcontrol sensitive information related to America's homeland security that might not meet one ormore of the standards for classification set forth in Part 1 of Executive Order 12958. The need toprotect such sensitive information from inappropriate disclosure should be carefully considered, ona case-by-case basis, together with the benefits that result from the open and efficient exchange ofscientific, technical, and like information. All departments and agencies should ensure that in taking necessary and appropriate actions to safeguard sensitive but unclassified information relatedto America's homeland security, they process any Freedom of Information Act request for recordscontaining such information in accordance with the Attorney General's FOIA Memorandum ofOctober 12, 2001, by giving full and careful consideration to all applicable FOIA exemptions. See FOIA Post , "New Attorney General FOIA Memorandum Issued" (posted 10/15/01) (found atwww.usdoj.gov/oip/foiapost/2001foiapost19.htm), which discusses and provides electronic links tofurther guidance on the authority available under Exemption 2 of the FOIA, 5 U.S.C. � 552 (b)(2),for the protection of sensitive critical infrastructure information. In the case of information that isvoluntarily submitted to the Government from the private sector, such information may readily fallwithin the protection of Exemption 4 of the FOIA, 5 U.S.C. � 552 (b)(4). As the accompanying memorandum from the Assistant to the President and Chief of Staff indicates, federal departments and agencies should not hesitateto consult with the Office of Information and Privacy, either with general anticipatory questions oron a case-by-case basis as particular matters arise, regarding any FOIA-related homeland securityissue. Likewise, they should consult with the Information Security Oversight Office on any matterpertaining to the classification, declassification, or reclassification of information regarding thedevelopment or use of weapons of mass destruction, or with the Department of Energy's Office ofSecurity if the information concerns nuclear or radiologicalweapons.

The U.S. Government has always protected scientific and technical information that might compromise national security. Since the 2001 terrorist attacks, controls have been widened onaccess to information and scientific components that could threaten national security. The policychallenge is to balance science and security without compromising national security, scientificprogress, and constitutional and statutory protections. This report summarizes (1) provisions of thePatent Law; Atomic Energy Act; International Traffic in Arms Control regulations; the USAPATRIOT Act, P.L. 107-56 ; the Public Health Security and Bioterrorism Preparedness and ResponseAct of 2002, P.L. 107-188 ; and the Homeland Security Act, P.L. 107-296 , that permit governmentalrestrictions on either privately generated or federally owned scientific and technical information thatcould harm national security; (2) the evolution of federal concepts of "sensitive but unclassified"(SBU) information; (3) controversies about pending Department of Homeland Security guidance onfederal SBU and "Sensitive Homeland Security Information" (SHSI); and (4) policy options. Even before the terrorist attacks of 2001, federal agencies used the label SBU to safeguard from public disclosure information that does not meet standards for classification in Executive Order12958 or National Security Decision Directive 189. New Executive Order 13292 might widen thescope of scientific and technological information to be classified to deter terrorism. SBU has notbeen defined in statutory law. When using the term, some agencies refer to definitions for controlledinformation, such as "sensitive," in the Computer Security Act, and to information exempt fromdisclosure in the Freedom of Information Act (FOIA) and the Privacy Act. The identification ofinformation to be released pursuant to these laws may be discretionary, subject to agencyinterpretation and risk analysis. The White House and the Department of Justice recently widenedthe applicability of SBU. Critics say the lack of a clear SBU definition complicates designing policies to safeguard such information and that, if information needs to be safeguarded, it should be classified. Others say thatwider controls will deny access to information needed for oversight and scientific communication. P.L. 107-296 required the President to issue guidance on safeguarding SBU homeland securityinformation, a function assigned to the Department of Homeland Security Secretary in ExecutiveOrder 13311; action is pending. Issues of possible interest to Congress include designing uniformconcepts and procedures to share and safeguard SBU information; standardizing penalties forunauthorized disclosure; designing an appeals process; assessing the pros and cons of wider SBUcontrols; and evaluating the implications of giving some research agency heads originalclassification authority. On February 20, 2004, DHS published a rule to protect voluntarilysubmitted critical infrastructure information. Some professional groups are starting to limitpublication of some "sensitive" privately controlled scientific and technical information. Theiractions may be guided by federal policy. This report will not be updated.

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The statutory framework for the communications sector largely was enacted prior to the commercial deployment of digital technology. The Telecommunications Act of 1996 (1996 Act), the most recent comprehensive revision of that framework, is virtually silent with respect to Internet Protocol (IP), broadband networks, and online voice, data, and video services. The expert agencies charged with implementing the relevant statutes—the Federal Communications Commission (FCC) and the Copyright Office—have had to determine if and how to apply the law to technologies and circumstances that were not considered by Congress. Frequently, their decisions have led to litigation, requiring the courts to rule with limited guidance from the statutes. This has led to long delays in the rule implementation and increased market uncertainty. These new technologies have driven changes in market structure throughout the communications sector that were not contemplated by the 1996 Act. Technological spillovers have allowed for the convergence of previously service-specific networks, creating new competitive entry opportunities. But they also have created certain incentives for market consolidation. Firms also have used new technologies to attempt to "invent around" statutory obligations or prohibitions, such as retransmission consent and copyright requirements. In addition, firms have developed new technologies that allow consumers to avoid paying for programming or to skip the commercials that accompany video programming, challenging traditional business models. The statutory framework imposes obligations and prohibitions on certain networks and service providers, but also provides privileges and rights. In some cases, entrants employing new technologies are not subject to the obligations and prohibitions imposed on the incumbents they compete against, but also are denied access to privileges and rights that accrue to those incumbents. Members on both sides of the aisle as well as industry stakeholders have suggested that many existing provisions in the Communications Act of 1934, as amended, and in the Copyright Act of 1976, as amended, need to be updated to address current technological and market circumstances. There is no consensus about the changes needed. There is agreement, however, that the statutory framework should foster innovation, investment, and competition both in physical broadband networks and in the applications that ride over those networks. One of the challenges is to determine the appropriate mix of market forces and regulation when the sector is characterized by a small number of vertically integrated network providers that also offer applications in direct competition with the independent applications providers that must use those networks. Any statutory provision intended to create incentives for one group of industry players to innovate and invest runs a risk of creating disincentives for other groups to do likewise. Three broad, interrelated policy issues are likely to be prominent in any policy debate over how to update the statutory framework: how to accommodate technological change that already has taken place and, more dynamically, how to make the framework flexible enough to accommodate future technological change; given that underlying scale economies allow for only a very small number of efficient facilities-based network competitors, how to give those few network providers the incentive to invest and innovate while also constraining their ability to impede downstream competition from independent service providers who must use their networks; and given that spectrum is an essential communications input, how to implement a framework that fosters efficient spectrum use and management. Congress will be addressing these three broad questions during a time of great market uncertainty. Technology-driven market forces are potentially undermining the established business models of many incumbent firms, even as the viability of most new entrants remains uncertain. But the communications sector as a whole is robust and growing, with overall usage and revenues increasing, many incumbents enjoying record revenues and profits, and many new entrants enjoying rapid revenue gains though they may not yet have attained profitability. It is difficult to predict which business models ultimately will succeed, and therefore it is difficult to predict the ultimate impact of proposed statutory changes. While this suggests the need for caution, it should not necessarily be justification for inaction if technology-driven market forces have rendered some existing statutory provisions ineffective or even counterproductive. The communications sector does not look at all as it did when the Telecommunications Act was passed in 1996. Most significantly, consumer behavior in 2013 bears little resemblance to that in 1996. The Centers for Disease Control's National Health Interview Survey found that 38.2% of U.S. households had only wireless telephones during the second half of 2012, and six in 10 adults aged 25-29 lived in households with only wireless telephones. According to eMarketer, which performs data collection and analysis on digital markets, "the average adult will spend over 5 hours per day online, on nonvoice mobile activities or with other digital media this year ... compared to 4 hours and 31 minutes watching television." Thus it is not surprising that Verizon Communications chief financial officer Francis Shammo reportedly has stated that its recent deal with the National Football League for the rights to live-stream football games on 7.5-inch devices or smaller (including smartphones) was "pretty significant for us." Similarly, James Dolan, chief executive officer of Cablevision Systems, a major cable company, has reportedly stated that "Ultimately over the long term I think that the whole video product is eventually going to go over the Internet. I'm not willing to cede that position now, and I've got a lot of customers that buy my video product ... [but] the handwriting is on the wall, particularly when you look at young customers." Three interrelated elements of this digital transition have had substantial impact on U.S. markets and on the efficacy of the existing communications statutory framework. First, digital technologies have led to the "convergence" of networks that previously had provided a particular type of communication, such as voice or video. This has fundamentally changed market structure. As explained in the 2005 Phoenix Center Paper, true convergence (i.e., one that actually affects the underlying market structure) is not the offering of a "bundle" of several products into a single service offering, but is, in fact, a technological spillover that reduces entry costs so that existing firms find it profitable to extend their network into related markets, a decision that would not be profitable without the spillover. As such, "convergence" does not generally mean that busloads of new firms can now enter the market—it means only those firms with assets in a related market that have been affected by the spillover can afford to enter. [Emphasis in original.] Network providers that are able to exploit these technological spillovers can enter new service markets, as with cable operators that have upgraded their coaxial cable networks to offer high speed Internet access and voice services. But providers whose service-specific networks could not be readily modified to exploit spillovers, such as satellite operators unable to offer quality high speed Internet access or voice services, not only have failed to gain new business opportunities but now face competition from network providers that were able to exploit the spillovers. Second, independent efforts by a wide variety of large and small entrepreneurs, using unlicensed as well as licensed spectrum, have yielded a mobile wireless alternative to local wireline broadband networks that is viable for most popular consumer and small business applications (though this new alternative still depends on wireline facilities for much of its backbone and backhaul). This new mobile wireless ecosystem includes (1) cellular broadband wireless networks (sometimes referred to as macro networks) that offer consumers mobile connectivity to the Internet and hence access to a vast array of voice, data, and video services, (2) femtocell and other small cell networks that extend the reach of macro networks, and (3) WiFi networks that sometimes compete with macro networks but more often provide essential offloading and backhaul capabilities that allow macro network providers to relieve traffic pressures and constrain the capital and spectrum requirements of their macro networks. Given the projected rate of growth in mobile data (including video) traffic that will be generated by users of mobile devices such as smartphones and tablets, and the consequent need of macro network providers to offload from their macro networks a substantial portion of that traffic (onto femtocell or WiFi networks that they or other network providers may own), all three technologies—macro networks, small cell networks, and WiFi—are needed for mobile wireless broadband to succeed. The initial research and development efforts relating to the non-macro technologies were not necessarily undertaken with the expectation that there would be synergies with the macro technologies. Today, however, the value of each of these wireless technologies (and of the licensed and unlicensed spectrum on which they ride) is tied to the other. Third, digital technologies have significantly changed the underlying cost structure of a wide range of communications services—voice, data, video, music—that ride over the new wireline and wireless broadband networks, with potentially revolutionary market ramifications. Most digital services are applications that ride on existing wireline or wireless broadband networks; although they directly or indirectly compensate broadband network providers for use of their networks, digital service providers do not face the substantial fixed upfront costs associated with constructing a network. For certain types of content, digital technologies turn products that can be costly to produce and distribute (such as CDs, DVDs, and hard copy newspapers) into formats that can be distributed inexpensively. More generally, digital technologies potentially allow for cost-saving "disintermediation"—the elimination of middle men between the content producer and the final consumer. But the ease associated with digital content distribution also can create costs for content providers, as the proliferation of distribution channels can make it more costly or more difficult for content producers to obtain compensation for use of their content, both because of increased piracy and because the elimination of middle men may be accompanied by the loss of scale economies needed for more efficient marketing and distribution. Technological change has lowered entry costs and thus boosted competition, but it also has created incentives for market consolidation. The technology-driven reduction in content distribution costs has fostered entry into the distribution of all types of content and, as a result, generally has increased the negotiating strength of content owners—or, perhaps more accurately, of owners of "must have" content—relative to distributors. This has created incentives for distributors to merge with content providers, for example, for Comcast to acquire NBC Universal. Where network providers have networks that cannot exploit spillover economies that would allow them to use their existing networks to enter new service markets, these network providers have had the incentive to seek marketing joint ventures with network providers that do offer those services. For example, the major cable operators, whose networks cannot accommodate wireless services, have entered into marketing agreements to sell Verizon Wireless service to their customers. In exchange, Verizon is marketing the cable companies' video services in those markets where it has not deployed its FiOS fiber-to-the-home network and thus cannot offer its own multichannel video service. Similarly, Dish Network, which cannot offer broadband services over its satellite network, in recent months has made (unsuccessful) offers to buy the wireless broadband providers Clearwire, Sprint, and LightSquared. There also are non-technology-driven incentives for consolidation. As broadcast television station groups purchase additional stations, they increase their leverage in retransmission consent and other negotiations. For example, recently proposed and/or consummated acquisitions will expand Sinclair Broadcast Group's reach to an estimated 37.1% of U.S. television households and Nexstar Broadcasting Group's reach to 14%. Similarly, Gannett's proposed acquisition of Belo Corporation's stations will allow it to reach 33% of U.S. television households and the combined Media General/Young Broadcasting will reach 14% of U.S. television households. Tribune Company's proposed purchase of Local TV LLS, which owns 19 stations in 16 markets, for $2.75 billion in cash, would leave Tribune with 42 stations, including 14 in the top 20 markets. Tribune chief executive officer Peter Liguori reportedly has stated he will seek higher retransmission consent fees for its growing number of network affiliated stations. Video distributors, fearful of potentially higher programming costs, have sought to thwart broadcaster consolidation. The American Cable Association (which represents small cable companies), Time Warner Cable, and DirecTV have filed with the FCC a petition to deny the transfer of five stations from Belo to Gannett on the grounds that, through the use of sharing agreements, Gannett would be able to negotiate retransmission consent agreements on behalf of multiple stations within a local market, enabling it to increase retransmission rates and raising the risk of a negotiations impasse leading to a programming blackout. Negotiating leverage is not the only motivation in today's brisk market for television stations, however. Purchasers also have been attracted by low interest rates and the rapid growth in political advertising revenues for stations in swing-states. Also, according to Michael Kupinski, an analyst with Noble Financial Group, "the industry needs to consolidate because you ... need to have scale now to invest in digital media technologies and move into mobile applications ... and also to drive economies through developing your own programming." Broadcaster consolidation may be triggering countervailing consolidation in the video distribution market. The trade press has reported that Liberty Media, which owns 27% of Charter Communications, seeks to have Charter purchase Time Warner Cable and then additional cable systems. SNLFinancial reports that "Time Warner Cable, which reportedly showed little interest in a deal with Charter, is reportedly eyeing mergers with Cablevision Systems Corp., which Charter also is eyeing, and Cox Communications Inc." It also reports that Charter CEO Thomas Rutledge predicted that only "two major players" will eventually emerge in the U.S. cable industry. At the same time, Charlie Ergen of Dish Network has suggested that a merger of Dish and DirecTV, which was rejected by the antitrust authorities in the past, might be possible now. If ownership consolidation by broadcasters triggers countervailing consolidation by video distributors, many programmer-distributor negotiations will feature large companies on both sides of the table, each with some leverage from their scale. This may make it more difficult for either party to impose its will on the other. But a battle between two companies, each with sufficiently deep pockets to be willing and able to withstand an extended blackout—as was the case in the month-long blackout of CBS programming channels on Time Warner Cable systems in August 2013—may injure consumers. There also will be situations in which a large broadcast station group is across the table from a small cable carrier or a large cable or satellite operator is across the table from an independent broadcast television station, with the smaller entity at a negotiating disadvantage. In addition to the programmer-distributor market, there also is a local advertising market. If the broadcast television stations in a local market are part of a large television group, and especially if that group owns more than one station in that market (or has a joint marketing agreement or shared services agreement with another station in that market), local retailers and other local advertisers may find themselves at a disadvantage when attempting to negotiate local advertising rates. The new market opportunities and new market forces generated by technological change have, overall, been a boon to stakeholders in the communications sector, with incumbents as well as new entrants benefiting. At the same time, even for the most successful firms the landscape is potentially risky since underlying costs and consumer demands continue to change. The big picture for communications remains favorable. Segments under direct pressure from new technologies likely will face lower rates of growth, but appear to continue to plan significant capital expenditures. According to a March 2013 FCC document, there has been nearly $250 billion in private capital investment in U.S. wired and wireless broadband networks since 2009. Annual investment in U.S. wireless networks alone was $30 billion in 2012 and is projected to be $35 billion in 2013, and more fiber-optic cable has been laid in the U.S. in each of the past two years than in any year since 2000. But there are some indications that network capital expenditures will fall. AT&T has announced a $2 billion decrease in capital expenditures over the next two years; and SNLFinancial forecasts a long-term decline in cable companies' capital expenditures, from a peak of $13.1 billion in 2012 to $11.4 billion in 2016. This decline may, in part, be the result of consolidation as mergers and joint marketing agreements reduce the number of competitors that must build out national networks. Although the term "apps economy" is widely used, it is difficult to get a handle on aggregate capital spending in the United States by applications providers. The United States enjoys dominance in some markets—according to the FCC, more than 90% of smartphones sold globally in 2012 use operating systems developed by U.S. companies. Also according to the FCC, there was more Internet venture capital investment in the U.S. in 2011 and 2012 than in any year since 2001. Looking only at those large venture capital investments for which there were public announcements, SNLFinancial estimated that such funding for digital-media firms in May 2013 alone was $601.8 million, with the largest investments coming in online advertising ($90.1 million), digital media ($85.2 million), online video ($72.2 million), mobile software/cloud ($55.7 million), and social networking ($53.5 million). Since these estimates only capture very large venture capital investments for which there are public announcements, they fall far short of aggregate investment levels. With respect to potential revenues, perhaps the most important group of applications involves over-the-top (OTT) video—video provided online by means other than a website controlled by the content owner or a cable television or satellite television company. SNLFinancial has begun to construct a database on five types of OTT deployments: OTT aggregators (currently dominated by Netflix, but also including Hulu, Amazon, Apple's iTunes, Redbox, Automated Retail LLC, Verizon's Redbox Instant, Time Warner's Warner Archive, Sony Entertainment Network, and subscription channels on Google's YouTube); game consoles (Nintendo's Wii, Microsoft's Xbox, and Sony's PlayStation 3), which have integrated a lot of video content and offer major aggregator services such as Netflix and Hulu; stand-alone set-top boxes such as Roku units and Apple TV, which also offer aggregator services such as Netflix and Hulu; Internet-connectable television sets, which have become the industry standard, with the manufacturers offering apps and both free and premium programming capabilities; and TV Everywhere, which gives authenticated subscribers to traditional MVPD service access to content on a variety of screens in addition to their television sets. As the OTT segment matures, more data may be collected to help policy makers analyze the impact of alternative public policies on the health and viability of applications markets. Various estimates indicate that the number of online video ads viewed is growing quickly and that media spending on OTT video is surging. SNLFinancial reports that 20.09 billion online video ads were viewed on desktops and laptops in June 2013, a 120.9% increase from January 2013, driven by more online sites monetizing their videos with an increasing number of ads and by the relatively stable pool of viewers watching more videos. BIA/Kelsey projects that local online video will increase fivefold to $5 billion by 2017; similarly, Standard Media Index found that digital media spending grew 27% during the first half of 2013 and Borrell Associates found digital video advertising increased 29% this year, to about $1 billion in revenues and will continue to grow. At the same time, advertising on traditional broadcast and cable channels continued to grow, though at lower rates; according to Standard Media Index, broadcast television advertising spending grew between 5 and 10% and cable television advertising spending grew 4% in the first half of 2013. (Although each of these data collection and analysis organizations uses its own unique data collection methodologies, so it is not appropriate to compare the numbers generated by one organization to those of another organization, they all are reporting similar trends.) There is no consensus on the extent to which households that had been subscribers to a pay cable, satellite, or telephone multi-channel video have "cut the cord" and now rely solely on over-the-air broadcasts and over-the-top video. But such cord-cutting is an identifiable trend. A recent study by GfK reportedly found that 19.3% of television homes (22.4 million) have broadcast-only reception (though they may also get programming online), compared with 17.8% in 2012. Of those 22.4 million households, 5.9% cut the cord in their current home at some point in the past; the remainder never subscribed to an MVPD service while living in their current house. The current statutory framework—which was shaped by negotiations among the many stakeholders present at the time the statutes were being developed—created obligations, prohibitions, privileges, and even rights for those various stakeholders. Industry players have constructed business models based on these. Now, new technologies have spawned entirely new networks, services, and industries that compete with the incumbent stakeholders but do not always easily fit the statutory definitions used to delineate who is subject to/eligible for those obligations, prohibitions, privileges, and rights. As a result, existing statutory provisions—and the regulations constructed by the FCC and Copyright Office to implement the provisions—in some cases may no longer be effectively fostering competition, public safety, and other long-standing policy goals for which they were created. In a technologically dynamic sector, the statutory framework cannot be modified every time there is a significant technological change. The challenge therefore is to create statutory language that is flexible enough to continue to foster articulated public policy objectives in the face of technological change, without artificially favoring either legacy technology or new technology. In industries characterized by networks and services provided over those networks, this tends to raise three related types of policy questions. Given that statutory provisions generally must define the services, networks, or entities to which they apply, and technological change may result in some competing services, networks, or entities falling within those definitions while others do not, how can policy makers minimize artificial competitive advantages or disadvantages, especially those that would discourage innovation or efficiency or otherwise undermine public policy goals? As providers deploy new technologies to migrate from legacy networks that are subject to statutory requirements to new networks that are not explicitly subject to statutory requirements, which of those requirements should be applied to the new networks? As some network providers (typically the largest providers) migrate from legacy time-division multiplexing (TDM) networks to new (IP) networks, but other network providers or end users have not made the investments needed to be able to connect with or otherwise utilize the new networks, (1) what requirements, if any, should be placed on the migrating providers to continue to support their legacy networks, and (2) what time limits should be placed on the other network providers and end users to take the steps needed for them to connect to the new IP networks? An obvious—but by no means simple, appropriate, or even feasible—way to limit distortions created when statutory definitions do not cover newly available technology is to frequently modify definitions and other relevant provisions in existing statutes. But even if it were possible for Congress to constantly monitor technological change and instantly modify statutes, this likely would not be an effective strategy because it often takes some time to identify the market and public policy implications of new technologies. There does come a time, however, when technological change renders statutory provisions ineffective. Existing statutes are silent on digital technology, Internet protocol, broadband networks, and online services, forcing the FCC, Copyright Office, and courts to extrapolate to these new technologies provisions explicitly crafted for legacy technologies. In another report, CRS has explored in detail the policy issues that this has created in the video distribution market. Online video distributors do not meet the statutory definitions of a "multichannel video programming distributor (MVPD)," "cable company," or "satellite carrier," and thus are treated differently than their distribution competitors on a wide range of issues. These include retransmission consent, broadcast retransmission rights, access to a compulsory copyright license, program access rules, program carriage rules, network non-duplication and syndicated exclusivity rules, must-carry obligations, equal employment opportunity rules, closed captioning, and emergency video programming accessibility for persons with hearing and visual disabilities. These differences in rights and obligations are likely to distort, and may undermine, potential competition from over-the-top online video distributors. Table 1 provides a brief summary of the different statutory treatment of competing video programming distributors. Similar analysis can be performed of other technology-specific definitions and provisions in current statute to determine whether they favor some competing services over others. For example, the statutory treatment of copyright for the public performance rights for sound recordings is different—and more favorable—for terrestrial broadcast radio (that is, AM and FM radio stations) than for satellite radio (XM-Sirius) or online radio (for example, Pandora), although all provide competing audio services. In June 2013, Broadcast Music Inc. (BMI), which represents 600,000 songwriters, composers, and music publishers, filed an action asking a federal court to set royalty rates for Internet radio service Pandora after negotiations did not result in an agreement. At about the same time, Pandora announced its purchase of KXMZ-FM, a small terrestrial radio station in Box Elder, SD, in order to qualify to pay lower royalty rates to music publishers. In response, the American Society of Composers, Authors and Publishers (ASCAP) has filed with the FCC a petition to deny the license transfer. In a technologically dynamic environment, there may be opportunities for a firm that is constrained by regulatory restrictions or prohibitions, or by patent or copyright restrictions, to "invent around" the impediment. This might take the form of exploiting a loophole in the regulation. It may allow for greater competition but it also could result in the innovating firm avoiding a regulation intended to foster a public interest objective. For example, the public performance of copyrighted works on broadcast television signals is subject to copyright licensing, but the private performance of such works is not. A cable or satellite operator must obtain a copyright license to retransmit the copyrighted material on broadcast signals to its subscribers, but a consuming household does not have to pay a license fee to capture the same broadcast programming directly over the air with use of a rooftop antenna. Video distributors therefore have the incentive to develop and deploy technologies that mimic the household's rooftop antenna or in some other fashion allow the consuming household to directly capture the broadcast signal. A start-up company, Aereo, now has deployed thousands of mini-antennas, which, though maintained at Aereo's own premises, are assigned to individual subscribers as their personal antennas; these antennas send the broadcast television signal to individual subscribers over the Internet. Aereo claims that it is not a video distributor but rather a technology rental company and that the programs received by its subscribers are private performances and not subject to copyright licensing requirements. The broadcasters claim otherwise and have sued Aereo for copyright infringement and sought a preliminary injunction. On July 11, 2012, a federal district court judge denied the injunction, concluding "that plaintiffs have failed to demonstrate they are likely to succeed in establishing that Aereo's system results in a public performance." That decision was appealed, but first a three-court panel of the Second U.S. Circuit Court of Appeals and then the full court en banc refused to enjoin Aereo from continuing to operate while a lower court decides the case. Aereo therefore has been able to continue to offer its service to residents of New York, Connecticut, and Vermont (the three states within the Second Circuit's jurisdiction) as the copyright infringement case moves forward. Separately and in two different federal district courts (in California and in Washington, DC), broadcasters have sought injunctions against a company using the same technology as Aereo, and in those cases the courts found that the online provider was infringing copyrights and enjoined it from offering service. The judge in the Washington, DC case made the scope of the injunction national, with the exception of the states in the northeastern part of the U.S. covered by the Aereo decision. These cases also are being appealed. It is widely expected that with these inconsistent court rulings appeals will continue, perhaps reaching the Supreme Court. Should the Court decide to resolve the disagreement among the lower courts on the legality of these issues, a potential Supreme Court ruling is unlikely before 2015. In the interim, however, the adverse rulings in the AereoKiller/FilmOnX cases are expected to threaten Aereo's expansion plans. If the broadcasters are unsuccessful on this issue and lose copyright revenues, they are likely to pursue alternate compensation, most likely by seeking to make Aereo and similarly situated video distributors subject to retransmission consent requirements. Currently, however, online video distributors such as Aereo do not meet the definition of an MVPD and therefore are not subject to the statutory retransmission consent requirements, so the broadcasters would have to seek a statutory change. Since the current legal uncertainty is making it more difficult for both programmers and distributors to make business decisions, Congress may choose to address this issue through legislation. In another copyright case involving new technology, the U.S. Court of Appeals for the Ninth Circuit has affirmed the denial of a request by Fox Broadcasting Company, Twentieth Century Fox Film Corp., and Fox Television Holdings, which own the copyrights to television shows that air on the Fox television network, for a preliminary injunction against a Dish Network product, Auto-Hop, that allows subscribers to skip over commercials in the programming they receive. The court found that the plaintiffs "did not establish a likelihood of success on its claim of secondary infringement because, although is established a prima facie case of direct infringement by customers, the television provider showed that it was likely to succeed on its affirmative defense that the customers' copying was a 'fair use.'" The case will proceed, but whatever its outcome Congress may want to review copyright law in light of new technologies being developed by video distributors that make their products more attractive to consumers by giving consumers the ability to skip commercials. The copyright cases mentioned above are symptomatic of a larger challenge: how, in this digital era, to keep the balance in our copyright laws between rewarding creators for their work and fostering the dissemination and innovative use of those works. Article I, Section 8 of the Constitution states that Congress shall have power: "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." It gives Congress the authority to grant copyright holders a limited monopoly over their works in order to foster the public policy goal of promoting innovation. This has two, sometimes complementary, sometimes conflicting, components—protecting copyright holders' intellectual property rights while promoting the dissemination of the knowledge, information, and other value in the copyrighted content. In the digital age, it is very cheap and easy to copy and distribute works, so copyright laws must set up a framework for protecting the intellectual property rights of the copyright holders. At the same time, digital technology provides unique opportunities for unleashing the value in existing works that may be denied if the creator of the work is allowed to employ exclusive rights to curtail innovative uses. This argues, at the least, for laws that clearly spell out what is legal and what is illegal use of copyrighted materials so potential innovators are not unnecessarily discouraged by penalties for infringement that, in their view, does not cause substantial economic harm to copyright holders. The Department of Commerce Internet Policy Task Force has released a report, Copyright Policy, Creativity, and Innovation in the Digital Economy, which lists a number of policy issues that the Obama Administration seeks to address. The report tends to focus more on protecting copyright holders' intellectual property than on removing disincentives for third party use of copyrighted materials, but it does demonstrate the strain between those two objectives. Some of the issues identified in the report, which Congress may want to investigate, include the following: A proposal supported by the Administration to extend the public performance right for sound recordings to cover broadcasting (as discussed earlier in this report). Assessing the appropriateness of different rate-setting standards for the public performance of sound recordings by different types of digital music services (as discussed earlier in this report). A proposal supported by the Administration to make willful violations of the public performance right—such as streaming copyrighted materials without a license—a felony, rather than a misdemeanor. Determining whether legislative adjustments can help modernize the existing mechanical license by converting it into a blanket license, permitting a single license for a complete repertoire. A proposal supported by the Administration to ensure that consumers have the ability to unlock their cell phones, subject to applicable service agreements. A review of the legal framework for the creation of remixes, which some observers claim is being unacceptably impeded by legal uncertainty. Reviewing the relevance and scope of the "first-sale doctrine" in the digital environment. A copyright owner has an exclusive distribut ion right and also an exclusive reproduction right, which involves making copies. The first-sale doctrine creates a basic exception to the distribution right; once the work is lawfully sold or transferred, the copyright owner's interest in the material object in which the copyrighted work is embodied (a book or a CD) is exhausted; the owner of that material object can thereafter dispose of the object as she sees fit (such as giving it away to a friend or reselling it to a used book or record store). But unlike a tangible transfer, a digital transfer between two end users results in a reproduction of the work through the electronic transmission of a new copy of the work to its recipient, and the reproduction right is not subject to the first-sale doctrine limitation, so such transfers are a copyright infringement. Reviewing the application of statutory damages in the context of individual file-sharers and secondary liability for large-scale online infringement. The particular concern is that while statutory damages are necessary for online copyright enforcement, in some cases they may be set at an unreasonably high level. The appropriate role for the government, if any, to help the private sector improve the online licensing environment. Derek Khanna raises several additional copyright issues that may affect innovation and therefore may be of interest to Congress. The original copyright term was 14 years, plus a 14 year renewal if the author were still alive. Over time it has been extended and now the term is the lifetime of the author plus 70 years, and for corporate authors 120 years after creation or 95 years after publication. Khanna suggests that these time periods may be inconsistent with the constitutional language restricting exclusive rights to "limited times." He claims that these lengthy terms benefit content producers, but harm other, added-value services that have the potential to develop in an interactive Internet environment. For example, with shorter copyright terms, entrepreneurs seeking niche audiences would have greater access to books to which they could add pop-up text capability and to videos to which they could add pop-up trivia and commentary add-ons. He therefore proposes significantly shortening the term. Khanna also argues for an expansion of what is legally fair use. In addition, to protect against the abuse of false copyright infringement claims, he proposes more stringent requirements for requests that content be removed from websites (takedown requests) and penalties for fake takedown requests, which have a chilling effect on legitimate speech. The current federal statutory framework for communications contains many network interconnection, network reliability, emergency service, consumer protection, universal service, and competition provisions intended to foster specific public policy objectives. But most of those provisions only apply to a subset of communications networks that are "telecommunications carriers," that is providers of telecommunications services. To foster the development of advanced communications services, Congress created a category of services, called "information services," that it distinguished from "telecommunications services" and freed from some of the regulations imposed on telecommunications services in Title II of the Communications Act. Telecommunications services involve "the transmission of information of the user's choosing, without change in the form or content of the information as sent and received ." In contrast, information services are defined as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." In 2002, the FCC classified cable modem Internet access service as an information service with a telecommunications component, rather than a telecommunications service, and thus outside the purview of Title II. In 2005, the Supreme Court upheld this determination. Later that year, the FCC reached a similar determination with respect to the DSL Internet access service offered by telephone companies. As a result, wireline broadband Internet access service, whether provided by a cable company or by a telephone company, is not treated as a telecommunications service and services offered as broadband applications, such as Voice over Internet Protocol, are not telecommunications services. But this creates some statutory and regulatory asymmetry because IP networks offer voice services in direct competition with the voice services provided by telecommunications carriers; the latter may be subject to regulations that do not apply to the former. Moreover, among telecommunications carriers there is a statutory hierarchy, with some carriers subject to greater regulation than others. There are a number of statutory provisions that apply to all telecommunications carriers. Additional provisions apply to "local exchange carriers" (LECs), basically those telecommunications carriers that offer local telephone service. And still more provisions apply to "incumbent local exchange carriers" (ILECs), those local exchange carriers that offered service as government-sanctioned monopolies before the 1996 Act opened up the market to competitive entry. In addition, many state regulatory agencies require ILECs (and sometimes all LECs) to be "carriers of last resort" and to serve all requesting customers in their service areas upon demand. In the on-going broadband transition, many network providers are migrating from legacy circuit-switched, largely copper networks that use time division multiplexing technology—the long-standing public switched telephone network (PSTN) that offers plain old telephone service (POTS)—to packet-switched, fiber and wireless-based networks that offer multiple video and data as well as voice services. These new networks are not subject to many of the requirements imposed on telecommunications carriers, LECs, and ILECs. But in some cases the network providers, which have invested billions of dollars to deploy these new networks, are required by federal or state law to maintain their legacy networks and to continue to offer legacy voice services. AT&T has announced its intention to upgrade all of its wireline and wireless facilities to IP, which may result in it no longer serving about one percent of its legacy customers. It has asked the FCC to open a proceeding to address transition issues, including legacy regulations to which it is subject, but to which some of its competitors are not subject. The FCC has opened a proceeding and also has created an internal Technology Transitions Policy Task Force. But the FCC will deliberate in the absence of congressional guidance about which of the statutory requirements on legacy networks should apply to new networks, how they should be applied, and which legacy requirements should be retained during the transition. Some issues of potential interest to Congress include the following: VoIP Interconnection: Although the FCC in May 2013 reiterated that it "expect[s] all carriers to negotiate in good faith in response to requests for IP-to-IP interconnection for the exchange of voice traffic" and that "[t]he duty to negotiate in good faith has been a longstanding element of interconnection requirements under the Communications Act and does not depend upon the interconnection, whether TDM, IP, or otherwise," IP network providers are not considered telecommunications carriers and therefore are not subject to the interconnection requirements in Section 201 of the 1996 Act. Rather, IP networks rely on negotiated "peering agreements" for the exchange of traffic. But there have been instances of "peering disputes" in which networks refuse to exchange traffic because they cannot agree on terms. Although such disputes—and the resultant interruption of traffic—are rare, Congress may well be concerned if peering disputes between IP network providers result in captive customers losing access to telephone service. Interconnection agreements cover a multitude of parameters, including the number and physical points of interconnection, pricing (intercarrier compensation), transit, numbering and number portability, service levels, quality of service, and other terms and conditions. Many of these parameters may be best left to negotiations among private parties, and others may be best left to the FCC's expertise, but Congress may want to provide guidance and a mechanism for protecting residential and business customers if disputes arise between network providers. Public Safety/NG911: Successful transition from the legacy enhanced 911 (E911) architecture to the IP-based NG911 model will require the industry to resolve challenging technical issues relating to conveying accurate caller location data to the 911 call center when calls are made using nomadic, mobile, and over-the-top VoIP applications. The FCC plans to have trials to determine, among other things, how VoIP and other IP-based networks can interconnect with emergency service IP networks (ESInets). Although the industry and the FCC will take the lead in this transition, Congress may want to review statutory requirements to make sure they are not impeding the E911 to NG911 transition. Copper Wireline to Fiber or Wireless: Some ILECs are replacing existing customer voice and broadband services delivered over legacy circuit switched wireline networks with similar product offerings delivered over fiber and/or wireless IP networks. The FCC intends to seek information on how this technology migration would affect capabilities such as access to 911 and emergency services, the ability to send and receive a fax, credit card transactions for small businesses, alarm/security systems, and the ability for individuals with disabilities to continue to use assistive devices. This is important because, despite the fact that both wireline and wireless IP networks have many capabilities that the legacy copper PSTN lacks, there also are some uniquely positive features of the PSTN that wireless or fiber networks lack. For example, the legacy copper PSTN network has its own power source and continues to operate even when the electric service to a premise is not working; by comparison, fiber networks depend on the electric service at the premise. The copper PSTN has been engineered and built to 99.999% reliability, which is significantly higher than the reliability of IP and wireless networks. Also, the copper PSTN has been adapted to be able to accommodate the special needs of hearing-impaired and vision-impaired customers. Wireless networks may be less able to accommodate these needs. Congress may want to review the many requirements it has imposed on telecommunications carriers to determine which of these, if any, should be retained for IP networks. Legacy M onopoly- Era R egulatory O bligations: There are a number of federal and state statutory requirements, first enacted during the long period of government-sanctioned monopoly provision of telephone service, that are intended to protect customers from discontinued service or unanticipated network changes. For example, Section 214(a) of the Communications Act prohibits common carriers from discontinuing, reducing, or impairing service to a community, or part of a community, until the FCC certifies that the public interest will not be adversely affected in the present or future. Many states impose "carrier of last resort" service obligations that require ILECs to serve customers in their service areas on demand, regardless of the cost of offering such service. The FCC's rules for "eligible telecommunications carriers" (ETCs)—those providers eligible to receive funds from the high-cost universal service fund—also require network providers to offer certain services upon demand. These requirements, singly or in combination, may have the effect of forcing incumbent carriers to maintain their legacy TDM-based networks and services even as they are attempting to migrate to IP-based networks and services. Any diversion of capital expenditures to the upkeep of legacy networks could slow migration to the innovative new architecture. At the same time, Congress may be concerned that even if the vast majority of customers benefits, some may lose service in the transition. To the extent these issues stem from state laws, Congress might want to delineate what role, if any, states should continue to have as technology renders all services interstate in character. Differing R ates of IP A doption in a Network E nvironment: Some network providers are migrating to IP networks more quickly than others, and some end-users are migrating to IP-based customer premises equipment more quickly than others. Though the transition to an IP world is inevitable, late adopters will prefer to control the timing of their change-over. In some cases, they may even have a market incentive to delay the changeover, for example if that would allow a carrier to continue to collect above cost intercarrier compensation payments that it would not be able to command if interconnection rates were set in peering negotiations. Similarly, consumers who seek only the most basic voice service might resist purchasing IP-capable customer premises equipment such as a smartphone. If legacy networks or legacy customer premise equipment are incompatible with new IP networks, and if network providers are required to retain legacy networks and services in order to serve the slow-adopters, the IP transition will be delayed. Congress may want to provide the FCC with guidance on how to weigh the tradeoff between rapid IP deployment and protection of end users who may not wish to adopt new technologies. From its inception, the statutory framework for the U.S. communications sector has explicitly addressed issues of market structure for two reasons. First, communications networks are characterized by significant economies of scale that limit the number of efficient-sized providers in the market. Second, the capacity of the spectrum available for use at any point in time is constrained by existing technology and lack of spectrum can impede competition by inhibiting market entry or the offering of new services. A comprehensive statutory framework for U.S. communications policy, covering telecommunications and broadcasting, was first created in the Communications Act of 1934. That act created the FCC to implement and administer the economic regulation of the interstate activities of government-sanctioned telephone monopolies and the licensing of spectrum used for broadcast and other purposes. It explicitly left most regulation of intrastate telephone services to the states. In the 1970s and 1980s, a combination of technological change, court decisions, and changes in U.S. policy permitted competitive entry into some telecommunications and broadcast markets. In 1996, Congress passed the Telecommunications Act (1996 Act), which sought to open up markets to competition by removing unnecessary regulatory barriers to entry. The 1996 Act attempted to foster competition among providers that used similar underlying network technologies (for example, circuit-switched telephone networks) to offer a single type of service (for example, voice). It created one regulatory regime for carriers providing voice telephone service and another regime for cable television providers, and removed barriers to competitive provision of voice or cable (video) services. Within each of these communications modes it attempted to foster "intramodal competition." For example, the ILECs, which until passage of the 1996 Act enjoyed government-sanctioned monopolies and a regulated rate of return, were required to make the individual, unbundled elements of their networks available to new entrants at cost-based rates. It was assumed that the entrants would slowly build out their networks, and reduce their dependence on ILEC network elements, as they built up market share and could begin to exploit economies of scale. But intramodal competition has proved limited. Although a number of new entrants were able to take advantage of the unbundling requirements to serve large business customers across multiple urban locations—and to build out their own telecommunications networks in geographic areas with large business concentrations—these "competitive local exchange carriers" (CLECs) generally were not able to successfully enter the residential voice market. Technological advances not envisioned by, or addressed in, the 1996 Act, however, created spillovers that began to allow for inter modal competition. Cable operators upgraded their networks to offer voice and Internet access as well as video services. Responding to the cable operators, telephone companies have now upgraded their wireline networks to offer video and Internet access services. Increasingly, both the legacy telephone companies and the legacy cable networks are migrating their traffic onto IP networks whose offerings represent information services that to varying degree are not subject to the legacy voice or video statutory provisions. Although both the cable and telephone companies have invested heavily in their new networks, it appears that the migration has been relatively easier and less expensive for the cable companies to accomplish. The relatively inexpensive upgrade available to the telephone company networks—deploying digital subscriber line (DSL) technology on existing copper telephone lines—could not provide bandwidth and speeds equivalent to those provided over cable companies' upgraded hybrid fiber-coaxial cable networks with data over cable service interface specification (DOCSIS) 3.0 technologies. Instead, landline telephone companies have had to deploy relatively expensive optical fiber that cannot be economically justified except in areas that exceed some threshold level of population density. AT&T has deployed optical fiber to neighborhood nodes and then used legacy copper lines into customer premises. Verizon has deployed optical fiber all the way into the customer premise, and although this has yielded a higher bandwidth service it has cost a lot more to deploy. Wall Street has penalized Verizon for the higher upfront costs. AT&T has been able to extend its U-verse service into a larger portion of its service area than Verizon has been able to deploy its FiOS service, but neither has been able to provide high bandwidth landline broadband service universally throughout its service area. Moreover, by choosing an all-Internet Protocol technology platform with a fiber to the node network architecture, AT&T has had challenges meeting long-standing regulatory requirements, such as making public, educational, and governmental (PEG) access cable television channels available to subscribers in the same fashion as it makes commercial programming available, including making its PEG platform fully accessible to hearing-impaired and visually impaired viewers. Those same telephone companies, however, have been the leaders in developing wireless broadband networks. Although these wireless networks do not have the same bandwidth capability as optical fiber networks and upgraded coaxial cable networks, they do offer sufficient bandwidth for many applications, and especially for many consumer and small business users. They also provide complementary mobile services for enterprise customers and other heavy-bandwidth users whose bandwidth needs cannot be met by wireless alone. Although the telephone companies continue to invest in their wireline facilities, they have responded to an apparent shift in demand from fixed to mobile services by shifting their capital investments from wireline to wireless. For example, in September 2012 Verizon announced that it would not expand its FiOS fiber-optic network beyond its existing contractual franchise obligations, and would redirect investment toward its wireless network. Yet Tony Melone, Verizon's chief technical officer, explicitly included the FiOS network among the four platforms the company plans to use in the future, alongside its 4G LTE wireless network, a global IP backbone, and data centers using cloud infrastructure. On one hand, Verizon appears to be committed to taking full advantage of FiOS capabilities in the locations where it is deployed; on the other hand, the high cost of FiOS deployment appears to be constraining the footprint on which such deployment will take place. In December 2011, Verizon announced it was purchasing from four major cable operators—Comcast, Time Warner Cable, Bright House Networks, and Cox Communications—the advanced wireless service (AWS) spectrum that those companies had first purchased in a federal auction in 2006. At the same time, Verizon announced joint marketing agreements with these four companies, under which Verizon would market the cable operators' video services in those markets in which Verizon did not offer its own FiOS video service and the cable companies would market Verizon Wireless service. These agreements confirmed that the cable companies had decided not to enter the wireless service market and that Verizon was not planning to expand the footprint of its FiOS offering. The spectrum transfers and joint marketing agreements were approved by the Antitrust Division of the Department of Justice and by the FCC in August 2012 subject to several modifications and conditions. In those markets in which the purchase would have resulted in Verizon Wireless holding more than certain threshold levels of spectrum, Verizon Wireless sold or swapped spectrum with T-Mobile. Similarly, the joint marketing agreement was modified to allow the cable companies to market Verizon Wireless services under their own brand names, such as Comcast Wireless, immediately (rather than having to postpone such marketing for five years, as required under the original agreement). The policy implications of these transactions, and thus the appropriate statutory framework for this new market structure, may depend on the extent to which consumers view wireline and wireless services as substitutes or complements. The decision of the cable companies to forgo entry into the wireless market, Verizon's acquisition of an important block of wireless broadband spectrum, and the joint marketing agreements between Verizon and the cable companies may reduce the amount of spectrum available to independent wireless carriers and limit Verizon's participation in the video market to those geographic markets in which it already offers FiOS service. The Verizon/cable company transactions highlight the possibility that the enter/don't enter/exit decisions of incumbent network providers can markedly change market forces and incentives. Congress may want to consider whether structural constraints (such as spectrum caps) and/or behavioral constraints (such as interoperability and/or network neutrality requirements) are needed to limit the market power of the vertically integrated network providers. The 2005 Phoenix Center Convergence Paper describes possible policy-maker concerns when there is convergence. In a section entitled "What Entry Says About Collusion," it first states, "When faced with a concentrated market, probably the first concern that comes to the mind of a policymaker is the threat of collusion." It then explains that "the collusive outcome is to ignore convergence and not enter. The converse is also true— if we observe reciprocal entry, then that entry is solid evidence that collusion is not occurring. " (Emphasis in original.) Noting cable operator entry into the voice market and telephone company entry into the video market, it concludes that "this simple observation alone is strong evidence that collusion is not present ... and policymakers should not focus on the possibility of collusion, at least in those markets where reciprocal entry is observed." But in a footnote it adds the caveat, "Once market shares stabilize, probably five to seven years out, then policymakers may wish to revisit the question of collusion." Although the Phoenix Center scenario focuses solely on wireline convergence, and thus does not take into account the development of wireless networks as partial complements to and substitutes for wireline networks, its analysis suggests that policy-makers should be mindful of the enter/don't enter/exit decisions of incumbent network providers. Given the simultaneous decisions of the cable operators not to enter the wireless broadband market and of Verizon to limit its geographic reach in the wireline broadband market, Congress may want to be sure that its statutory framework is able to address competition and other public policy issues in an environment in which the enter/don't enter/exit decisions of one or two providers can markedly change market forces and incentives. There are four general approaches that a statutory framework could take (or some combination of these): structural regulation, such as caps on the amount of spectrum any network provider may own or control in a geographic market; ex ante non-discrimination rules, such as explicitly stated network neutrality requirements; ex post adjudication of abuses of market power, as they arise, on a case-by-case basis; and reliance on antitrust (and unfair methods of competition) law and self-regulation. Ex ante rules and ex post adjudication both typically focus on anti-competitive discrimination that harms consumers, but in distinct ways. Ex ante rules create affirmative legal duties that are intended to remedy either past discrimination or the likelihood of future discrimination, prohibiting certain activities before the fact. By contrast, ex post adjudication typically seeks to punish identified episodes of discrimination on a case-by-case basis, after the fact. Ex ante schemes impose more up-front costs, by restricting certain behaviors, some of which might have proven beneficial to consumers. But, depending on the cost to consumers (in terms of denied access to potentially highly valued applications) of allowing discrimination to occur and then adjudicating after the fact, the ultimate cost of ex ante rules might prove lower than that of ex post adjudication. The dominant cost characteristic of the communications sector is the substantial fixed costs, and associated scale and scope economies, of large networks. Both wireline and wireless broadband networks are subject to economies of scale that limit the number of efficient competitors that can participate in the market. Thus, historically the statutory framework for communications has focused on market structure. As discussed earlier, in recent years the FCC has taken steps to reduce structural regulation by distinguishing between telecommunications services and information services and removing information services and networks from Title II regulation. But given recent enter/don't enter/exit decisions by major network providers, there has been increased interest in structural regulation. There has been concern about potential choke points that could limit the number of viable competitors. This is a particular concern in the wireless broadband market, as only limited amounts of suitable spectrum are available in major metropolitan areas. As wireless carriers migrate from 2G to 3G and 4G networks, they cannot abandon their customers who still have older-technology phones, and thus they must allocate some of their spectrum to each generation of technology. As a result, the major wireless carriers have sought to amass large amounts of spectrum in major markets. Some observers have alleged, however, that the two dominant carriers—AT&T and Verizon Wireless—may have the incentive to strategically hoard spectrum, depriving smaller carriers of access to the low frequency spectrum that has superior propagation characteristics. These observers generally argue that spectrum caps or spectrum screens are needed both for the auctioning of newly available spectrum and for reviewing wireless spectrum license transactions. The FCC has employed such structural rules since 1994. (The policy debate on spectrum caps and screens is discussed later in this report, in the section on spectrum policy.) The basic principle behind a network non-discrimination regime is to give users the right, by rule, to use non-harmful attachments or applications, and to give equipment and applications innovators the corresponding right, also by rule, to supply them. It therefore applies both to end users and to independent applications providers. Proponents claim that such a regime avoids some of the costs of structural regulation by allowing for efficient vertical integration so long as the rights granted to the users of the network are not compromised. In December 2010, the FCC adopted its Open Internet Order, establishing ex ante rules to govern the network management practices of broadband Internet access providers. There are three primary components: transparency: fixed and mobile broadband Internet service providers are required to publicly disclose accurate information regarding network management practices, performance, and commercial terms to consumers and to content, application, service, and device providers; no blocking: fixed and mobile broadband Internet service providers are both subject, to varying degrees, to no blocking requirements. Fixed providers are prohibited from blocking lawful content, applications, services, or non-harmful devices, subject to reasonable network management. Mobile providers are prohibited from blocking consumers from accessing lawful websites, subject to reasonable network management, nor can they block applications that compete with the provider's voice or video telephony services, subject to reasonable network management; and no unreasonable discrimination: fixed (but not mobile) broadband Internet service providers may not unreasonably discriminate in transmitting lawful network traffic over a consumer's broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination. Multiple appeals of the order, challenging the FCC's authority to impose these rules, have been filed and subsequently consolidated for review in the U.S. Court of Appeals, D.C. Circuit, with Verizon Communications the remaining challenger seeking review. Oral arguments were held in September 2013. Typically, proponents of non-discrimination rules are proponents of network neutrality—not favoring one application (or applications provider) over another. They argue that network neutrality, as embodied in ex ante non-discrimination rules, fosters the goal of stimulating investment and innovation in broadband technology and services in two ways: (1) by eliminating the risk of future discrimination, thereby providing independent applications providers greater incentives to invest in broadband applications, and (2) by facilitating fair competition among applications, ensuring the survival of the fittest. Proponents claim that a network that is as neutral as possible, with such neutrality ensured by explicit non-discrimination rules, provides entrepreneurs predictability in that all applications are treated alike. This, they argue, will foster investment in broadband applications by eliminating the unpredictability created by potential future restrictions on network usage. Neutrality provides applications designers and consumers alike with a baseline on which they can rely. Usage restrictions, they claim, particularly harm those small and startup developers that are most likely to push the envelope of what is possible using the Internet's architecture. Proponents also claim that the most promising path of development will be difficult to predict in advance; neutral network development is likely to yield better results than planned innovation directed by a single prospect holder. Any single entity will suffer from cognitive biases (such as a predisposition to continue with current ways of doing business). These proponents conclude that restrictions on usage, however well-intended, tend to favor certain applications over others. A regulatory framework that requires network providers to justify deviations from neutrality would prevent both unthinking and ill-intentioned distortions of the market for new applications. The proponents of non-discrimination rules argue that the restrictions not only directly harm consumers and applications providers today, but also have a chilling effect on innovators and venture capitalists considering future applications development and deployment. They argue that the possibility of discrimination in the future dampens the incentives to invest today. Critics of e x ante non-discrimination rules claim that such rules would intrude too much into the business plans of broadband network providers. These critics argue that non-discrimination rules impinge on the ability of broadcast network providers to fully exploit efficiencies from vertical integration or to use price discrimination or other pricing strategies to maximize return on investment. Another criticism of ex ante non-discrimination rules is that they inherently lead to delays, litigation, and other regulatory costs, as parties fight over interpretation of the rules. The complexity of communications networks, it is argued, renders it difficult, if not impossible, to construct clear ex ante rules. These critics point to the industry experience implementing the 1996 Act. The other major criticism is that ex ante rules of any sort, and especially those relating to network access, will artificially aid an independent applications provider in its contractual negotiations with a broadband network provider by allowing the applications provider to threaten to bring a regulatory complaint and attendant costs if the network provider does not accept its terms. According to this argument, the network provider often might be forced to accept unfavorable or inefficient access terms to avoid the threat of litigation. An alternative approach would adjudicate alleged abuses of market power ex post , as they arise, on a case-by-case basis. For example, the Progress and Freedom Foundation has proposed an ex post approach modeled after the Federal Trade Commission Act which would give the FCC the authority to adjudicate allegations of "unfair methods of competition ... and unfair or deceptive acts in or affecting electronic communications networks and electronic communications services." These unfair practices could include interconnection-related practices (such as the refusal to interconnect or unfair terms, conditions, and rates of interconnection): if such practices were shown to pose a substantial and non-transitory risk to consumer welfare; and if the Commission determined marketplace competition were not sufficient to protect consumer welfare; and if the Commission considered whether requiring interconnection would affect adversely investment in facilities and innovation in services. Under the proposal, the Commission could require the guilty party to pay damages to the harmed party if any violation were found. Proponents of ex post adjudication claim that the potential harm to consumers from bad regulation far exceeds the potential harm from badly functioning markets and therefore the burden of proof must fall on the regulator for imposing any regulation. They claim that even inefficient market outcomes are likely to be less problematic than regulatory solution because (1) markets are effective at responding to and overcoming their own inefficiencies, (2) government may not have the incentive to improve matters, and (3) policy makers are likely to lack the information needed to make efficient decisions. Proponents of ex post adjudication argue that a new statute is needed in order to replace the current model of regulation based on vague standards such as the "public interest" and "just and reasonable" with the well-established "unfair competition" standard in the Federal Trade Commission Act. E x post adjudication has been subject to several criticisms. First, it is based on the assumption that consumer welfare loss from bad regulation is always far greater than consumer welfare loss from badly performing markets, and that it is therefore best to err on the side of under-regulating. This may or may not be true in the case of markets characterized by networks where the platform provider and applications providers must cooperate to maximize consumer welfare. There is a large and growing academic law and economics literature on these unique markets; there is no consensus in the literature, or from empirical evidence, that in these markets there is less risk from erring on the side of under-regulation than on the side of over-regulation. Nor is there theoretical or empirical proof that the potential harm to consumers from distortions created by ex ante rules are greater than those created by ex post adjudication. It is possible that a narrowly crafted ex ante non-discrimination rule could create less distortion than ex post adjudications that will inherently result in some, and potentially many, innovative independent applications providers being driven from the market, thereby denying customers the benefit of their services. More generally, critics claim that ex post regulation distorts the business plans, and undermines the negotiating positions, of independent applications providers by placing the burden of proof for network access on them if they seek to develop and introduce an application that may not fit into the business plan of the network provider. According to this argument, the independent applications provider might be forced to modify its planned application or accept unfavorable or inefficient access terms to avoid the threat of being denied access to the broadband network. Some critics also are concerned that replacing the public interest standard with what is basically an antitrust standard fails to take into account non-economic objectives of U.S. communications policy, such as public safety, consumer protection, access for hearing- and visually impaired individuals, localism, and diversity of voices. The broadband network providers have argued that they should not be subject to access regulation because they face strong market incentives not to restrict the access of independent applications providers to their networks. They cite the existence of indirect network efficiencies, which reward network providers for keeping their networks open, and the availability to most Americans of at least two broadband networks. They argue that any access regulation would cause harm, by curtailing their ability to vertically integrate to exploit efficiencies such as ensuring quality of service levels needed for video and voice services. They argue that where they have placed usage restrictions on customers those restrictions were needed to ensure quality of service and other bandwidth management objectives and to make it feasible to undertake their huge infrastructure investments. They also claim that they remain subject to the antitrust laws, which would constrain them from undertaking any anticompetitive activities that are harmful to consumers. Critics of reliance on antitrust enforcement argue that public policy objectives in the communications sector extend far beyond the market competition issues addressed by antitrust law, to include public safety, consumer protection, access for hearing- and visually impaired individuals, localism, diversity of voices, etc. There is a Supreme Court decision that could affect the efficacy of an antitrust approach to regulation. The 1996 Telecommunications Act includes an "antitrust savings clause" stating that neither the act nor any amendments made by it "shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws." An antitrust suit was brought against Verizon, an incumbent telephone company that had been disciplined by both the FCC and the New York Public Service Commission (PSC) for breaching its duty under the 1996 Act to adequately share its network with competitive providers. The plaintiff alleged that such breaches represented illegal exclusionary and anticompetitive behavior under Section 2 of the Sherman Act. In its 2004 Trinko decision, the Supreme Court ruled that the breached FCC and PSC rules affirmatively required Verizon to aid its competitors but that failing to meet those requirements was not a sufficient basis for finding a violation of antitrust law. The Court found that "the act does not create new claims that go beyond the existing antitrust standards." Violations of the obligations under communications law cannot be enforced via the antitrust laws. In the case, three justices joined the concurring opinion that argued that Trinko, the plaintiff, did not have standing. The majority opinion decided the case on the merits, and did not address the question of whether the plaintiff had proper standing. The concurring opinion raises important questions as whether Trinko has the proper standing to bring the case. That opinion did not say that no one had standing to bring the case, but rather that AT&T, Trinko's service provider, would have been the proper plaintiff (since it was injured by Verizon's failure to provide it access), rather than Trinko, AT&T's customer. This means it is likely possible to bring a private antitrust suit against a regulated telecommunications company, but it may not be possible for consumers to bring suit. Congressional reaction to the Trinko decision was mixed. Then-chairman of the House Judiciary Committee, Representative Sensenbrenner, stated concern that the decision not be "perceived as giving a green light to all manner of anticompetitive behavior by the Bells.... The Committee on the Judiciary ... will not hesitate to develop legislative responses to competitive problems that may arise as a result of this decision." Then-ranking minority member of the House Judiciary Committee Conyers called for legislation to address the "Supreme Court's horrible blunder." Representatives Sensenbrenner and Conyers introduced a bill in May 2004 that would have added a section to the Clayton Act to make unlawful actions such as those that had been taken by Verizon, but the bill did not move forward. At the same time, then-chairman of the House Energy and Commerce Committee Tauzin expressed his approval that the Supreme Court had "decisively reiterated ... that the regulation of the telecommunications industry should be the purview of the FCC and the state [public utility commissions], rather than judges all across the country." It may be that, when Congress inserted the "antitrust savings" clause in the 1996 Act, many Members believed that the clause was preserving an unlimited private right of action on the part of other-than-directly affected parties to sue under the antitrust laws. But, as this case indicates, the clause may be of little effect in instances such as this in which it is found that traditional antitrust principles and standards are not implicated. These concerns might be moot, however. Under current FCC and court interpretations of law, IP network providers and providers of information services are not subject to the provisions in Title II of the Communications Act that were intended to jump-start competition, but rather to the much more limited requirements in Title I. Congress, however, may want to clarify that for those network and service providers that are not subject to the provisions in Title II that require local exchange carriers to affirmatively aid new entrants, the Trinko decision is not relevant. Two elements of the current regulatory framework—the retransmission consent/must carry requirements for retransmission of broadcast signals by multi-channel video programming distributors (MVPDs) and the broadcast media ownership rules—were constructed to address specific market structure concerns. The Cable Television Consumer Protection and Competition Act of 1992 (1992 Cable Act, P.L. 102-385 ) established rules that govern the carriage (retransmission) of television signals by cable operators. At that time, before cable faced competition from satellite television or from the video services of telephone companies, Congress was concerned that cable companies might refuse to carry the signals of local broadcast stations or might refuse to compensate local stations for the carriage of their signals. Those outcomes would have harmed the long-standing public policy objective of localism—fostering programming of particular interest and importance to the local area. Congress therefore created the retransmission consent/must-carry rules under which every three years each local commercial broadcast television station must choose between the following: retransmission consent— negotiating a retransmission consent agreement with each cable system operating in its area, such that either the broadcaster is compensated by the cable system for the right to retransmit the broadcast signal or the cable system may not retransmit the broadcast signal; and must-carry —requiring each cable system operating in its service area to carry the signal, but receiving no compensation for such carriage. With this mandatory election, broadcasters with popular programming that are confident the local cable systems will want to carry that programming can make the retransmission consent election and be assured compensation for such carriage, and broadcasters with less popular programming that the local cable systems might otherwise not choose to carry can make the must-carry election and be assured that their signals will be carried by all local cable systems. As satellite and telephone providers have entered the video distribution market and been classified as MVPDs, they too have become subject to the same or analogous retransmission consent/must-carry requirements. The retransmission consent/must-carry rules were intended to help mitigate cable company negotiating leverage vis-à-vis local broadcast stations. The regulatory framework also includes broadcast media ownership rules (some explicitly in statute, some implemented by the FCC but later referred to in statute) intended to place limits on broadcasting consolidation that could impair the three long-standing policy objectives of competition, localism, and diversity of voices. There are separate rules addressing the number of television stations that a single entity may own or control in a local market, the number of radio stations that a single entity may own or control in a local market, ownership or control of radio and television stations (radio/television cross-ownership) in a local market, ownership or control of a newspaper and a broadcast station (newspaper/broadcast cross-ownership) in a local market, the total television reach that a single entity may have nationwide (in terms of the percentage of all U.S. television households served by the stations owned or controlled by that entity), and the number of national broadcast networks that a single entity may own or control. In addition, there are FCC rules relating to what kind of activities and decision making one station in a market may undertake on behalf of a second station in the same market without control of the second station being attributed to the first station. By statute, the FCC must review these ownership rules every four years to determine if they remain in the public interest. There have been many structural and behavioral changes in the video market since the retransmission consent/must carry rules were enacted in 1992 that have affected the relative negotiating strength of the various parties. In 1992, there were only limited multichannel pay television alternatives to cable. Today, Dish Network operates in all 210 U.S. markets, DirecTV in about 195 markets, and AT&T and Verizon are expanding their video footprints. As a result, the cable companies have lost some of their leverage when negotiating retransmission consent agreements with broadcasters. If a broadcaster reaches an impasse with a cable company and the cable company faces the threat of not being allowed to carry the broadcaster's signal, then that cable company risks losing customers to a cable or telephone company competitor that continues to offer the broadcast programming, especially if the broadcaster offers "must-have" programming that some portion of cable subscribers would change providers to retain. In the 1990s and early 2000s, the compensation that local broadcast stations received for retransmission consent rarely took the form of cash payments from MVPDs. Rather, in most cases, the local broadcast affiliate gave its network the right to negotiate retransmission consent directly with the MVPDs; in exchange, the affiliate station made lower cash payments to its network for the network programming (or, in some cases, received cash payments from the network). The major broadcast networks, which are subsidiaries of major program producers and aggregators that also own multiple cable networks, sought non-cash compensation in the form of MVPD agreement to carry their full array of cable networks. By the mid-2000s, there were two market developments that led to changes in these business relationships. The broadcast network parent companies had successfully gotten most of the major MVPDs to carry their full array of branded cable networks. And the cable networks had developed a very successful business model based on two revenue streams—advertising revenues and also per subscriber license fees imposed on MVPDs. By 2005, some broadcasters—in particular, those that had many stations across multiple markets, such as CBS with its owned-and-operated stations and large group station owners, such as Sinclair and Nexstar—sought to emulate the cable network business model, especially as their advertising revenues were becoming increasingly sensitive to the underlying business cycle. This placed an emphasis on cash compensation for retransmission consent. Since in many cases compensation previously was in non-cash form, the move to cash payments was strongly resisted by MVPDs. In this new strategy, the broadcast network or station group negotiated with each MVPD on behalf of all of its owned stations. That is, a single retransmission consent negotiation covered multiple local markets, rather than having separate negotiations for each broadcast station. At the same time, online video distribution and mobile video distribution were beginning to develop. MVPDs developed their own websites and sought the rights to retransmit the broadcast signals over those websites. In some cases, the broadcasters and MVPDs jointly developed "TV Everywhere," a strategy to retain the legacy business model by extending consumer access on new gateways such as applications for tablets and smartphones to those consumers who subscribed to an existing MVPD. But there also were new online video distributors not affiliated with the MVPDs and the broadcasters also wanted to make their programming available to these new outlets. As a result, the traditional retransmission consent negotiations between broadcasters and MVPDs began to take on additional elements—for example, the terms and conditions, including timing windows and exclusive/non-exclusive access to the broadcaster programming for screens other than the television screen. The terms, conditions, and rates that had to be negotiated within retransmission consent agreements increased exponentially. This created many more elements that potentially could create a negotiating impasse. Thus, although formally retransmission consent is a right of a particular local broadcast television station, an impasse could be caused by a conflict that had nothing to do with that station or with its local market. In addition, in recent years, many television stations have entered into sharing arrangements with other stations in their local market to jointly sell advertising and/or produce local news programming, typically with one station managing the shared operation and perhaps providing most or all of the staffing and other resources. In many cases the FCC has not deemed a station to have control over another station in the same market even if such control is considered to exist, and must be reported, under generally accepted accounting practices. Such agreements have resulted in the proliferation of so-called "virtual duopolies" that would not be allowed under the local ownership rule if control had been attributed to the first station. Where a single entity is able to jointly negotiate retransmission consent on behalf of two or more stations in a local market, this provides that broadcaster with leverage, especially if both stations are affiliates of major broadcast networks. According to the American Cable Association, which represents small cable companies, "48 pairs of Big 4 broadcasters in 43 DMAs coordinat[ed] their retransmission consent negotiations in 2011." The number of virtual duopolies is expected to increase if the many recently announced television group mergers are approved. As explained above, in recent months there have been a large number of mergers that, if approved, would give the acquiring station groups greater leverage when negotiating retransmission consent agreements with MVPDs. In some cases, these larger station groups also will enjoy duopoly or virtual duopoly positions in some local markets, again increasing their negotiating leverage. In part to create a countervailing negotiating force, some large cable companies have discussed merging and Dish Network has raised the trial balloon of merging with DirecTV. According to a recent survey by Leichtman Research Group, 86% of households nationwide subscribe to a multichannel video service, down from 88% in 2010. Of the television households that do not subscribe to an MVPD service, 42% get one or more of the three major over-the-top services (Netflix, Amazon Prime, and Hulu Plus). Eight percent of all television households watch over-the-air broadcast television only. About 1.4% of all television households discontinued subscription to an MVPD service over the past year, which is about the same rate as in recent years, suggesting no great surge in "cord cutting" households. In recent years, a number of online video distributors have entered the market. They do not qualify as MVPDs and therefore are not subject to the retransmission consent requirements. As discussed earlier, Aereo and a number of copycat companies have a mini-antenna for each of their subscribers to retransmit broadcast signals to subscriber premises, and claim that such retransmission does not infringe copyright. Broadcasters have sued these companies for copyright infringement, but the cases are still progressing in court. In the interim, in those markets in which the courts have not issued an injunction, those services provide households with an alternative source of broadcast programming if an impasse between their MVPD and a local broadcaster has resulted in a blackout of that broadcaster's programming. This alternative access to broadcast programming could weaken the position of broadcasters in their retransmission consent disputes with MVPDs, though it is potentially a two-edged sword since households that subscribe to Aereo might have less reason to maintain their MVPD subscriptions. These market developments, with the exception of the last one, have tended to make broadcaster-distributor negotiations more contentious, with greater risk of impasses. The highly publicized retransmission consent blackout of CBS networks on Time Warner Cable systems was just one of several impasses between programmers and distributors in the summer of 2013, some of which were resolved before blackouts occurred, some of which were not. For the period January 1 through August 22, 2013, SNLFinancial has identified 12 publicized instances of broadcast signal negotiation impasses, which resulted in the blackout of 94 full-power broadcast television stations for various periods of time, including the CBS-Time Warner Cable and Raycom-DISH blackouts that began in August. In addition to these blackouts involving broadcast station signals, there have been a number of impasses involving MVPDs and cable networks. Congress is more likely to be concerned about broadcast-related blackouts than cable network-related blackouts because of its long-standing commitment to localism and diversity of voices, which are impacted more by the loss of local broadcast signals than by the loss of a national cable programming network. (Congress also has been concerned about blackouts of local sports programming when regional cable sports networks are unable to reach agreement with MVPDs, because such programming is of great interest to consumers, but local news and public affairs programming is more central to civic institutions.) Congress may want to review the current statutory framework to determine whether any changes are needed to make it more effective in the new market environment characterized by greater consolidation and increased risk of programming blackouts. From the perspective of consumer protection, blackouts result in households losing access to programming that they paid for. SNLFinancial has identified 35 retransmission consent blackouts between 2005 and 2013 that lasted 28 days or longer. In total, these blackouts involved 145 stations in 111 markets. Four of these blackouts, involving 30 stations in 19 markets, began in 2013. In these situations, MVPDs are in a difficult situation. On one hand, they risk alienating customers by not providing a credit for blacked out programming. On the other hand, giving anything beyond the most token credit lends support to the broadcaster negotiating claim that its programming is highly valued and thus merits substantial retransmission consent compensation. One of the most effective broadcaster negotiating devices is to time the termination of retransmission consent agreements to coincide with major sports events, which represent the ultimate in "must have" programming. To the extent the programming is local, blackouts decrease the diversity of local voices. This can be especially significant if a blackout involves more than one local station because the broadcaster has a "duopoly" or "virtual duopoly" position in the local market. Some observers have proposed that the best way to protect consumers is to require the broadcasters to continue to provide the programming to the MVPD while the impasse is addressed in some sort of mandatory arbitration process either within or outside the FCC. But mandating that the program continue to be provided would substantially reduce the leverage the broadcaster would have in its negotiations. One middle position might be to mandate that the programming continue to be made available only for 30 days, while an expedited arbitration process takes place. That would allow MVPDs to meet the typical language in their franchise agreements with local franchise authorities that they give subscribers 30-day notice of any change in programming. An alternative approach to direct intervention into the retransmission consent negotiating process would be to set structural regulations that would attempt to limit those situations most likely to give rise to undue negotiating leverage. Structural constraints could be set up that are market-specific or that cross markets. For example, if a single entity owns multiple stations that reach a very large portion of total U.S. television households, that entity could be negotiating with MVPDs that have far less reach and thus would be at a greater disadvantage if an impasse led to a blackout. By statute, an entity may own and operate local broadcast stations that reach, in total, up to 39% of U.S. television households. But when calculating the total audience reach by an entity's stations, the so-called "UHF discount" is applied—audiences of UHF stations are given only half-weight. Thus an entity could own stations that reach up to 78% of U.S. television households. This discount had been imposed because in the pre-digital analog world UHF stations had less reach than VHF stations and there was a policy goal of fostering use of the UHF spectrum. Now that the broadcast digital transition has been accomplished, stations broadcasting on the UHF spectrum actually enjoy superior transmission to stations on the VHF spectrum. There are differences of opinion as to whether the FCC has the authority to eliminate the UHF discount on its own. Nonetheless, the FCC has issued for public comment a Notice of Proposed Rulemaking that tentatively concludes that the UHF discount should be eliminated, but that would grandfather the discount for UHF stations already owned by station groups. If Congress is concerned that a single entity could attain undue negotiating leverage if it exceeded a 39% national reach, it might instruct the FCC to eliminate the discount or to clarify that the FCC has the authority to undertake a rulemaking proceeding that could result in elimination of the discount. There also have been differences of opinion about the public interest impact of allowing a single entity to own and control two major network-affiliated stations in a single local market or of allowing an entity to have a virtual duopoly in a single local market through use of a sharing arrangement. The National Association of Broadcasters and other supporters of duopolies argue that the economies gained and potential increase in revenues generated allow stations to invest more in local programming and might even be the only way to keep two stations on the air. While all video distributors tend to oppose such duopoly situations, small cable operators represented by the American Cable Association in particular claim that two concurrent trends—the development of competitive alternatives to cable and the increase in virtual duopolies that allow a single broadcaster to negotiate retransmission consent agreements for the affiliates of two different network in a single local market—place small cable companies at a distinct disadvantage in those negotiations. They cite a study by Professor William P. Rogerson that claims that smaller MVPDs—and hence their primarily rural customers—pay retransmission consent fees that on average are twice as high per subscriber as those paid by large MVPDs. The small cable operators propose, among other things, that the retransmission consent statute be modified to prohibit any entity from negotiating retransmission consent on behalf of more than one station in a local market. The Television Consumer Freedom Act ( S. 912 ), introduced by Senator McCain, would indirectly address some of the complexities that are affecting broadcaster/MVPD retransmission consent negotiations as well as cable network/MVPD negotiations by creating incentives for both programmers and distributors to offer programming on an a la carte basis, rather than in packages or tiers. It would deny an MVPD access to the low-cost compulsory copyright for the retransmission of the copyrighted works on a broadcast signal if the MVPD did not offer that signal and all other video programming channels to its subscribers on an a la carte basis. It also would not allow a broadcast station to receive compensation for the retransmission of its signal by an MVPD if it did not offer its broadcast signal, or any other video programming under its control, to MVPDs on an a la carte basis. Finally, a programmer could offer a channel of video programming to an MVPD as part of a package only if it also offered that channel on an a la carte basis. If an MVPD and a programmer (of broadcast or cable channels) failed to reach agreement regarding the terms, including prices, for the distribution rights, then both the MVPD and the programmer would have to disclose to the FCC the terms of the most recent offer they made. Proponents of this proposal suggest that these incentives for broadcasters and other large programmers to make their offerings available on a "wholesale" a la carte basis, and for MVPDs to make their consumer offerings available on a "retail" a la carte basis could foster channel-specific negotiations that would be less subject to impasses. But, at least at the wholesale level, programmers already make their offerings available on an a la carte basis; they simply choose to price their individual channels and packages in such a fashion that it rarely is beneficial for a distributor to acquire programming on an a la carte basis. There are market forces at play that could constrain the recent increase in programmer-distributor impasses and blackouts without any government intervention. Consumers who face actual blackouts, or even the threat of blackouts, become aware of alternatives—the availability of Aereo for relatively inexpensive access to broadcast signals in some markets, the availability of rooftop or rabbit-ear antennas for free over the air reception of broadcast signals in all markets. Actual and threatened blackouts therefore may increase the rate of "cord-cutting"—of households abandoning MVPDs altogether. Any significant migration of MVPD customers to over-the-top alternatives is likely to harm the financial position of broadcasters (and other major programmers) and MVPDs alike. This suggests that all these parties should have an incentive to avoid blackouts. But given the increasing complexity of the negotiations, that incentive may not be sufficient to protect consumers from blackouts. Wireless broadband is very spectrum-intensive. Steep projected growth in demand for both mobile and fixed wireless services and other spectrum-using services make efficient spectrum management an increasingly important policy goal. As never before, there will be costs to society if the statutory framework does not foster efficient spectrum use. Spectrum, by itself, is not of any use. It has value when technology is applied to it to create services. But the direction that the applied technology takes will depend on the way spectrum is allocated for use and rules about such use. For example, since different parts of the spectrum have different signal-carrying characteristics, different equipment must be developed for different portions of the spectrum. But innovators have little incentive to develop the equipment needed for a previously unused portion of the spectrum until the policy makers have made that portion available to service providers. As another example, technological development will take a very different path if spectrum users are assigned exclusive licenses to specific spectrum than if spectrum users are required to share spectrum, since these two options create different potential problems of electromagnetic interference. As a third example, since transmitters are subject to rules about the interference they can create, but receivers are not subject to requirements about their ability to block extraneous transmissions, vendors have placed a lot of effort in developing transmitters that meet those requirements but little or no effort in developing receivers that can block out unwanted signals. More generally, product development tends to follow the path defined by statutory and regulatory rules. Just as different portions of the spectrum have different characteristics, different technologies that can be applied to spectrum to create services have different characteristics. For example, "spread spectrum" technology, which underlies Wi-Fi, spreads a radio signal out over a wide range of frequencies; this makes the signal both difficult to intercept and less susceptible to interference. It is an especially effective technology for shared spectrum use, but loses its advantages in an environment of exclusive channel assignments. In contrast, the technologies being deployed by the cellular wireless broadband network providers in their macro networks create more interference and lend themselves to exclusive channel assignments. As explained earlier, U.S. wireless broadband service relies heavily on both types of technology. This suggests that relying on a single way to allocate spectrum—for example, only through auctions for exclusive channel rights or only through rules for shared, unlicensed use—could favor one type of technology over another, thereby artificially cutting off potentially rich avenues for innovation. In fact, the FCC already employs multiple approaches. As discussed below, since 1993 it has been authorized by Congress to hold spectrum auctions and has held a number of auctions. But as far back as 1985, the FCC also has set aside blocks of spectrum for shared use. Recently it has moved toward a hybrid approach to spectrum allocation in the "white spaces" that exist between licensed television broadcasters by creating rules that allow different types of users to share that block of spectrum while protecting broadcasters from interference. Traditionally, spectrum management has included three tasks—allocating blocks of spectrum to different uses, granting individual entities exclusive spectrum licenses for specific radio frequency channels within those spectrum blocks, and setting rules on how licensees may utilize the spectrum channels they are granted, for example, not allowing them to transmit in a fashion that creates electromagnetic interference with any other channel. To protect against interference, a lot of spectrum was set aside to provide buffers. These buffers have taken the form of "guard bands" (unused spectrum channels) between spectrum blocks and "white spaces" between licensees operating within a channel. New technological developments, such as network-centric technologies that can turn some types of interference from an insurmountable obstacle into a manageable occurrence, are increasing the productive capacity of fixed amounts of spectrum by allowing shared use of spectrum and reducing the need to set aside buffer spectrum. With the new technologies, the transmitting and receiving radios of multiple users can be "networked" to jointly move transmissions from one communications node to the next in the same fashion that traffic moves on the Internet, reducing or eliminating interference choke points while better utilizing available spectrum. With the danger of interference reduced, more users can share a given amount of spectrum. These new technologies already allow for spectrum sharing and, more generally, the more intensive use of existing spectrum, since it potentially allows for the utilization of otherwise unused white spaces and perhaps even guard bands. But this technology does not work well in narrow spectrum channels. To bring significant efficiencies, it requires setting aside a large block of spectrum for shared use. Some in the wireless sector, and in particular the large wireless carriers, argue that it is more efficient to give individual licensees blocks of spectrum for their own exclusive use than to require spectrum sharing. They claim that they—and the financial community—require the certainty associated with exclusivity in order to invest in their networks and that this in turn will generate technological innovation. But given that there can be benefits from spectrum sharing as well as from license exclusivity, there may be reasons for Congress and the FCC to continue to allocate spectrum using both methodologies. Peter Rysavy, a longtime wireless industry observer, has identified the potential and the challenges of spectrum sharing: There is no question that spectrum sharing can and will eventually result in more efficient overall use of spectrum. There are already a number of spectrum sharing solutions in the market that can work under defined circumstances. But what must be understood is that the spectrum-sharing approaches range from simple to extremely complex, from readily achievable and in use today to extremely difficult with technologies yet to be developed. The ones being used today solve relatively simple problems, e.g., geographic sharing or sharing between two types of fixed systems. More complex problems, such as how a carrier class mobile technology could share with multiple government systems will take many years to develop, test, and implement in an economically rational manner. Making spectrum sharing a reality will mean identifying what types of systems can be shared, negotiating and stipulating access rights, determining the market for such shared systems, developing specifications and standards to allow sharing including spectrum-coordination systems, modifying existing networks to integrate with the new sharing architectures, developing infrastructure and devices to implement the sharing, certifying equipment using new test procedures and equipment for compliance, and finally enforcing compliance. This process could easily take ten years or possibly even much longer. The FCC and the various industry participants undoubtedly will have many policy discussions about the pace at which specific types of spectrum sharing can move forward. For example, the President's Council of Advisors on Science and Technology (PCAST) appears to be more bullish than Mr. Rysavy about the advantages of moving to spectrum sharing. In a recent report, PCAST found that clearing and reallocating Federal spectrum is not sustainable because of the high cost, lengthy time to implement, and disruption to the federal mission. Instead, PCAST concluded "that the norm for spectrum use should be sharing, not exclusivity." Whatever the outcome of those policy debates, there is widespread recognition that spectrum sharing will become increasingly important over time and that Congress should make sure that the statutory framework does not create obstacles to such sharing. Historically, the United States employed a command-and-control approach to spectrum management in which the FCC (and the National Telecommunications and Information Administration within the Department of Commerce for that portion of the spectrum allocated to government use) allocated blocks of spectrum to specific uses and then assigned channels within those blocks to specific licensees based on public interest criteria. Once allocated and assigned, spectrum could not readily be reallocated to a different use or reassigned to a different user. As a result, much spectrum has been underutilized or available only for a relatively low-value use. In recent years, Congress has taken a number of steps intended to foster more efficient spectrum use. In particular, it has given the FCC authority in limited situations to implement market mechanisms, such as auctions and secondary spectrum markets, which could be expected to move spectrum to higher-valued uses. (A secondary market is a market for a good or service that has previously been purchased. Examples of secondary markets are the markets for financial stocks and bonds, used cars, and used books. What is exceptional about secondary markets for spectrum is that the licensee does not own the spectrum, but rather owns the right to use the spectrum, subject to various non-interference and other requirements. It is that right that is sold or leased in a secondary market) Setting a price on spectrum and allowing its transfer to higher valued uses increases incentives for licensees to use their spectrum efficiently—for example, by employing spectrum-saving transmitting and receiving equipment or by making unused or underutilized spectrum available to others. Congress already has taken the following actions: The Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ) first authorized the FCC to establish "competitive bidding systems" for awarding spectrum licenses. This authority was extended in the Balanced Budget Act of 1997 ( P.L. 105-33 ), the Deficit Reduction Act of 2005 ( P.L. 109-171 ), and the DTV Delay Act ( P.L. 111-4 ). Title VI of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ), often referred to as the Spectrum Act, contains provisions that reallocate certain spectrum, assign new spectrum rights, and change the procedures for "repurposing" spectrum used by the federal government to commercial use. It allows the FCC to establish an "incentive auction" through which licensees of certain spectrum currently used for broadcast television could voluntarily relinquish their spectrum in exchange for a portion of the proceeds generated by auctioning that spectrum to wireless broadband providers. The FCC has used its spectrum management authority both to hold spectrum auctions and to foster secondary spectrum markets. In an initial order, it implemented two different options for spectrum leasing. One option enables licensees and lessees to enter into leasing arrangements, without the need for FCC approval, so long as the licensee retains de facto control of the leased spectrum under the newly refined standard. The other option permits parties to enter into arrangements in which the licensee transfers de facto control pursuant to streamlined approval procedures. In a second order, the FCC adopted additional streamlining procedures for certain categories of spectrum leases; adopted policies to facilitate advanced technologies within existing regulatory frameworks, including dynamic spectrum leasing arrangements; created a third option for spectrum leasing called "private commons" that permits peer-to-peer communications between devices in a non-hierarchical network arrangement that does not utilize the network infrastructure of the licensee; and streamlined the process for licensee assignments and transfer of control. Market mechanisms such as auctions and secondary markets are efficient to the extent that the private valuation of spectrum coincides with the overall societal valuation of spectrum. The private value of a particular block of spectrum typically will be highest for those providers that have established products or services that generate substantial revenues from the use of that spectrum. In most cases, the total value of the spectrum—public and private—will also be highest when the spectrum has been assigned to the producer of the most highly valued services, who likely could make the highest bid. There are several situations in which the public and private valuation may diverge, however, and these may require non-market allocation mechanisms. Federal, state, and local public safety organizations and first responders need a reliable communications network, but may not have the funds to compete with commercial interests in spectrum auctions, especially since most organizations are not national in scope. To make sure that spectrum is available for public safety needs, either certain spectrum must be set aside for that purpose or some system of shared use must be established that in effect gives public safety preferred access—and perhaps even exclusive access—to the spectrum in times of emergency. This issue, including the creation of a public safety trust fund from auction revenues, was addressed in the Spectrum Act. Spectrum is essential for the development of new network and application technologies and services. Some of that research is performed by established firms using their own available licensed spectrum. But some is performed by start-up firms working on the technology frontier that do not have spectrum licenses and may not have the wherewithal to successfully bid against established firms for needed spectrum. Even established firms may not have licenses for spectrum with the characteristics needed to perform their research. To foster innovation, it may be beneficial to set aside some spectrum for experimental, unlicensed, shared use constrained only by specified non-interference criteria. Incumbent providers may have an incentive to oppose the allocation of blocks of spectrum for unlicensed experimental use if such experimentation potentially could result in the development of new technologies that undermine their existing business model. But just as making sufficient spectrum available for the major wireless carriers to transition from 2G to 3G and then 4G networks was essential for the rapid deployment of networks capable of meeting the demands of consumers with smartphones and tablets, so was making sufficient spectrum available for experimentation and unlicensed services. As noted earlier, the wireless broadband ecosystem is strong today in large part because Wi-Fi was able to develop in the unlicensed spectrum block set aside for spread spectrum and other experimentation. The underlying cost structure of wireless broadband is characterized by significant economies of scale, such that there are likely to be few efficient network providers, perhaps only a single efficient provider in some rural areas, and no profitable provider in very rural areas. There are universal service and rural utilities service funds available to provide subsidies needed to ensure the availability of service, and the FCC has followed Congressional mandates to encourage spectrum license ownership for small, rural, or entrepreneurial businesses. But many small companies that have received licenses through preferential programs have later transferred their licenses to larger companies, and a number of small wireless carriers and their associations have submitted filings in recent FCC proceedings on the increasing difficulties they face competing for wireless customers. It is possible that the policy goal of ensuring a competitive alternative in certain rural areas will not prove feasible even with subsidies and preferences. Over time, spectrum can be repurposed from federal to commercial use or from one type of commercial use to another, or new spectrum-saving technologies can be developed and deployed, but at a point in time, the amount of available spectrum is fixed. There is a long history of concern that competition could be constrained if a few wireless providers control so much of the bands with superior propagation characteristics that other providers were effectively foreclosed from the market. The FCC first introduced a spectrum cap on mobile spectrum holdings in 1994 to promote diversity and competition in mobile services. In 2003, the FCC replaced the spectrum cap with case-by-case review of mobile spectrum holdings when making public interest determinations of transactions involving the transfer, assignment, or lease of licenses. Since 2004, the FCC has used a two-part screen to help identify markets where the acquisition of spectrum would provide particular reason for further competitive analysis. The first part of the screen considers changes in market concentration as a result of the transaction. The second part examines the amount of spectrum in each market that is suitable for the provision of mobile telephony/broadband service. Those markets highlighted in the analysis are subject to detailed reviews to determine whether the transaction would result in an increased possibility of anticompetitive conduct. In 2008, it extended the case-by-case analysis to spectrum acquired by auction. In 2012, the FCC opened a proceeding to review its spectrum screening process in light of the expansion in the number of spectrum bands used for mobile wireless service, and the roll-out of new service offerings, consumer devices, and bandwidth-intensive applications. In a submission in that proceeding, which coincided with a proceeding to develop rules for the upcoming incentive auction, the Department of Justice raised a concern that incumbent carriers that controlled a substantial portion of preferred spectrum might "have incentives to acquire spectrum for purposes other than efficiently expanding their own capacity or services" and that the "foreclosure value" of that spectrum might be greater than its "use value," thus allowing the incumbents to outbid others for the spectrum. It concluded "that rules that ensure that smaller nationwide networks, which currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum could improve the competitive dynamic among nationwide carriers and benefit consumers." It therefore proposed that the FCC build into its auction rules a bright-line test, in the form of rules, weights, or caps that would reduce the risk of foreclosure. This proposed intervention into a market-based auction has been criticized by Verizon and AT&T and others. For example, a Phoenix Center report characterized it as an ill-founded attempt to direct spectrum to rivals of the leading firms in order to equalize competition among competitors, thus reverting from market allocation to agency selection of winners. Pricing mechanisms such as auctions and secondary markets help create market signals that improve the efficient allocation of resources such as spectrum. But pricing mechanisms are only useful if the market participants know in advance what rights they are getting—especially with respect to protection from interference and permissible levels of interference creation—when they bid for a spectrum license in an auction or seek to acquire or lease a spectrum license in a secondary market or consider using shared, unlicensed spectrum. In a market such as the one for spectrum, in which the actions of one participant may impose costs on other participants—notably, spectrum use will create some level of electromagnetic interference that limits the usefulness of the spectrum or raises costs for other spectrum users—market mechanisms will foster efficient spectrum usage only if the rules help create market signals that appropriately take into account the interference-related "externality" created. The extent to which spectrum use by one entity precludes its use by another entity is a function of the amount of interference created by that use and the ability of others to withstand that interference. All participants have a variety of parameters at their disposal to modify the impact of the interference. It generally is possible to develop transmitters that lower or otherwise mitigate the amount of interference created and also to develop receivers that mitigate the impact of interference, but both of these cost money and parties will prefer rules that place those costs on the other guy. It sometimes is possible for the parties to come together to jointly develop standards and equipment that mutually reduce the impact of interference so that the spectrum can be more intensively used, as was the case for the development of Wi-Fi and appears to be the case for the current development of network-centric technologies. But before these collaborations can begin, there must be some basic ground rules on the rights and responsibilities of participating entities, and the choice of these ground rules can foster or impede the efficient use of spectrum. Historically, those ground rules have applied to transmitters, but not to receivers. By rule, a licensee operating a transmitter in a particular spectrum frequency band is prohibited from allowing its signal to stray into an adjacent band and create interference to a receiver operating in that adjacent band. If the licensee is allowing this to happen, it would be ordered to discontinue transmission. In contrast, if the licensee's signal is not straying into an adjacent band, but receivers in that adjacent band are not sufficiently well-tuned to pick up only the signals from their own frequency band—rather, they experience interference because they are picking up both the signals of the licensee in the adjacent band and the signals in their own frequency band—there is no rule that would require the licensee to discontinue its transmission. Nor is there a rule requiring that a receiver only be able to receive signals from the intended frequency band. In the past, it was not important that a receiver be selective in the signals it receives because there were few services operating near one another in the spectrum. But as demand for spectrum increases to meet demand for new wireless services, fewer frequency bands are remaining vacant. As a result, adjacent frequency channels are being assigned and utilized, and existing spectrum users (service providers and/or end users) with non-selective receivers increasingly pick up adjacent channel signals that are being transmitted according to rules, but nonetheless resulting in interference known as "receiver overload" or "desensitization." This is most likely to happen with mass market devices, such as GPS receivers, which both service providers and customers have strong incentives to make as inexpensive as possible. Inexpensive GPS devices may well lack filters that keep them from picking up signals from adjacent channels. In such cases, although the transmitter in the adjacent channel that is "creating" the interference for the unsophisticated GPS devices may be fully meeting the interference rules, there could be strong pressure to protect the sunk investments consumers have made in GPS receivers by constraining legal transmissions in the adjacent channel. This occurred in 2011, when testing of LightSquared's plan to offer terrestrial broadband service using a satellite band that is located next to the band used for GPS devices indicated that some GPS receivers were subject to interference even though the LightSquared signals were properly transmitted within the LightSquared frequency band. Because of this impact on GPS owners, the FCC ultimately did not approve LightSquared's proposal and that spectrum band has remained largely unused. More generally, the lack of rules that set requirements or incentives for receivers to be selective in the signals they pick up leads to valuable portions of the electromagnetic spectrum being kept out of service or only sparsely utilized. It also raises the cost of competitive entry. The absence of rules requiring (or, at the least, providing incentives for) receivers to be sufficiently selective that they do not pick up signals from adjacent frequency bands may encourage "moral hazard." Moral hazard occurs when a party will have a tendency to take risks because it has reason to believe it will not bear the costs that might be incurred as a result of that risky behavior. In the absence of any receiver ground rules, a provider of a mass-market wireless service might attempt to attract customers by offering inexpensive receivers that do not block out signals from adjacent channels, confident that if another spectrum user sought to use the adjacent spectrum in a way that would create interference to the non-selective receivers, the FCC would protect those customers from interference, even if the new spectrum user was operating its transmitter within the rules. Since the costs associated with the risk of interference would fall on the new spectrum user, not the mass market wireless service provider, that service provider would have the incentive to undertake the risky behavior. There is wide recognition that ground rules are needed for receivers, but there will be vigorous debate about the form those rules should take. Incumbent service providers and customers that have invested in receivers will seek to minimize the impact any rules will have on the status quo. In light of that, in its recent spectrum report, the President's Council of Advisors on Science and Technology proposed "a receiver management framework that does not mandate additional costs on receivers but provides a framework for defining harmful interference and provides clarity on the requirements that a new entrant must meet to co-exist with legacy systems in adjacent bands." Rules that "grandfather" inefficient legacy spectrum use, however, may impose costs on future spectrum users. The PCAST report indicated that some have claimed the FCC's authority to implement receiver rules is limited, and suggested that Congress might want to clarify the FCC's authority. Technological innovation and efficiency are important public policy objectives, but there are other policy goals that may not always be consistent with innovation and efficiency. Two of these are likely to be part of the policy debate in any attempt to update the communications statutory framework—budgetary considerations and fairness considerations that typically are raised in the context of grandfather clauses intended to protect certain parties from regulatory changes. Since market mechanisms generally allocate resources to their highest-valued use, spectrum auctions often yield both efficient resource allocation and substantial government revenues. But as discussed in the earlier section on spectrum management, some public policy objectives are not fostered by market mechanisms and can be better achieved by non-market allocations or by placing partial constraints on the market. These include the direct allocation of spectrum for public safety uses; the allocation of spectrum for experimentation, research, and development, typically by creating opportunities for innovators to have access to unlicensed spectrum; and placing constraints on how much spectrum any bidder can obtain through auction to protect against market foreclosure or to subsidize rural service providers. Statutes intended to foster each of these goals could reduce the potential contribution to the Treasury from spectrum auctions. Congress may want to provide guidance to the FCC on how best to weigh the tradeoffs between maximizing auction revenues and meeting these other public policy objectives. When proposals are made to change statutory or regulatory rules to better meet public policy goals, one associated cost may be the harm that would be suffered by existing providers or consumers who have made business model, investment, or purchasing decisions based on the old regulations. A frequent way to avoid such harm is to "grandfather" the old regulation for those legacy providers or customers. But if the proposed change would further a policy goal, then to the extent providers or consumers are excluded from the change, the public benefits from the change will be reduced. These grandfather clauses, some explicit, some implied, are common in communications statutes and regulations or in how agencies choose to construct new rules. For example: Many of the media ownership rules, such as the newspaper-broadcast cross ownership rule, grandfathered pre-existing cross ownership combinations. Similarly, when making public interest determinations about whether a licensee with a pre-existing combination could transfer that combination to a new entity, the FCC typically has continued to grandfather such combinations and make them permanent. Broadcast satellite carriers are allowed to retransmit the signals of distant television stations affiliated with a particular network to that subset of subscribers who are deemed "unserved" by any local affiliate of that network. But due to grandfather clauses, there are many situations in which the signal of a local station affiliated to that network is available to subscribers but they nonetheless continue to be considered unserved and are allowed to receive the distant signal. When the President's Council of Advisors on Science and Technology prepared its report on spectrum sharing, and proposed the implementation of receiver management requirements, it explicitly "propose[d] a receiver management framework that does not mandate additional costs on receivers" and "recommend[ed] starting with the smallest plausible incremental step." In each of these cases, Congress, the FCC, or the Obama Administration chose to limit the reach of policy change (as expressed in statutory or regulatory change) in order to minimize harm to legacy market participants. As Congress considers future statutory changes, however, it is possible that in some situations the overall public interest calculus will not allow for such grandfathering.

The statutory framework for the communications sector largely was enacted prior to the commercial development and deployment of digital technology, Internet Protocol (IP), broadband networks, and online voice, data, and video services. These new technologies have driven changes in market structure throughout the communications sector. Technological spillovers have allowed for the convergence of previously service-specific networks, creating new competitive entry opportunities. But they also have created certain incentives for market consolidation. Firms also have used new technologies to attempt to "invent around" statutory obligations or prohibitions, such as retransmission consent and copyright requirements. In addition, firms have developed new technologies that are attractive to consumers because they allow them to avoid paying for programming or allow them to skip the commercials that accompany video programming, but present a challenge to the traditional business model. The expert agencies charged with implementing the relevant statutes—the Federal Communications Commission (FCC) and the Copyright Office—have had to determine if and how to apply the law to technologies and circumstances that were not considered when the statutes were developed. Frequently, this has led parties unhappy with those interpretations to file court suits, which has delayed rule implementation and increased market uncertainty. The courts, too, have had to reach decisions with limited guidance from the statutes. Members on both sides of the aisle as well as industry stakeholders have suggested that many existing provisions in the Communications Act of 1934, as amended, and in the Copyright Act of 1976, as amended, need to be updated to address current technological and market circumstances, though there is no consensus about the changes needed. Three broad, interrelated policy issues are likely to be prominent in any policy debate over how to update the statutory framework: how to accommodate technological change that already has taken place and, more dynamically, how to make the framework flexible enough to accommodate future technological change; given that underlying scale economies allow for only a very small number of efficient facilities-based network competitors, how to give those few network providers the incentive to invest and innovate while also constraining their ability to impede downstream competition from independent service providers that must use their networks; and given that spectrum is an essential communications input, how to implement a framework that fosters efficient spectrum use and management.

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Economic and trade relations between the United States and India have experienced a number of ups and downs since India's independence in 1947. During much of the 1950s and early 1960s, the United States was a leading trading partner for India, providing the nation with about a third of its imports. However, those economic ties quickly subsided when India fostered closer ties with the Soviet Union following the Indo-Pakistani War of 1965. For the next 40 years, political and economic relations between India and the United States were rather cool. Since 2004, Washington and New Delhi have been pursuing a "strategic partnership" based on numerous shared values and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly. According to official U.S. trade statistics, bilateral merchandise trade with India has grown from under $10 billion in 1996 to nearly $31 billion in 2006—a trebling in a decade. In 1996, India was the 32 nd largest market for U.S. exports and the 25 th largest source of imports. By 2006, India had risen to be 21 st biggest export market for the United States and the 18 th biggest supplier of imports. The United States' total trade with India in 2006 exceeded that with Israel, Nigeria, and Thailand. Both governments appear to be committed to improving trade relations. On March 2, 2006, President George W. Bush and Indian Prime Minister Manmohan Singh endorsed the goal of doubling bilateral trade in three years. On December 18, 2006, President Bush signed into law H.R. 5682 , the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 ( P.L. 109-401 ), signaling an intent to waive restrictions on civil nuclear cooperation with India. Despite the growth in bilateral trade and the improvement in trade relations, there are still a number of economic and trade issues between India and the United States. Both nations seek greater market access to the other's domestic markets, as well as the lowering of perceived trade barriers. In addition, both India and the United States would like to see changes in the other nation's legal and regulatory policies to help protect and promote exports and foreign direct investment. Moreover, there are significant differences in the stances of the two countries in various multilateral trade fora, including the current Doha Round of negotiations. For Congress, resolution of some of the key economic and trade issues may involve alterations in current federal law. In particular, changes in laws pertaining to agricultural goods, pharmaceuticals, nuclear and dual-use technology, and immigration may be considered as part of an effort to foster closer trade relations with India. Plus, Congress may consider heightened oversight of U.S.-India trade relations. This report provides a summary of India's current political climate (with a focus on its effects on the nation's economic and trade policies), its economic condition and policies, the recent trends in bilateral trade and foreign direct investment, and key economic and trade issues between India and the United States. Where suitable, the report also compares India to China to provide a different perspective on U.S. relations with both nations. India is the world's most populous democracy and remains firmly committed to representative government and the rule of law. With a robust and working democratic system, India is a federal republic where the bulk of executive power rests with the prime minister and his or her cabinet (the Indian president is a ceremonial chief of state with limited executive powers). As a nation-state, India presents a vast mosaic of hundreds of different ethnic groups, religious sects, and social castes. Most of India's prime ministers have come from the country's Hindi-speaking northern regions and all but two have been upper-caste Hindus. Larger than Alaska, Texas, and California combined, India is a land of great demographic, geographic, and climatological variety. From stark deserts in the west to thick jungles in the northeast, the towering Himalaya mountains of the north to the vast tableland of the Deccan Plateau of the south, and with the fertile Indo-Gangetic plain between, India dominates the Asian Subcontinent and shares long borders with its six other continental states. About one-third of the population lives in urban areas; an overwhelming majority of the remainder is engaged in the agricultural sector. Most of India's people inhabit either the alluvial soil of the Indo-Gangetic plain across the north, or the eastern and western coasts of the southern Deccan Peninsula. About 290 million Indians live in the densely-populated northern states of Uttar Pradesh and Bihar; another 100 million live in the western state of Maharashtra. These three states account for more than one-third of the country's total population. The 543-seat Lok Sabha (People's House) is the locus of national political power, with directly elected representatives from each of the country's 28 states and 7 union territories. A smaller upper house, the Rajya Sabha (Council of States), may review, but not veto, most legislation, and has no power over the prime minister or the cabinet. Although India's political stage is crowded with numerous regional and caste-based parties, recent years have seen an increasingly dyadic battle between two major parties that vie for smaller allies in a system that now requires coalitional politics. No party has won a national election outright since 1984. India has one of the largest and fastest growing economies in the world. India's real gross domestic product (GDP) rose by 9.2% in 2006—a growth rate second only to China among Asian nations. The strong GDP performance in 2006 capped five years of rapid economic expansion, transforming India into the third largest economy in Asia (after Japan and China). Its recent economic success is generally attributed to a combination of internal and external factors. Internally, a series of economic reforms (begun when the current prime minister was finance minister) have stimulated solid growth of India's manufacturing and service sectors. Externally, a relatively strong global economy, combined with India's trade and investment liberalization policies, have stimulated increased trade and investment flows to and from India. Despite the recent growth, India's economy confronts several challenges to its future prosperity. First, although the nation's manufacturing and services sectors have grown rapidly, there has been relatively little job creation. Second, its agricultural sector has experienced relatively slow growth for many years. With more than half of Indian households still reliant on agriculture for their income, the standard of living for much of the country's population remains relatively low. There are indications that most of the Indian populace remains untouched by and thus unimpressed with the country's widely touted economic boom. Third, the standard of living of India's rural and urban poor is being threatened by an emerging economic challenge—inflationary pressures. After seven years of modest inflation at or below 4% per year, inflation in 2006 was nearly 7% and has risen to about 8% in the first part of 2007. India's poor have been especially hard hit by major increases in the cost of food in recent years. In the longer run, India faces three additional barriers to economic growth—lack of infrastructure, bureaucratic obstacles, and environmental degradation. India's economy is already hindered by its inadequate transportation system and electricity shortage. Similarly, India's complex and entrenched bureaucracy frequently creates a barrier to implementing new economic policies and programs. At the same time, its large population and recent rise in industrial output are putting more and more pressure on India's environment, exacerbating existing problems in providing its people with clean, potable water, as well as clean air. Even with the continued strength of the economy and the Singh government's attempt to balance its economic policies, many analysts see India facing a number of economic challenges and believe there are still several important economic reforms that India should make to increase the benefits generated by its restructured economy. In particular, critics of the current economic policies point to the unequal distribution of the benefits of the economic reforms, noting that the rapid economic growth has not brought a corresponding reduction in poverty in India, particularly in rural areas. For some, the solution is to press forward more aggressively with the economic reforms by greater liberalization of India's domestic economic and international trade policies. For others, the solution is reverse elements of the reform and refocus agriculture and India's rural population. In March 2007, Prime Minister Singh addressed a roundtable hosted by the Economist magazine. In his remarks, Prime Minister Singh provided a fairly comprehensive overview of his administration's view of the current status of the Indian economy, arguing that India's economy will probably continue its rapid growth for another decade or more. However, Singh also pointed out India's need for additional reforms, including changes to its banking and financial system, its labor markets, and its "public service delivery mechanisms." In light of India's past and planned reforms, he stated, "I find it surprising when I continue to hear complaints about our economy still being a relatively inward-looking economy." The Bush Administration seems to hold a different view of India's economic conditions, maintaining that the Singh government ought to push forward more actively with its economic reforms. In September 2006, U.S. Ambassador to India, David Mulford, said to an audience in New Delhi: Today's business environment in India is more favorable to trade and investment. But there are signs of a pause in the reform process in recent months. Privatizations have stopped, and political reality suggests that reform of other key sectors and policies of central interest to investors will take longer than envisioned. It is important to bear in mind there are serious economic costs to any loss of momentum on the reform front.... The solution to attracting much greater private sector investment in energy and infrastructure development is a blend of policies that includes better governance, market sensitive regulatory regimes, continued liberalization of the financial sector that enables foreign and domestic private capital to finance major projects, and the timely resolution of investor-state disputes. One U.S. trade official opined that it is only through meaningful reforms in India's vast and poorly performing agricultural sector that the country's true economic potential can be realized. This, he says, will require rural infrastructural improvements, land reform, and changes that will allow foreign direct investment in the farm sector. A review of India's economic and trade policies over the last 60 years reveals a pattern of conceptual economic theory moderated by pragmatic political and economic considerations. Major shifts in economic policy were typically initiated with significant changes and then followed by a period of gradual adjustments. Following its independence in 1947, the government of Prime Minister Jawaharlal Nehru of the Indian National Congress Party (INC) adopted an economic policy emphasizing rapid industrialization, import substitution, and relatively high levels of government participation in economic production. Monopolies were granted to state enterprises in a number of industries considered of economic or strategic importance. Private companies in other industries were often subject to licensing requirements and legally constrained in their size of operation. The agricultural sector was a key focus of the First Five Year Plan, with the implementation of various subsidy programs, food price controls, and restrictions on the transport of agricultural crops. Labor laws provided workers with protection from managerial misconduct, but also significantly reduced labor mobility. Both exports and imports were controlled by licenses and tariffs. Foreign direct investment was also severely restricted both by industry and size. Successive Indian governments, still headed by Prime Minister Nehru, remained relatively true to these policies for both its First and Second Five Year Plans (1951-56 and 1956-61) with moderately successful results. Real GDP grew at an average annual rate of 3.6% for the First Five Year Plan, and 2.5% for the Second Five Year Plan. Agricultural production rose 44% and manufacturing output increased 144%. However, the economic policies were also leading to growing merchandise trade and current account deficits that were depleting India's foreign reserves. For the Third Five Year Plan (1961-66), Prime Minister Nehru and the INC made an adjustment in its economic policies, shifting focus away from "rapid industrialization" over to a program of "self sustained growth." At the same time, India's trade policy shifted from "import substitution" to "efficient substitution of imports," which in effect opened up new trade opportunities for goods considered crucial to economic growth and development. This adjusted economic policy remained in effect until the end of the Seventh Five Year Plan in 1990. In 1990 and 1991, India was struck by a number of political and economic shocks. On the political side, the INC refused to form a coalition government following a poor showing in the elections of 1989. The next largest party, the Janata Dal, was able to form a coalition government, headed by Prime Minister V.P. Singh, but it proved unstable and collapsed in December 1990. During the election campaign of 1991, ex-Prime Minister Rajiv Gandhi was assassinated, and P.V. Narasimha Rao was selected as the new leader for the INC. Following the INC's success in the 1991 elections, Rao became prime minister. During the political tumult of 1990 and 1991, the combined effects of rise in oil prices (precipitated by Operation Desert Storm in the Persian Gulf) and the demise of the Soviet Union, a major trading partner and a key source of foreign aid, led to a rapid devaluation of the rupee, a depletion of India's international reserves, and fears of an impending severe recession. In response, Prime Minister Rao made a major and controversial change in economic policies designed to restore faith in the rupee, replenish the nation's international reserves, and stimulate economic growth. These reforms were overseen by his finance minister, Manmohan Singh. The initial round of reforms included several elements. First, efforts were made to reduce India's perpetual fiscal deficits at both the federal and state levels. Second, the number of sectors reserved solely for the public sector were reduced from 18 industries to just three—military aircraft and warships, nuclear energy generation, and railway transport. Third, India liberalized international trade by reducing import tariffs, eliminating import restrictions, and opening up India to foreign direct investment. Fourth, India liberalized its financial markets, by dismantling its interest rate controls, reducing government regulations and permitting greater competition. Following the initial round of economic reforms, India's real GDP growth rate accelerated from around 3-4% per year in the 1980s to 5-7% during the early 1990s. However, toward the end of the decade, India's economic growth began to slow. Some analysts attributed the economic slowdown to a failure of the federal government to continue and to complete the economic reforms initiated at the beginning of the decade. Other analysts argued that economic problems generated by the reforms were creating structural barriers to continued growth. The ensuing debate over the merits of the 1991 reforms contributed to a second period of gradual economic reform in the second half of the 1990s and into the current decade. Since 1991, India has made a number of significant changes in the structure of its economy, including: The termination of state monopolies for all but three industries; The elimination of the "License Raj"—prior to the reforms, there was a rather elaborate system of licenses and regulations governing the establishment of a business in India, making it a very timely and expensive process to start a new concern; The abolition of import licenses for most commodities; A major reduction in average and peak tariff rates for imports; A reduction in domestic price controls for key consumer goods; and A restructuring of many of the nation's various subsidy programs. However, some analysts argue that many Indians are skeptical about economic reforms in general, thus posing a "marketing" problem for the government in a democratic system. Some suggest that even segments of the private sector oppose reform efforts. Still, representatives of the Indian business community insist that all of New Delhi's progress in economic reform has been voluntary and is not made under external pressure, and that the general path of liberalization will continue to be followed regardless of what party or coalition is in power. New Delhi's current ruling United Progressive Alliance (UPA) coalition was seated in May 2004, when the INC, long associated with the Nehru-Gandhi families, won 145 of the Lok Sabha's 543 seats and built a ruling coalition with the support of 14 smaller parties. The election unseated a National Democratic Alliance (NDA) coalition led by the Bharatiya Janata Party (BJP), which had been in power under Prime Minister Atal Vajpayee since 1998. Some analysts saw in the election results a rejection of the BJP's neo-liberal economic reform program. INC President Sonia Gandhi surprised supporters and opponents alike by declining to assume the office of prime minister, instead nominating her lieutenant, Manmohan Singh, a former finance minister. The May 2004 poll results were notable for the best-ever national showing of a leftist alliance—commonly known as the Left Front—led by the Communist Party of India (Marxist) (CPI-M). Although this Left Front is not part of the UPA coalition, it provides crucial parliamentary support from the outside and was described as being "militant" in its opposition to the BJP's privatization efforts. The CPI-M seated the third largest number of parliamentarians in 2004 (43), but its vote bank is almost wholly limited to the states of West Bengal and Kerala. Immediately following the election, investor fears that a coalition government including communists might curtail or halt India's economic reform and liberalization process apparently led to huge losses in the country's stock markets. Market recovery began when INC leaders quickly offered assurances that the new government would be "pro-growth, pro-savings, and pro-investment." Indian industrial leaders also sought to assure foreign investors that Left Front members are not "Cuba-style communists," but could be expected to support the UPA reform agenda. The Chief Minister of West Bengal, Buddhadeb Bhattacharya, a CPI-M member, has himself actively sought corporate investment in his state. However, since coming to power, the Congress-led coalition has slowed certain aspects of its economic reform program, including suspending major disinvestment and special economic zone initiatives. These moves are widely viewed as gestures to the Left Front. While there are indications that both Prime Minister Singh and party chief Gandhi remain fairly popular figures in India, February 2007 state elections in Punjab and Uttaranchal saw INC candidates decisively defeated by the main opposition BJP and its allies, causing some pundits to suggest that national economic policies and rising inflation may be damaging the ruling coalition's standing. Some analysts saw the "neoliberal policies" of the UPA as harming its electoral position. In June, eight regional parties formally launched a new "Third Front" that might emerge as a national alternative to the UPA and NDA. Well-known Tamil Nadu leader Jayalalithaa is likely to lead. August 2007 political wrangling between the UPA and its Left Front allies over planned U.S.-India civil nuclear cooperation (the leftists oppose the plan) has added to political instability in New Delhi and led some to foresee early national polls if Singh's coalition loses Left Front support. Several governmental figures and trade-related institutions wield influence over India's economic policies. The following is a selected listing of key economic players in the current government: Prime Minister Manmohan Singh , INC member and widely-respected Oxford-educated economist who, as finance minister from 1991-1995, was the architect of a comprehensive set of national economic reforms; INC President Sonia Gandhi , the Italian-born widow of former Prime Minister Rajiv Gandhi, while not formally a member of the central government, oversaw the UPA's 2004 poll victory and wields considerable influence over the coalition's policy making; Finance Minister Palaniappan Chidambaram , a Harvard-educated lawyer from the southern state of Tamil Nadu (and member a regional affiliate of the INC) who served as finance minister in the late1990s, is considered to be a highly-competent, pro-market fiscal manager; Commerce and Industry Minister Kamal Nath , an INC stalwart from the east-central Madhya Pradesh state, has launched major trade policy initiatives and is a key interlocutor for the U.S. government; Planning Commission Deputy Chairman Montek Singh Ahluwalia , a widely-respected, Oxford-educated economist who works directly under Prime Minister Singh and has close ties to Washington; Oil Minister Murli Deora , INC member and former mayor of Mumbai who was appointed in 2006, by some accounts due to pressures for a more pro-business, pro-U.S. oil minister; Power Minister Sushilkumar Shinde , an INC stalwart and former Chief Minister of Maharashtra; CPI-M General Secretary Prakash Karat , a vocal critic of many economic reforms and of India's warming relations with the United States, is the most notable leader of the UPA-supporting Left Front; BJP President Rajnath Singh , a Hindu nationalist from the Uttar Pradesh state who served in the government of former Prime Minister Vajpayee, is seen as a new-generation leader for India's main opposition party and has been critical of the UPA for slowing the process of economic reform; The Federation of Indian Chambers of Commerce and Industry (FICCI) , a nationwide grouping of corporations, chambers of commerce, and business associations that claims to speak directly or indirectly for more than 250,000 Indian business units; and The Confederation of Indian Industry (CII) , a nongovernmental industry group with a membership of more than 6,300 private and public sector organizations that employs advisory and consultative processes aimed at improving India's business climate. For many years, political power in India was monopolized by the Indian National Congress. However, starting in the 1970s, INC dominance was challenged by the emergence of other, increasingly influential political parties. In 1977, nearly 30 years after independence, the Janata Dal Party's Morarji Desai became India's first-ever non-INC prime minister. Later, in the 1980s, political party fragmentation in India led to an era of coalition governments, variously led by the INC, the Janata Dal, or the BJP. As noted above, no party has won a national election outright since 1984. India's political landscape offers no clear division between proponents and opponents of economic reform. Prime Minister Nehru and the INC oversaw decades of centralized economic planning—and today the UPA coalition relies on leftist forces that strongly oppose liberalizing policies—yet it was also later INC governments that launched India's major reform and liberalization programs. At the same time, the main opposition BJP accelerated "second generation" economic reforms during its time in power from 1998 to 2004, even as the BJP is home to some Hindu nationalist and " swadeshi " (self-reliance) forces that maintain a deep scepticism of neo-liberal economic systems. Generally perceived as being a center-left coalition, the UPA is an alliance among the INC and 14 smaller regional parties, including the Bihar-based Rashtriya Janata Dal (RJD) and the Dravida Munnetra Kazhagam (DMK) of Tamil Nadu. INC members hold about two-thirds of the coalition's 219 Lok Sabha seats, as well as all of the four major cabinet posts (External Affairs, Defense, Home, and Commerce). In forming a government, the UPA coalition created a "Common Minimum Program," a document providing the basic principles of governance that would guide the UPA, along with a policy framework for specific issue-areas. Left Front support for the UPA—which is necessary for the coalition to maintain majority status in the Parliament—has been predicated on government strategies that were seen as compatible with the provisions of the Common Minimum Program. In addition to taking credit for India's dramatic economic growth during the 1990s and criticizing the BJP for "mismanaging" the economy in general and reform efforts specifically, the INC's economic agenda for the 2004 elections, entitled "An Expanding Economy, A Just Society," called for achieving up to 10% annual GDP growth, while also seeking a shift of emphasis from a rapid rate of growth to "a specific pattern of growth" that would benefit all segments of the population, with ambitious (and far from realized) promises to "abolish" an array of societal ills, including hunger, unemployment, poverty, and illiteracy. A major aspect of this proposed effort would involve creating "a congenial atmosphere" for both domestic and foreign investment. The INC also blamed the BJP-led government for abject failure in the agricultural sector (which employs more than two-thirds of India's workforce), vowing major public investments in rural infrastructure. The right-leaning NDA, which held power in New Delhi from 1998-2004, is dominated by the BJP, which holds nearly three-quarters of the alliance's 189 Lok Sabha seats (12 smaller regional parties hold the remainder). The surprise emergence of the BJP as a national political force in the early 1990s gave voice to a repudiation not only of the Nehru-INC secular version of Indian nationalism, but also of its concepts of state-directed economic planning. Instead, the BJP called for major liberalization efforts, including abolition of India's complex system of permits and licenses, as well as a selling off of most public sector enterprises. Many early BJP economic policy recommendations were, in fact, adopted by Prime Minister Rao's INC government in the early 1990s. However, the BJP subsequently moderated some of its liberalization policies, and also had to deal with tensions between Hindu nationalism and the entry into India of major multinational corporations, which some feared would lead to an erosion of "Hindu culture." This led to measured support for trade protectionism and what the party called "calibrated globalization." While also asserting a goal of "complete eradication of poverty and unemployment," the BJP's 2004 economic agenda was more enthusiastic about unfettered continuation of economic reform efforts and did not place the same degree of emphasis on "social justice" as did the INC. The NDA's premier statement in 2004 promised an energetic continuation of economic reforms across a multitude of sectors. BJP leaders subsequently have been critical of the INC-led government for significantly slowing the reform process, sometimes accusing the UPA of buckling under pressure from leftist parties. Moreover, the BJP has been critical of the way in which the Singh government has entered into an agreement on civil nuclear cooperation with the United States, claiming that provisions of such an agreement will constrain India's nuclear weapons program. Organized resistance to proposed economic reforms has come from Hindu nationalist groups that were influential under the BJP government from 1998 to 2004. As a "sister organization" to the Rashtriya Swayamsevak Sangh—a leading Hindu nationalist organization—the Swadeshi Jagaran Manch (SJM) has taken the lead in efforts to forward the swadeshi (self-reliance) cause. According to the SJM, "The Western notion of a global market does not fit into the swadeshi approach," nor does the "Western notion of individual freedom, which fragments and compartmentalizes family, economy, culture, and social values...." Such anti-globalization policies continue to enjoy limited, but still substantial backing among Indians. The swadeshi lobby did, however, welcome the UPA's Common Minimum Program document in 2004. Long-time and bitter rivals of the INC, India's major communist parties now provide outside support to the INC-led ruling coalition as part of their mutual efforts to keep the BJP from power. The current Left Front alliance is dominated by the CPI-M and, secondarily, the Communist Party of India, which combine to account for about 85% of its 60 Lok Sabha seats. During the 1950s—and in correspondence with growing Soviet support for the new Indian state—India's various communist groups resolved to abjure revolutionary ideology and work within the parliamentary system. These parties, however, remain proponents of government-directed economic and industrial development, moderate land reform programs, and strong labor protection laws. Initially and still nominally opposed to the essence of New Delhi's reform and liberalization efforts since 1991, communist party leaders in their stronghold of West Bengal have continuously sought both domestic and international investments in their state, thus demonstrating a willingness to compromise in some areas of economic policy. Still, such leaders maintain an intensive focus on caste-based and poverty issues, styling themselves as the champions of minority groups and farmers, along with a deep-seated scepticism about the intentions and goals of U.S. and Western political, military, and economic interests in India. On economic policy, the Left Front has taken firm stands against raising limits of foreign direct investment, against government efforts to privatize public sector enterprises, and against the government's initial plans to launch hundreds of Special Economic Zones in India. Along with its considerable influence at the national level, the Left Front wields administrative power in the states of Kerala and West Bengal, where important trade unions have caused disruption in the course of major strikes and protests over inflation and unemployment. Since 2004, the Left Front has accused the UPA government of "serious violations" of the Common Minimum Program, including its planned disinvestment from a major public sector undertaking (PSU) in the summer of 2006. Communist parties characterize such moves as "anti-working class, neoliberal" policies being pushed by the UPA coalition. Moreover, these parties view New Delhi's apparent pro-U.S. foreign policy tilt as accentuating such neoliberal initiatives. It is the Left Front's opposition to "alliance" with the United States that is at the root of its vehement opposition to planned U.S.-India civil nuclear cooperation. India's political and economic situation is complicated by sharp regional contrasts in its economy. While some cities and states are relatively prosperous and modern, many others are seriously underdeveloped with significant poverty. These regional disparities not only have substantive impact on economic policies, they also influence the nation's politics. What follows is a brief summary of India's major geographic regions. (See Figure 14 , "Map of India.") Western India is a relatively prosperous region of the country. The state of Maharashtra, home to Mumbai (formerly Bombay)—a megacity, the world's third most populous and India's business and entertainment capital—is among the most urbanized of states, with some 42% of its citizens living in cities, more than half of these in slums. Despite an abundance of urban poor, the state ranks relatively high in measures of health, education, and infrastructure, and Mumbai itself has some of the world's highest real estate prices. Further to the west, the state of Gujarat has a particularly productive agricultural sector and is said to be the region's most lucrative investment environment, with social and infrastructure measures nearing those of Maharashtra. Other western states of Rajasthan and Madhya Pradesh rank in the middle-range on such measures. In the southwest, the small state of Goa—a former Portuguese colony—has the country's highest per capita income. The Delhi National Capital Territory is another Indian megacity. It is also the most affluent of India's administrative districts, with a per capita income double the national average. In fact, along with Delhi, the medium-sized northern states of Punjab, Himachal Pradesh, and Haryana form India's most prosperous region, as well as its largest market for many products and services. However, immediately to the east, Uttar Pradesh is the most populous and among the poorest of Indian states, consistently ranking low in development measures. Further to the north and isolated by mountainous terrain is the Jammu and Kashmir state, which has been suffering the effects of a religious-based insurgency since 1989. Still, "J&K" has relatively low poverty rates. Much of the recent global attention on India has focused on its fast-growing states of Karnataka and Andhra Pradesh, which (along with Delhi) have been at the forefront of the country's widely-touted software and information technology boom. Their respective capital cities—Bangalore and Hyderabad—have earned fame as emerging hubs for high-technology research and services, as well as for business process outsourcing (BPO) centers which serve many of the world's largest corporations. Other major southern states are Kerala, known for its social infrastructure and a 91% literacy rate, and Tamil Nadu, with its major commercial and industrial capital of Chennai (formerly Madras), said by some to be India's best-governed state. Despite the massive infrastructural and environmental problems caused by the rapid growth of its cities, India's southern region has been dubbed the country's most livable by India Today magazine. The numerous states of India's east and northeast face historical and geographical disadvantages that include inaccessibility and several ongoing armed insurgencies. This region thus continues to be India's least developed and its infrastructure remains quite poor. Bihar, India's poorest state, consistently ranks at or near the bottom of most development indices, and Orissa, Jharkhand, and Chhattisgarh are similarly challenged. West Bengal, with the megacity and former British colonial capital of Calcutta (now officially called Kolkata) is eastern India's fastest-growing and most important commercial and industrial center, even as jute and tea represent major cash crops. A stronghold of India's communist parties, West Bengal was also the site of major and lethal March 2007 protests against the establishment of a new special economic zone (SEZ). The "Seven Sisters"—smaller northeastern states connected to the rest of India by a 20-mile-wide "Chicken Neck"—are relatively sparsely populated and are distinguished by considerable religious and ethnic diversity. One result has been armed tribal and separatist conflicts, some of which pre-date Indian independence, that present major obstacles to economic development. India suffers from an increasingly lethal and disruptive conflict with "Naxalites"—Maoist insurgents ostensibly engaged in violent struggle on behalf of landless laborers and tribals. As many as 20,000 armed rebels, active mainly in inland areas of southern, eastern, and central India, claim to be battling oppression and exploitation in order to create a classless society. Their opponents call them terrorists and extortionists. The groups get their name from Naxalbari, a West Bengal village and site of a militant peasant uprising in 1967. In 2006, Prime Minister Singh identified a worsening Maoist insurgency as "the single biggest internal security challenge" ever faced by India, saying it threatened India's democracy and "way of life." The U.S. State Department's Country Reports on Terrorism 2006 warned that actions of the Maoist insurgents "grew in sophistication and lethality" during 2006. Naxalites now operate in about half of India's 28 states; Andhra Pradesh and, more recently, Chhattisgarh have been particularly hard hit (Naxalites were behind a 2003 landmine attack that nearly killed the chief minster of Andhra Pradesh). Related violence caused more than 700 deaths in 2006, including nearly 300 civilians, and has not waned in 2007. The insurgents are seen to have a detrimental effect on economic development in some regions of India. During his first visit to Hyderabad in 2005, U.S. Ambassador to India David Mulford reportedly said that he and potential U.S. investors had been concerned about Maoist violence in Andhra Pradesh, but received "good answers" about the investment climate from area business leaders. Still, Maoist attacks on roads, railways, and other infrastructure targets can retard development in affected areas, and the rebels are most active in those Indian states that contain the great bulk of the country's coal supplies, raising a further threat to energy security. Over the last five years, India has been one of Asia's fastest growing economies. Figure 1 shows India's nominal gross domestic product (GDP) for the years 2002 to 2007. In nominal terms, India's GDP grew from 24.5 trillion rupees in 2002 to 40.3 trillion rupees in 2006—an increase of 64% in four years—and is projected to reach 45.6 trillion rupees in 2007. When converted into "real" GDP using a purchasing power parity conversion, India's GDP rose from $3.2 trillion in 2002 to $4.4 trillion in 2006, and is projected to increase to $4.7 trillion in 2007. Much of India's economic growth has been the result of the expansion of its manufacturing and service sectors. Table 1 provides a sectoral breakdown of India's real GDP for fiscal years 1996, 2001, and 2006. Although the value of all three sectors increased, growth in the services sector exceeded that of the manufacturing sector, and the manufacturing sector grew faster than the agricultural sector. As a result, the portion of GDP contributed by the agricultural sector fell, the share of the manufacturing sector declined slightly, and the contribution of the services sector rose. The dominance of the services sector in India's GDP hides the continued importance of agriculture to the Indian population. An estimated 71% of India's population in 2006 lived in rural areas, with over half of those people living in villages of less than 5,000 people. While there has been growth in non-agricultural employment in India, about two-thirds of India's male population in 2004 continued to work primarily in agricultural activities. Another worrying aspect of the recent restructuring of India's economy has been a surprising lack of job creation. In other nations, when the economy exhibited rapid economic growth, along with a shift from agriculture to manufacturing to services, there was a corresponding rise in manufacturing and service employment. However, in India's case, the level of job creation has been low. According to a recent International Monetary Fund country study of India, "employment in the organized sector has remained roughly unchanged at about 27 million over the past decade and a half." Some analysts attribute this to the nature of the manufacturing and services that dominate India's economic growth, claiming that they are typically higher-skilled, professional jobs in contrast to the low-skill work generated in nations that previously experienced rapid economic growth. Others point to India's restrictive labor laws as being a major barrier to job creation. The living conditions for much of India's rural population have improved, but conditions for many remain quite meager. As of 2002, only 27% of India's rural households had access to tap water; over half relied on tube wells or hand pumps for water. Nearly half of India's rural household do not have electricity for lighting, and less than 10% possess a telephone, either landline or cell phone. One government study found that 77% of Indians—more than 830 million people—live on less than 20 rupees (about 50 cents) per day. The U.N. Development Program ranked India 126 th out of 177 countries on its 2006 human development index (between Namibia and Cambodia), up from 127 th in 2005. At the other end of the income scale, India has a substantial number of wealthy people and a large and growing urban middle class. A byproduct of India's growth is the emergence of a relatively prosperous and substantial middle class. India has long had a small wealthy sub-population in both its urban centers and rural communities. In a notable indicator of its growing wealth, India in 2007 beat out Japan as the home of the most billionaires in Asia, with 36. However, its middle class was comparatively small in number. According to one estimate, India's middle class in the mid-1980s constituted less than 10% of the population. Since the implementation of economic reforms, India's middle class has grown in size and affluence. Current estimates vary, but most studies indicate that less than 20% of India's households are in the middle class. The sectoral shift of India's domestic economy is partially driven by the rapid growth in the nation's trade in goods and services. Figure 2 shows the increase in both merchandise and service trade from 1990 to 2005. Between 1990 and 1999, India's total merchandise trade doubled in value and its trade in services trebled in value. Since 1999, India's international trade growth has accelerated. Between 1999 and 2005, India's total merchandise trade and imports of services nearly tripled in value, and its exports of services quadrupled in value. The overall growth of international trade has also created a potential economic problem—a growing trade and current account deficit (see Figure 3 ). From fiscal year (FY) 1997 to 2004, India's merchandise trade balance—exports minus imports—generally ran a deficit of less than $20 billion. However, since FY2004, India's merchandise trade deficit has grown from $13.7 billion to a projected $63.7 billion in FY2007. Along with this rise in India's balance of trade deficit, its current account balance has gone from a surplus of $14.1 billion in FY2004 to an estimated deficit of $14.1 billion in FY2007. The recent rise in India's merchandise exports has been led by the production of oil, ores, metals, motor vehicles, and machinery (see Table 2 ). In 2006, oil displaced jewelry as India's top exported commodity. Nearly three-quarters of India's oil exports in 2006 were high-speed diesel and other fuels. Also, India's exports of ores, slag, and ash increased from less than $500 million in 2000 to almost $4.6 billion in 2006, when more than four-fifths of the value came from exports of iron ore, and more than 86% of these iron ore exports went to China. The buildup in India's exports of motor vehicles and parts has several elements. Nearly a third of the exports—$1.257 billion in 2006—are automotive parts, with the United States as the largest export market, purchasing almost $340 million. The second segment of India's chapter 87 exports are automobiles, worth $1.501 billion in 2006, and shipped principally to Europe. In addition, India also exported a large amount of motorcycles—nearly $319 million worth in 2006. Another notable aspect of India's recent export growth is the relatively poor performance of its past leading exports—jewelry and clothing. In 2000, India's top four exports were jewelry (HS Chapter 71), non-knit clothing (HS chapter 62), cotton cloth and yarn (HS Chapter 52), and knit clothing (HS Chapter 61). By 2006, non-knit clothing had slid to third place and knit clothing had dropped to ninth, despite the expiration of the quotas under WTO Agreement on Textiles and Clothing on January 1, 2005. Despite the rise and fall of other commodities, jewelry remained India's top export in 2006. Within jewelry, India continues to be primarily an exporter of diamonds. In 2006, two-thirds of India's jewelry exports were cut, unmounted diamonds. India's top markets for its diamonds were, in order: Hong Kong ($3.2 billion), the United States ($2.5 billion), Belgium ($1.4 billion), and the United Arab Emirates ($1.2 billion). In contrast to exports, India's top 10 merchandise imports remained relatively stable between 2000 and 2006 (see Table 3 ). Oil was and remains India's top import, and over three-quarters of its oil imports are crude oil. Jewelry remains India's second biggest import, consisting of nearly equal amounts of gold and diamonds to be used by India's jewelry manufacturing industry. The next two top import categories—machinery and electrical machinery—incorporate both consumer goods (televisions, telephones, and computers) and intermediate goods (hard disc drives and integrated circuits). Finally, the fastest growing import category among the top ten, iron and steel, was more than 90% copper imports. The rapid rise in India's merchandise trade has been outdone by even faster growth in trade in services. The value of India's services exports increased 250% between 2000 and 2005, while the value of its services imports increased 176%. In 2005, the total value of India's services trade was $108.3 billion, or nearly half the size of its total merchandise trade. India's services trade surplus in 2005 was $3.9 billion. Figure 4 shows the sharp increase in India's services exports from 1990 to 2005. Although both transportation and travel services experienced strong growth over this time period, much of the rapid expansion in services exports occurred in other service sectors. Over the 15 years in question, India's services exports increased from $4.6 billion in 1990 to $56.1 billion in 2005—more than a 12-fold increase in size. Figure 5 presents the growth in India's services imports between 1990 and 2005. The sectoral composition of growth for services imports is similar to that of exports—transportation services and travel services both increased, but the greatest growth was in the import of other commercial services. Between 1990 and 2005, the value of India's services imports grew almost nine-fold, from $5.9 billion in 1990 to $52.2 billion in 2005. The structural changes in India's economy, the decline in poverty, the emerging middle class and the rapid growth in foreign trade are all seen as stoking the engines of economic growth in India. In fact, there is rising concern that India's economy may be growing too fast, raising fears of that its recent success may soon be followed by a sharp economic downturn. Commentators often point to India's rising rate of inflation as evidence that its economy is growing too fast. After several years of very modest inflation—about 4% per year—the consumer price index (CPI) in India topped 7% in 2006 and remained high in the first half of 2007. In May 2007, the CPI for industrial workers was up 6.6% over the previous month, and the CPI for agricultural workers was up 8.2%. The official government target is to bring inflation down to 4.0-4.5% in 2007, but some analysts project that the consumer price index will stay above 6%. While Reserve Bank of India (RBI) increased interest rates and raised reserve requirements to dampening inflationary pressures in 2006 and 2007, the efforts apparently have not significantly slowed economic growth. The United Nations Economic and Social Survey of Asia and the Pacific project India's economy would grow by 9.0% in 2007, down only 0.2% from its 2006 growth rate. In 2007, the International Monetary Fund (IMF) projected India's GDP would grow by 8.4% in 2007 and 7.8% in 2008. IMF recommendations on how to reduce the risk of the economy overheating focus on lowering the public debt (currently about 80% of GDP), continuing to reduce the general government deficit, and promoting greater job growth. Where the anti-inflationary efforts of the RBI may have affected the economy is India's exports. According to some economists, the higher interest rates have contributed to a significant appreciation of the rupee against the U.S. dollar and the Euro. The stronger rupee, these analysts maintain, is making India's exports less competitive. As will be discussed later in this report, the strength of the rupee is supposedly hitting India's jewelry and clothing exports especially hard. The UPA coalition came into office promising sustained economic growth "in a manner that generates employment." It set out to enact guaranteed employment (for minimum 100-day periods), and major public investment in social programs and in the agricultural and rural sectors. The UPA also vowed to give a high priority to the development of physical infrastructure such as roads, ports, power, railways, water supply, sewage treatment, and sanitation, even offering "explicit" subsidies to bring private sector participation in this area. Economic reforms were to be continued, but with a "human face": The UPA reiterates its abiding commitment to economic reforms with a human face, that stimulates growth, investment, and employment. Further reforms are needed and will be carried out in agriculture, industry, and services. The UPA's economic reforms will be oriented primarily to spreading and deepening rural prosperity, to significantly improving the quality of public systems and delivery of public services, to bringing about a visible and tangible difference in the quality of life of ordinary citizens of our country. The UPA economic priorities were largely welcomed by analysts calling for India to "get over its obsession" with GDP growth and FDI so as to better attend to the needs of common citizens, especially those in the rural, agricultural economies. These observers warn that a single-minded focus on economic expansion facilitates significant damage to the environment and to human health, as well as encouraging corruption. The UPA economic program also addresses many of the economic challenges listed in a July 2006 World Bank report. According to the World Bank, India's most pressing economic issues are: improving the delivery of core public services such as healthcare, education, and power and water supply for all India's citizens; making growth more inclusive by diminishing existing disparities, accelerating agricultural growth, improving the job market, and helping lagging states grow faster; sustaining growth by addressing its fiscal and trade deficits, and pushing ahead with reforms that facilitate growth; and addressing HIV/AIDS before the epidemic spreads to the general public. Prime Minister Singh took office in 2004 insisting that development would be a central priority of the UPA government, with reforms aimed at reducing poverty and increasing employment. He also emphasized that privatization was not part of UPA ideology and that major public sector concerns would not be sold off. The appointment of Harvard-educated lawyer and economic reformer Palaniappan Chidambaram to head the Finance Ministry, and a UPA Common Minimum Program emphasizing economic growth and increased investment, were welcomed by most business interests, even if the pace of privatization and labor reform efforts was expected to slow. In brief, from the start, the Singh government has attempted to walk a tightrope of economic policies designed to maintain its informal coalition government. Any sharp shift, either to the left or the right, might bring about sufficient political opposition from coalition members to destabilize the government. As a result, economic policies over the last three years have been characterized as being modest in scope and uneven in implementation. Eighteen months after taking power, for example, the UPA government was coming under fire for not pushing through a single major economic reform initiative. Many analysts have attributed the government's sidelining of reform initiatives to the influence of the Left Front, yet resistance to economic reform may run deep among a broader spectrum of ordinary Indians, many of whom are distrustful of the motives of an oftentimes corrupt political class. This pattern of fitful gradualism is demonstrable by reviewing the key areas where the Singh government has attempted to make substantive changes in the Indian economy. Because India's government continues to be a major economic force even after the economic reforms of the 1990s, the federal budget is an important indicator of government priorities. In FY2006/2007, the federal expenditures were 11.2% of GDP, and the fiscal deficit was 3.8% of GDP. By comparison, U.S. government expenditures for FY2006/2007 were 19.9% of GDP, and the fiscal deficit was 1.3% of GDP. The UPA's first budget, released in July 2004, generally was lauded by Indian industrial groups as "progressive and forward-looking." Subsequent budgets were similarly greeted by business interests, even as the prime minister and finance minister were seen to be tempering some of their more reformist instincts with heavy social and anti-poverty spending. India's federal budget for FY2007/2008 is an apparent response to the criticisms of economic reforms from both ends of the political spectrum. In part, the budget continues the past program of liberalization, while also giving greater attention to the agricultural sector and efforts to provide more assistance to India's poor. Such efforts are still viewed by the Left Front as being insufficient; this faction accuses the Singh government of prioritizing expenditure reduction over services for the poor. Meanwhile, opposition BJP leaders have criticized UPA budgets for slowing or even abandoning economic reform programs. One of the more difficult components of the government's budget is its efforts on poverty reduction. In August 2005, the lower house of India's Parliament passed a $9 billion jobs bill promising guaranteed work for up to 25 million of India's poorer citizens. Some critics called the initiative the kind of "socialism" that diverts scarce resources to efforts that have failed in the past, with most funding being lost to administrative costs and corruption. Yet the World Bank supported the policy, predicting it would help sustain growth. Having rebuffed the previous critics, in February 2006 the Singh government formally launched the country's most ambitious anti-poverty initiative that would provide guaranteed jobs for one member of each of India's 60 million rural households. Another chronic budgetary problem is balancing needs with resources. As described below, India has seriously underinvested in infrastructure for decades. However, a culture of tax evasion limits funds for public services. One report has only 30 million Indians paying any taxes and only 15% of federal government revenue coming from tax collection. India continues to retain remnants of its pre-reform "democratic socialist" economy. Three strategic sectors of the economy—railroads, nuclear power, and military aircraft and warships—remain state monopolies and closed to the private sector. However, the Singh government is continuing the privatization policies of its predecessor, but at a more gradual pace. Within the government, the Department of Disinvestment of the Ministry of Finance oversees India's privatization program. The privatization slowdown has not proven to be acceptable to elements of the UPA coalition. In July 2006, Prime Minister Singh announced that all government disinvestment decisions would be put on hold following opposition from the DMK party, a powerful Tamil Nadu-based member of the ruling coalition. The move was criticized by industrial groups. Barely a month later, the Singh government announced that it was abandoning plans to sell more than a dozen state-owned companies in what many analysts saw as a gesture to the Left Front parties which support the ruling coalition in New Delhi. However, the government appeared to be renewing its efforts in 2007 with a February decision to join a disinvestment process involving three publicly-owned power companies. Domestic business interests and potential foreign investors complain that India's labor laws are biased against employers and often prevent them from making high-risk investments. A culture of strict government oversight of the labor market is illustrated by the existence of 47 national laws and nearly 180 state-level laws meant to monitor its functioning. Work stoppages cause millions of lost human-days of labor each year and the country's courts are clogged by hundreds of thousands of pending labor disputes. In February 2005, Prime Minister Singh unveiled a blueprint for labor sector reforms. Singh later admitted that Indian labor laws were "rigid," reportedly saying, "We cannot move straightforward to the Western or the American model of hire and fire, quite frankly. I don't see that there is today a climate of opinion which will go to that extreme." More than two years after it was announced, and despite the prime minister's efforts to create a working consensus on the issue, the reform initiative has been effectively stalled by the UPA's Left Front allies. The urgent need for extensive investment in India's infrastructure is rarely questioned. The premiere report of the U.S.-India CEO Forum from March 2006 identified India's poor infrastructure as one of two key impediments to increased bilateral trade and investment relations (the other being India's dense bureaucracy). At a 2005 Economic Summit in New Delhi, Finance Minister Chidambaram acknowledged the problem, telling an audience of international business leaders and policy makers that India needs major investments in infrastructure such as roads, ports, and electricity generation. He asserted that a more liberal policy on bringing in foreign capital would be a key to this endeavor. Electricity shortages are especially acute and are widely believed to be seriously hindering the country's economic potential. Reports indicate that massive flooding in Mumbai in the summer of 2005 further exposed what was called India's economic "Achilles heel" (poor infrastructure). Another representative story describes the "utter chaos" common at New Delhi's international airport and the deterrent effect this can have on foreign visitors. The Singh government is attempting to address decades of underinvestment in infrastructure, but financing problems continue to hinder this effort. New Delhi estimates that the country will need up to $350 billion in infrastructure investment over the next five years. Some of this funding may come from India's record-high pool of foreign exchange reserves, and Indian officials hope that as much as one-quarter will come from foreign investors. Further reform in India's financial sector may be key to raising capital for infrastructure projects. In FY2007/2008, the central government plans to spend more than $46 billion on infrastructure development. According to the Indian Planning Commission's Committee on Infrastructure (created in August 2004), current initiatives include a 15-year, multi-billion-dollar project to widen and pave 40,000 miles of national highways; a $5 billion plan to build a dedicated freight railway; extensive renovation of 276 seaports, including bringing 12 major ports up to "world-class standards"; the modernization and expansion of the New Delhi and Mumbai airports (which were privatized in 2006), along with other major airports such as those in Kolkata and Chennai; further expansion of telecommunication networks; and large-scale investment in new power plants. Some of these efforts are not without their opposition from well-entrenched stakeholders, however. One of the more controversial elements of India's recent economic reforms are the special economic zones (SEZs) across the country. Modeled in part after China's SEZs, the goal was to develop new industrial areas near India's rural population to create alternatives to agricultural employment. Firms operating in the SEZs are expected to be net foreign exchange earners. Investment may come from public or private companies; foreign companies may also operate in the SEZs. There are a number of tax, tariff, and regulatory incentives offered to companies that operate in the SEZs. At the time of this writing, a total of 234 SEZs have been approved by the Indian government. The most controversial aspect of the SEZ policy is the acquisition of land. Indian law grants the Indian states the power of eminent domain over land, with relatively little recourse for the land owner to appeal the compensation for appropriated land. In some cases, the land acquired for the SEZs was take from local farmers, rather than from fallow areas. Some farmers have complained about their displacement from the land, which they viewed as a source of economic stability and their primary store of wealth. The SEZ policy has elicited energetic opposition from interest groups representing the political left and right, alike. Some critics says that building SEZs on fertile agricultural land will impoverish farmers without adequate compensation. Even INC chief Sonia Gandhi openly opposed exposing farmers to "unscrupulous developers." Other opponents, including India's finance minister, warn that the government will be denied billions of dollars in tax revenues lost due to special concessions offered to participating firms. In October 2006, the Left Front parties demanded extensive curbs on the SEZ initiative. There have been a number of violent protests and deaths associated with the establishment of SEZs in India. In January 2007, at least seven people were killed during protests about the establishment of an SEZ in Nandigram, West Bengal. Reports implicate the local police and supporters of the ruling CPI-M Party in the deaths. Then, on March 14, at least 11 more protesters were killed in Nandigram, again during demonstrations against the SEZ. As a result of the continued protests and violence, the SEZ policy has been put on hold by Prime Minister Singh. India's trade policies have generally been coordinated with its overall economic policies. Prior to the economic reforms of the 1990s, India utilized a fairly comprehensive import licensing system to control the import of goods. The import of a number of products was banned and over 1,400 products faced quantitative restrictions. With the advent of the economic reforms, India started a gradual process of transforming its import control mechanisms from quantitative restrictions to a tariff-based system that favored the import of some types of products, but deterred the import of other types of products. In some cases, tariff rates were significantly raised when the import restrictions were lifted. A side effect of the change in trade policy was the rising importance of import tariffs for India's federal budget. In fiscal year 1996/97, tariffs provided one third of India's gross tax revenue. Over the last few years, India has been simplifying its import policies by lowering tariffs, reducing the variation in tariff rates, and eliminating import licensing requirements. The stated goal is to reduce tariffs towards levels found among Association of South East Asian Nations (ASEAN) members. However, while India has been lowering its various import barriers, it has become a leading nation in the filing of antidumping measures with the WTO. Following the passage of the 1995 amendment to its 1975 Customs Act, which established India's antidumping and countervailing duty procedures, India began filing a large number of antidumping notifications. Between 1995 and 2001, India made 250 such notifications. As of June 30, 2006, India had 174 antidumping measures in force on products from 30 different WTO members, including 11 measures on U.S. products. India's tariff system has long had a reputation of being complex and opaque. Besides having a comparatively high average tariff rate, India also had a more dispersed range of tariff rates, even among similar types of products. Moreover, India had many exemptions or exceptions to the standard "most favored nation" (MFN) tariff rate, making it difficult for foreign companies to determine the correct tariff rate for their exports. Finally, there were frequent reports of uneven enforcement of existing tariff laws, as well as claims of arbitrary evaluation of imported goods. Most of these perceived problems with India's tariff system have improved with the lowering of its average tariff rate and the simplification of its tariff schedule. In fiscal year 1991/92, just before the start of its economic reforms, India's average tariff rate was almost 130%. According to the WTO, in fiscal year 1997/98, India's average tariff rate was 35.3%, with a peak rate of 260%, but by fiscal year 2001/2002, the average rate had declined to 32.3%, with a peak rate of 210%. By 2005, India's average tariff rate was down to 19.5%. Along with the lowering of tariff rates, India also reduced the number of different tariff rates it charged. For fiscal year 2006/07, the tariff rate became 30% for most agricultural goods and 12.5% for most non-agricultural goods. However, the peak tariff rates for agricultural goods is 100% and for non-agricultural goods is 182%. Two product categories that remain exceptions to India's tariff reduction and simplification are textiles and clothing. Prior to the elimination of import licenses for textile and clothing imports in April 2001, India introduced specific duties for a range of fabrics and apparel. These duties generally involved the imposition of the higher of two tariffs—one calculated on a percentage basis; the other calculated by a fixed amount per kilogram or square meter. According to one estimate, depending on the unit price of the imported textile or garment, the implicit tariff rate could be as high as 63%. In fiscal year 2006/07, many products in HS chapters 50 to 63 still face this two-track duty system. Although most of India's import restrictions have been lifted, there remain a small set of goods that are either prohibited, controlled or monitored. Import bans are either due to existing international obligations (for example, the international ban on trade in ivory) or on health and safety concerns. In March 2007, India banned the import of live poultry, pigs, and pig meat products from countries with bird flu outbreaks. India also controls the import of some products by means of stringent regulations. Finally, India regulates imports by means of monitoring import flows. Among these items are: milk products, fruits, nuts, coffee, tea, spices, cereals, oilseeds, edible oils, alcoholic products, silk, and toys. In its 2007 report on foreign trade barriers, the United States expressed concern about several other aspects of India's trade policy beyond its tariff rates and import restrictions. According to the report, India provides trade-distorting subsidies for di-ammonium phosphate (DAP) fertilizer. Also, the report is critical of Indian Customs for the "extensive documentation" it requires, as well as its apparent application of "discretionary customs valuation criteria to import transactions." In addition, the United States is concerned about India's standards and certification requirements, especially as they pertain to sanitary and phytosanitary measures. In some cases, the United States believes that the scientific basis of the standards is questionable; in other cases, it sees the certification requirement as forming a non-tariff trade barrier. Economic and trade relations between the United States and India have been problematic in the past, but are currently considered comparatively cordial. U.S. policymakers often identify in the Indian political system shared core values, and this has facilitated increasingly friendly relations between the U.S. and Indian governments. In addition, the trade and investment reforms implemented by India over the last 15 years have generally fostered improved trade relations. Indian officials opine that the two national economies present "complimentary business interests rather than a standard developed-developing relationship." However, the improvement in trade relations has been punctuated by episodic problems, generally based on political—rather than economic—differences of opinion. A major divergence came on May 13, 1998, when the United States imposed trade sanctions on India in response to its nuclear weapons tests. Regardless of which nation's trade statistics are considered, the value of merchandise trade between India and the United States has picked up dramatically over the last 20 years. In 1986, according to U.S. trade statistics, the total value of bilateral trade with India was $4.0 billion. By 2006, the total value of bilateral trade had risen to $31.9 billion—nearly an eight-fold increase. However, despite the rapid growth in the value of trade, the relative importance of the other nation to its total trade declined markedly in the late 1960s—a decline from which it has not recovered. Figure 6 shows the value of India's exports to and imports from the United States from 1958 to 2006, according to data reported by the Indian government to the International Monetary Fund (IMF). The graph shows that both India's exports to and imports from the United States were relatively low in value and subject to fluctuations from 1958 to about 20 years ago. However, since the mid-1980s, U.S. imports from India have steadily increased in value while India's exports to the United States have shot up dramatically. Despite the recent strong growth in trade flows in both directions, the relative importance of the U.S. for India's imports has actually declined over the last 40 years, while its share of India's exports has rebounded (see Figure 7 ). In the mid-1960s, nearly one-fifth of India's exports went to the United States, and the United States supplied India with over one-third of its imports. In 1981, the United States had declined in importance, purchasing just over 11% of India's exports and supplying less than 10% of its imports. In 2006, the United States purchased 17.4% of India's exports—almost the same percentage as in 1961—but only provided India with 5.9% of its imports. As a result, the United States was India's largest export market in 2006, and its third largest source of imports. An examination of U.S. statistics for bilateral trade with India reveals a similar pattern as India's data. Figure 8 shows official U.S. trade statistics for the same time period as Figure 6 . In value terms, U.S. exports to India and India's exports to the United States are comparatively low in value and flat until the mid-1980s. After a significant increase in the 1980s, U.S. imports from India rise rapidly starting in the early 1990s. U.S. exports to India also pick up in value starting in the early 1990s, but not at the same pace as imports from India. The role of India in U.S. merchandise trade flows has undergone a similar, but less dramatic, change as was seen for the importance of the United States for India's trade (see Figure 9 ). In the mid-1960s, India provided the United States with about 3% of its imports and purchased about 1.5% of its exports. Both of these percentages slid to under 1% in the 1970s. Since then, India's importance as a supplier of U.S. imports has risen slightly and slowly to 1.2% while India's share of U.S. exports has increased modestly to 1.0% after falling to 0.4% in the early 1990s. As a result, India was the 21 st largest export market for the United States in 2006 and its 18 th largest supplier of imports. There are some differences between official U.S. and Indian trade data on what the top traded commodities are between the two countries. In some cases, the difference is only in the value and ranking of the leading traded goods. However, in other cases, there are significant differences in the value of goods exchanged, leading to differences in the top traded items. Table 4 lists the top five commodities imported and exported according to U.S. and India trade statistics in 2006. The United States and India agree that the top U.S. exports to India in 2006 included machinery, electrical machinery, optical & medical instruments, and aircraft, but disagree on the value of those exports and their relative ranking. Similarly, both nations report that the top Indian exports to the United States in 2006 included jewelry, woven apparel, knitted apparel, and miscellaneous textile articles. There are differences between the two countries over the last commodity in their respective top five exports to each other. U.S. data indicates that missing commodity category for top five exports to India is jewelry, but Indian data says it is fertilizer. Similarly, Indian trade authorities list machinery as its fifth largest export to the United States, but U.S. trade figures place electrical machinery as the country's third largest import from India. While there are minor differences in the trade figures for bilateral U.S.-India merchandise trade, both nations recognize that China is a rising competitor to the United States. According to India's trade statistics, China became India's leading source of imports in 2004, displacing the United States (see Figure 10 ). In 2000, U.S. exports to India were worth nearly $2.9 billion—nearly twice the value of China's exports to India. By 2004, China's exports to India totaled $6.0 billion, and U.S. exports to India were $5.7 billion. In 2006, U.S. exports to India totaled $9.9 billion, but China's exports to India had risen to $15.6 billion. The United States remains India's leading trading partner on the strength of India's exports to the United States. The value of such exports more than doubled from $9.3 billion in 2000 to $18.7 billion in 2005. Over the same time period, India's exports to China increased from $0.7 billion to $7.8 billion—a more than 10-fold increase. As a result, India's total trade with the United States rose from $12.2 billion in 2000 to $28.6 billion in 2006, while its total trade with China jumped from $2.2 billion to $23.3 billion. To summarize, from both the U.S. and Indian perspective, there has been a recent rapid increase in bilateral merchandise trade flows, with India's exports to the United States our performing U.S. exports to India. However, despite the rise in the value of bilateral trade, the relative importance of the other country to the nation's external trade volume has remained small and is well below levels seen in the decade immediately following India's independence. Also, over the last five years, India's trade with China has grown more rapidly than trade with the United States. As a result, China has already surpassed the United States as India's leading source of imports, and may soon become India's largest trading partner. According to the U.S. Bureau of Economic Analysis, bilateral trade in services in 2005 totaled just over $10 billion—about one-third the size of the nation's merchandise trade with India (see Table 5 ). However, many analysts believe that bilateral trade in services has greater potential for rapid growth in the near future than merchandise trade. As a result, there is increased interest in service trade relations between the United States and India, including a proposal for a U.S.-India free trade agreement in services. In contrast to merchandise trade, bilateral service trade was nearly balanced in 2005, after a period of service trade surpluses for the United States. Between 2000 and 2005, bilateral services trade increased 130%, compared to 90% growth in bilateral merchandise trade over the same five year span. Trade in transportation services is a major component of the bilateral trade. In 2005, the United States exported about $1.5 billion worth of transportation services to India, and imported a nearly identical amount of such services from India. India and the United States also exchanged a large amount of professional services, with U.S. exports worth $462 million in 2005 and imports of $597 million. The recent growth in U.S. foreign direct investments (FDI) in India parallels the growth in bilateral trade. After steady, modest growth during the 1990s, U.S. investments in India rose dramatically between 2001 and 2005, according to official U.S. data (see Figure 11 ). Between 1990 and 2000, U.S. investments in India rose from $372 million to $2.4 billion—an increase of over $2 billion over 10 years. Over the next five years, U.S. FDI in India increased by over $6 billion to $8.5 billion. Over the 15 year period, the total value of U.S. FDI in India increased 22-fold. Despite the rapid growth in U.S. investments in India, the nation remains a relatively small destination for overseas U.S. investors. As of 2005, less than one-half of one percent of U.S. direct investment overseas was located in India. U.S. investments in India are about half the size of its investments in China, less than a quarter of the size of U.S. investments in Hong Kong, and nearly a sixth the size of U.S. investments in Singapore. Overall, India ranked 31 st in 2005 for locations for overseas U.S. direct investments. If the United States views India as a growing, but comparatively minor market for its overseas investments, the United States is an important source of foreign direct investment for India. According to India, the United States had $4.913 billion in investments in India as of December 2005, making the United States the second biggest investor in India and representing 16.1% of all foreign direct investment in India. There are, however, forces that may increase the importance of India for U.S. companies looking for overseas investment opportunities. With multinational firms anticipating increased labor costs and a growing labor shortage in China, India's large, educated, English-speaking young workforce may become more appealing. Nearly two-thirds of the recent FDI in India went into the manufacturing rather than services sector. Meanwhile, Indian companies have in recent years been buying up overseas firms. An example of Indian company actively involved in overseas FDI is the Tata Group. In 2000, the Tata Group bought Britain's Tetley Tea brand. In June 2006, a Tata subsidiary purchased Eight O'Clock Coffee for $220 million, which has a majority share in the U.S. branded whole bean coffee market. Then, in January 2007, Tata Steel took over Corus, a European steel company, for over $11 billion. According to an IMF report, India's overseas acquisitions for the first nine months of 2006 totaled over $7.2 billion. India and the United States have not signed either a bilateral trade agreement or bilateral investment treaty. Their bilateral trade relations are principally governed by the terms of their memberships in multilateral organizations, such as the World Trade Organization (WTO) and the International Monetary Fund (IMF). There are, however, four specific bilateral relationships that have affected or will likely affect trade relations between India and the United States. India's status as a non-signatory to the 1968 Nuclear Nonproliferation Treaty (NPT) has kept it from accessing most nuclear-related materials and fuels on the international market for more than three decades. New Delhi's 1974 "peaceful nuclear explosion" spurred the U.S.-led creation of the Nuclear Suppliers Group (NSG)—an international export control regime for nuclear-related trade—and the U.S. government further tightened its own export laws with the Nuclear Nonproliferation Act of 1978. In a major policy shift, the July 2005 U.S.-India Joint Statement asserted that, "as a responsible state with advanced nuclear technology, India should acquire the same benefits and advantages as other such states," and President Bush vowed to work on achieving "full civilian nuclear energy cooperation with India." As a reversal of three decades of U.S. nonproliferation policy, such proposed cooperation stirred controversy and required changes in both U.S. law and in NSG guidelines. India reciprocally agreed to take its own steps, including moving 14 of its 22 nuclear reactors into permanent international oversight by the year 2014 and placing all future civilian reactors under permanent safeguards. After many months of deliberation and multiple hearings involving Administration and non-governmental experts, the 109 th Congress passed enabling legislation near the end of its term. President Bush signed the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 (or "Hyde Act") into law in December 2006 ( P.L. 109-401 ). The final bill language made significant procedural changes to the Administration's original legislative proposal, changes that sought to retain congressional oversight of the negotiation process, in part by requiring the Administration to gain future congressional approval of a completed peaceful nuclear cooperation agreement with India (this is often referred to as a "123 Agreement," as it is negotiated under the conditions set forth in Section 123 of the Atomic Energy Act). Congressional conferees also provided a 30-page explanatory statement ( H.Rept. 109-721 ). U.S. proponents of the civil nuclear initiative with India assert that, in addition to bringing India "into the nonproliferation mainstream," it has the potential to reduce pressures on global energy markets, reduce carbon emissions/greenhouse gases, and benefit progress of the broader U.S.-India "global partnership." India seeks access to U.S. nuclear technology as part of a national program to improve its energy infrastructure. U.S. business interests are eager benefit through the export to India of nuclear reactors, fuel, and support services. The U.S. Chamber of Commerce, which, along with the U.S.-India Business Council, lobbied vigorously in favor of President Bush's initiative, speculated that civil nuclear cooperation with India could generate contracts for American businesses worth up to $100 billion, as well as generate up to 27,000 new American jobs each year for a decade. However, foreign companies such as Russia's Atomstroyexport and France's Areva may be better poised to take advantage of the Indian market. Moreover, U.S. nuclear suppliers will likely balk at entering the Indian market in the absence of nuclear liability protection, which New Delhi does not offer at present. In 2007, U.S.-India negotiations toward finalizing a 123 Agreement proved contentious, as New Delhi expressed significant dissatisfaction with some aspects of U.S. conditions (these included provisions to end civil nuclear cooperation in the event that India tests a nuclear device, and an absence of assurances of uninterrupted fuel supplies or prior authorization for India's reprocessing of spent fuel). Influential political elements in India—including the Left Front, the main opposition BJP, and members of the nuclear scientific community—voiced strong disapproval of the proposed deal, and these domestic political pressures constrained the space in which Indian leaders were able to maneuver on the issue. However, in July, the United States and India announced having concluded negotiations 123 Agreement, calling it a "historic milestone" in the bilateral strategic partnership. New Delhi appeared to have been successful in negotiating reprocessing rights, assured fuel supplies, and no automatic termination if it conducts further nuclear weapons test. Indeed, subsequent reports suggested that U.S. negotiators had made considerable concessions to Indian demands and that the agreement could face resistance from some in Congress if its legal stipulations are seen to deviate from those found in the Hyde Act (the 123 Agreement can become operative only through a Joint Resolution of Approval from Congress). Civil nuclear cooperation with India cannot commence until the NSG allows for such cooperation, and until New Delhi concludes its own safeguards agreement with the International Atomic Energy Agency. In March 2006, President Bush pledged to create a verified end user (VEU) program with India. Also known as the "Trusted Customer" program, the VEU program would facilitate the license-free sale of otherwise controlled U.S. exports to approved Indian end users. As described by U.S. Commerce Secretary Carlos Gutierrez in a February speech, the VEU program would provide qualified Indian companies "access to U.S. technology products in a faster, more efficient, and more transparent manner." According to Secretary Gutierrez, the VEU Program will be operational in a "few months." The United States is pressing India to strengthen its export control systems and meet the standards specified in the Wassenaar Arrangement and the Australia Group. While India's strengthening of its export controls is not a precondition for the VEU program, the United States has indicated that it will exclude certain chemicals and Wassenaar items from the program if India does not tighten its export controls. India is a beneficiary of the U.S. Generalized System of Preferences (GSP) Program, which "provides duty-free tariff treatment to certain products imported from designated developing countries." In 2006, India received GSP preferential treatment for $5.7 billion of its exports to the United States, of which $2.4 billion, or 42%, was jewelry or jewelry-related products (HTS chapter 71). Some in the 109 th Congress discussed discontinuing India's inclusion in the GSP Program, in part due to India's stance on the Doha Round of negotiations. In May 2006, the then-Senate Finance Committee Chairman questioned the renewal of the GSP Program, pointing to India and Brazil as "two of the countries most responsible for holding up the Doha negotiations." In September 2006, the then-Senate Agriculture Committee Chairman called for U.S. Trade Representative Susan Schwab to consider revising the GSP Program to exclude advanced developing countries such as Brazil and India. However, no action was taken by the Bush Administration to remove India from the GSP Program. During the Indian prime minister's July 2005 visit to Washington, D.C., he and President Bush agreed to revitalize the U.S.-India Economic Dialogue. The Economic Dialogue has four main fora—the U.S.-India Trade Policy Forum, the Financial and Economic Forum, the Environmental Dialogue, and the Commercial Dialogue. At the July 2005 session, India and the United States agreed to three new initiatives under the Economic Dialogue—the Information and Communications Technology Working Group, the CEO Forum, and the U.S.-India Agricultural Knowledge Initiative—and reconstituted the High Technology Cooperation Group. The objective of the Economic Dialogue is to seek ways to resolve outstanding economic and trade issues, develop administrative capacity, and provide technical assistance. In general, meetings of the Economic Dialogue or its constituent groups consist of government officials from both nations, as well representatives of the Indian and U.S. private sectors. In addition to their direct bilateral relations, India and the United States interact on economic and trade issues in several multilateral fora. Both countries are members of the WTO, IMF, the World Bank, the Asian Development Bank (ADB), and other topical multilateral organizations. In other multilateral organizations, one nation may be a member, but the other nation may have informal ties to the group or interest in its activities. For example, while the United States is a member of the Asia Pacific Economic Cooperation (APEC) and India is not, there are indications that India would be interested in joining APEC when its current moratorium on new members ends. Similarly, India is a member of the East Asian Summit (EAS) and the South Asian Association for Regional Cooperation (SAARC), but United States is not. While the United States has a rather ambivalent attitude about the EAS, it and has applied for observer status with SAARC. Current discussions among WTO members regarding the Doha Round have placed the United States and India on opposing sides of key issues. When a half-year long suspension in negotiations ended earlier this year, India and the United States were joined by the European Union and Brazil to form a core group seeking to resolve the outstanding issues. The key outstanding issues for the Doha Round center around trade in agricultural goods, non-agricultural market access (or NAMA), trade in services, and trade remedies. At present, differences on trade in agricultural goods are foremost among the four remaining issues, and is generally viewed as the lynchpin for the successful completion of the Doha Round. It is generally understood that resolution of all the outstanding issues must occur for a successful outcome to the Doha Round, in part because the four key issues are to varying degrees linked to one another. India's Commerce Minister, Kamal Nath, has blamed U.S. intransigence for the Doha Round's collapse. In November 2006, during a visit to New Delhi to discuss trade issues with top Indian leaders, U.S. Agriculture Secretary Mike Johanns urged India to match "ambitious" U.S. offers and "lead the way toward unlocking the Doha negotiations by offering real market access." Indian officials later rejoined the negotiations, but, in June 2007, claimed the talks had "collapsed" due to lack of convergence among the major actors. Trade Representative Schwab later expressed U.S. surprise at how "rigid and inflexible" India (and Brazil) were during the June negotiations and she suggested that "some countries ... really don't want a Doha round outcome." During the suspension of the Doha Round negotiations, interest in alternative means of trade promotion and investment liberalization grew. In Asia, one of the more popular alternatives discussed was the formation of a regional free trade agreement. At the 2006 APEC meetings in Vietnam, the United States proposed the creation of a Free Trade Association of the Asia-Pacific, or FTAAP. As envisioned by the United States, the FTAAP would include the current APEC members only, thereby excluding India. At the second meeting of the East Asian Summit, held in conjunction with the January 2006 ASEAN Summit held in Cebu, Philippines, one of main agenda items was a proposal to form a pan-Asian free trade association that would include current ASEAN members plus Australia, China, India, Japan, New Zealand, and possibly Russia. The United States, which was not invited to the summit, was not being considered for membership in the pan-Asian FTA because it is not an Asian nation. India had already expressed its support for the idea of a pan-Asia FTA before the summit took place. The United States opposes the idea, preferring its FTAAP model of an Asian FTA. The United States and India are both members of the Asian Development Bank (ADB)—one as a developed country and a contributor of funds; the other as a developing country and a recipient of funds. According to the most recent ADB Annual Report, India received $567.2 million in assistance in 2005, including $440.3 million in loans, $100 million in "special funds" (primarily tsunami relief support), and $20.6 million in equity and guarantees. Outside of the tsunami relief assistance, most of the ADB's 2005 support in India went to infrastructure development projects. Since joining the ADB in 1966, India has received nearly $15 billion in ADB assistance. The United States has pledged to contribute $461 million to the ADB's Asian Development Fund between 2005 and 2008. However, Congress set the U.S. support for the ADB for FY2006 and FY2007 at $99 million. For FY2008, the Bush Administration has requested $133.85 million: $115.25 million for its annual contribution and $18.6 million to pay a portion of its arrears. One important issue of note emerging from the ADB is a proposal to create an Asian Currency Unit (ACU), to be overseen by the ADB. The ACU is envisioned as a unit of account, determined by a weighted average of regional currencies, to be used by financial market participants for regional settlement of payments and invoicing of trade transactions. According to the ADB, over time the ACU may be transformed into a regional currency, much like the Euro. India has expressed a desire to be part of the ACU, but Finance Minister Chidambaram has admitted the "Asian Currency Unit is not going to happen overnight." India is also aware of resistance among the ASEAN nations to include India in the ACU. The United States has expressed misgivings about the ACU proposal in general, raising concerns about "mission creep." Besides the general multilateral and bilateral economic and trade issues described above, there are several sectoral or topical issues of significance between India and the United States. Some of these issues interplay with more general issues, such as the Doha Round negotiations or the bilateral trade balance. What follows is a brief summary of each of these issues, arranged in alphabetical order. In India and the United States, there is interest in improving market access to each other's markets in anticipation of greater trade in agricultural goods. In 2006, the United States exported over $300 million in agricultural goods (including over $42 million in prepared foods) to India, and imported $1.3 billion in agricultural goods from India (see Table 6 ). U.S. exports of live animals and animal products are hindered by Indian import restrictions and cultural norms. Cattle and beef imports are subject to import controls because of the risk of "mad cow" and "hoof in mouth" disease, as well as the Hindi and Buddhist prohibitions of eating beef and Muslim prohibitions of eating pork. Similarly, on March 14, 2007, India stopped the import of poultry, poultry products, pigs, and pork products from countries infected with avian influenza to protect the public health. Other U.S. products—such as coffee, tea and most grains —are effectively kept out of India by tariff rates as high as 100%. A July 2007 Indian government reported determined that U.S. wheat was unfit to be imported into India due to the presence of pervasive weeds. On March 6, 2007, the United States requested WTO dispute settlement consultations with India over the customs duties it imposes on imports of wine and distilled spirits, claiming that charges for "additional duty" and "extra additional duty" increased the imposed tariff rate to 150% to 550%. The European Union (EU) also requested consultations over the same issue. India has committed to the WTO to bind its tariff on wine and spirits to no more than 150%. On March 30, 2007, Indian Trade Minister Kamal Nath said that India knew its import duties on wine and alcohol were "high" and that "this situation would be corrected." However, at an April 10 meeting of WTO Dispute Settlement Board, India blocked the first attempt by the European Union to request the creation of a dispute settlement panel to address India's import regime for wine and alcohol. The dispute panel was approved at a subsequent meeting of the WTO Dispute Settlement Board on April 24, 2007. The United States has also expressed concern about India's application of its sanitary and phytosanitary (SPS) regulations on certain U.S. exports. The United States questions some of the scientific basis for India's SPS regulations. It also believes that some of the SPS standards are not in accord with internationally recognized standards. Plus, the United States has indicated that India has failed to notify other nations of changes in SPS regulations in a timely fashion. In particular, the U.S. Trade Representative has objected to India's proposed import and labeling requirements for genetically modified foods. For its part, India has also indicated dissatisfaction with U.S. SPS regulations with regards to the treatment of Indian agricultural goods. For example, one long-standing source of tension between the two nations is a 17-year old ban on the import Indian mangoes into the continental United States. The mango ban was a subject of discussion during President Bush's trip to India in March 2006, during which President Bush promised to have the ban lifted. On March 12, 2007, when the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS) issued a final rule allowing, under certain conditions, the import of mangoes from India. However, according to India's Commerce Department, the estimated cost of compliance with the new rule is about $3 per mango, rendering the Indian mango uncompetitive. Other than issues of threats to public health and unfair SPS rules, India's concern about agricultural imports from the United States also includes the U.S. farm subsidy program. India, along with a number of other nations, views the current U.S. farm support program as a form of trade-distorting export subsidy and is calling on the United States to significantly reduce the annual limit on farm assistance. India has rejected the proposed U.S. limit of $22 billion as insufficient, pointing out that the actual level of support in 2006—$19 billion—was already below the U.S. offer. India, the United States, Brazil, and the European Union are actively discussing the agricultural support programs as part of the reinvigorated Doha Round negotiations. Trade in clothing and textiles is a major issue in U.S. relations with India for two key reasons. First, as shown in Table 4 , clothing and textiles are among the top five India exports to the United States. Second, following the termination of the WTO's Agreement on Textiles and Clothing (ATC) on January 1, 2005, most experts predicted that the global manufacturing of clothing and textiles would restructure, and that China and India would emerge as major production sites. By implication, it was expected that U.S. clothing and textile imports from India (and China) would jump beginning in 2005, as production shifted from other nations to India (and China). As a result, the termination of the ATC might cause a spike in the U.S. bilateral trade deficit with India. The U.S. trade data on textile and clothing imports from India appear to support the predictions for clothing, but not textiles (see Figure 12 ). Clothing imports, which had been increasing by about 10% per year for the previous three years, rose by over 30%, or more than $1 billion, in 2005, and then returned to the previous growth rate. By contrast, textile imports from India did not spike in either 2005 or 2006, but grew at a rate similar to the previous three years. The sharp increase in clothing imports from India did not, however, translate into an unusual rise in the U.S. bilateral trade deficit with India (see Table 7 ). According to U.S. trade figures, the nation's bilateral trade deficit with India grew in a rather uneven pattern between 2000 and 2006. The increase in the trade deficit between 2004 and 2005 was large—over $1.5 billion—but not that much larger than the year before or the increase between 2001 and 2002. While the debate over the impact of the termination of the ATC on global trade patterns continues, another factor—the relative value of key currencies—appears to be influencing the global clothing and textile market. For India, the dramatic strengthening of the rupee against the U.S. dollar (see Figure 13 ) has apparently hurt the nation's clothing and textile exports to the United States. Between July 1, 2006, and March 1, 2007, the value of the Indian rupee gained 4% against the U.S. dollar, as the exchange rate declined from 46.126 rupees per U.S. dollar to 44.287 rupees per U.S. dollar. However, over the next two months, the strengthening of the rupee accelerated, so that by the middle of July, the exchange rate stood at 40.423 rupees per dollar—or an appreciation of 9.1% in less than four months. According to some market observers, the appreciation of the rupee has reversed two years of growth of clothing and textile exports to the United States. Official U.S. trade statistics for the first six months of 2007 show a 1.5% year-on-year decline in the value of textile imports from India and a 0.6% year-on-year decline in the value of clothing imports. D.K. Nair, secretary-general of the Confederation of Indian Textile Industry, said that the slowdown in U.S. demand along with the strengthening of the rupee are causing serious harm to India's clothing and textile industry. The more recent appreciation of the rupee is making it even more difficult for India to remain competitive. At another forum, Nair stated, Supply side problems like unworkable labor laws that restrict the garment industry to SMEs [small and medium enterprises], high transaction costs that render exports uncompetitive and infrastructure weaknesses have been infusing production inefficiencies into the textile and clothing industry. What is new is perhaps the steep appreciation of the rupee during the last few months, and particularly during the last couple of weeks. The forthcoming Verified End Users (VEU) Program is perceived as portending a period of greater trade in dual-use technology and military equipment between the United States and India. Because the Export Administration Act (EAA) of 1979 ( P.L. 96-72 ,) expired in August 2001, exports of dual-use technology to India are currently restricted or controlled by International Emergency Economic Powers Act (IEEPA) ( P.L. 95-223 ). Munitions and military equipment are controlled by the Arms Export Control Act ( P.L. 94-329 ). India is seen as a large and promising market for U.S. exporters of military equipment and dual-use technology. From 1998 to 2005, India was the leading arms purchaser among less industrialized countries, signing arms transfer agreements worth $20.7 billion. Most of these agreements were made with Russia, upon which India has long relied for its procurement of military equipment. India's future defense procurement budget could total as much as $35 billion over the next two decades. Officials from both the U.S. and Indian governments assert that greater defense trade should be an important aspect of future bilateral relations. As a result of New Delhi's increased defense expenditures, the issue of U.S. arms sales to India has taken a higher profile in recent years. In 2002, the Pentagon negotiated a sale to India of 12 counter-battery (or "Firefinder") radars sets worth a total of $190 million, the largest such bilateral arms deal to date. In 2006, New Delhi approved a $44 million plan to purchase the USS Trenton , a decommissioned American amphibious transport dock. The ship, the second largest in the Indian navy, set sail for India as the INS Jalashva in June 2007 carrying six surplus Sikorsky helicopters purchased for another $39 million. In May 2007, the Pentagon notified Congress of the possible sale to India of six C-130J Hercules transport aircraft (manufactured by Maryland-based Lockheed Martin) which, along with associated equipment and services, could be worth more than $1 billion. The Pentagon reports military sales agreements with India worth $336 million in FY2002-FY2006. American defense firms eagerly pursue new and expanded business ties with India, lobbying most recently at India's biennial air show in Bangalore in February 2007, where 52 U.S. companies exhibited their wares and sought deals. According to U.S. Ambassador to India Mulford, there is a widespread expectation in the United States that U.S. companies should get "favorable treatment" following American gestures to India, even as he denied there was any "negotiated quid pro quo " related to planned bilateral civil nuclear cooperation. Still, some top Indian officials express concern that the United States is a "fickle" partner that may not always be relied upon to provide the reciprocity, sensitivity, and high-technology transfers sought by New Delhi. Nevertheless, the Indian government reportedly possesses an extensive list of desired U.S.-made weapons, including PAC-3 anti-missile systems, electronic warfare systems, and possibly even combat aircraft. The 2005 unveiling of the Bush Administration's "new strategy for South Asia" included assertions that the United States welcomed Indian requests for information on the possible purchase of F-16 or F/A-18 multi-role fighters, and indicated that Washington is "ready to discuss the sale of transformative systems in areas such as command and control, early warning, and missile defense." India is expected in 2007 to issue a tender for the purchase of 126 new fighter jets in a deal that could be worth up to $10 billion. Lockheed Martin and Illinois-based Boeing are competing with aircraft built in Russia, France, and Sweden. The enthusiasm of U.S. defense companies themselves is somewhat dampened by India's Offset Policy for defense procurements. Introduced in 2005, the Offset Policy requires that foreign defense contracts worth more than 3 billion rupees (about $74 million) include an offset purchase, investment, or transfer of technology worth at least 30% of the total contract. The direct purchases may include goods or services from India's defense industry, and the investments should be made in either India's defense industry or organizations conducting defense research and development. Some U.S. companies object to India's Offset Policy and have lobbied for its termination. Trade in dual-use technology with India is subject to the provisions of the IEPPA. As a result, U.S. companies wishing to export dual-use products to India must secure an export license from the Department of Commerce's Bureau of Industry and Security (BIS). In addition, some exports to India (including certain computers) are subject to post-shipment verification to ensure that the products are not being re-exported to other restricted locations. Finally, the BIS maintains a list of entities to which the export of dual-use technology is generally prohibited. At the time of this writing, the list includes four Indian entities and/or their subordinates. At a February 2007 meeting of the U.S.-India High Technology Working Group, there was extensive discussion of the possibility of removing some or all of the Indian companies from the BIS entities list, as well as eliminating or alleviating the restrictions on dual-use technology trade with India. Assistant Secretary of Commerce for Export Administration Chris Padilla appeared to signal a willingness to consider a relaxation of export restrictions during the HTCG meeting, saying, "There may be some remainders of Cold War-type treatment that we may be able to address and clean up in our regulations." However, there are some indications that the United States would like to see India tighten its export control regime before relaxing its exports controls on India. While emphasizing that tighter export controls were not a precondition to the implementation of the proposed VEU program, Assistant Secretary Padilla implied that the scope of VEU program might be constrained by the status of India's export controls. Although current levels of U.S. foreign direct investment (FDI) are relatively low when compared to China, there is strong private interest in the Indian market for U.S. companies in certain industries. Annual FDI to India from all countries rose from about $100 million in 1990 to nearly $6 billion for 2005, then nearly doubled in one year to more than $11 billion in 2006. About one-third of these investments was made by U.S. firms; in recent years, the major U.S.-based companies Microsoft, Dell, Oracle, and IBM announced plans for multi-billion-dollar investments in India. However, current Indian law restricts foreign ownership in many industries to varying degrees, making FDI less attractive to many U.S. companies. At present, India strictly prohibits FDI in four industries: retail trade (except single-brand outlets); atomic energy; lottery business; and gambling and betting. For other sectors of interest to U.S. companies—including broadcasting, pharmaceuticals, banking, financial services, insurance, defense production, mining, oil and natural gas, and telecommunications—FDI limits range from 26% to 100% of total equity, both across and within sectors. In addition, depending on the sector and the size of the FDI, the investment may be subject to administrative approval. In late 2006, India announced it is considering new legislation on FDI. The so-called FDI Promotion Act would cover all aspects of FDI, including entry conditions, dispute settlement, incentive programs, approval procedures. The Indian government is also considering a proposal to create uniform FDI limits within each sector, as well as raise some of the current FDI limits. Prospects for these two proposals are uncertain. However, New Delhi did increase the FDI limit for the telecommunications industry from 49% to 74% in March 2007. Especially closely watched are opportunities for investment in India's potentially vast retail sector. Foreign involvement in his sector is a sensitive issue for Indians; in March 2005, Commerce Minister Nath said, "We are very clear that if at all FDI is permitted into retail trade it should lead to incremental economic benefits and not substitute ongoing activities. There is no question of replacing or displacing what we have: it must add to economic activity." New Delhi subsequently commissioned a report on FDI in the retail sector and, in January 2006, Nath announced new regulations that allow foreign investors to own up to 51% of retail outlets selling only single-brand goods. India has a particularly large number of small merchant shops—perhaps the highest per capita number worldwide—meaning that tens of millions of citizens could be adversely impacted by the appearance in India of "big-box" retailers. The U.S. Trade Representative listed India on the U.S. Special 301 Priority Watch List in 2007, despite recognition of improvements in India's IPR laws, regulations and enforcement. On the administrative side, the United States urged India to "improve its IPR regime by providing stronger protection for copyrights, trademarks, and patents, as well as protection against unfair commercial use for data generated to obtain marketing approval." The U.S. Trade Representative has also indicated that the United States would like to see India join the World Intellectual Property Organization's (WIPO) Internet Treaties. On the enforcement side, the United States claimed that piracy of copyright materials was "rampant." Opponents of inserting "data exclusivity" clauses into Indian law assert that they constrict India's generic drug industry's ability to compete both domestically and internationally, and place a large financial burden on firms that must repeat expensive clinical trials. By removing the availability of inexpensive and oftentimes life-saving medications, the argument goes, would have a seriously detrimental resulting impact on public health. India appears to have been active in its IPR enforcement during 2007. On February 6, 2007, India joined 11 other Asia-Pacific entities in a combined sting operation that arrested 870 people and seized nearly 5 million pirate DVDs and VCDs. The operation was called "Operation Trident," and involved operations in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, and Thailand. In India, there were 110 raids, with 118 arrests. Operation Trident occurred while India was hosting the first-ever International Meeting on Intellectual Property and Development. Organized by India's Department of Industrial Policy & Promotion (DIPP), the meeting included representatives from 22 countries, including the United States. The focus of the February 5-7 meeting was on the relationship between intellectual property rights (IPR) and economic development. In addition, in May 2007, the U.S.-India Business Council (USIBC) in conjunction with the Federation of Indian Chambers of Commerce and Industry (FICCI), implemented a "Bollywood-Hollywood" anti-piracy initiative aimed at stopping the illegal copying and distribution of U.S. and Indian entertainment videos. The initiative seeks to reduce video piracy both in India and the United States, where the growing popularity of Bollywood movies has given rise to a growing problem of video piracy. The relationship between IPR and economic development has been of interest to India for several years. In 2003, a group of developing countries, including India, circulated a paper at the WTO making recommendations on actions that could be taken to foster greater technological transfer to developing countries. The United States and other WTO members objected to the paper's analysis, which suggested that the TRIPS agreement and its IPR protection provisions were hindering technological transfers. In October 2005, India, Pakistan, and the Philippines submitted another paper on the subject of technological transfer and the TRIPS agreement that focused on ways to encourage technical assistance, promote the performance of technological development work by multinational corporations in developing countries, and facilitate the mobility of scientists and technicians under the GATS agreement. The U.S. response to the second paper was more favorable. The second paper became the focus of discussion in 2006 of the WTO's Working Group on Trade and Transfer of Technology (WGTTT), a body established in 2001 at the Doha Ministerial Conference. According to the USTR's 2007 Trade Policy Agenda, the United States expects that the paper will also dominate WGTTT discussions in 2007. Beyond the usual concerns expressed by the software, movie, and publishing industries about IPR protection, the U.S. pharmaceutical industry has of late been very actively seeking improved IPR protection in India. In particular, it would like to improve patent protections, secure test data exclusivity, and limit pre-grant opposition to patent applications. India's pharmaceutical industry, for its part, believes that the level of IPR protection sought by the U.S. companies exceeds those provided for in the TRIPS agreement, and will effectively prevent the introduction of generic drugs in India in the future. India is a leading exporter of jewelry, especially diamonds and diamond jewelry, to the world and to the United States. In 2006, the United States imported $5.9 billion worth of jewelry (HTS71) from India, or 25.5% of all imports from India. Of this, $3.3 billion (55.5%) were diamonds and diamond jewelry and another $2.4 billion (41.0%) was precious metal jewelry. The depletion of many of India's diamond mines has pushed its industry to source its diamonds from overseas. In 2005, India imported nearly $10.6 billion worth of diamonds. This has raised concerns about the possible import of so-called "conflict diamonds." In January 2003, India, the United States, and 53 other countries endorsed a UN initiative called the Kimberley Certification Process that certifies that the diamonds do not come from Angola, Liberia, Sierra Leone, and Congo. In 2005, India considered lowering the FDI limit for diamond mines from 100% to 74% in an effort to close a possible back door for the import of "conflict diamonds." However, there are claims that uncut "conflict diamonds" are still finding their way into India, especially into the markets in Surat. If true, then there is high likelihood that "conflict diamonds" could also be making their way into the U.S. consumer market. The rapid growth in India's economy has also meant a rapid increase in its demand for oil. Although India has proven oil reserves, production is nearly at capacity, while demand continues to rise. According to the U.S. Department of Energy's Energy Information Agency (EIA), India produced an average of 846,000 barrels per day (bbl/day) of "total oil liquids" in 2006, and used an average of 2.63 million bbl/d of oil, resulting in a shortage of nearly 1.8 million bbl/d. In addition, according to the EIA's estimates, India's oil demand increased by 100,000 bbl/d in 2006, and will increase by similar amounts in 2007 and 2008, leading to the nation's growing "energy deficit." In order to fill its oil gap, India national oil companies have been actively seeking overseas sources of crude oil, involving the acquisition of equity in some cases. According to EIA, the most active Indian oil company overseas is ONGC Videsh Ltd., which holds interests in 25 oil and natural gas projects in 15 different countries in Africa, Asia, the Americas, and the Middle East. Indian companies have also been actively involved in Sudan's oil industry, as well as the operation of the major oil pipeline and terminus in Port Sudan. India's growing oil demand, along with China's growing demand, are contributing factors in the a tightening global petroleum market and higher crude oil prices. Competition for crude oil and energy in general is becoming an important issue in Asia, pressing nations to develop trade relations outside of the region. For example, India is pursuing closer relations with the repressive regime in neighboring Burma (Myanmar), with an interest in energy cooperation and to counterbalance China's influence there. In response, the United States is exploring ways to foster cooperation with friendly nations with respect to global petroleum market. Legislation specifically on energy cooperation with India has been introduced in both the House of Representatives and the Senate. At present, most of the focus of Indo-U.S. service trade is in the information technology (IT) sector. Over the last few years, U.S. companies have been outsourcing many aspects of their IT work to India and other nations. According to one recent study, U.S. banks will increase the share of their IT work overseas from 6% to 30% by 2010, representing a transfer of over $10 billion of IT services. The study also predicted that the nature of the overseas IT work will shift from "low-level applications" to more sophisticated IT activities. Another study projected that U.S. IT outsourcing would increase at a compound annual growth rate of 5.9% over the next five years, reaching a total value of $17.7 billion in 2011. This later study indicated that an impending shortage of IT skills among government employees will be one of the key stimuli of the outsourcing. U.S. companies are not limiting their activities in India to IT; they are also utilizing India to provide a growing array of services related to the financial sector. On April 11, 2007, Citigroup announced the elimination of 17,000 jobs—or nearly 5% of its global workforce—and the relocation of 9,500 jobs to "low-cost" locations. However, in the same news story, sources close to Citigroup said that between 5,000 and 8,000 jobs would be moved to India in the near future. Most of these relocated jobs would involve equity research, investment banking, and back-office transaction-related services. Meanwhile, India's domestic IT industry is attempting to branch out of the lower value-added activities (such as call centers and payroll processing) into higher value-added services (such as product design, software development, and chip engineering). Many U.S. companies are establishing tech centers in India to take advantage of the greater availability and lower cost of Indian engineers. Plus, leading Indian IT companies—such as Tata, Infosys, Wipro, Satyam, and HCL Technologies—are developing their international IT service capacity. The growth of trade in IT services has placed pressure on the U.S. H-1B visa program. The H-1B visa permits U.S. companies and universities to temporarily employ foreign workers who have the equivalent to a U.S. bachelor's degree. While there is an annual quota of 78,200 visas, exemptions have allowed the U.S. Citizenship & Immigration Services to issue over 100,000 H1-B visas in 2004 and 2005. Recipients of an H1-B visa may remain in the United States for up to six years (ten years for Defense Department related work) so long as they remain employed by the same company. H1-B visas are not transferable. Both U.S. and Indian companies have complained that the current quota is too restrictive, making it difficult for U.S. companies to hire enough engineers and technicians to remain competitive in the global market. Also, some companies would like to see the creation of a new visa category that would allow foreign nationals to work and/or train in the United States for a short period of time. However, there is opposition to the expansion of the current H1-B program. In May 2007, two senior U.S. Senators wrote letters to nine Indian companies that account for nearly one-third of all H1B visas issued in 2006 and requested further details about their use of the special visa program. The Senators expressed concern that fraud and abuse in such programs may have negative impact on U.S. workers. Given the relatively positive relationship between the United States and India, most of the economic and trade issues between India and the United States are developing trends with few direct legislative implications. One of the exceptions is in the energy sector, where there are bills before Congress concerning U.S.-Indian energy cooperation. However, in some cases, there is pending or possible congressional legislation that may have an indirect impact on U.S.-Indian relations. What follows is a summary of the more prominent issues or topics in U.S.-Indian relations. There currently is legislation before 110 th Congress on the subject of U.S.-India energy cooperation. The United States-India Energy Security Cooperation Act of 2007 ( H.R. 1186 ) would "promote global energy security through increased cooperation between the United States and India in diversifying sources of energy, stimulating development of alternative fuels, developing and deploying technologies that promote the clean and efficient use of coal, and improving energy efficiency." Both the Energy Diplomacy and Security Act of 2007 ( S. 193 ) and the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 ( S. 1419 ) would, inter alia , establish a U.S. petroleum crisis response mechanism in conjunction with China and India. A section of the International Climate Cooperation Re-Engagement Act of 2007 ( H.R. 2420 ) would create Foreign Commercial Service attaches and deploy these to India (and China) for the purpose of promoting U.S. exports in clean and energy efficient energy technologies. The New Direction for Energy Independence, National Security, and Consumer Protection Act ( H.R. 3221 ), introduced in July 2007, contains similar provisions. Moreover, and as noted above, an initiative to launch civil nuclear cooperation with India was provisionally endorsed by the 109 th Congress in the Hyde Act ( P.L. 109-401 ) and any future "123 Agreement" guiding such cooperation must be approved by Congress. Immigration reform is a major issue for the 110 th Congress. The Comprehensive Immigration Reform Act of 2007 ( S. 1348 ), currently being considered by the Senate, would alter the eligibility requirements for H-1B visas under the Securing Knowledge, Innovation, and Leadership Act of 2007 (SKIL Act of 2007), and limit the number of "market-based visas" to 115,000 per fiscal year. While this is an increase from the current limit, it is below the level sought by both Indian and U.S. information technology companies. Nor does the bill address the industry's desire to see the creation of a new visa category for short-term training of foreign nationals in the United States. Many provisions of the current omnibus farm bill, the Farm Security and Rural Investment Act of 2002 ( P.L. 107-171 ), expire in 2007. India, along with Brazil and other nations, have argued that certain aspects of the current U.S. farm program are "trade distorting,' and are pushing the United States to change various agricultural programs, including its farm subsidies. It was previously hoped that the Doha Round would be completed in time for Congress to consider the enabling legislation under Trade Promotion Authority (TPA), and that any changes in U.S. agricultural policy could be including the enabling legislation. However, since the Doha Round discussions are not completed, Congress is considering the expiring programs without the benefit of knowing the terms of any new WTO obligations. The recently introduced H.R. 2419 provides for the continuation of the expiring farm programs, but may not prove to be in compliance with the results of any agreement coming out of the current Doha Round discussions. The 110 th Congress is considering legislation pertaining to the operation of the Committee on Foreign Investment in the United States, or CFIUS, an interagency committee that overseas the security implications of foreign investments in the United States. While U.S. laws governing FDI are generally viewed as being very liberal, there has been recent concern about the security implications of some proposed overseas investments, especially their implications for national defense and port security. Proposed legislation would require CFIUS to investigate all foreign investment transactions in which the entity is owned or controlled by a foreign government, regardless of the nature of the business. Given the recent increase in Indian FDI in the United States, this could cause some tension with India, as well as weaken U.S. efforts to persuade India to lower its current barriers to FDI. The growth of outsourcing various services to India, as well as other nations, is a serious concern for many U.S. workers. Current U.S. law provides some assistance to "displaced workers" via the Trade Adjustment Assistance (TAA) program authorized by the Trade Act of 1974 ( P.L. 93-618 ), the Worker Adjustment and Retraining Notification (WARN) Act of 1988 ( P.L. 100-379 ) of 1988, and the Workforce Investment Act of 1998 ( P.L. 105-220 ). However, various groups and individuals have called upon Congress to revisit these programs, and strengthen the provisions protecting U.S. workers from job losses caused by outsourcing. There are currently two bills before Congress that offer additional assistance and/or protection to displaced U.S. workers. The Trade Adjustment Assistance Reform Act ( H.R. 1729 ) expands eligibility for displaced textile and apparel workers for trade adjustment assistance, arguably in response to the growth in clothing and textiles imports from India. The second bill, the Worker Empowerment Act ( S. 1330 ), would amend the Social Security Act to provide for wage insurance for dislocated workers.

After decades of strained political relations, the U.S. and Indian governments are currently pursuing a "strategic partnership" based on numerous overlapping interests, shared values, and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly. Bilateral merchandise trade has grown from $6 billion in 1990 to $33 billion in 2006. Although India was only the 21st largest export market for the United States in 2006, the United States has become India's leading trading partner, mostly due to the growth in India's exports to the United States. However, recent increases in trade with China have made it a close second to the United States. In 2006, the U.S. bilateral trade deficit with India totaled $13 billion. In 2006, India's gross domestic product (GDP) grew by 9.2%, a growth rate second only to China among Asian nations. India's economic growth has also brought about the emergence of a sizeable "middle class" and the largest number of billionaires in Asia, but the country's mostly rural population remains comparatively poor and largely isolated from the benefits of growth. In addition, there is growing concern that the economy is "overheated," as evidenced by rising rates of inflation. Moreover, despite several years of strong growth, investment in infrastructure is lagging, creating a potential bottleneck for long-term economic expansion. Finally, attempts at additional economic reforms aimed at resolving these and other economic problems are constrained by India's political dynamics. Despite the significant liberalization of India's trade and foreign investment policies, there remain a number of bilateral and multilateral trade issues between the United States and India. The United States seeks greater market access to India's agricultural market and key service sectors for its exports and for foreign direct investment. The United States is also concerned about "outsourcing," and would also like to see improvements in India's intellectual property rights protection. India, for its part, calls for the lowering of perceived U.S. barriers to agricultural and service imports, as well as an expansion of the H-1B visa program. Many of the more prominent Indo-U.S. trade issues may have indirect implications for Congress. The growth of India's services exports to the United States has contributed to congressional consideration of possible legislation to provide greater assistance to displaced U.S. workers. Also, India's growing demand for crude oil has raised the possibility of boosting bilateral energy cooperation. Finally, the passage of the Hyde Act in 2006 (P.L. 109-401) has led to the negotiations of a bilateral peaceful nuclear cooperation ("123") agreement, which cannot go into effect without congressional approval. For a broader review, see CRS Report RL33529, India-U.S. Relations, by [author name scrubbed]. This report will be updated as warranted.

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Soon after the 111 th Congress convened, it began drafting H.R. 1 , the American Recovery and Reinvestment Act of 2009, generally referred to as the "economic stimulus" bill. On January 28, the House passed a version of the bill which would have provided, in Title III, $4.9 billion for accounts funded by the regular FY2009 DOD appropriations provided by Division D of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009, generally referred to as the "continuing resolution," which President George W. Bush signed into law on September 30, 2008. The House version of the economic stimulus bill also provided in Title X of the economic stimulus bill $6.0 billion for accounts funded by the regular military construction appropriations provided by Division E of the continuing resolution. The Senate passed an amended version of H.R. 1 on February 10, which would have provided an additional $3.7 billion for DOD accounts other than military construction in FY2009 and 3.4 billion for military construction. House-Senate conferees on the economic stimulus bill agreed February 10 on a compromise version that added $4.6 billion to the non-construction DOD accounts and funded by the FY2009 Defense Appropriations Act and $2.9 billion for military construction accounts(see Table 1 ). The House and Senate each adopted the conference report on H.R. 1 on February 13, 2009, with the House approving it by a vote of 246-183 and the Senate approving it by a vote of 60-38. Provisions of H.R. 1 relevant to accounts funded in the FY2009 defense appropriations bill are analyzed in pp, 3-5, below. (Provisions of the economic stimulus relevant to military construction accounts are analyzed in CRS Report RL34558, Military Construction, Veterans Affairs, and Related Agencies: FY2009 Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] (pdf).) The balance of this report analyzes the FY2009 defense appropriations bill that was incorporated into the FY2009 Consolidated Security, Disaster Assistance and Continuing Appropriations Act ( P.L. 110-329 ), which the President signed September 30, 2008. That bill provided $477.6 billion in discretionary defense appropriations for the so-called "base budget" of the Department of Defense, that is, for regular operations other than combat operations in Iraq and Afghanistan. The House Defense Appropriations Subcommittee had marked up its version of the FY2009 Defense Appropriations Bill on July 30, recommending a total of $477.6 billion, which the panel said was $4 billion less than the President requested for that bill. The Senate Defense Appropriations Subcommittee marked up its version of the appropriations Bill on September 10, also recommending $477.6 billion. Neither chamber held full committee markups of a FY2009 defense appropriations bill, and neither chamber considered a defense appropriations bill on the floor. Instead, a compromise version of the two subcommittee bills—in effect, a conference agreement on FY2009 defense appropriations—was negotiated informally by members of the House and Senate Appropriations committees and was incorporated into the FY2009 continuing resolution, along with full-year versions of the FY2009 homeland security and military construction/veterans affairs appropriations bills. The bill was passed by the House September 24, 2008 and by the Senate September 27, 2008 and was signed by the President September 30 (See Table A-2 in the Appendix to this report.). Together with defense funds appropriated in other acts for military construction and emergency war costs and the permanent appropriation for accrual payments to the Tricare for Life fund for military retirees, the defense appropriations act brought the total for DOD appropriations in FY2009 to $578.9 billion, as of December 31, 2008 (see Table 1 ). In a related action, the President signed into law on October 14, 2008 the FY2009 defense authorization bill ( S. 3001 ) authorizing $611.1 billion for national defense, including $68.6 billion for war-related programs (see Table A-1 in the Appendix to this report). The House had passed its version of the FY2009 defense authorization bill ( H.R. 5658 ) on May 22, 2008, by a vote of 384-23. The House version of the bill authorized $612.4 billion, including $542.4 billion for national defense-related activities of DOD and other federal agencies and an additional $70 billion for costs related to military operations in Iraq and Afghanistan. On April 30, the Senate Armed Services Committee marked up its version of the FY2009 authorization bill, which it reported to the floor on May 12 as S. 3001 . It also authorized the appropriation of $612.5 billion in new budget authority for national security programs, including $542.5 billion for the base budget and an additional $70 billion allowance for war-related costs. Controversies over various issues—including a provision that would incorporate into the legislation hundreds of earmarks listed in the committee's report on the bill and an unrelated dispute over offshore oil drilling—delayed Senate action on the measure until September 8. Because of the controversy over the earmarks provision, the Senate acted on only four of the several dozen amendments to the bill that were proposed before it passed the bill on September 17, 2008 by a vote of 88-8. Another result of the earmark dispute was that the Senate did not request a conference with the House to reconcile the two versions of the defense bill. Instead, members of the House and Senate Armed Services committees negotiated informally a final version of the bill authorizing $611.1 billion, a reduction of $1.4 billion from the Administration's request as re-estimated by the Congressional Budget Office. All but a very small amount of the authorization bill's reduction was taken from the $70 billion requested for military operations in Iraq and Afghanistan. On September 24, the House passed the compromise version of the authorization bill as an amended version of the Senate-passed S. 3001 . The bill was passed by a vote of 392-39 under suspension of the rules, a procedure which did not permit amendments but which required approval by a two-thirds vote. The Senate passed the amended version of S. 3001 by voice vote on September 27, thus clearing the measure for the President who signed it on October 14, 2008. Since neither the defense authorization bill nor the defense appropriations bill was the result of a formal conference committee, neither was accompanied by a traditional conference report. However, explanatory statements associated with the compromise version of each measure, fleshing out the details of the final legislation, were published in the Congressional Record . H.R. 1 , the American Recovery and Reinvestment Act of 2009, also known as the "economic stimulus," added $4.6 billion to DOD accounts funded in the regular FY2009 defense appropriations bill enacted September 30, 2008 as Division D of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009. The additional DOD funds provided by the economic stimulus bill were aimed largely at programs that would serve one of two goals. A total of $4.24 billion was for maintenance of DOD facilities of which $400 million is for medical facilities, $153.5 million is for renovation of barracks, and the remaining $3.69 billion is for repair and maintenance of other facilities and for projects that would improve the energy efficiency of DOD facilities. An additional $300 million is for research and development projects that would improve DOD's energy efficiency. Representative David R. Obey, chair of the House Committee on Appropriations, introduced the bill on January 26, 2009, three weeks after the 111 th Congress convened. Following referral to the Committees on Appropriations and Budget, the bill was brought up for consideration on the floor on January 27 ( Congressional Record , pp. H557-H583, H620-H749). After debate and amendment, H.R. 1 was passed by the Yeas and Nays, 244-188 (Roll no. 46). As passed by the House, the bill would have added $4.9 billion to the DOD accounts funded by the regular FY2009 Defense Appropriations Act that comprised Division D of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009. (see Table 2 ) The Senate received the economic stimulus bill on January 29. It was laid before the Senate by Unanimous Consent on February 2, when Sen. Harry Reid, the Majority Leader, proposed on behalf of Sen. Daniel K. Inouye, chair of the Senate Committee on Appropriations, to amend H.R. 1 by substituting the text of S. 336 , the chamber's own version of the bill ( Congressional Record S 1237-S1243, S1266-S1273). The Senate adopted several floor amendments before passing the bill Feb. 10 by a vote of 61-37. As passed by the Senate, the bill would have added $3.7 billion to the accounts funded by the regular FY2009 DOD appropriations act. (see Table 2 ) A conference report on the economic stimulus bill, adopted by both the House and the Senate on February 13, 2009 increased accounts funded by the regular FY2009 DOD appropriations bill by a total of $4.6 billion. President Obama signed the bill into law on February 17, 2009. (see Table 2 ) On February 4, 2008, the Administration released its federal budget request for FY2009 which included $606.8 billion in discretionary budget authority for national defense. This included $515.4 billion for the so-called base budget of the Department of Defense (DOD)—the cost of routine activities excluding U.S. operations in Iraq and Afghanistan. It also included a lump-sum request for $70 billion to cover war costs in the first part of the year. The total national defense request also included $16.1 billion for nuclear weapons and other defense-related programs of the Department of Energy and $5.2 billion for the defense-related activities of other agencies. Because it did not submit a request for funds to cover the full anticipated costs of operations associated with Iraq and Afghanistan, the Administration was not in compliance with a provision of the FY2007 John Warner National Defense Authorization Act ( P.L. 109-364 , Section 1008) which requires the President to include in future annual budget requests funds to cover the anticipated cost of operations in Iraq and Afghanistan. Last year, the Administration's DOD budget request for FY2008 included a request for $141.7 billion (subsequently increased to $189.3 billion) to cover anticipated war costs for the entire fiscal year. When the FY2009 defense request was submitted in February 2008, administration officials contended that there was too much uncertainty about future troop levels in Iraq to enable them to provide a funding request for war costs for the entire year. Pressed by Senate Armed Services Committee Chairman Carl Levin during a February 5 hearing to provide an estimate of war costs for all of FY2009, Defense Secretary Robert M. Gates observed that a simple extrapolation of the FY2008 costs would amount to $170 billion, but he added that he had no confidence in that projection because of the uncertainties concerning U.S. combat operations. On May 2, 2008, the Administration submitted an amended budget request that specified funding levels by account in the FY2009 war costs bridge fund, including a total of $66 billion for DOD and $4 billion for foreign aid. Congress incorporated action on the FY2009 war costs request into H.R. 2642 ( P.L. 110-252 ), a bill making supplemental appropriations for FY2008 and FY2009 for military operations in Iraq and Afghanistan and for other purposes. On June 30, President Bush signed the bill providing $96.1 billion for military operations in Iraq, Afghanistan and elsewhere in FY2008 and $65.9 billion for those purposes in FY2009. The President's $515.4 billion request for DOD's FY2009 base budget is $35.9 billion more than Congress appropriated for the FY2008 base budget, a nominal increase of 7.5 %. Adjusting for the cost of inflation, the FY2009 request would provide a real increase of 5.4 %. Roughly two-thirds of the proposed increase would go to the accounts that pay for current operations: funding for military personnel would increase by $8.8 billion over the FY2008 appropriation, to $125.2 billion; operations and maintenance funding would increase by $15.6 billion, to $179.8 billion (see Table 3 ). The FY2009 base budget request is $3.3 billion larger than the base budget request for that year the Administration had projected in February 2007. However, compared with the earlier projection, the actual request for procurement was lower by $6.3 billion and the military construction request was lower by $2.7 billion. On the other hand, the operations and maintenance request was $5.4 billion higher and the R&D request $2.4 billion higher than had been forecast in February 2007. Congress began action on the annual defense authorization bill with the Senate Armed Services Committee approving its version ( S. 3001 ) on April 30 and the Senate passing it September 17. The House Armed Services Committee marked up its version of the bill ( H.R. 5658 ) on May 14 and passed the bill May 22. Instead of convening a House-Senate conference committee to reconcile the two versions of the bill, House and Senate negotiators worked out a compromise version, which the House passed September 24 as an amended version of the Senate-passed bill. The Senate passed the compromise version September 27 and the President signed in October 14 ( P.L. 110-417 ). The House Defense Appropriations Subcommittee marked up an unnumbered version of the FY2009 defense appropriations bill on July 30. The Senate Defense Appropriations Subcommittee marked up its own unnumbered bill on September 10. But in neither chamber did the full Appropriations Committee markup the bills drafted by the two defense subcommittee. Nor was a defense appropriations bill brought to the floor of either the House or Senate. Instead, House and Senate negotiators worked out a compromise version which was incorporated into the FY2009 Consolidated Security, Disaster Assistance and Continuing Appropriations Act ( H.R. 2638 ) which included the compromise defense appropriations bill as Division C. The House passed that bill on September 24. The Senate passed it September 27 and the President signed in September 30 ( P.L. 110-329 ). For several months leading up to action on the FY2009 defense funding legislation, a number of senior military officers, as well as research groups and advocacy organizations, argued that defense spending needs to be substantially higher in the next few years to avoid drastic cuts in major weapons programs or in the size of the force. Many have called for a baseline defense budget, not including war-related costs, pegged to about 4% of Gross Domestic Product—an amount that would be anywhere from $70 to $180 billion per year higher over the next few years than the Administration plan. Senior leaders of the military services were particularly vocal in arguing for substantial increases in the defense budget. The Chairman of the Joint Chiefs, Admiral Michael Mullen, has, for some time, urged 4% of GDP for defense. For the previous two years, the Chief of Staff and Secretary of the Air Force argued that the Air Force needs an average of $20 billion more each year for the next several years in weapons acquisition accounts. Senior Army officials pointed out that the Army budget, including war costs, has grown to over $230 billion. Though it may come down some, they say, if forces in Iraq and elsewhere are brought home, several more years of spending at near that level will be needed to repair, replace, and upgrade equipment consumed by the war-time pace of operations. For their part, Navy leaders now calculate that the long-term shipbuilding plan they have proposed for the past few years will, in the future, cost an average of $20 billion a year in FY2007 prices, an increase of about 40% over earlier estimates. These arguments for a substantial increase in the defense budget, however, come at a time when, by historical standards, military spending appears to be very robust. Between FY1998, when the post-Cold War decline in defense spending reached its zenith, and FY2008, the baseline Department of Defense budget, not including war costs, increased by almost 40% above inflation (see Table 6 ). After adjusting for inflation, the requested FY2009 baseline DOD budget was more than $100 billion, or about 20%, greater than the average during the Cold War (measured from the end of the Korean War in FY1954 through FY1990). Requested funding for weapons acquisition (procurement plus R&D) in FY2009 was more than $45 billion—or about one-third—higher than the annual Cold War average. The disconnection between the size of the budget and the appeals for more money appears even more striking when amounts that have been appropriated for war costs are added to the equation. On top of a baseline DOD budget that grew from $255 billion in FY1998, in current year prices not adjusted for inflation, to almost $520 billion in FY2008, supplemental appropriations for war-related costs climbed from $19.4 billion in FY2001, as an initial response to the 9/11 attacks, to $63 billion in FY2003, the year of the Iraq invasion, to an estimated $189 billion in FY2008. While large portions of the supplementals have been consumed by war-related operating costs, substantial amounts have also been devoted to buying new equipment, particularly for the Army and the Marine Corps. Although the bulk of this acquisition has been for force protection, communications, and transportation, the effect has been to modernize much of the basic equipment stock of both services, in effect augmenting their baseline budgets. The fact that so large a level of spending appears to the military services to be so inadequate has several explanations—and the policy implications are, accordingly matters of varying interpretation. Reasons include the following. Future baseline budgets are widely expected to decline: The Administration plan to balance the federal budget by FY2012 includes limits on defense as well as non-defense spending. White House budget projections accommodate an increase of about 5% above inflation in the FY2009 DOD budget, but project a cumulative decline of about 3% between FY2009 and FY2012. Many unofficial projections of the deficit situation are less sanguine than the Administration's, so many analysts expect, at best, a flat baseline defense budget for the foreseeable future. Increased costs in part of the budget, therefore, will necessarily come at the expense of resources available in other areas. Supplemental appropriations are expected to decline as well: Although plans to withdraw from Iraq are uncertain, the military services expect that supplemental appropriations will come down within a few years. Costs for training and equipment maintenance that have been covered in supplementals, then, will migrate back into the baseline budget at the expense of other programs, and money to further upgrade ground forces will have to be found elsewhere. Costs of military personnel have grown dramatically in recent years: Since the end of the 1990s, Congress has approved substantial increases in military pay and benefits, including pay increases of ½ percent above civilian pay indices in seven of the past eight years, three rounds of "pay table reform" that gave larger raises to personnel in the middle grades, increased housing allowances to eliminate on-base and off-base disparities, DOD-provided health insurance for Medicare-eligible military retirees (known as "TRICARE" for Life), concurrent receipt of military retired pay and veterans disability benefits that had earlier been offset, elimination of a reduction in retiree survivor benefits that had occurred at age 62, and large increases in enlistment and reenlistment bonuses and special pays. Although bonuses and some other payments may decline in the future, most of the past increases in pay and benefits have been built into the basic cost of personnel. CRS calculates that uniformed personnel now cost 40% more, after adjusting for inflation, than in FY1999. Operating costs continue to grow above base inflation: Historically, military operation and maintenance budgets, which pay for everything from personnel training, to weapons repairs, to facility operations, to health care, have increased relative to the size of the force by about 2.5% per year above inflation. These increases are not as large as in some areas of the civilian economy, such as health care, but they do not reflect gains in productivity that are common in other sectors of the economy. Continued growth in operating costs, which is now widely seen as a fact of life in defense planning, erodes the availability of resources for weapons modernization and other priorities. Increasing generational cost growth in major weapons programs: It is generally expected that new generations of weapons will be more expensive than the systems they replace as weapons technology advances. The rate of generational cost growth, however, is becoming a matter of increasing concern within the Defense Department. New stealthy aircraft, multi-mission ships, advanced space systems, and networked missiles, guns, and vehicles appear to be getting more expensive than their predecessors at a greater rate than in the past. Unless budgets increase more rapidly than costs, trade-offs between the costs of new weapons and the size of the force may be required. Poor cost estimates: The difficulties engendered by accelerating inter-generational weapons cost growth are exacerbated by poor cost estimation. The Government Accountability Office has documented frequent, substantial increases in costs of major defense systems compared to original development estimates. A side-effect of inaccurate cost projections is to exacerbate instability in the overall defense budget, which entails inefficient production rates for major weapons programs and increased costs due to changing production plans. New requirements based on the lessons of Iraq and Afghanistan: The wars in Iraq and Afghanistan have led to very large increases in equipment requirements for ground forces, particularly for force protection, communications, and transportation. National Guard combat units that earlier were equipped with older systems cascaded from active units are now seen as part of the rotation base that require equally modern equipment. And full sets of current equipment are also expected to be available not only for next-to-deploy units, but also for units as they begin to reset from overseas rotations. A key lesson of the war is that what used to be called "minor procurement" for ground forces was substantially under-capitalized. A broader range of national security challenges: A common presumption before 9/11 was that forces trained and equipped for traditional conflicts between national armies would be able to cope with what were seen as less demanding other challenges such as stability operations. Now the view is that forces must be designed not only for traditional conflicts, but for insurgencies and other irregular wars, support of allies, threats of catastrophic attacks by non-state actors with weapons of mass destruction, and entirely new kinds of disruptive attacks on specific U.S. and allied vulnerabilities. The effect has been to broaden requirements without, necessarily, an attendant offsetting reduction in older force goals. When these factors are taken as a whole, it is not so surprising that military planners discover some shortfalls. But, for Congress, it may not be so obvious that the principle answer is simply to provide more money for defense. As a practical matter, the arguments for more money that senior military leaders have begun to lay out appear most likely to become matters of debate in Congress once the next Administration takes office. The next Secretary of Defense, and the 111 th Congress, may, very early on, face a contentious debate about defense resources. More money is one alternative. Other alternatives may include backing away from plans to add 92,000 active duty troops to the Army and Marine Corps; shifting resources among the military services to reflect new challenges rather than allocating them roughly the same proportions every year; reviewing requirements for expensive new technologies in view of the presence or absence of technologically peer or near peer competitors; and shifting resources from military responses to global threats toward non-military means of prevention. The defense budget environment, however, appears likely to be troubling enough that it will force some attention to these matters earlier in the term of the next President rather than much later. Following is a brief summary of some of the other issues that may emerge during congressional action on the FY2009 defense authorization and appropriations bills, based on congressional action in prior years and early debate surrounding the President's pending request. The budget includes $2 billion to give military personnel a 3.4% pay raise effective January 1, 2009, an increase that would keep pace with the average increase in private-sector wages as measured by the Labor Department's Employment Cost Index (ECI), as required by law. For several years, some have contended that service members' pay should increase at a faster rate than the annual increase in the ECI in order to compensate for a lag in military pay resulting from budget-constrained pay hikes in the 1990s. DOD officials deny that any such pay-gap exists, but Congress typically has sided with the advocates of larger increases. For every fiscal year but one since FY2000, Congress has mandated a military pay increase one-half percent higher than the rate of increase in the ECI. The budget includes $20.5 billion to pay for the costs in FY2009 of the $112 billion multi-year plan to increase active-duty end-strength by a total of 92,000 Army and Marine Corps personnel. Most of the additional personnel are slated for assignment to newly created combat units—Army brigade combat teams and Marine regiments—which would enlarge the pool of units available for overseas deployment. This would make it easier for the services to sustain overseas roughly the number of troops currently deployed in Iraq and Afghanistan while allowing soldiers and Marines to spend more time between deployments at their home bases for rest and retraining. The plan has been challenged by some who note that, after the initial investment costs have been covered, the additional units would cost about $13 billion annually, in a time when the total DOD budget is expected to be relatively flat. It also has been criticized by some who contend that the Army in particular needs more units organized and trained especially for counter-insurgency and advisory missions more than it needs additional traditional combat units. For the third consecutive year, the Administration's budget assumes that part of the cost of the Defense Health program—$1.2 billion in the pending FY2009 request—will be covered by an increase in fees, co-payments and deductibles charged to retirees under the age of 65 who participate in TRICARE, DOD's medical insurance program for active and retired service members and their dependents. The increases are intended partly to restrain the rapid growth of DOD's annual health-care budget—projected to reach $64 billion by FY2015—and partly to compensate for the fact that TRICARE fees have not been increased since 1995. This year, as in the two previous years, the proposed fee increases are vehemently opposed by organizations representing service members and military retirees who argue that giving medical care to retirees on favorable terms is appropriate given the unique hardships of a military career. Congress rejected the proposed fee hikes in the FY2007 and FY2008 budget proposals, and the Senate Armed Services Committee has done so in drafting its version of the FY2009 defense authorization bill. Some analyses of the number of F-18 strike fighters available to the Navy show a substantial shortfall of aircraft from about the middle of the next decade until about 2025, when the full planned number of F-35 Joint Strike Fighters becomes available. The number of available aircraft, however, depends on assumptions about the number of hours that current aircraft can fly, and at what cost for maintenance, upgrades, and overhauls. Boeing has recently offered to sell additional F/A-18E/F versions of the aircraft to the Navy for about $50 million apiece, as much as 10% cheaper than planned for additional aircraft, if the Navy agrees to buy 170 aircraft in a multiyear contract that would have early termination penalties. Several Members of Congress have expressed concerns about the potential shortfall and may propose that the FY2009 authorization approve a new multiyear deal. Future funding for the additional aircraft, however, might compete with funds for other projects, particularly if defense budgets level off in the 2010s. For the past two years, the Marine Corps has included a request for an additional LPD-17-class amphibious ship, which would be the 10 th to be bought, at the top of its unfunded priorities list. There has been some support in Congress for adding a 10 th LPD, but funding might have to come at the cost of financing for surface combatant ships such as the DOG-1000 destroyer. Support for shifting money from the DOG-1000 to LPDs or other ships that have been in production for some time comes partly from advocates of the Marine Corps and from legislators who represent the Gulf coast, where the ship would be built. In addition, there has been some support for a shift because the cost and design of the LPD-17—as for TAKE auxiliary ships and DOG-51 destroyers—has been stable for some time. A directly related issue is whether Congress will agree to continue funding DDG-1000 acquisition. The Administration's FY2009 request includes $2.6 billion for a third DDG-1000. Several legislators on the defense committees have proposed eliminating the funds and using the money instead to buy a mix of LPD-17, TAKE auxiliary ships, and DDG-51 destroyers. This would spread available shipbuilding money more widely to sustain the industrial base, provide funding to programs in which costs are stable and more predictable, and also allocate funds to less expensive ships that might be built, in the long run, in larger numbers to sustain the Navy's 313 ship fleet. The Administration has also requested $920 million for two Littoral Combat Ships (LCS). This is a relatively small, lower cost ship with a common hull to support modular designs for several purposes. It is intended to be bought in large numbers over time for operations in relatively close-to-shore waters. The program has suffered significant cost growth, however, raising questions about the number of ships that can be afforded. Last year, Congress cut funding for all but one ship and shifted the savings to purchase other ships. This year may again be a test of congressional support for the ship in view of continuing cost issues. The CG-X is the current designation for a new ship dedicated to missile defense missions. Its design was, for many years, expected to be based on the DDG-1000. Now, however, it appears that the Navy is inclined to build a substantially larger ship. Some defense committee members have raised questions about the status of the Navy's design and about the affordability of the program. There has also been some support in Congress for building a nuclear powered cruiser. There has been a great deal of controversy in Congress in recent years about the Energy Department's plans to design a new nuclear warhead intended, according to its advocates, to take advantage of new technologies to improve safety and reliability in a new warhead to replace deteriorating older systems. In the past, Congress has provided funding only for conceptual design of the Reliable Replacement Warhead (RRW), but it has not permitted funds to be used for engineering development. The FY2008 consolidated appropriations act, P.L. 110-161 , which included energy and water appropriations, provided no DOE funds for the RRW. In the FY2009 budget, DOE has requested $10 million for RRW design, and the Navy has requested $23 million. The Administration requested $9.3 billion for missile defense R&D in FY2009. While Congress has generally supported about the level of spending the Administration has requested in recent years, it has frequently reduced funding for technologically more challenging systems such as the kinetic energy interceptor program to intercept missiles in the boost phase, and it has increased funding for currently deployed systems, mainly the Patriot PAC III theater defense system. For the past two years, Congress has also eliminated money to begin construction at missile defense sites in Europe, saying in various reports that the funding was premature because there was no firm agreement with Poland and the Czech Republic where deployment is planned. The FY2009 request includes $132.6 million for military construction at an interceptor site in Europe, which is planned in Poland, and $108.5 million for military construction at a radar site, which is planned in the Czech Republic. For the past several years, the Administration has pursued programs that might permit it to deploy conventional warheads on long-range missiles that now carry nuclear warheads. In recent years, this effort has focused on the possible deployment of conventional warheads on Trident submarine-launched ballistic missiles. The funding requests sought to continue R&D on the reentry vehicle that would carry the warhead, and have sought to begin modifying and equipping Trident missiles and submarines to carry the new reentry vehicles. Congress has not approved this funding. In FY2007, it permitted the continuing R&D on the reentry vehicle, but did not fund the programs that would modify the missiles and submarines. In FY2008, Congress again rejected all funding for the conventional Trident modification, and aggregated the funding for research on the reentry vehicle with other DOD funding for research on prompt global strike technologies. It directed that DOD explore all options for achieving the PGS mission, and not focus on the near-term Trident option. Congress has objected to the Trident option in part because of doubts that the capability is needed immediately, and in part because of concerns that other nations might mistake the nature of a U.S. Trident missile launch. Congress appropriated $100 million for this combined program in FY2008; the Administration has requested $117 million for FY2009. The FY2009 budget request includes $3.6 billion to continue development and begin production of the Army's Future Combat Systems (FCS). FCS is a computer-networked array of 14 types of manned and unmanned ground and aerial vehicles intended to replace the Army's current fleet of combat vehicles, including M-1 Abrams tanks and M-2 Bradley infantry vehicles, beginning in 2015. The Army has estimated that the entire program could cost $230 billion over many years and the Defense Department's Cost Analysis Improvement Group (CAIG) projects the cost to be $300 billion. Critics have assailed the program on several grounds: some argue that it is unaffordable; some contend that it is optimized to fight the sort of conventional battles at which the U.S. Army already excels rather than the insurgencies, such as those in Iraq and Afghanistan, that it may be more likely to confront; and some object that the program as currently scheduled will take too long to get more effective weapons into the hands of the troops. In FY2006-08, Congress cut a total of $789 million from the Army's FCS budget requests. This year, House Defense Appropriations Subcommittee Chairman John P. Murtha has suggested that near-term funding for the program be increased by $20 billion to accelerate deployment of those elements of FCS nearest completion, at the expense of cancelling or delaying other elements of the program. For the third consecutive year, the Administration has proposed cancellation of the effort to develop the General Electric F-136 engine as a potential alternative to the Pratt & Whitney F-135 currently slated to power the F-35 Joint Strike Fighter. The $6.7 billion requested for the F-35 program in FY2009 includes $3.1 billion to continue development of the plane and $3.7 billion to buy 16 aircraft, but no funds to continue development of the alternative engine. DOD has argued that the alternative engine is a needless expense because the process of designing and developing high-performance jet engines has become much less uncertain than it once was. But Congress has backed development of the alternate engine since 1996, likening the current situation to the case of the F-15 fighter in the late 1970s which was handicapped by problems with its Pratt&Whitney-built engines until Congress mandated development of an alternative (GE-built) engine. To keep the F-35 alternative engine program going, Congress added $340 million to the FY2007 budget and $480 million to the FY2008 budget. Congress may want to consider whether to add funds to the Air Force's F-22 fighter program either to shut down production or to continue it. Although Air Force officials have argued vigorously for purchase of 381 of the planes, DOD plans to buy only 183, with the last 20 paid for by $3.4 billion included in the FY2009 budget. However, the request includes no funds to pay for closing the F-22 production line in an orderly way that would facilitate its resuscitation at a later date. Reportedly, the shut down could cost as much as $500 million. DOD officials have said they may include in the FY2009 war cost supplemental request—not yet sent to Congress—funds to buy four additional F-22s which, they contend, would defer the necessity of a shut down decision until the next Administration had time to decide whether to continue production or end it. However others deny that funding for four planes would delay the need for a decision long enough to make a difference. The FY2009 budget request includes $832 million to continue developing a new mid-air refueling tanker (designated KC-X) and $62 million for components that would be used to begin building the planes. On February 29, 2008, the Air Force selected a consortium consisting of Northrop Grumman and the European Aeronautic Defense and Space Company (EADS)—the parent company of Airbus—over Boeing to build the new tankers. But on June 18, the Government Accountability Office (GAO) upheld Boeing's protest of the Air Force decision and DOD announced that it would re-compete the award. With the initial contract for 179 aircraft worth $12.1 billion (and the final cost of the purchase estimated to reach approximately $35 billion) proponents of the competing bidders may try to tilt the second competition toward one firm or the other. On September 10, Defense Secretary Robert Gates cancelled the second competition to select a new tanker. In a statement, Gates said there was not enough time for DOD to complete the selection process by next January, when a new Administration will take office and that, accordingly, he had decided to allow the next Administration to define the requirements budget allocation for the new plane. During a House Armed Services Committee hearing on September 10, Gates said DOD soon would recommend to Congress how to allocate the tanker funds requested for FY2009. On September 15, Air Force Chief of Staff Gen. Norton Schwartz, reportedly said in a press conference that it could take the next Administration between eight months and four years to conduct a new tanker competition. As with the F-22 fighter program, so with the C-17 long-range cargo plane. The Administration's FY2009 budget request includes neither funds to buy components to continue C-17 production, as many have urged, nor the funds that would be needed to terminate production. As with the case of the F-22, the Administration has said that the next President should decide the future of the C-17 program. While some DOD studies have concluded that the 190 C-17s previously funded will suffice, critics challenge that assessment on several grounds. While some in Congress favor production of additional C-17s, others favor upgrades to older C-5 cargo planes DOD plans to retire. Policymakers are debating the appropriate balance between military and civilian personnel in operations and activities involving "soft" power functions, i.e., building and strengthening government institutions and economic systems abroad, as well has providing humanitarian assistance. As demands have increased on military personnel to perform such functions over the past several years, especially in Iraq and Afghanistan, Congress has granted DOD new authorities and funded expanded DOD activities in areas where civilian agencies were traditionally in the lead. For some policymakers, the expanded use of the defense budget to fund, and military personnel to perform, "stabilization and reconstruction" activities reflects shortfalls in civilian agency budgets and in civilian personnel that should be remedied. Nevertheless, there is no consensus on an optimal division of labor, authorities, and funding sources for such functions, or how to achieve that balance, nor on appropriate interim arrangements. Among the DOD programs of most concern: The Commander's Emergency Response Program (CERP) provides funds for commanding officers in Iraq and Afghanistan to carry out small-scale reconstruction programs, to fund state-building activities such as supporting local militias such as the Sons of Iraq, and to provide urgent humanitarian relief. In early 2008, the Administration requested Congress make CERP authority permanent and extend its use to other developing countries where U.S. forces are operating. "Section 1206" Global Train and Equip authority allows the Secretary of Defense to fund, with the concurrence of the Secretary of State, the training and equipping of foreign military forces for counterterrorism operations and to participate in or to support military and stability operations in which U.S. armed forces participate. In early 2008, the Bush Administration asked Congress to codify an expanded version of Section 1206 to increase the annual authorization from $300 to $750 million and to permit DOD to train and equip a broad array of security forces in addition to military forces. It asked for an FY2009 appropriation of $500 million. The Combatant Commander Initiative Fund (CCIF) has traditionally been used to fund foreign participation in military exercises and the military education and training of foreign personnel, and certain humanitarian and civil assistance. In 2006 Congress also added to the permitted categories, "civic assistance, including urgent and unanticipated humanitarian relief and reconstruction assistance." For FY2009, the Administration requested $100 million for the CCIF specifically to meet those needs. "Section 1207" Security and Stabilization funding authorizes DOD to transfer defense articles, services and other support to assist civilian agency responses to critical situations, in particular stabilization activities and operations planned and coordinated by the State Department's Office of the Coordinator for Reconstruction and Stabilization (S/CRS). The Administration requested authority to transfer $200 million for this purpose in FY2009. The Administration has requested $389 million in FY2009 to create U.S. Africa Command (AFRICOM) to give a senior general unified command over activities related to Africa that, previously, had been distributed among three regional DOD commands. Although the new organization is intended to have a large non-military staff and to cooperate extensively with the State Department, Agency for International Development and other civilian agencies, some question the wisdom of giving DOD such a prominent leadership role in U.S. policy toward Africa. To get a more complete picture of war funding, the John Warner FY2007 National Defense Authorization Act requires the Administration to request a full year's war cost in the February budget. Despite this requirement, the Administration included in its FY2009 budget request only a placeholder figure of $70 billion for bridge funding, with no details, that was intended to cover the gap between the beginning of the fiscal year and passage of a supplemental. In their spring markups, the authorization committees used the original $70 billion placeholder figure. On May 2, 2008, the Administration filled in the details by submitting an amended emergency war request with $66 billion for the Department of Defense (DOD) and $4 billion for State/USAID programs; however, these materials arrived too late to be taken into account in the authorization markup this spring. Since FY2004, the Defense Department has generally received war funding in two appropriations acts—a bridge fund included as a separate title in DOD's baseline appropriations bill to cover the first part of the same fiscal year, and a separate supplemental appropriation provided after the fiscal year has begun. In the spring of 2008, however, Congress passed H.R. 2642 , the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ) with funding to cover war costs for the rest of FY2008, and a bridge fund to cover part of the following fiscal year, FY2009. Coupled with DOD's regular appropriations for FY2009, this bridge fund is expected to last until June or July 2009, leaving it to a new Administration to decide how much funding to request for the remainder of the year. Like the members of the House and Senate Appropriations committees, the members of the House and Senate Armed Services committees, which draft the defense authorization bill, did not address full-year war costs for FY2009. Instead, the authorizing committees included in their respective bills funding levels for the FY2009 bridge fund, along with various policy restrictions. The House passed its bill ( H.R. 5658 ) on May 22, 2008 and the Senate passed its bill ( S. 3001 ) on September 17, 2008, including levels that differed from funding already included in for FY2009 in the already enacted supplemental ( P.L. 110-252 , see Table 7 ). Dropping funding levels proposed in the House and Senate bills, the conference version of the authorization, S. 3001 , adopts the funding levels included for FY2009 bridge fund already enacted in the FY2008 Supplemental except for a $2.1 billion addition for six more C-17 transport aircraft. Thus, S. 3001 includes a total of $68 billion for war funding compared to the $66 billion appropriated in the FY2009 bridge fund ( H.R. 2642 / P.L. 110-252 ). The conference authorization bill does, however, include different restrictions on funding and reporting requirements for the Iraq Security Forces Fund and the Commanders Emergency Response Program (see Table 7 ). With passage of the FY2008 Supplemental ( P.L. 110-252 ), CRS estimates that the total amount of DOD war funding for this fiscal year is $176 billion excluding funding that is not related to the wars in Iraq and Afghanistan. In February 2008 testimony, Secretary of Defense Gates suggested that war costs in FY2009 could total $170 billion, which would be about the same level as the FY2008 request excluding certain one-time costs for Mine Resistant Ambush Protected (MRAP) vehicles. The Administration said it had not submitted a full-year budget because of the uncertainty of predicting future troop levels in Iraq. In later testimony in May 2008, Secretary Gates suggested that "further reductions in the [U.S.] presence in Iraq during the course of 2009 and, perhaps, later this year" would contribute to DOD's ability to return to 12-month tour lengths to which the President committed the Administration. General Petraeus, former Commander of Multinational Forces, Iraq, and now head of Central Command, has been assessing troop levels since completion in July 2008 of the withdrawal of five combat brigades sent to Iraq in 2007 in the "surge." With the departure from Iraq of these five additional combat brigades, and the completion of MRAP purchases funded last year, war costs in FY2009 will be below FY2008's level. On September 9, 2008, the President announced a modest additional cut below surge levels of 8,000 troops in Iraq by January 2009 that would be coupled with an increase of troops in Afghanistan to meet requests from commanders on the ground for additional troops. Those additional troops could offset some if not all of the savings that would result from further troop reductions in Iraq. Working from the Administration's original request, the House and Senate-passed versions of the FY2009 National Defense Authorization bills ( H.R. 5658 and S. 3001 ) both proposed $70 billion in emergency bridge funds for DOD. Those bills were $5.8 billion above the amended request and the amount appropriated in the recently passed FY2008 Supplemental, H.R. 2642 / P.L. 110-252 . Prior to calendar year 2008, Congress has funded war costs by including a so-called "bridge fund" in the regular DOD appropriations bill for the pending year to cover part of that year's war costs and then funding war costs for the balance of that year through a supplemental appropriations bill the following spring. But the FY2008 war cost supplemental ( P.L. 110-252 ) enacted June 30, 2008 includes not only the war costs for the balance of FY2008 but also a $65.9 billion bridge fund for FY2009 to cover DOD war costs until a new Administration submits and a new Congress approves a FY2009 supplemental. Expected to last until June or July 2009, the FY2009 bridge fund was intended to give time to a new Administration to determine the future course in Iraq and Afghanistan. Like previous bridge funds, over 70% of the appropriated FY2009 bridge fund in P.L. 110-252 is dedicated to operation and maintenance funding to ensure that funding for operations is available well into the fiscal year (see Table 7 below). This appropriations act includes relatively small amounts for procurement—$4 billion compared to the $67 billion requested by DOD for all of FY2008—selecting those items that may be more urgently needed such as force protection upgrades or more uparmored HMMWVs for the Army. This leaves potentially controversial decisions about whether it is appropriate to cast as war costs service requests for major weapon systems such as EA-18 G electronic warfare aircraft or V-22 Osprey tilt rotor aircraft for the Navy, C-17 transport aircraft for the Air Force, or substantial upgrades to Army Abrams tanks or Bradley fighting vehicles, which some observers argue are more appropriately considered in the baseline budget as part of ongoing modernization programs. Congress halved DOD's procurement request in the FY2008 supplemental appropriations act passed in late May ( P.L. 110-252 ) reflecting in part on DOD's informal proposals this spring to withdraw procurement requests for $6.7 billion in order to pay for higher fuel costs and other unanticipated needs. This may indicate that congressional scepticism about war-related procurement funding requests may be growing. Although the House and Senate authorizers initially included funding for major weapons systems recommended such as F-22 aircraft for the Air Force, all but the C-17 aircraft were dropped in the conference version that, instead, adopted funding levels for the FY2009 bridge already enacted in the FY2008 Supplemental ( P.L. 110-252 ). Although the conference version of S. 3001 , the FY2009 NDAA generally adopts the funding levels in the already enacted FY2008 Supplemental (HG.R. 2642/ P.L. 110-252 ), it adds $2.1 billion for six more C-17 aircraft that is not included in that enacted bridge appropriations act. This brings the authorization total for the FY2009 bridge fund to $68 billion compared to the $66 billion appropriated (see Table 7 ). The conference bill also resolves most of the outstanding differences between the two houses and P.L. 110-232 , the enacted supplemental. The FY2009 NDAA conference bill, does, however, add various restrictions and reporting requirements on the use of funds for several high-interest programs—the Iraq Security Forces Fund, Commanders Emergency Response Program, and the Joint Improvised Explosive Device Defeat Organization (JIEDDO). The conference bill: authorizes $1 billion, half the request, for the Iraq Security Forces Fund (ISFF) but prohibits using these funds for infrastructure; authorizes $1.5 billion, $200 million less than requested and $300 million more than appropriated for the Commanders' Emergency Response program with a prohibition on projects over $2 million unless waived by the Secretary of Defense; authorizes $350 million for Section 1206 authority to build and equip foreign militaries for counter-terror operations; adopts the appropriated funding level for Mine Resistant Ambush Protected (MRAP) vehicles transfer fund; and adopts the Senate proposal to require separate budget displays for Iraq and Afghanistan. Neither of the two authorizing bills, nor the already passed FY2009 bridge fund address the overall funding for the full year's war costs for FY2009. That will be decided by the next Administration. The current Administration did not submit a request for a full year's war funding in part because of the uncertainty about future troop levels in Iraq and Afghanistan. With the conference bill, differences between House and Senate authorizers and amounts already appropriated are largely resolved (see Table 7 ). The halving of DOD's request for the ISFF from $2 billion to $1 billion in the enacted version of the FY2009 authorization bill reflects broad and growing sentiment to push the Iraqis to pay more of the cost of reconstituting their security forces in reaction to large and growing Iraqi oil revenues that are documented in a recent GAO report. In addition to the funding cut, the authorizers prohibit funding for any facilities used by Iraqi forces, limiting funding to equipment, supplies, services, training and facility repair (see Sec. 1508 , S. 3001 ). This prohibition adopts the stricter House version rather than limiting infrastructure funding to smaller projects as proposed by the Senate. Senate authorizers argued that "the Iraqi Government is well able to afford to finance its own infrastructure needs at this point." The strict prohibition on funding infrastructure in the authorization conference would presumably supersede report language in the appropriations act that required "equal cost-sharing" for all reconstruction projects above $750,000. These changes set new standards that increase Iraqi "burden-sharing" of the cost to rebuild its security forces and reconstruction. Reflecting oversight concerns, the final version of the authorization bill provides $2.2 billion rather than the $3 billion requested, and requires that the Director of JIEDDO develop a science and technology investment strategy for countering Improvised Explosive Devices (IEDs), as well as annual reporting. In addition, the final bill requires five-day advance notification of obligations and 15-day notice of transfers (Sec. 1503-1505, S. 3001 ). Another high visibility and rapidly growing program where the $1.5 billion authorization cap in the final authorization bill is below the request is the Commanders Emergency Response Program (CERP), which allows individual commanding officers to dispense funds for small-scale reconstruction projects, or to pay local militias such as the Sons of Iraq. The CERP program has grown from $180 million in FY2004, its first year, to $956 million in FY2007 to $1.7 billion in FY2008. Instead of adopting the House-proposed restrictions limiting U.S. funding for CERP) to no more than twice Iraqi funding, the authorization bill requires reporting of all projects over $500,000 and certifications for projects over $1 million. The bill also requires detailed reporting, including for Iraqi government contributions, and prohibits funding for projects above $2 million unless there are contributions from other countries, the Iraqi government, or private organizations or the Secretary of Defense submits a waiver (Sec. 1214, S. 3001 ). The final version of the authorization bill does, however, exempt CERP projects from the overall prohibition on infrastructure spending (Sec.1508) as was proposed in the Senate version. In addition, the appropriations act requires equal cost sharing of all reconstruction projects over $750,000 in report language as the "necessary first step in decreasing the Government of Iraq's reliance on U.S. funds for reconstruction." In its FY2009 request, the Administration proposed a broadening of Sec.1206 authority to include training of foreign and border police as well as military forces, an increase in the current funding cap from $300 million to $750 million, and $500 million in designated funding rather than the current practice where funds are transferred from other programs. As recommended by both houses, the final version of the authorization bill rejects most of the Administration's proposals and limits Section 1206 authority to train and equip foreign militaries for counter-terror operations, reflecting congressional concerns about the foreign policy implications of expanding DOD authority. The bill extends authorization for the Section 1206 program for three years. It also raises the annual cap to $350 rather than the $750 million requested (Sec. 1206, S. 3001 ). The FY2008 Supplemental sets a limit of $150 million for FY2008 but did not include a FY2009 cap. Reflecting action by both houses, the final authorization bill raises the limit for Sec. 1208 authority to fund foreign irregular forces from $25 million to $35 million until FY2013 and also specifies that the irregular forces would work with U.S. special forces. In its amended submission, DOD requested $2.6 billion in the Mine Resistant Ambush Protected (MRAP) vehicle transfer fund to buy additional vehicles for as yet undefined requirements. The conference bill adopts the $1.7 billion funding level appropriated in the FY2008 supplemental ( P.L. 110-252 ) rather than setting a cap with funds drawn from other accounts as was in the House bill or the $600 million level funding in the Senate bill. According to DOD, the current requirement for 12,000 MRAP vehicles is already funded while the House authorizers suggest that more funding is needed to buy additional V-shaped heavy-duty trucks for training purposes. Currently, funding for Iraq and Afghanistan is provided in standard appropriation accounts, which mix funds for the two operations and the funds for DOD's baseline and war appropriations. While the final version of the authorization bill does not specify separate amounts for Iraq and Afghanistan in FY2009 as the Senate bill did, it requires DOD to present separate budget displays for each operation at the appropriation level and by program, project or activity level in the next submission (Sec. 1502). In addition, the conference version requires that DOD provide a "detailed description of the assumptions underlying the funding for the period covered by the budget request, including the anticipated troop levels, the operations intended to be carried out, the equipment reset requirements necessary to support such operations," as proposed by the House. This requirement for separate budget displays would not necessarily require that DOD to set up individual accounts for war spending for each operation. Although separate war funding by operation would improve transparency and help Congress to see the relative cost of the two operations, DOD is likely to object to designating funds by operation in order to preserve its flexibility. According to the Senate report, separate funding displays would help prevent confusion between the two missions, a concern of both Secretary of Defense Gates and the committee. Finally, the final version of the authorization bill sets a $4 billion cap on transfer authority for FY2009 funds, which limits the overall amount that DOD can transfer between accounts as requested by DOD and adopted by the appropriations act (Sec. 1507, S. 3001 ). The level of transfer authority is of considerable concern to DOD because it provides flexibility to adjust funding levels during execution. The Concurrent Resolution on the Budget for FY2009 ( S.Con.Res. 70 ), adopted by the Senate on June 4 and by the House on June 5, set an overall target for national defense budget authority of $612.5 billion. This is essentially identical to the President's request ($611.1 billion) with the difference reflecting recalculation by the Congressional Budget Office (CBO) on the basis of slightly different technical assumptions. This total covers the so-called 050 function of the budget, which includes funding for DOD, defense-related nuclear-energy spending by the Department of Energy, and defense-related programs in other agencies. The same defense total had been included in both the House version of the budget resolution ( H.Con.Res. 312 ), adopted March 13, and original version of S.Con.Res. 70 , adopted March 14 by the Senate. The $612.5 billion total cap on defense budget authority set by the final version of S.Con.Res. 70 , as in the House-passed resolution, was the sum of two ceilings set by the resolution: For national defense activities other than military operations in Iraq and Afghanistan (budget function 050), the ceiling is $542.5 billion; operations in Iraq and Afghanistan are covered by a separate ceiling of $70 billion (budget function 970), which is the amount of the placeholder funding request included in the President's FY2009 budget. Subsequently, the Appropriations Committees of the House and Senate, under the so-called "302b allocation" process gave their respective defense subcommittees a budget authority allowance for FY2009 of $487.7 billion—which, in practice, is the ceiling for the FY2009 defense appropriations bill. The House passed H.R. 5658 , the Duncan Hunter National Defense Authorization Act for FY2009, on May 22 by a vote of 384-23. The bill would authorize $531.4 billion for national defense-related activities of DOD and other federal agencies and an additional $70 billion for costs related to military operations in Iraq and Afghanistan. The Administration's initial FY2009 budget request included a lump-sum of $70 billion as an initial increment of funding for DOD and other agency costs related to combat operations in Iraq and Afghanistan. On May 2, five days before the House Armed Services Committee (HASC) subcommittees began marking up H.R. 5658 , the Administration issued a budget amendment formally allocating the $70 billion request among appropriations accounts. However HASC, which also authorized the $70 billion by accounts in H.R. 5658 , acknowledged only a handful of the specific allocations included in the May 2 amendment. The bill authorizes $2.0 billion of the $3.7 billion requested to support Afghan Security Forces and $1.4 billion of the $2.0 billion requested for support of Iraqi Security Forces. Within the $70 billion authorized for operations in Iraq and Afghanistan, the House bill also allocates nearly $4.9 billion for aircraft procurement programs not included in the Administration's budget request: $3.9 billion to buy 15 C-17 cargo planes; $523 million for components that would be needed to fund an additional 10 F-22 Air Force fighters in FY2010; $448 million to repair worn out wing structures on Navy P-3C patrol planes, which have been used extensively for reconnaissance in Iraq and Afghanistan. Congress has incorporated the Administration's $70 billion FY2009 costs related to operations in Iraq and Afghanistan into H.R. 2642 , the Second FY2008 Supplemental Appropriations Bill. The House version of the FY2009 defense authorization bill also included a provision (Sec. 1431) that would exempt it from the President's Executive Order 13457, which prohibits agencies from complying with congressional earmarks not specified in statutory language. As is customary, the more than 500 earmarks associated with H.R. 5658 are specified in the HASC report accompanying the bill ( H.Rept. 110-652 ), which it reported to the House on May 16. In a Statement of Administration Policy issued May 22, the Office of Management and Budget (OMB) cited the provision exempting the bill from the executive order dealing with earmarks as one of many provisions which, if included in the final version of the bill, would cause the President's advisors to recommend a veto. Other provisions of H.R. 5658 cited by OMB as potential reasons for a veto are reductions totaling more than $700 million in the $10.8 billion requested for missile defense programs, a prohibition of proposed increases in health care fees and copays paid by some military retirees, and a provision requiring that any agreement with the Iraqi government concerning the legal status of U.S. military personnel in that country include a requirement that Iraq pay some of the costs of those forces. H.R. 5658 authorizes a military pay raise of 3.9 percent, rather than 3.4 percent as requested, and bars during FY2009 a proposed increase in TRICARE health insurance and pharmacy fees charged to some military retirees. Congress had prohibited proposed health care fee increases in each of the two previous budgets. To offset the lost revenue the proposed fee increases had been expected to generate, the bill would authorize, subject to appropriation, the transfer to the Defense Health Program of $1.3 billion from the unobligated balances of the National Defense Stockpile Transaction Fund. As requested, the bill would authorize increases in the active-duty end-strength of the Army (by 7,000) and Marine Corps (by 5,000), in line with the Administration's plan to increase the active-duty end-strength of the two services by 92,000 personnel over their end-strength in FY2007. It also would add a total 1,431 personnel to the requested end-strength of the Navy and Air Force (at a cost of $101 million). The Administration had proposed to substitute civilians for this number of Navy and Air Force military personnel in medical care positions. But the House bill reaffirms a provision of the FY2008 National Defense Authorization Act ( P.L. 110-181 ) prohibiting such military-to-civilian conversions of medical personnel. The bill also includes a provision that would allow a limited number of service members to take sabbaticals from active service for up to three years and return with no loss of rank or time-in-service. The bill denies authorization of $62 billion requested for long lead-time components to begin procurement of the Northrop Grumman KC-45A refueling tanker, but approved the request for $832 million to continue development of the aircraft. Some members have objected to the Air Force's selection of the Northrop Grumman system, based on a European-designed Airbus for this mission, rather than a tanker version of the Boeing 767. According to the committee, denial of the long lead-time funding would not delay the program. The bill includes a provision (Section 134) requiring the Secretary of the Air Force to submit to the congressional defense committees a report on the process by which the requirements were established that were the basis for selecting a new tanker. Another provision (Section 801) requires the Secretary of the Air Force to review the impact on the decision to buy the European-designed tanker of any subsidies by European governments that are illegal under the agreement reached in Uruguay round of the General Agreement on Tariffs and Trade. Although the budget request included no funds either to continue production of the C-17 cargo plane or to shut down the production line, the bill allocates $3.9 billion of the $70 billion requested for operations in Iraq and Afghanistan to buy an additional 15 C-17s. It also includes a provision (Section 131) that would allow the Air Force to retire C-5A cargo planes and replace them with additional C-17s only if a federally funded research and development center concludes that this would be more prudent than upgrading the engines and electronics on the C-5As. The bill authorizes $3 billion requested for 20 F-22 fighters. However, it also adds to the bill authorization of $523 million for long lead-time components that would be used to build an additional 20 F-22s in FY2010. The Administration's request includes neither the funds that would be needed to continue production of the F-22 beyond FY2009 nor the funds that would be needed to close down the production line. The bill authorizes the requests for $3.1 billion to continue development of the F-35 Joint Strike Fighter (JSF) and $3.7 billion to buy 16 of the planes. But it would add to the Administration request $525 million to continue development of an alternative engine for the JSF. The bill cuts $200 million from the $3.6 billion requested for the Army's FCS program. Armed Services Air and Land Forces Subcommittee chair Neil Abercrombie said these cuts were targeted to slow production of some components until they were more thoroughly tested. If the proposal were enacted, it would mark the fourth consecutive budget in which Congress trimmed the funding request for FCS. The bill also includes several legislative restrictions on the FCS program, including a requirement for annual reports to Congress on cost growth in the program's eight types of manned ground vehicles (Section 213), an independent report on potential vulnerabilities of the digital communications web intended to link FCS components (Section 212), and a provision that would bar the program's lead system integrators, Boeing and SAIC, from producing major components of the program (Section 112). The bill authorizes a total of $10.1 billion for missile defense programs, which would be $719 million less than the President requested, but $213 million more than Congress appropriated for these programs in FY2008 (see Table A-3 ). It cuts the amounts requested for several programs intended to deal with long-range missiles and added to the amounts requested for defenses against short-range and medium-range missiles which, HASC said in its report, are the more pervasive threat. Among the reductions were cuts totaling $372 million from the $954 million requested to begin deploying in Poland and the Czech Republic an anti-missile system intended to deal with long-range missiles launched from Iran. The bill also includes a provision (Section 222) that would bar the proposed European deployment until (1) the governments of Poland and the Czech Republic have ratified agreements to accept the stationing of U.S. personnel and equipment on their territories; and (2) the Secretary of Defense has certified to Congress that the interceptor missiles intended for the European site—a modified variant of the interceptors currently deployed in Alaska and California—has passed operationally realistic flight tests. The bill cut $100 million from the $386 million requested to develop a new, high-speed interceptor missile (designated the Kinetic Energy Interceptor (or KEI) and it cut $43 million from the $421 million requested to develop an anti-missile laser carried in a Boeing 747. The KEI and Airborne Laser both are intended to destroy attacking missiles while in their "boost phase," that is while they still are accelerating away from their launchers and, thus, are relatively easy to detect. The bill included a provision (Section 221) requiring a detailed analysis by a federally funded research and development center of the technical feasibility and cost-effectiveness of such boost-phase defenses, compared with various anti-missile systems already deployed or nearing production. The bill cuts from the request $100 million of the $354 million to develop a multiple-warhead interceptor able to hit several attacking missiles. It also cuts $10 million, the entire amount requested for the Space Test Bed, an experiment to test the feasibility of space-based anti-missile interceptors. In its report, HASC criticized the Navy's shipbuilding plan as both unaffordable and unwise—the latter in that it would end production of proven ship classes while investing large amounts in expensive, new, unproven designs: the DDG-1000 destroyer and the Littoral Combat Ship. Compared with the Administration's request, H.R. 5658 significantly increases or decreases funding for most major shipbuilding programs. The bill denies the $2.5 billion requested in FY2009 to build a third ship of the DDG-1000 class. Instead, it adds to the budget a tenth ship of the LPD-17 class of amphibious landing transports ($1.7 billion) and $278 million to buy long lead-time components for use in two additional T-AGE-class supply ships, designed to replenish warships in mid-ocean, that would be funded in FY2009. It also authorizes $400 million, which the Navy could use either to buy components that could be used to build an additional DDG-1000 or to resume production of the much less expensive DDG-51-class destroyers. HASC Seapower Subcommittee chair Gene Taylor has urged the Navy to use the funds to continue DDG-51 procurement. To buy two additional Littoral Combat Ships, the bill authorized $840 million rather than the $920 million requested, on grounds that the contractors could use components previously purchased for ships of this class that had been cancelled. The bill authorizes $722 million more than the $3.4 billion requested for acquisition of Virginia -class submarines. The request would buy one sub in FY2009 and long lead-time components (including a nuclear powerplant) to be used in another sub slated for purchase in FY2010. The bill's addition would let the Navy buy enough long lead-time components in FY2009 to allow the purchase of two subs in FY2010, thus accelerating by one year the time when the Navy could begin buying subs at the rate of two per year. Reflecting SASC's concern that the Administration's shipbuilding plan shows little progress toward meeting its avowed goal of increasing the size of the fleet to 313 ships, the bill did not grant the Administration's request that Congress waive a provision of law (10 U.S.C. § 5062) that requires the Navy to maintain 11 aircraft carriers in service. To avoid the cost of refueling the nuclear-powered carrier Enterprise , the Navy wants to retire that ship in 2013, which would cause the carrier force to drop to 10 ships for four years or more, until the carrier George H. W. Bush , which was funded in FY2005, enters service. Instead of including the requested waiver in the bill, HASC directed the Secretary of the Navy to report how much it would cost and how long it would take to return to service the recently retired carrier John F. Kennedy and to retain in service the carrier Kitty Hawk , which is slated for retirement. HASC also directed the Navy secretary to report on the cost and feasibility of extending the service life of existing Los Angeles -class submarines, many of which are nearing their scheduled retirement dates. The bill denies the $348 million requested for long lead-time components to be used in a modified version of the LHA-class helicopter carriers used to carry Marine combat units. The ship—for which the projected total cost is $3.5 billion—would be the first of a new Maritime Prepositioning Force (Future) (or MPF(F)) comprising 10-12 ships from which a Marine Expeditionary Brigade (typically numbering 20,000 troops with several dozen supporting helicopters and combat jets) could be put ashore. Unlike the currently deployed maritime prepositioning force, which consists of container ships and vehicle-carrying "roll-on, roll-off" (or RO-RO) vessels, the proposed MPF(F) would include three modified versions of the big helicopter carriers that are part of the Navy's amphibious warfare fleet. However, like the current prepositioning ships, the MPF(F) is not intended to land a force that would have to fight its way ashore. Such so-called "assault" landings are to remain the province of the amphibious landing ships. Accordingly, MPF(F) vessels based on amphibious ship designs—such as the helicopter carriers—will be built without some of the communications equipment and damage-control features found in their combat-equipped counterparts. In its report, HASC challenged the idea of using non-combatant ships—like those envisioned for the MPF(F)—rather than amphibious landing ships designed as combat vessels. It directed the Navy to report the number and types of amphibious ships that would be needed to carry out the MPF(F) mission. The bill also includes a provision (Section 1013) requiring that helicopter carriers and other large amphibious landing ships be nuclear-powered. A similar provision requirement covering aircraft carriers, large surface warships and submarines was included in the FY2008 defense authorization bill. The bill incorporates the text of the Reconstruction and Stabilization Civilian Management Act of 2008, H.R. 1084 , as passed by the House on March 5, 2008. The provisions of this act would authorize the President to furnish, after notifying Congress, up to $100 million in assistance annually from FY2008 through FY2010, for stabilizing and reconstructing a country or region in conflict or civil strife, or in transition from that status. It also would codify the establishment of the State Department Office of the Coordinator for Reconstruction and Stabilization (S/CRS), authorize the Secretary of State to establish a response readiness corps, including a civilian reserve corps, and authorize the appropriation of funds for through FY2010 to cover personnel, education, training, equipment, travel, and deployment costs. The bill authorizes $1 billion of the $2 billion requested for training and support of Iraqi Security Forces and $1.5 billion for the Commanders Emergency Response Program (CERP), a fund available to U.S. commanders in Iraq to pay for reconstruction projects. However, the bill also includes a provision (Section 1214b) requiring that Iraq obligate one dollar on similar reconstruction projects for every two dollars spent by CERP. The Secretary of Defense may waive the requirement under certain circumstances. The bill includes provisions requiring that future budget requests list separately those items related to operations in Afghanistan (Section 1002) and Iraq (Section 1003). It also would continue an existing prohibition on the use of funds either to establish permanent bases in Iraq or to control Iraqi oil revenues (Section 1211). The bill also would require a report by the President on any agreement with the Iraqi government concerning the legal status of U.S. personnel in Iraq, U.S. rights of access to bases in that country, the rules of engagement governing U.S. units in Iraq, or any U.S. security commitment to Iraq (Section 1212); periodic reports by the President on the strategy and performance of U.S.-led Provincial Reconstruction Teams in Iraq (Section 1213); establishment of a performance monitoring system for Provincial Reconstruction Teams in Afghanistan (Section 1215); a report by the Secretary of Defense on the command and control structure for U.S. and NATO-led military forces in Afghanistan (Section 1216); and a report by the Secretary of Defense on (1) the number of police training teams needed to staff a majority of the 1,100 police stations in Iraq; (2) the cost of staffing such an effort; and (3) the feasibility of transferring responsibility for Iraqi police training from DOD to the Department of State (Section 1218). Among other provisions of H.R. 5658 as passed by the House are the following: Denial of authorization for the $10 million requested to develop a new nuclear weapon, the Reliable Replacement Warhead, intended to replace some currently deployed warheads on Trident submarine-launched ballistic missiles; Authorization of $118 million, as requested, for development of a long-range, conventionally armed missile for "prompt global strike." No funds had been requested to develop a conventionally armed version of the Navy's Trident submarine-launched, nuclear-armed missile, which Congress has refused to fund in prior budgets; Authorization of $1 billion as requested to continue development of the VH-71, a new fleet of White House helicopters. Citing cost overruns in the Lockheed Martin program, which is based on a European-designed aircraft, HASC directed DOD to report alternatives for future production; Prohibition for one year of so-called "A-76" competitions in which private contractors bid to take over work currently performed by federal employees (Section 325); A requirement that the Office of Management and Budget (OMB) draft a government-wide definition of "inherently governmental functions" that should be performed by federal employees rather than by contractors (Section 322). The House passed H.R. 5658 May 22 by a vote of 384-23 after two days of debate, during which it adopted several amendments bearing the U.S. military posture in the Middle East and a wide-ranging amendment to federal contracting law. An amendment by Representative Barbara Lee, adopted by a vote of 234-183, denies legal effect to any agreement obligating the United States to defend Iraq unless the agreement is a treaty ratified with the advice and consent of the Senate or is specifically authorized by Congress. An amendment by Representative Braley, adopted by a vote of 245-168, requires the President to submit to Congress a report on the long-term cost (through FY2068) of U.S. operations in Iraq and Afghanistan , including the costs of operations, reconstruction and health care and disability benefits. An amendment by Representative Holt, adopted by a vote of 218-192, requires recording by videotape or other electronic method of any interrogation of a detainee under the jurisdiction or effective control of DOD. An amendment by Representative David Price, adopted by a vote of 240-168, would prohibit the interrogation of detainees by contractors, although it would allow the use of contractors as interpreters. An amendment by Representative Spratt, adopted by voice vote, would require the Director of National Intelligence to submit to Congress an annual update of the November 2007 National Intelligence Estimate on Iran's nuclear weapons program. The amendment also requires the President to notify Congress within 15 days of determining that Iran has accelerated, decelerated or ceased work on any significant element of its nuclear weapons program or that Iran has met any major milestone in its effort to develop nuclear weapons. The House also adopted by voice vote an amendment by Representative Waxman incorporating several provisions intended to reduce the federal government's use of sole-source and cost-reimbursement contracts, establish government-wide conflict-of-interest rules governing contractor employees working in government contracting offices, and create a government-wide database of any judicial proceeding, contract suspension or disbarment of any federal contractor. Among the other amendments to H.R. 5658 acted on by the House were the following: An amendment by Representative Akin that would have restored $193 million of the $200 million the bill would cut from the $3.6 billion request for the Army's Future Combat Systems (FCS) program, was rejected 128-287. An amendment by Representative Franks that would have restored $719 million the bill cuts from the Administration's $10.1 billion request for anti-missile programs was rejected 186-229. An amendment by Representative Tierney that would have cut an additional $966 million from the anti-missile budget was rejected 122-292. An amendment by Representative Pearce that would have restored the $10 million requested to continue development of the Reliable Replacement Warhead, a request the bill denies in its entirety, was rejected 145-271. An amendment by Representative McGovern requiring the Secretary of Defense to make public, on request, the names, ranks and countries of origin of students and instructors at the Western Hemisphere Institute for Security Cooperation, was adopted 220-180. An amendment by Representative Hodes, adopted by voice vote, requires the DOD Inspector General and the General Accounting Office to report on whether a prohibition on the use of appropriated funds for domestic propaganda was violated by a Pentagon program to provide special briefings for military analysts who are frequent press commentators. The Senate Armed Services Committee (SASC) approved S. 3001 , the National Defense Authorization Act for FY2009, on April 30 and reported the bill to the Senate on May 12 ( S.Rept. 110-335 ). The Senate passed the bill September 17 by a vote of 88-8. The bill authorizes a total of $612.5 billion in new budget authority, including $542.5 billion for the base budget and a $70 billion placeholder allowance for war-related costs. This is essentially the amount requested by the President except for minor differences that reflect score-keeping adjustments by the Congressional Budget Office (CBO). During floor debate on the bill, the Senate adopted three amendments: By Senator Kyl and others, directing that $89 million of the total appropriated for missile defense research be used to deploy an X-band, long-range missile-detection radar in a secret location; Adopted by voice vote; By Senator Leahy and others, extending from three years to five years the period following the end of a war during which the statute of limitations on contractor fraud would be suspended; Adopted by voice vote; By Senator Bill Nelson, repealing the requirement that military survivors' benefits paid from DOD's Survivor Benefit Plan be reduced by the amount of any benefits received under the dependency and indemnity compensation program of the Department of Veterans Affairs; Adopted 94-2. The Senate rejected by a vote of 39-57 an amendment by Senator Vitter and others that would have increased by a total of $358 million the amounts authorized for three missile defense programs. The bill incorporates $2.0 billion worth of reductions to the Administration's budget requests for military personnel and operation and maintenance which, according to SASC, would have no adverse impact on DOD operations. This includes cuts of $1.1 billion from military personnel accounts and $212 million from operations and maintenance accounts based on an historic pattern of DOD requesting for those amounts than it spent in a given year, reductions totalling $198 million based on what the committee said was an erroneously high request for civilian pay, and a reduction of $497 million in the amount requested for depot maintenance of Air Force planes. The $497 million the bill cuts from the Air Force maintenance account was requested to repair a weak section of the structure of older F-15 fighters, after one of the planes broke apart in mid-air during a training flight. In its report, SASC said a much smaller number of planes had been found to need reconstruction than had been assumed in the budget request. President Bush's Executive Order 13457 prohibits agencies from complying with congressional earmarks not specified in statutory language; S. 3001 includes a provision (Section 1002) that would incorporate into the bill the detailed funding tables in the accompanying committee report, which would circumvent E.O. 13457. These funding tables spell out how the Senate intends DOD and the services to allocate the lump sums authorized for each appropriations account—for instance, the accounts for procurement of aircraft for the Army and for research and development for the Navy. Member's earmarks, which are listed at the end of the report in a separate table by sponsor, amount authorized, and intended beneficiary, also are listed in the funding tables but are described there in more general terms (rather than in terms of the specific entity intended to receive the authorized funding). On several important military personnel questions, S. 3001 agrees with the House-passed FY2009 authorization bill ( H.R. 5658 ). Both bills approve the requested addition of 12,000 troops to the active-duty end-strength of the Army and Marine Corps, as a step toward a planned increase of 92,000 troops over the FY2007 level. Similarly, both bills authorize a 3.9% raise in military pay effective January 1, 2009, rather than the 3.4% raise in the budget request, an increase that costs an additional $316 million. Like the House bill, S. 3001 prohibits the Administration's proposed increase in fees, co-payments, and pharmacy prices charged some military retirees by DOD's TRICARE health insurance system. The bill adds to the budget request $1.2 billion to make up for the loss of anticipated revenue from the proposed fee increases. Unlike the House bill, however, and pursuant to an Administration request, the SASC bill repeals a provision of the FY2008 Defense Authorization Act (Section 721 of P.L. 110-181 ) that prohibits replacing military medical personnel with civilians, as the Administration has proposed. Unlike the House bill, S. 3001 authorizes $2.5 billion requested for a third DDG-1000 class destroyer. However, the Senate bill also would expand the Administration's shipbuilding plan, rejecting the request for $103 million to shut down production of LPD-17 class amphibious landing transports and adding to the bill $273 million for long lead-time components that would allow the Navy to budget for an additional LPD-17 in FY2010. It also adds $79 million to the $1.3 billion requested for long lead-time components to allow the Navy to begin budgeting for two submarines per year starting in FY2011. Noting delays in the construction of helicopter carriers at the Northrop Grumman shipyard in Pascagoula, MS, that was damaged by Hurricane Katrina, SASC concluded that the contractor was unlikely to proceed as quickly as the budget assumed to assemble long lead-time components for an LHA(R) class helicopter carrier slated to be part of the planned Maritime Prepositioning Force (Future). Accordingly, the bill authorizes $178 million of the $348 million requested for that purpose. It also includes a provision (Section 1432) requiring the Navy to fund that ship—and others slated for the MPF(F) that are basically amphibious landing ships—through its ship construction account instead of through a revolving fund for sealift ships, which gives the service more leeway to reallocate funds. The bill adds $25 million to the $165 million requested to begin a $10 billion, long-term program to modernize the 61 Arleigh Burke-class destroyers—its most numerous class of warships—so they can operate for 40 years, rather than the 20 years that the committee cited as the norm for vessels of that size. But the committee also directed the Navy to provide detailed justification of its decision to have the ships upgraded in several stages by shipyards near their homeports instead of having each one get a full upgrade from either the Northrop Grumman yard in Pascagoula or the General Dynamics-owned Bath Iron Works in Bath, ME, the two yards where all the ships were built. Citing delays in finalizing the design of a new class of cruisers (designated CG(X) that would replace the 22 Aegis cruisers in the anti-aircraft and missile defense mission, the bill cut $121 million from the $313 million requested to prepare to begin building the first CG(X) in FY2011. In addition to authorizing $3.1 billion, as requested, to buy 20 F-22 fighters, the bill authorizes $497 million to be used either to shut down the F-22 production line or to buy long lead-time components that would allow the Air Force to buy 20 additional planes in FY2010. The bill also authorizes, as requested, $3.1 billion to continue development of the F-35 Joint Strike Fighter, $3.3 billion to buy 16 of the planes, and $396 million for long lead-time components to support future purchases. But it also adds to the budget request $500 million to continue congressional effort to make DOD fund development of a General Electric engine that could replace the Pratt & Whitney engine currently used in the F-35. The added funds include $430 million to continue developing the alternate engine, $35 million to develop improvements in the Pratt & Whitney powerplant—to "level the playing field," in the words of the SASC report—and an additional $35 million to buy long lead-time components that would be needed in future production of the alternate engine. Citing warnings by the Navy, Marine Corps, and Air Force that the retirement of older fighter planes combined with delays in fielding the F-22 and F-35 could leave the services short of planes to equip their squadrons, the committee included in the bill a provision (Section 171) requiring DOD to give Congress annually a 30-year plan detailing projected changes in its inventory of all major types of aircraft. The committee also urged the Navy to prepare to sign a multi-year contract for more F/A-18E/F strike fighters than it currently plans to buy, as a hedge against delays in the acquisition of F-35s. The bill authorizes $1.3 billion requested to buy 52 Global Hawk and Predator unmanned aerial vehicles (UAVs), some of which would be armed but all of which are equipped for surveillance missions. It trims $48 million from the $480 million requested to develop a long-range UAV for maritime surveillance. But it authorizes $371 million requested for shorter-range Army and Navy UAVs. The bill adds to the budget request $98 million to develop an improved ground-surveillance radar (designated R-TIP) which the committee urged the Air Force to consider backfitting on the existing E-8 J-STARS planes. It authorizes $111 million requested for long lead-time components that would be used to begin production of a modified Boeing 737 (designated P-8) that the Navy will use as a long-range sub-hunter and reconnaissance plane and it authorizes $160 million, not requested, to repair aging P-3 patrol planes that the P-8 is intended to replace. Because the losing contractors have filed an official protest of the Air Force's selection of the Boeing Chinook as its new search and rescue helicopter (designated CSAR-X) intended to retrieve downed pilots from enemy territory, the bill authorizes $265 million of the $305 million requested to develop the aircraft and none of the $15 million requested to buy long lead-time components in preparation for manufacture. The bill authorizes the $1.0 billion requested to continue development of the VH-71, intended to replace the aging helicopters that serve the White House. But in its report, the committee cited a rash of problems besetting the program which, it said, might experience of 70% cost overrun. The report directs the Navy to submit to Congress a detailed report on the status of the program. Following the same general approach as the companion House bill, S. 3001 would authorize less for anti-ballistic missile defenses than the administration requested. Of the $10.9 million requested, the House bill would authorize $9.9 billion and the Senate bill $10.2 billion. . Moreover, within those overall totals, both bills authorize more than was requested for systems that are ready, or nearly ready, for deployment to deal with existing short-range and medium-range missiles. On the other hand, both bills authorize less than requested for programs that would not enter production that soon, many of which are intended to deal with intercontinental-range missiles. In its report, SASC places great emphasis on an analysis by the Joint Staff—the body of officers that provide technical expertise to the Joint Chiefs of Staff—which concludes that, to meet the needs of combatant commanders around the globe, DOD needs about twice as many of the Army's THAAD interceptors and the Navy's SM-3 interceptors missiles than it currently plans to buy. Both systems are designed to knock down medium-range missiles, which fly much slower than intercontinental ballistic missiles (ICBMs). S. 3001 would add to the budget request $135 million to field additional THAAD and SM-3 missiles and THAAD radars and an additional $80 million to improve the anti-missile capability of the Navy's Aegis system, which uses the SM-3 missile. Among the reductions the bill would make in anti-missile programs are cuts of: $269 million (undistributed) from the Missile Defense Agency; $10 million, the entire amount requested, for the Space Test Bed; and $50 million of $354 million requested for the Multiple Kill Vehicle, intended to let one interceptor knock out several attacking warheads. S. 3001 authorizes the funds requested to begin deploying in Europe a variant of the defense against intercontinental-range missiles currently deployed in Alaska and California. However, the bill includes a provision (Section 232) that would bar use of the funds to buy interceptor missiles for that deployment or to begin construction on-site until (1) Poland and the Czech Republic have formally ratified agreements to allow the American sites on their territory and (2) the Secretary of Defense certifies to Congress that the interceptor slated for deployment at the European site—which is a considerably modified variant of the version already deployed—has been successfully tested in operationally realistic flight tests. Among other provisions of S. 3001 are the following: authorizes the services to let a limited number of personnel leave active service for up to three years and return with no loss of rank or time-in-service to test the feasibility of allowing service members more flexibility in pursuing their careers, requires DOD to conduct a comprehensive study of the risk that critical installations could be cut off from their current sources of energy; requires DOD to establish ethics standards to prohibit conflicts of interest on the part of contractor employees who perform acquisition functions for the Department; bars private security contractors from performing in an area of combat operations any "inherently governmental functions," which are defined to include "security operations if they will be performed in highly hazardous public areas where the risks are uncertain and could reasonably be expected to require deadly force that is more likely to be initiated by contractor personnel than by others; prohibits contractor employees from interrogating detainees during or in the aftermath of hostilities, a restriction that would take effect one year after enactment of the bill; requires the armed services to ensure that field commanders "urgent requirements" for specific equipment be presented to senior service officials for review within 60 days of submission; adds $350 million to the $843 million requested to develop the Transformational Satellite (TSAT), which would be a key node in a planned, high-volume, global laser-communication network; authorizes the $10 million requested in the Energy Department's defense-related budget for research on the Reliable Replacement Warhead, but denies authorization for the $23 million in the Navy's budget request for that proposed new nuclear warhead; prohibits, with a few exceptions, the use of funds authorized by the bill to pay for infrastructure projects in Iraq costing more than $2 million. Although the House and Senate both passed versions of the FY2009 defense authorization bill through the usual procedures, the Senate's final action on its version ( S. 3001 ) was delayed until September by various controversies. One issue contributing to the delay was a provision of the defense bill (Section 1002) that would incorporate into the legislation hundreds of earmarks listed in the committee's report on the measure. Another issue was an unrelated dispute over offshore oil drilling, which held up Senate action on most legislation. The Senate passed the bill September 17 after acting on only four amendments. The Senate did not request a conference with the House to reconcile S. 3001 with the House-passed H.R. 5658 . Instead, members of the House and Senate Armed Services committees negotiated informally the compromise version of S. 3001 that was cleared for the President. Although the Administration objected to the provision that incorporated into the Senate-passed bill the earmarks listed in the Senate Armed Services Committee's report on the bill, a substantially identical provision (Section 1005) was included in the compromise version of S. 3001 , that incorporated into that measure the hundreds of earmarks listed in summary tables in the "explanatory statement" that was, for all practical purposes, equivalent to the explanatory statement in a formal conference report. The compromise version of S. 3001 did not include any of several provisions in either the House or Senate versions of the authorization bill that had been singled out by Administration officials as grounds for a veto, if they had been included in the version of the bill sent to President Bush. Following is a summary of provisions of the House or Senate versions of the authorization bill that Deputy Defense Secretary Gordon England had cited as grounds for a veto in a September 19 letter to leaders of the House and Senate Armed Services committees: a ban on the government's use of private security contractors in combat zones; Section 832 of the compromise bill expresses a sense of Congress that security missions in combat zones should be performed by U.S. military personnel. a ban on the use of contractor employees to interrogate detainees; Section 1057 of the compromise expresses a sense of Congress that contractors should not conduct interrogations. a requirement that detainee interrogations be videotaped. Section1058 of the compromise expresses a sense of Congress that such interrogations be videotaped or otherwise electronically recorded. a requirement that Congress approve, either as a treaty or by legislation and agreement governing the legal status of U.S. forces in Iraq. The compromise included no such requirement but retained in Section 1212 a requirement in the House bill that DOD provide Congress with a detailed report on such an agreement, should it be reached. a requirement that the Davis-Bacon Act, requiring the payment of locally prevailing wages on federal construction projects, apply to military construction projects on Guam, to which Marine Corps units currently stationed on Okinawa, are being moved. The provision was dropped. provisions that would bar or inhibit DOD from outsourcing on the basis of a "public-private competition" jobs currently performed by military or federal civilian personnel. No such provisions were included in the compromise bill. provisions that would halt the construction of facilities to replace Walter Reed Army Medical Center in Washington, D.C., pending a review, and would prohibit the use of an independent commission to draw up recommendations for any future rounds of military base closures. No such provisions were included in the final bill. several provisions in the Senate bill relating to the management of intelligence activities in DOD. All such provisions were dropped. four provisions in the House bill—added in the wake of the Air Force's now-cancelled selection of a European-designed mid-air refueling tanker—three of which the Administration said would require DOD to discriminate against foreign manufacturers and one of which it said would require disclosure of contractors' proprietary information. The provisions were dropped or greatly diluted in their impact. funding cuts "below acceptable levels" to the $657 million requested for research and development and facilities construction associated with deployment of an anti-missile system in Poland and the Czech Republic. While the Administration did not specify an "acceptable level," the compromise bill cut $208 million compared with the $421 million that had been cut by the House version. The bill requires the Secretary of Defense to submit annually an aircraft procurement plan for the Navy, Marine Corps and Air Force that would project procurements, retirements and losses over the following 30 years for all types of combat and support aircraft (Section 141). The services have warned Congress in recent years of coming shortfalls in combat planes as planned retirements outstrip the acquisition of replacement craft. The amounts authorized for particular programs were generally consistent with (and largely superseded by) the amounts actually appropriated by the companion defense appropriations bill. But the authorization measure included significant policy provisions bearing on some high profile programs: The bill would defer until FY2010 application to the Navy's Littoral Combat Ship (LCS) program of a cost cap set by Congress in the FY2007 John Warner National Defense Authorization Act (Section 122). The cap limits the cost of each LCS to $460 million with the proviso that the cost would be allowed to exceed that cap by up to $10 million because of inflation. To buy long lead-time components that would allow the procurement of additional F-22 fighters in FY2009, the bill authorizes $523 million not requested by the Administration (funds that also were included in the companion FY2009 defense appropriations bill). However, the bill would allow DOD to expend only $140 million of that amount until the next President decides whether to buy additional F-22s or shut down the program. The bill would authorize $835 million to continue development of a new fleet of helicopters for the White House, a reduction of $213 million from the request. The companion FY2009 defense appropriations bill provides the same amount. Although the project is based on an existing helicopter of European design, costs have increased significantly, in part because of the high-tech communications equipment being installed in the aircraft. The authorization bill would require the Secretary of Defense to submit to Congress several reports called for by the House and Senate versions of the measure, including one that would analyze the advantages and disadvantages of re-competing the helicopter contract, which was won in 2005 by Lockheed Martin. In an explanatory statement accompanying the compromise version of S. 3001 , the House and Senate members who negotiated the bill objected to the frequency with which the Missile Defense Agency (MDA) had cancelled scheduled flight tests. They directed MDA to consult with certain other DOD agencies before cancelling future tests and to report to the congressional defense committees on the reasons for any future test cancellations and MDA's plan to meet the objectives of the cancelled test. The bill would also require the National Academy of Sciences to analyze the feasibility of the proposed systems that are intended to destroy missiles in their "boost-phase"—the period immediately after launch when their rocket motors are firing (Section 232) One of the boost-phase defenses covered by that section is the Airborne Laser—a Boeing 747 armed with a huge laser . Another section of the bill (Section 235) would require DOD's director of operational testing to report on the operational effectiveness, survivability and affordability of the Airborne Laser. While the bill authorized $449 million of the $667 million requested to begin deploying anti-missile interceptors in Poland and their associated radar in the Czech Republic, the bill also would bar expenditure of the funds until after the two host countries have signed and ratified the agreements necessary for the deployments and 45 days have elapsed from the time Congress receives an independent assessment of the proposed European deployment conducted by a federally funded research and development corporation (Section 233). That review was mandated by the FY2008 National Defense Authorization Act. The bill would authorize a military pay raise of 3.9 percent, which is one-half of 1 percent higher than the President requested. But it does not include a provision in the House-passed bill that would have required military pay raises in FY2010-FY2013 that would be one-half of 1 percent above the annual increase in the Labor Department's Employment Cost Index (ECI), which is a measure of changes in employee compensation in the private sector. The bill would mandate, for male service members whose spouse gives birth to a child, 10 days paternity leave in addition to any other leave to which the service member is entitled. It also would authorize a pilot program to test the value of allowing a small number of military personnel to leave active duty for a period of up to three years to focus on personal or professional goals. Participating members would return to active duty at the same rank and seniority they held when the left active duty, but the time spent in the program would not could toward the 20 years of service required to retire. The bill does not include a Senate-passed provision which would have repealed an existing legal requirement that, if the survivor of a deceased service member is eligible both a DOD annuity from the Survivor Benefit Plan (SBP) and an annuity from the Dependency and Indemnity Compensation program (DIC) of the Department of Veterans Affairs, the SBP payment would be reduced by the amount of the DIC payment. For the third year in a row, the authorization bill reject's Administration proposals to increase fees and copayments for military retirees participating in DOD's Tricare health care program. The bill also includes several provisions intended to encourage service members and Tricare beneficiaries to take steps designed to prevent health problems, such as controlling their weight, abstaining from smoking and exercising. These include a provision that would waive Tricare copayments for preventive services (Section 711), authorize a demonstration program testing the effectiveness of monetary and other incentives to participate in a program to monitor health risk factors, such as weight and blood pressure (Section 712) and establish a smoking cessation program under Tricare (Section 713). The compromise bill dropped a House-passed provision that would have prohibited the award of any contract for a contractor to act as lead systems integrator (LSI) on a major acquisition program. It includes a provision requiring the creation of a career path for military personnel who specialize in the acquisition field, and it requires the creation of five additional positions for general officers serving in acquisition jobs. It requires establishment for all major acquisition programs of a Configuration Steering Board intended to control costs by controlling proposed changes in the design of the system (Section 814). Among the bill's other significant provisions relating to DOD's acquisition process are the following: authorization of a streamlined hiring process to fill acquisition jobs in DOD (Section 833); requirement to establish a government-wide policy (codified in standard contract clauses) to prevent conflicts of interest for contractor employees who are managing DOD acquisitions (Section 841); and extension from three years to five years of the period after the end of a congressionally authorized conflict during which no statute of limitation applies for contractor fraud (Section 855). The House and Senate versions of the FY2009 National Defense Authorization Act (NDAA) each included a variety of Iraq policy provisions. Some of them required reports to the Congress from the President or from the Secretary of Defense, while others were designed to have a more direct impact on activities in Iraq. The only point of overlap was language in both drafts that would extend a prohibition from the FY2008 National Defense Authorization Act, P.L. 110-181 , prohibiting the use of funding to support permanent stationing of U.S. military forces in Iraq or to exercise control over Iraqi oil resources. Table 8 , below, provides a side-by-side summary of selected Iraq policy provisions in each bill and the resolution of each issue in the final version of S. 3001 . The House Defense Appropriations Subcommittee marked up its version of the FY2009 Defense Appropriations Bill on July 30, recommending a total of $477.6 billion, $4 billion less than the President requested for that bill. The Senate Defense Appropriations Subcommittee marked up its version of the appropriations Bill on September 10, also recommending $477.6 billion. Neither chamber held full committee markups of a FY2009 defense appropriations bill, and neither chamber considered a bill on the floor. Instead, a compromise version of the two subcommittee bills—in effect, a conference agreement on FY2009 defense appropriations—was incorporated into H.R. 2638 , the FY2009 Consolidated Security, Disaster Assistance and Continuing Appropriations Act, which the House passed September 24 by a vote of 370-58. The Senate passed the bill September 27 by a vote of 78-12 and the President signed it September 30 ( P.L. 110-329 ). The House Defense Appropriations Subcommittee marked up its version of the FY2009 Defense Appropriations Bill on July 30, recommending a total of $477.6 billion. In addition to funding a military pay raise of 3.9% (0.5% higher than the President's request), the bill would provide, for service members who were retained on active duty involuntarily by a so-called "Stop Loss" action, an additional $500 per month for each month their service was extended from October 2001 onward. The subcommittee bill denied the $2.5 billion requested for a third ship of the DDG-1000 class of destroyers, but this action was revised in the final version of the appropriations bill. On other key weapons systems, the unnumbered House subcommittee bill would appropriate: $6.7 billion, as requested, for development and production of the F-35 Joint Strike Fighter, but with a $785 million cut from production funding that is nearly offset by increases in the development program to continue work on an alternative engine ($430 million) and to increase the amount of testing, partly by purchasing two more prototypes ($320 million); $523 million not requested to buy components to permit continued production in FY2010 of the F-22 Raptor, in addition to approving the funds requested to buy 20 of the aircraft in FY2009 ; $3.6 billion for the Army's Future Combat Systems (FCS) program, including an increase of $33 million to accelerate the development of unmanned ground and aerial vehicles; Additions to the request of $1.6 billion for an LPD-17 amphibious landing transport, $450 million for components to be used in the DDG-1000 program, and $941 million for two T-AGE cargo ships. $398 million for components to be used in a future Virginia-class submarine, thus allowing the Navy to begin in 2010—a year earlier than currently planned—funding two subs per year instead of one; $835 million, which is $212 million less than the budget request, to continue development of a fleet of new helicopters for use by the White House; The subcommittee also approved $893 million, as requested, to develop a new aerial refueling tanker for the Air Force to replace existing KC-135 tankers built by Boeing in the 1950s. In addition, the subcommittee directed that, as DOD conducts a new competition to choose between a tanker offered by Northrop Grumman and one offered by Boeing, it comply with findings made by Government Accountability Office (GAO) in its ruling that a previous competition, won by Northrop Grumman, was invalid. On September 10, Defense Secretary Robert Gates cancelled the second competition to select a new tanker. In a statement, Gates said there was not enough time for DOD to complete the selection process by next January, when a new Administration will take office and that, accordingly, he had decided to allow the next Administration to define the requirements budget allocation for the new plane. During a House Armed Services Committee hearing on September 10, Gates said DOD soon would recommend to Congress how to allocate the tanker funds requested for FY2009. On September 15, Air Force Chief of Staff Gen. Norton Schwartz, reportedly said in a press conference that it could take the next Administration between eight months and four years to conduct a new tanker competition. The House subcommittee bill also would require the Administration to include in future annual defense budget requests funding to cover the cost for the year of ongoing operations in Iraq and Afghanistan. The bill would provide $80.6 million of the $389 million requested to stand up a new U.S. Africa Command. According to press accounts, subcommittee's draft report to accompany the defense bill contended that a high-profile military command was not the appropriate basis for organizing U.S. government efforts, carried out by many agencies, to promote security stability in Africa. Action on the subcommittee draft by the full House Appropriations Committee, which had been scheduled for September 9, was postponed. The Senate Defense Appropriations Subcommittee marked up its version of the FY2009 Defense Appropriations Bill on September 10. Like its counterpart House panel, the Senate subcommittee recommended a total of $477.6 billion. The subcommittee accepted by voice vote an amendment by Senator Domenici that would continue a nuclear nonproliferation agreement under which Russia is converting 500 metric tons of weapons-grade uranium to a less potent form of uranium that can be used to fuel nuclear powerplants. To protect U.S. producers of nuclear reactor fuel, the amendment limits the amount of uranium fuel Russia can sell to U.S. powerplants. An amendment by Senator Dorgan that would have rescinded funds appropriated for reconstruction in Iraq and for training and equipping Iraqi security forces, was rejected by a vote of 10-9. The bill would fund a military pay raise of 3.9% (0.5% higher than the President's request). The bill would fund procurement of 14 of the 16 requested F-35 Joint Strike Fighters and would add to the request $495 million to continue developing an alternative engine for the F-35. It also would fund, as requested, procurement of a third destroyer of the DDG-1000 class. It would add funds to buy components that would enable the purchase in a future budget of a DDG-51 class destroyer ($397 million), an LPD-17 class amphibious landing transport ($273 million), and an LHA(R) class helicopter carrier ($178 million). The bill would provide $362 million of the $893 million the Air Force requested for the replacement mid-air refueling tanker. The Senate subcommittee marked up its bill on the same day that DOD cancelled the second competition to select the new tanker. It would deny all funds requested for procurement of the Stryker Mobile Gun System, a version of the Stryker armored car armed with a tank-like cannon. It also would deny funds requested to integrate with the Navy's Trident submarine-launched ballistic missile a proposed new nuclear warhead designated the Reliable Replacement Warhead. Neither the House nor the Senate ever held full committee markups of an FY2009 defense appropriations bill, neither committee issued a report on the bill, and neither chamber considered a bill on the floor and debated amendments. Instead, what is in effect a conference agreement on FY2009 defense appropriations, along with agreements on military construction/VA and homeland security appropriations, was considered as Division C of H.R. 2638 , the FY2009 Consolidated Security, Disaster Assistance and Continuing Appropriations Act. In all, the FY2009 defense appropriations bill provides $477.6 billion in new appropriations for the Department of Defense and related agencies, which is $4.0 billion below the Administration request, and which, in turn, reflects the House and Senate Appropriations Committees' allocations of funds to the each chamber's defense subcommittees under Section 302(b) of the Congressional Budget Act (see below for a discussion of the annual budget resolution and Section 302 allocations). For most programs, the defense appropriations bill ultimately determines the level of funding Congress provides. The defense authorization bill recommends amounts to be appropriated, but, with few exceptions, the final amount of new budget authority actually made available is determined in appropriations bills. Appropriations bills may provide more or less than amounts in the authorization, may eliminate funds for programs approved in the authorization, and may provide funds for "new start" programs not approved in an authorization bill. The main exception is that defense authorization bills generally include statutory language that (1) establishes end-strength levels for uniformed personnel in each of the military services and reserve components and (2) sets amounts for pay and benefits of uniformed personnel. The appropriations bills, therefore, do not usually determine the amount of a military pay raise, though they normally include funds for military personnel accounts based on pay rates, bonuses, benefits, and end-strength established in the annual defense authorization. On military personnel matters, the House-Senate agreement on the FY2009 defense appropriations bill provides funds for a 3.9% increase in base pay for uniformed personnel, reduces funding to reflect lower-than planned strength levels in some of the services, and establishes a new health professionals scholarship program. The bill also includes a general provision, Section 8116, that provides $72 million in FY2009 for a program to provide up to $500 per month in additional compensation to personnel kept on active duty beyond the end of their normal enlistment periods under a "Stop Loss" order. The provision does not, however, require that a specific amount be paid. On major weapon programs, The agreement provides $1.5 billion of the $2.5 billion requested for a third Navy destroyer of the DDG-1000 class. The House and Senate negotiators directed the Navy to use the funds as an initial increment of funding for the ship and to request the remaining $1 billion increment in the FY2010 budget. The agreement also requires the DOD Joint Requirements Oversight Council, comprised of Deputy Chiefs of the military services, to review the Navy's decision to reduce DDG-1000 acquisition and resume production of smaller DDG-51 destroyers. The measure eliminates $59 million in advance procurement for the DDG-1000 program and adds $200 million in advance procurement to preserve the option to build additional, DDG-51s. In effect, the bill keeps both the DDG-1000 and DDG-51 production lines open, for now, deferring a decision as to how to proceed. On other shipbuilding issues, the bill adds $830 million as the first half of split funding to procure an additional, 10 th of the class, LPD-17 amphibious ship; provides $1.02 billion, $100 million more than requested, for the Littoral Combat Ship (LCS) program, rescinds $337 million in earlier LCS funding, and directs that funding be allocated to two ships with contract awards as soon as possible; cuts $170 million from the $348 million requested for a replacement for LHA class amphibious ships and shifts funds from the National Defense Sealift Fund (NDSF) to the Navy shipbuilding account, where the ability to reallocate funds is more constrained; and adds $79 million to the $1.3 billion requested in advance procurement for Virginia-class attack submarines in order to facilitate production of two boats per year beginning in FY2010. The agreement provides $6.3 billion, the amount requested, to the Navy and the Air Force for the F-35 Joint Strike Fighter program, but trims procurement from 16 to 14 aircraft and allocates $430 million for alternate engine development—a perennial congressional addition to the Administration request. The bill provides $2.9 billion, as requested, to purchase 20 Air Force F-22 fighters and adds $523 million for advance procurement of an additional 20 aircraft in future years. The additional amount is to keep the production line open and allow the next Administration to decide whether to purchase more than the 181 aircraft now planned. The bill shifts $62 million requested in procurement and $832 million requested in R&D for the KC-X tanker replacement program into an already established "Tanker Replacement Fund," which is a no-year transfer account which sets no limit on the number of years for which funds remain available and from which funds can be shifted as needed to other accounts. The bill also rescinds $72 million in previously appropriated funds for the tanker program from Air Force R&D and $239.8 million from the Tanker Replacement Fund. The bill provides $3.6 billion for the Army's Future Combat System, adding $26 million to accelerate unmanned air and ground vehicle acquisition, and moving funds between programs to reflect recent Army adjustments to the program to accelerate near term elements. On satellite and other space programs, many of which have suffered long delays and large cost growth in recent years, the bill adds $150 million for a fourth, current-generation Advanced EHF communications satellite, cuts $75 million from the $843 million requested for the Transformational Communications Satellite (T-SAT) program, transfers $152 million into the Evolved Expendable Launch Vehicle program, and cuts $163.5 million from launch vehicle for a second Navy MUOS fleet communications satellite program to reflect delays. These are fewer changes than in past years, when the Space-Based Radar and T-SAT programs were often cut substantially. The imposition of fewer congressional cuts on space programs may reflect efforts by the services to be less technically ambitious in pursuing new space systems. The bill adds $750 million for intelligence, surveillance, and reconnaissance (ISR) programs, including $360 million for 24 C-21 aircraft equipped with sensor suites, $20 million for MQ-9 UAVs for special operations forces, and $13 million for additional medium UAVs. Secretary of Defense Gates has acknowledged disputes with the Air Force, in particular, in allocating sufficient ISR resources to operations in Iraq and Afghanistan. On other matters The agreement provides $350 million, $150 million less than requested, for the "Global Train and Equip" program, originally established by Section 1206 of the FY2006 national defense authorization act (and still commonly referred to as Section 1206 authority). The Secretary of Defense, with the concurrence of the Secretary of State, may use Section 1206/Global Train and Equip funding to provide a wide range of security and other assistance to foreign nations. The joint explanatory statement accompanying the bill asserts bluntly that the State Department, rather than the Department of Defense should be responsible for training and equipping foreign military forces and that the Administration should request future funds in the State Department budget. The bill also trims $123 million from the $389 million requested in military personnel and operation and maintenance accounts for the newly established Africa Command (AFRICOM). The cut in AFRICOM funding reflects the same sentiment as the reduction in Global Train and Equip funding. While the AFRICOM reduction is not as steep as in the House Defense Appropriations Subcommittee version of the bill, and the joint explanatory statement expresses support for AFRICOM, the statement also insists that the State Department and the U.S. Agency for International Development (USAID) should "play a more important role in this new organization supported with the appropriate manpower and funding required." The joint explanatory statement includes a critique of Air Force management of major acquisition programs, citing in particular recent numerous breaches of limits on cost growth under the Nunn-McCurdy amendment, a provision of law first enacted in 1981 (10 U.S.C. § 2433) which requires notification of Congress when major acquisition programs exceed specific cost thresholds. The statement requires the Secretary of Defense to report by March 31, 2009, on steps to reform Air Force practices. The joint explanatory statement also cites inaccurate cost estimates in many other major programs and requires the Defense Department to report on which programs since 2004 did not use cost estimates by the independent DOD Cost Analysis Improvement Group (CAIG) and to explain why. The bill also directs the Defense Department to provide funding for the Acquisition Workforce Development Fund, established by the FY2008 defense authorization act, in the regular appropriations process.

Soon after the 111th Congress convened, it began drafting H.R. 1, the American Recovery and Reinvestment Act of 2009, generally referred to as the "economic stimulus" bill. This bill added a total of $8.5 billion to amount previously appropriated for DOD in FY2009. Of the additional funds provided by H.R. 1, $4.6 billion was for accounts funded by the regular FY2009 DOD appropriations provided by Division D of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009, generally referred to as the "continuing resolution," which President George W. Bush signed into law on Sept. 30, 2008. The economic stimulus bill also provided an additional $2.9 billion for accounts funded by the regular military construction appropriations provided by Division E of the continuing resolution. Congress' disposition of FY2009 funding for DOD in H.R. 1 (other than funding for military construction) is discussed in this report on pp. 3-5, below. The balance of the report discusses the President's regular DOD budget request for FY2009 and Congress' disposition of that request in the regular defense authorization and appropriations legislation. The President's FY2009 budget request, released February 4, 2008, included $611.1 billion in new budget authority for national defense. This total included $515.4 billion in discretionary budget authority for the base budget of the Department of Defense (DOD)—i.e., activities not associated with operations in Iraq and Afghanistan—$2.9 billion in mandatory spending for the DOD base budget, and $22.8 billion for defense costs of the Department of Energy and other agencies. It also included a placeholder of $70 billion for war costs in the first part of FY2009. On April 30, the Senate Armed Services Committee marked up its version of the FY2009 defense authorization bill (S. 3001), authorizing the appropriation of $612.5 billion in new budget authority, including $542.5 billion for the baseline budget and a $70 billion allowance for war-related costs. On September 17, the Senate passed the authorization bill by a vote of 88-8. The House passed its version of the defense authorization bill (H.R. 5658) on May 22, authorizing $612.5 billion for national defense, including $70 billion for war-related costs. The bill denied authorization of the $2.5 billion requested for a third destroyer of the DDG-1000 class, allocating those funds instead to buy several other ships. A compromise between the House and Senate bills authorizing $611.1 billion, worked out informally, was passed by the House September 24 as an amended version of the Senate-passed S. 3001 by a vote of 392-39. The Senate passed the bill September 27 by voice vote and the President signed it on October 14 (P.L. 110-417). The House Defense Appropriations Subcommittee marked up its version of the FY2009 Defense Appropriations Bill on July 30, recommending a total of $477.6 billion, $4 billion less than the President requested for that bill. The Senate Defense Appropriations Subcommittee marked up its version of the appropriations bill on September 10, also recommending $477.6 billion. Neither chamber held full committee markups of a FY2009 defense appropriations bill, and neither chamber considered a bill on the floor. Instead, a compromise version of the subcommittee bills was incorporated into H.R. 2638, the FY2009 Consolidated Security, Disaster Assistance and Continuing Appropriations Act. The bill included $477.6 billion in regular FY2009 defense appropriations and $25.0 billion in military construction appropriations. The House passed the compromise bill September 24 (370-58). The Senate passed the bill September 27 (78-12), and the President signed it September 30 (P.L. 110-329).

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Science and technology (S&T) play an increasingly important role in our society. Advances in science and technology can help drive economic growth, improve human health, increase agricultural productivity, and meet national priorities. Federal policies affect scientific and technological advancement on several levels. The federal government directly funds research and development (R&D) activities to achieve national goals or support national priorities, such as funding basic life science research through the National Institutes of Health (NIH) or developing new weapons systems in the Department of Defense (DOD). The federal government establishes and maintains the legal and regulatory framework that affects S&T activities in the private sector. Federal tax, trade, intellectual property, regulatory, and education policies can have effects on private sector S&T activity. This report serves as a brief introduction to many of the science and technology policy issues that may come before the 115 th Congress. Each issue section provides background information and outlines selected policy issues that may be considered. Each issue includes a heading entitled "For Further Information" that provides the author's name and the titles of relevant CRS reports containing more detailed policy analysis and information. A table at the end of the report includes each author's contact information. Several issues of potential congressional interest apply to federal science and technology policy in general. This section begins with a brief introduction to the roles each branch of the federal government plays in S&T policymaking, then discusses overall federal funding of research and development. Additional sections address issues related to the America COMPETES Act; oversight of federally supported academic research; technology transfer; the adequacy of the science and engineering workforce; science, technology, engineering, and mathematics (STEM) education; and innovation-related tax policy. The federal S&T policymaking enterprise is composed of an extensive and diverse array of stakeholders in the executive, legislative, and judicial branches. The enterprise fosters, among other things, the advancement of scientific and technical knowledge; STEM education; the application of S&T to achieve economic, national security, and other societal benefits; and the use of S&T to improve federal decisionmaking. Federal responsibilities for S&T policymaking are highly decentralized. In addition to appropriating funding for S&T programs, Congress enacts laws to establish, refine, and eliminate programs, policies, regulations, regulatory agencies, and regulatory processes that rely on S&T data and analysis. However, congressional authorities related to S&T policymaking are diffuse. Many House and Senate committees have jurisdiction over important elements of S&T policy. In addition, there are dozens of informal congressional caucuses in areas of S&T policy such as research and development, specific S&T disciplines, and STEM education. The President formulates annual budgets, policies, and programs for consideration by Congress; issues executive orders and directives; and directs the executive branch departments and agencies responsible for implementing S&T policies and programs. The Office of Science and Technology Policy, in the Executive Office of the President, advises the President and other Administration officials on S&T issues. Executive agency responsibilities for S&T policymaking are also diffuse. Some agencies have broad S&T responsibilities (e.g., the National Science Foundation). Others use S&T to meet a specific federal mission (e.g., defense, energy, health, space). Regulatory agencies have S&T responsibilities in areas such as nuclear energy, food and drug safety, and environmental protection. Federal court cases and decisions often affect U.S. S&T policy. Decisions can have an impact on the development of S&T (e.g., decisions regarding the U.S. patent system); S&T-intensive industries (e.g., the break-up of AT&T in the 1980s); and the admissibility of S&T-related evidence (e.g., DNA evidence). For Further Information [author name scrubbed], Specialist in Science and Technology Policy CRS Report R43935, Office of Science and Technology Policy (OSTP): History and Overview , by [author name scrubbed] and [author name scrubbed] The federal government has long supported the advancement of scientific knowledge and technological development through investments in R&D. Federal R&D funding seeks to address a broad range of national interests, including national defense, health, safety, the environment, and energy security; advance knowledge generally; develop the scientific and engineering workforce; and strengthen U.S. innovation and competitiveness. The federal government has played an important role in supporting R&D efforts which have led to scientific breakthroughs and new technologies, from jet aircraft and the Internet to communications satellites and defenses against disease. Between FY2009 and FY2016, federal R&D funding fell from $147.3 billion to $146.1 billion, a reduction of $1.2 billion (0.8% in current dollars, 11.1% in constant dollars); funding has increased from a period low of $130.3 billion in FY2013. The decline was a reversal of sustained growth in federal R&D funding for more than half a century, and has stirred debate about the potential long-term effects on U.S. technological leadership, innovation, competitiveness, economic growth, and job creation. Concerns by some about reductions in federal R&D funding have been exacerbated by increases in the R&D investments of other nations (China, in particular); globalization of R&D and manufacturing activities; and trade deficits in advanced technology products, an area in which the United States previously ran trade surpluses. At the same time, some Members of Congress have expressed concerns about the level of federal funding in light of the current federal fiscal condition. In addition, R&D funding decisions may be affected by differing perspectives on the appropriate role of the federal government in advancing science and technology. As Congress undertakes the appropriations process it faces two overarching issues: (1) the direction in which the federal R&D investment will move in the context of increased pressure on discretionary spending and (2) how available funding will be prioritized and allocated. Low or negative growth in the overall R&D investment may require movement of resources across disciplines, programs, or agencies to address priorities. Congress will play a central role in defining the nation's R&D priorities as it makes decisions with respect to the size and distribution of aggregate, agency, and programmatic R&D funding. For Further Information [author name scrubbed], Specialist in Science and Technology Policy CRS Report R45150, Federal Research and Development (R&D) Funding: FY2019 , coordinated by [author name scrubbed] CRS Report R44888, Federal Research and Development Funding: FY2018 , coordinated by [author name scrubbed] The America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (COMPETES) Act ( P.L. 110-69 ) was enacted in 2007. The act, a response to concerns about U.S. competitiveness, authorized certain federal research, education, and innovation-related activities. In 2010, Congress passed the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ), extending and modifying certain provisions of the 2007 law, as well as establishing new provisions. Congressional appropriations have generally been below authorized levels, and the specific authorizations of appropriations in the 2010 act have expired. Following previous reauthorization efforts that inspired debate about such topics as the scientific peer review process, certain provisions of these acts were reauthorized and modified as part of the American Innovation and Competitiveness Act (AICA, P.L. 114-329 ), enacted at the end of the 114 th Congress. The 115 th Congress may consider additional provisions from the COMPETES acts that were not addressed through the AICA, such as expired authorizations of appropriations for the National Science Foundation (NSF) and the National Institute of Standards and Technology (NIST). The COMPETES acts were originally enacted to address concerns that the United States could lose its advantage in scientific and technological innovation. Economists have asserted that economic, security, and social benefits accrue preferentially to nations that lead in scientific and technological advancement and commercialization. Some analysts have suggested that historical U.S. leadership in these areas is slipping, and in particular, some stakeholders have questioned the adequacy of federal funding for physical sciences and engineering research and the domestic production of scientists and engineers. The COMPETES acts were designed to respond, in part, to these challenges by authorizing increased funding for the NIST, NSF, and Department of Energy's Office of Science. Together, the acts also authorized certain federal STEM education activities, the Advanced Research Projects Agency-Energy (ARPA-E), and prize competitions at federal agencies, among other provisions. Those who have expressed opposition to aspects of the COMPETES acts have done so from several perspectives. Some critics question the existence of a STEM labor shortage and thus the need for programs aimed at increasing the number of STEM workers. Other critics agree with the assertion of a shortage, but question whether the federal government should address it, believing that the market will make the necessary corrections to meet the demand. With respect to U.S. competitiveness, some analysts prefer alternative approaches to those proposed in the COMPETES acts, such as research tax credits or reducing regulatory costs. Other analysts object to the financial cost associated with the COMPETES acts, given concern about the federal budget deficit and debt. For Further Information [author name scrubbed], Analyst in Science and Technology Policy [author name scrubbed], Specialist in Science and Technology Policy ([email address scrubbed], [phone number scrubbed]) CRS Report R44345, Efforts to Reauthorize the America COMPETES Act: In Brief , by [author name scrubbed] For decades, the federal government and academic research institutions have been partners in supporting American innovation, competitiveness, and economic growth. The federal government is the largest source of academic research and development (R&D) funding in the United States, providing funds through more than two dozen federal agencies, with the National Institutes of Health (NIH) and the National Science Foundation (NSF) providing the largest portions of federal R&D funding to U.S. colleges and universities. As part of oversight of federal funding for academic research, Congress and federal agencies have established requirements through statutes, regulations, and guidance documents that U.S. universities and other research institutions must comply with when applying for, receiving, and reporting on the results of federal research grants. Such requirements seek to ensure transparency and effectiveness of federal funds, while helping to prevent waste, fraud, and abuse. Academic research institutions broadly recognize the need for federal regulations but have raised concerns about unintended consequences, such as reducing research productivity and the return on federal investments. Areas of concern frequently cited by researchers and academic administrators include the amount of time spent completing administrative tasks compared to conducting research; the increasing number, and lack of harmonization, of requirements across federal funding agencies; and the adequacy of stakeholder engagement in the review and modification of federal regulations. Legislation was enacted in the 114 th Congress that addressed some of the concerns, including the 21 st Century Cures Act ( P.L. 114-255 ), the American Innovation and Competitiveness Act (AICA, P.L. 114-329 ), and the National Defense Authorization Act for Fiscal Year 2017 (NDAA, P.L. 114-328 ). Enacted provisions addressed issues at specific agencies, including conflicts of interest disclosure, financial reporting, and subrecipient monitoring. Enacted provisions also addressed cross-agency efforts by directing the establishment of an advisory committee (Research Policy Board) with federal and non-federal stakeholders, as well as an interagency working group on federal research regulations. Congressional oversight may be an important part of monitoring the progress of implementing the provisions enacted in the 114 th Congress in a holistic way and evaluating their overall effectiveness. Further, Congress may broadly consider the appropriate balance between supporting the nation's academic research enterprise through efforts to streamline regulations and maintaining effective mechanisms for oversight, transparency, and accountability. For Further Information [author name scrubbed], Analyst in Science and Technology Policy Marcy Gallo, Analyst in Science and Technology Policy CRS Report R44774, Federally Funded Academic Research Requirements: Background and Issues in Brief , by [author name scrubbed] and [author name scrubbed] Every year, approximately one-third of the federal government's R&D spending is obligated to federal laboratories, including federally funded research and development centers, in support of agency mission requirements. The technology and expertise generated by federal laboratories may have applications beyond the immediate goals or intent of the original R&D. Over the years, Congress has established various mechanisms—primarily through the Stevenson-Wydler Technology Innovation Act of 1980 and subsequent legislation—to facilitate the transfer of technology and research generated from federal laboratories to the private sector where it can be further developed and commercialized. Technology transfer from federal laboratories can occur in many forms. In some instances, it can occur through formal partnerships and joint research activities between federal laboratories and private firms, including through cooperative research and development agreements or CRADAs. In other cases, it can occur when the legal rights to a government-owned patent are licensed to a private firm. Congressional interest in promoting the transfer of technology from federal laboratories is largely based on an interest in meeting social needs and promoting economic growth to enhance the nation's welfare and security. Economic benefits of a technology accrue when a product, process, or service is brought to the marketplace where it can be sold or used to increase productivity. In addition, cooperation with the private sector provides a means for federal scientists and engineers to obtain technical information from the private sector, which in some instances is more advanced than the federal government. Despite the efforts of federal agencies and Congress to increase the effectiveness of technology transfer from federal laboratories to the private sector, the use of federal technologies has remained restrained. Critics argue that working with federal laboratories continues to be difficult and time-consuming. Proponents of current efforts assert that federal laboratories are open to interested parties, but it remains up to the private sector to use them. At issue is whether additional legislative initiatives and federal incentives are needed to encourage increased technology transfer from federal laboratories, or if the available resources are sufficient. Further Information [author name scrubbed], Analyst in Science and Technology Policy CRS Report R44629, Federally Funded Research and Development Centers (FFRDCs): Background and Issues for Congress , by [author name scrubbed] The adequacy of the U.S. science and engineering (S&E) workforce has been an ongoing concern of Congress for more than 60 years. Scientists and engineers are widely believed to be essential to U.S. technological leadership, innovation, manufacturing, and services, and thus vital to U.S. economic strength, national defense, and other societal needs. Congress has enacted many programs to support the education and development of scientists and engineers. Congress has also undertaken broad efforts to improve science, technology, engineering, and math (STEM) skills to prepare a greater number of students to pursue S&E degrees. In addition, some policymakers have sought to increase the number of foreign scientists and engineers working in the United States through changes in visa and immigration policies. Most experts agree that there is no authoritative definition of which occupations comprise the S&E workforce. Rather, the selection of occupations included in any particular analysis of the S&E workforce may vary depending on the objective of the analysis. The policy debate about the adequacy of the U.S. S&E workforce has focused largely on professional-level computer occupations, mathematical occupations, engineers, and physical scientists. Accordingly, much of the analytical focus has been on these occupations. However, some analyses may use a definition that includes some or all of these occupations, as well as life scientists, S&E managers, S&E technicians, social scientists, and related occupations. Among the key indicators used by labor economists to assess occupational labor shortages are employment growth, wage growth, and unemployment rates. Many policymakers, business leaders, academicians, S&E professional society analysts, economists, and others hold differing views with respect to the adequacy of the S&E workforce and related policy issues. These issues include the question of the existence of a shortage of scientists and engineers in the United States, what the nature of any such shortage might be (e.g., too few people with S&E degrees, mismatches between skills and needs), and whether the federal government should undertake policy interventions or rely upon market forces to resolve any shortages in this labor market. For Further Information [author name scrubbed], Specialist in Science and Technology Policy The term "STEM education" refers to teaching and learning in the fields of science, technology, engineering, and mathematics. Policymakers have had an enduring interest in STEM education. Popular opinion generally holds that U.S. students perform poorly in STEM subjects—especially when compared to students in certain foreign education systems—but the data paint a complicated picture. Over time, U.S. students appear to have made gains in some areas but may be perceived as falling behind in others. Previous estimates of the federal STEM education effort found a range of between 105 and 254 STEM education activities at 13 to 15 federal agencies. However, as tracked over time by the Obama Administration, the number of federal STEM education activities appears to have dropped by half, from 254 to 125, between FY2010 and FY2016. While total federal funding for STEM education stayed about the same during this period—close to $3 billion annually—the effects of these changes on the federal STEM education effort overall are unknown. The national conversation about STEM education frequently develops from concerns about the U.S. science and engineering workforce. Some observers assert that the United States faces a shortage of STEM workers; others dispute this claim. Many proponents argue that a general increase in STEM abilities among the U.S. workforce could benefit the nation regardless. On the other hand, some scholars oppose the use of education policy to increase the supply of STEM workers, either because they perceive such policies as overemphasizing the economic outcomes of education at the expense of other values (e.g., personal development or citizenship) or because they perceive the labor market as the more efficient mechanism for dealing with these issues. Opinions differ as well on the appropriate scope, scale, and emphasis of federal STEM education policy. Some observers prefer policies aimed at lifting the STEM achievement of all students—such as teacher or faculty professional development; or changes in curriculum, standards, or pedagogy. Others emphasize policies designed to meet specific needs—such as scholarships for the "best and brightest," federal workforce training, or programs for underrepresented groups. For Further Information [author name scrubbed], Analyst in Education Policy CRS In Focus IF10654, Challenges in Cybersecurity Education and Workforce Development , by [author name scrubbed] The 115 th Congress may consider additional federal policies to promote technological innovation. Among the concerns behind such an interest is what some view as inadequate growth in domestic high-paying jobs in a range of industries in recent years. Four possible pathways to accelerating growth in these jobs are (1) faster rates of entrepreneurial business formation, (2) increased business investment in domestic R&D, (3) greater domestic production of products and services derived from that research, and (4) increased employer spending on training workers to acquire the skills needed to earn higher-paying jobs. One way Congress can influence the rate of high-wage job creation is tax incentives for investment in innovation and worker training and education. Under current federal tax law, three provisions directly affect entrepreneurial business formation and business investment in R&D: (1) an expensing allowance for research expenditures under Section 174 of the tax code (which is scheduled to switch to a five-year amortization for that spending starting in 2022), (2) a non-refundable tax credit for increases in research expenditures above a base amount under Section 41, and (3) a full exclusion for capital gains from the sale or exchange of qualified small business stock held by the original investor for five or more years under Section 1202. There is no federal tax incentive for employer investment in worker training. The tax credit and expensing allowance encourage companies to invest more in qualified research than they otherwise would by lowering the cost of capital for that research and boosting cash flow. Still, some argue that the current credit's incentive effect is too weak to increase business R&D investment to what economists would deem optimal levels. In the view of critics, the credit's design has certain flaws that lead to uneven and arbitrary incentive effects and make it difficult for small startup companies to benefit from the credit in their early years, when they are likely to have net operating losses. The credit was permanently extended at the end of 2015, while the expensing allowance has been a permanent tax provision since 1954. Section 1202 allows a non-corporate investor to exclude 100% of any capital gain on qualified small business stock acquired after September 27, 2010, and held for at least five years. The exclusion is intended to boost equity investment in small startup firms in designated industries (including manufacturing) by reducing the tax burden on the returns to that investment relative to the tax burden on the returns from alternative investments. Recent research indicates that startup firms in business no more than five years account for most net U.S. job growth over time, but that access to financial capital remains a significant barrier to the formation and growth of such firms. It is unclear what share of U.S. high-paying jobs are accounted for by small firms, but small entrepreneurial firms that survive and grow into large, successful companies can be a prolific source of such jobs. Industries that intensively use intellectual property (IP) directly and indirectly (through supply chains) accounted for 30% of U.S. jobs in 2014, and workers in those industries had average weekly earnings that were 46% larger than the average weekly earnings of workers in non-IP intensive industries. The 115 th Congress passed legislation ( P.L. 115-97 ) in late 2017 that substantially cut the tax rates for corporate and non-corporate business income, beginning in 2018. The new law also modified or repealed a number of tax provisions affecting business after-tax profits. Some argue that the tax cuts alone should be sufficient to increase the number of high-paying domestic jobs in a range of industries. Others are skeptical that many large employers will invest the windfall gains from the tax cuts in expanding domestic production and boosting worker wages and training and education. In their view, many large companies (including U.S. multinational corporations) are more likely to use much of the tax savings to buy back stock and raise dividends. One option for increasing the number of high-paying domestic jobs that was not included in P.L. 115-97 but that the 115 th Congress may examine is the creation of a tax incentive known as a patent or innovation box. Such an incentive lowers the tax burden on income earned from the commercial use of qualified intellectual property, such as trademarks or patents. Depending on its design, a patent box could give U.S. and foreign companies investing in innovation a stronger incentive to expand their investment in U.S. R&D and production activities. Potential drawbacks to such a subsidy include its budgetary cost and the difficulty of finding a sound economic justification for a tax subsidy that benefits companies that develop or purchase successful patented innovations only. A second option for spurring faster growth in domestic high-paying jobs that was also excluded from P.L. 115-97 is a tax incentive for employers to invest in worker training and education. Several bills have been introduced in the current Congress to promote employer investment in training programs such as apprenticeships and collaboration with community colleges to design courses of study that are based on the skill needs of employers. The U.S. economy benefits from high-paying jobs only if there are workers to fill them. Potential drawbacks to such a tax subsidy include the concern it would reward employers for doing what they do on their own without a tax subsidy and a lack of evidence that employers are systematically underinvesting in worker training. For Further Information [author name scrubbed], Analyst in Public Finance CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th Congress , by [author name scrubbed] CRS Report R44522, A Patent/Innovation Box as a Tax Incentive for Domestic Research and Development , by [author name scrubbed] The federal government supports billions of dollars of agricultural research annually. The 115 th Congress is likely to face issues related to funding this research and specific issues arising from advances in agricultural biotechnology and the use of antibiotics in food-producing animals. Public investment in agricultural research has been linked to productivity gains, and subsequently to increased agricultural and economic growth. The U.S. Department of Agriculture's (USDA's) Research, Education, and Economics (REE) mission area has the primary federal responsibility of advancing scientific knowledge for agriculture. USDA-funded research spans the biological, physical, and social sciences related broadly to agriculture, food, and natural resources. USDA conducts its own research and administers federal funding to states and local partners primarily through formula funds and competitive grants. The outcomes are delivered through academic and applied research findings, statistical publications, cooperative extension, and higher education. USDA's research program is funded with nearly $2.9 billion per year of discretionary funding and about $120 million of mandatory funding. Congress traditionally reauthorizes and revises agricultural research programs in the five-year farm bill. The 2014 farm bill ( P.L. 113-79 ) expires on September 30, 2018. The 115 th Congress has begun considering the next farm bill. Some agricultural research programs will face reauthorization. Various agricultural, academic, and other interests may pursue changes to the scope or focus of those programs or request additional funding. For Further Information [author name scrubbed], Analyst in Natural Resources and Rural Development CRS Report R40819, Agricultural Research: Background and Issues , by [author name scrubbed] CRS Report R45197, The House Agriculture Committee's 2018 Farm Bill (H.R. 2): A Side-by-Side Comparison with Current Law , coordinated by [author name scrubbed] CRS In Focus IF10187, Farm Bill Primer: What Is the Farm Bill? , by [author name scrubbed] and [author name scrubbed] The 115 th Congress might address issues regarding bioengineered foods labeling, or foods containing bioengineered ingredients, regulatory changes governing the introduction of genetically engineered (GE) plants and animals into the environment, and recent technical innovations that could raise new regulatory issues for agricultural biotechnology. Currently, labeling GE food products is not required. The 114 th Congress passed a bill ( P.L. 114-216 ) signed into law in July 2016 to establish a "national bioengineered food disclosure standard." The U.S. Department of Agriculture (USDA) has two years to implement the labeling law. Food manufacturers can adopt either text, a symbol, or an electronic/digital link for identifying bioengineered foods. The labeling bill includes foods made through conventional genetic engineering technology as well as newer techniques in the definition of bioengineered foods. P.L. 114-216 also requires USDA to conduct a study within a year of enactment that identifies potential technological factors that could affect consumer access to bioengineered food disclosure through electronic or digital methods such as QR codes on food products read by smart phones. Concerns have been raised that such digital methods of disclosure could have differential impacts on those without cell phones (e.g., the elderly, low-income families) and those without access to high-speed broadband. The required study is to specifically address the availability of wireless or cellular networks, availability of landline telephones in stores, and particular factors that might affect small retailers and rural retailers as well as consumers. The development over the past several years of new technologies to genetically engineer plants, in particular novel gene-editing technologies, has raised new regulatory issues. USDA currently regulates GE plants under the Plant Protection Act (PPA; 7 U.S.C. §770). However, USDA has stated that newer technologies may fall outside the purview of the PPA and thus the department might have no regulatory jurisdiction over plants genetically engineered using these new technologies. This has raised important questions about how such genetically engineered plants are to be regulated as they are introduced. As genetically engineered plant varieties created by these techniques become more common, and as the public becomes more aware that these varieties are not regulated under the PPA, Congress might choose to revisit the 1986 framework that governs U.S. biotechnology regulation. For Further Information [author name scrubbed], Analyst in Natural Resources and Rural Development CRS In Focus IF10376, Labeling Genetically Engineered Foods: Current Legislation , by [author name scrubbed] CRS Report R43518, Genetically Engineered Salmon , by [author name scrubbed] and [author name scrubbed] CRS Report RL32809, Agricultural Biotechnology: Background, Regulation, and Policy Issues , by [author name scrubbed] CRS Report RL33334, Biotechnology in Animal Agriculture: Status and Current Issues , by [author name scrubbed] CRS Report R43100, Unapproved Genetically Modified Wheat Discovered in Oregon and Montana: Status and Implications , by [author name scrubbed] The use of medically important antibiotics in food producing animals may interest the 115 th Congress. The Preservation of Antibiotics for Medical Treatment Act of 2017 ( H.R. 1587 ) and the Preventing Antibiotic Resistance Act of 2017 ( S. 629 ) have been introduced in the 115 th Congress. Both bills would restrict the use of some medically important antibiotics in food producing animals. In 2014, the Obama Administration launched the Presidential Advisory Council on Combating Antimicrobial Resistant Bacteria (PACCARB) initiative, a cross-departmental effort to preserve effective antibiotics for critical public and animal health needs. In May 2017, the advisory council held a public meeting that focused on animal health and antibiotics, and the challenges of antibiotic resistance. In March 2018, the advisory council drafted and passed a resolution expressing concern that the antibiotic resistance activities of the Department of Health and Human Services (HHS) and the U.S. Department of Agriculture (USDA) are being underfunded. USDA released its Antimicrobial Resistance Action Plan at the end of 2014, which included initiatives to develop research and to collect information on antibiotic use in animals. In 2017, as part of the effort to expand data collection, the USDA Animal and Plant Health Inspection Service launched studies on the use of antibiotics in cattle feedlots and in hog operations. The U.S. Food and Drug Administration (FDA) is responsible for evaluating human and animal drugs for safety and effectiveness under the Federal Food, Drug, and Cosmetic Act (FFDCA, 21 U.S.C. 301 et seq.). FDA is concerned about public health effects from certain antibiotic uses in food animals. According to FDA, foods of animal origin may carry pathogens that cause foodborne infections, and antibiotic use in animals that produce these foods may render the infections untreatable due to antibiotic resistance. In response to concern about antibiotic resistance, FDA issued guidance on the judicious use of antibiotics in animals. FDA finalized Guidance for Industry #213 in December 2013, giving animal drug sponsors three years to withdraw antibiotics for production uses (i.e., growth promotion or feed efficiency) and to update evidence for treatment and preventive or control uses. Guidance #213 became effective January 1, 2017. After this date, medically important antibiotics may only be used when necessary to treat and prevent diseases, and must be used under the supervision of a veterinarian. In June 2015, FDA finalized rules (80 Federal Register 31708) for the Veterinary Feed Directive (VFD)—prescriptions for animal drugs used in feed—that builds on FDA policy on judicious antibiotic use. Since January 1, 2017, all medically important antibiotics used in feed require a VFD. This requires that producers have an established veterinarian-client-patient relationship (VCPR) as defined in state regulations, or federal VFD regulations for states without VCPR requirements. A valid VCPR requires licensed veterinarians to be familiar with clients' farm and animals. Producers will now need prescriptions for non-feed antibiotics that previously were available over-the-counter. Finally, in May 2016, FDA issued a final rule (81 Fed eral Reg ister 29129) to expand its reporting on the distribution and use of antibiotics. In March 2017, the Government Accountability Office (GAO) issued "Antibiotic Resistance. More Information Needed to Oversee Use of Medically Important Drugs in Food Animals." The GAO report noted that HHS and USDA needed to develop a joint plan to collect antibiotic use data to be able to evaluate the effectiveness of antibiotic resistance policies. In April 2018 testimony before the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, FDA Administrator Gottlieb stated that FDA would be issuing a plan in a "couple months" to ensure antibiotics are judiciously used in the farm setting. For Further Information [author name scrubbed], Analyst in Agricultural Policy CRS In Focus IF10190, Antibiotic Use in Food Animals: FDA's Current Activities , by [author name scrubbed] and [author name scrubbed] Advances in science and technology related to biomedical research and development underpin improvements in medications and treatments. Some of the biomedical R&D issues that the 115 th Congress may face include those related to the budget and oversight of the National Institutes of Health, the role the Food and Drug Administration in approving new medicines and laboratory tests, and advances in precision medicine and genomic editing. The National Institutes of Health (NIH) is the lead federal agency conducting and supporting biomedical research. The agency was provided with $37 billion in funding for FY2018 for basic, clinical, and translational research in NIH's laboratories as well as in research institutions nationwide. The extramural research program (83% of the NIH budget) provides grants, contracts, and training awards to support over 30,000 individuals at more than 2,500 universities, academic health centers, and research facilities. Over a five-year period, FY1999-FY2003, the NIH budget doubled in current dollars, but since FY2003 budget growth has decreased to below the rate of inflation. In constant dollars, NIH was funded at its highest level in FY2003 (not counting additional funding provided in FY2009 through the ARRA). The 21 st Century Cures Act ( P.L. 114-255 ) authorizes to be appropriated $4.8 billion for NIH over a 10-year period (FY2017-FY2026), averaging slightly under a half billion per year. However, the funding is not guaranteed and must be provided each year in subsequent appropriations acts. These appropriations totaled $352 million in FY2017 and $496 million in FY2018. These funds may only be used for four specified projects: (1) the Precision Medicine Initiative, $1.455 billion total for FY2017-FY2026; (2) the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, $1.511 billion total for FY2017-FY2026; (3) cancer research, $1.8 billion total for FY2017- FY2023; and (4) regenerative medicine using adult stem cells, $30 million total for FY2017-FY2020. The 21 st Century Cures Act makes a number of other policy changes, such as modifying the NIH strategic planning process, altering the agency's reporting requirements, and reducing the administrative burden for researchers, among other things. For Further Information [author name scrubbed], Specialist in Biomedical Policy CRS Report R41705, The National Institutes of Health (NIH): Background and Congressional Issues , by [author name scrubbed] CRS Report R43341, NIH Funding: FY1994-FY2019 , by [author name scrubbed] CRS Report R44720, The 21st Century Cures Act (Division A of P.L. 114-255) , coordinated by [author name scrubbed] CRS Report R44505, Public Health Service Agencies: Overview and Funding (FY2015-FY2017) , coordinated by [author name scrubbed] and [author name scrubbed] The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; as well as public health aspects of tobacco products. FDA's total program level, the amount that FDA can spend, is composed of direct appropriations and user fees paid by the regulated industry. The human drugs program comprises the largest portion of FDA's total program level (about 31% of FDA's enacted FY2018 level). The 21 st Century Cures Act ( P.L. 114-255 ), signed into law on December 13, 2016, made several changes to the drug, biologic, and device approval pathways at FDA. Among other things, the law included various provisions to help accelerate development and review of certain medical products. For example, the law directs the Secretary of Health and Human Services to facilitate an "efficient development program for, and expedite review of" eligible regenerative advanced therapies (including cell therapy, therapeutic tissue engineering products, human cell and tissue products); creates a limited population pathway for antibacterial drugs to treat a serious or life-threatening infection; facilitates development, review, and approval of genetically targeted drugs and variant protein targeted drugs with respect to rare diseases or conditions that are serious or life-threatening; and establishes a priority review program to incentivize development of treatments for agents that present a national security threat. To help fund the FDA activities and programs authorized in 21 st Century Cures Act, the law established an FDA Innovation Account, to which a total of $500 million is authorized to be transferred over a nine-year period (FY2017-FY2025). Release of funds from the FDA Account is controlled through the annual appropriations process. On June 6, 2017, FDA submitted to Congress the "Work Plan and Proposed Funding Allocations of FDA Innovation Account," which sets out a plan for implementation of the programs and activities authorized or required by the 21 st Century Cures Act. In addition to implementation of activities required by the Cures Act, FDA has issued its own policy priorities related to, among other things, medical product innovation in the agency's "Healthy Innovation, Safer Families: FDA's 2018 Strategic Policy Roadmap." The roadmap discusses efforts aimed at promoting innovation in manufacturing to increase product reliability and safety, decrease interruptions in the supply of certain products, and lower costs. For Further Information [author name scrubbed], Analyst in Health Policy CRS Report R44576, The Food and Drug Administration (FDA) Budget: Fact Sheet , by [author name scrubbed] and [author name scrubbed] CRS Report R44720, The 21st Century Cures Act (Division A of P.L. 114-255) , coordinated by [author name scrubbed] CRS Report R44750, FDA Human Medical Product User Fee Programs: In Brief , by [author name scrubbed] et al. In vitro diagnostic (IVD) devices provide information that is used by clinicians and patients to make health care decisions. IVDs are used in laboratory analysis of human samples and include commercial test products and instruments used in testing, among other things. Laboratory-developed tests (LDTs) are a class of IVD that is manufactured, including being developed and validated, and offered, within a single laboratory. LDTs may sometimes be referred to as "home-brew tests." Genetic tests are a type of diagnostic test that analyzes various aspects of an individual's genetic material (DNA, RNA, chromosomes, and genes). Most genetic tests are LDTs. The regulation of LDTs has been the subject of debate over the past decade. The Food and Drug Administration (FDA) has traditionally exercised enforcement discretion over LDT regulation. This means that most LDTs, and most genetic tests, have not been subject to FDA premarket review and therefore have not received FDA clearance or approval for marketing. Given the growing use of LDTs and genetic tests in clinical medicine, the FDA has in recent years revisited whether, and the extent to which, LDTs should be regulated. On July 31, 2014, the FDA notified the Senate Committee on Health, Education, Labor and Pensions and the House Committee on Energy and Commerce that it would be issuing draft guidance on LDT regulation. On October 3, 2014, the agency published a notice in the Federal Register announcing the availability of the guidance documents and requesting comments within 120 days to ensure their consideration in the development of final guidance. However, on November 18, 2016, the FDA indicated that it would postpone finalization of the draft guidance until the new Administration is in place. FDA summarized the comments it had received on the guidance documents in its January 2017 "Discussion Paper on Laboratory Developed Tests (LDTs)" and included in that paper the outline of a possible approach to LDT oversight. To date, no further action has been taken by the agency. For Further Information Amanda Sarata, Specialist in Health Policy Judith Johnson, Specialist in Biomedical Policy CRS Report R43438, Regulation of Clinical Tests: In Vitro Diagnostic (IVD) Devices, Laboratory Developed Tests (LDTs), and Genetic Tests , by [author name scrubbed] and [author name scrubbed] CRS Report RL33832, Genetic Testing: Background and Policy Issues , by [author name scrubbed] On February 25, 2016, the White House hosted a Precision Medicine Initiative (PMI) Summit to mark the one year anniversary of the initiative's launch, first announced in the 2015 State of the Union address. The mission of the PMI is "[t]o enable a new era of medicine through research, technology, and policies that empower patients, researchers, and providers to work together toward development of individualized care." The PMI primarily involves three federal agencies—the National Institutes of Health (NIH), the Food and Drug Administration (FDA), and the Office of the National Coordinator for Health Information Technology (ONC)—although other federal agencies have collaborated on and contributed to the effort. Precision medicine, also called personalized medicine, involves providing health care to an individual patient based on their unique characteristics, such as a genetic profile. NIH has awarded multiple grants to begin building an extensive biobank; develop health care provider organizations (HPOs); and develop recruitment strategies for a million-person national research cohort program, called the All of Us Research Program. To ensure underserved individuals have the opportunity to participate, NIH is working with the Health Resources and Services Administration (HRSA) to determine infrastructure needs for health centers to serve as HPOs. In addition, FDA has developed precisionFDA to facilitate data sharing and validation of new genomic assays in precision medicine. The 115 th Congress may be interested in policies that support ongoing or modified investments in precision medicine. In the PMI's initial year, FY2016, NIH received $200 million for the PMI: $70 million for the National Cancer Institute and $130 million for the research cohort. Pursuant to the authorizations of appropriations in the 21 st Century Cures Act ( P.L. 114-255 ), NIH received $40 million—in additional appropriations—for the PMI in FY2017 and $100 million in FY2018. For Further Information Amanda Sarata, Specialist in Health Policy Judith Johnson, Specialist in Biomedical Policy CRS Report R44888, Federal Research and Development Funding: FY2018 , coordinated by [author name scrubbed] CRS Report R44720, The 21st Century Cures Act (Division A of P.L. 114-255) , coordinated by [author name scrubbed] CRS Report R44026, Genomic Data and Privacy: Background and Relevant Law , coordinated by [author name scrubbed] Researchers have long been searching for a reliable and simple way to make targeted changes to the genetic material of humans, animals, plants, and microorganisms. A new gene editing tool, based on clustered regularly interspaced short palindromic repeated DNA sequences, known as CRISPR-Cas9 offers the potential for substantial improvement over previous technologies in terms of ease of use, precision and efficiency, and cost. These characteristics have led many in the scientific and business communities to assert that CRISPR-Cas9 could lead to revolutionary advances across a broad range of areas—from medicine and public health to agriculture and the environment. Over the next 5 to 10 years, the National Academy of Sciences projects a rapid increase in the scale, scope, complexity, and development rate of biotechnology products, many enabled by CRISPR-Cas9. For example, CRISPR-Cas9 has increased both the pace of development and the variety of crops being genetically modified and it is beginning to be used in clinical trials for a variety of cancers, among other conditions. Concomitant with the promise of potential benefits associated with CRISPR-Cas9, such advances may also pose new risks and raise ethical concerns. For example, Chinese researchers have published the results of studies that used CRISPR-Cas9 in both viable and non-viable human embryos. While federal funds currently cannot be used for research involving human embryos in the United States, the Chinese studies and other research being conducted both domestically and internationally have sparked debates regarding the ethics of such research and prompted discussion about how existing law and regulation in the United States would apply to the conduct of this type of research, its clinical testing in humans, and specifically its applications in human embryos. Additionally, CRISPR-Cas9 related approaches are being considered by some researchers to reduce or eliminate the Zika virus and malaria. For example, effective reduction or elimination of the mosquito that serves as the primary vector for the transmission of Zika or malaria could save lives and substantially reduce costs. However, a 2016 report from the National Academy of Sciences indicates that existing mechanisms may be inadequate to assess the potential immediate and long-term environmental and public health consequences associated with the use of the technology. In the 115 th Congress, policymakers may want to examine the potential benefits and risks associated with the use of CRISPR-Cas9 gene editing, including the ethical, social, and legal implications of CRISPR-related biotechnology products. Congress also may have a role to play with respect to regulation, research and development, and economic competitiveness associated with CRISPR-Cas9 gene editing and future biotechnology products. For Further Information [author name scrubbed], Analyst in Science and Technology Policy [author name scrubbed], Specialist in Science and Technology Policy [author name scrubbed], Specialist in Health Policy [author name scrubbed], Analyst in Natural Resources and Rural Development CRS Report R44824, Advanced Gene Editing: CRISPR-Cas9 , by [author name scrubbed] et al. In addition to its general oversight of workplace safety, the federal government addresses the safety of laboratory personnel who work with infectious microorganisms through guidance such as Biosafety in Microbiological and Biomedical Laboratories (BMBL), published by the Department of Health and Human Services Centers for Disease Control and Prevention (CDC) and National Institutes of Health (NIH). BMBL sets "Biosafety Levels" for work with the highest-risk pathogens. BMBL guidance is often adopted as a requirement. For example, BMBL compliance is required of federal grant recipients. Biosecurity requirements, to protect the public from intentional and unintentional releases of pathogens, were first mandated by Congress in 1996, and expanded through subsequent reauthorizations. The Federal Select Agent Program, administered jointly by CDC and the U.S. Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS), oversees the possession of "select agents," certain biological pathogens and toxins with the potential to cause serious harm to public, animal, or plant health. All U.S. laboratory facilities—including those at government agencies, universities, research institutions, and commercial entities—that possess, use, or transfer select agents must register with the program and adhere to specified best practices. All persons given access to select agents must undergo background investigations conducted by the Federal Bureau of Investigation (FBI). Several incidents involving the mishandling of select agents in federal laboratories occurred in recent years. Samples of decades-old but viable smallpox virus were found in an FDA laboratory on an NIH campus. Laboratories at CDC, one of the select agent regulatory agencies, had incidents involving the anthrax agent, a virulent avian influenza virus, and Ebola virus. A Department of Defense laboratory inadvertently distributed viable instead of killed samples of the anthrax organism. Each incident was attributed, at least in part, to lapses in protocol or some other form of human error. Several incident reports have recommended improvements in the "culture of safety" in laboratories, standardized microbial handling practices, and better incident reporting, among other measures. In the 114 th and 115 th Congresses, the House Committee on Energy and Commerce has conducted investigations and held hearings on these lapses. The authorizations of appropriations for the Select Agent Program (7 U.S.C. 8401-8402 and 42 U.S.C. 262a) expired in 2007. Congress has continued to fund ongoing implementation and enforcement. The 115 th Congress may revisit program authority or regulations in light of recent incidents to determine whether current safety and security measures are adequate, as well as whether they allow important research on these pathogens to proceed. For Further Information [author name scrubbed], Specialist in Public Health and Epidemiology Science and technology play an important role in national defense. The Department of Defense (DOD) relies on a robust research and development effort to develop new military systems and improve existing systems. Issues that may come before the 115 th Congress regarding the DOD's S&T activities include budgetary concerns and the effectiveness of programs to transition R&D results into fielded products. The Department of Defense spends more than $80 billion per year on research, development, testing, and evaluation (RDT&E). Roughly 80-85% of this is spent on the design, development, and testing of specific military systems. Examples of such systems include large integrated combat platforms such as aircraft carriers, fighter jets, and tanks, among others. They also include much smaller systems such as blast gauge sensors worn by individual soldiers. The other 15-20% of the RDT&E funding is spent on what is referred to as DOD's Science and Technology Program. The S&T Program includes activities ranging from basic science to demonstrations of new technologies in the field. The goal of DOD's RDT&E spending is to provide the knowledge and technological advances necessary to maintain U.S. military superiority. DOD's RDT&E budget contains hundreds of individual line items. Congress provides oversight of the program, making adjustments to the amount of funding requested for any number of line items. These changes are based on considerations such as whether the department has adequately justified the expenditure or the need to accommodate larger budgetary adjustments. RDT&E priorities and focus, including those of the S&T portion, do not change radically from year to year, though a few fundamental policy-related issues regularly attract congressional attention. These include ensuring that S&T, particularly basic research, receives sufficient funding to support next generation capabilities; seeking ways to speed the transition of technology from the laboratory to the field; and ensuring an adequate supply of S&T personnel. Additionally, the impact of budgetary constraints, including continuing resolutions, on RDT&E may be of interest to the 115 th Congress. Specifically, senior DOD officials have been describing the need to develop and implement a third offset strategy—a strategy aimed at identifying new and innovative ways to maintain the dominance of U.S. military capabilities into the future—which would likely require increased investment in RDT&E. For Further Information [author name scrubbed], Specialist in Science and Technology Policy [author name scrubbed], Analyst in Science and Technology Policy CRS Report R44711, Department of Defense Research, Development, Test, and Evaluation (RDT&E): Appropriations Structure , by [author name scrubbed] CRS Report R45110, Defense Science and Technology Funding , by [author name scrubbed] CRS Report R45150, Federal Research and Development (R&D) Funding: FY2019 , coordinated by [author name scrubbed] CRS Report R44888, Federal Research and Development Funding: FY2018 , coordinated by [author name scrubbed] Energy-related science and technology issues that may come before the 115 th Congress include those related to reprocessing spent nuclear fuel, advances in nuclear energy technology, the development of biofuels and ocean energy technology, and international fusion research. Spent fuel from commercial nuclear reactors contains most of the original uranium that was used to make the fuel, along with plutonium and highly radioactive lighter isotopes produced during reactor operations. A fundamental issue in nuclear policy is whether spent fuel should be "reprocessed" or "recycled" to extract plutonium and uranium for new reactor fuel, or directly disposed of without reprocessing. Proponents of nuclear power point out that spent fuel still contains substantial energy that reprocessing could recover. However, reprocessed plutonium can also be used in nuclear weapons, so critics of reprocessing contend that federal support for the technology could undermine U.S. nuclear weapons nonproliferation policies. The potential commercial viability of reprocessing or recycling is also an issue. In the 1950s and 1960s, the federal government expected that all commercial spent fuel would be reprocessed, using "breeder reactors" that would convert uranium into enough plutonium to fuel additional commercial breeder reactors. Increased concern about weapons proliferation in the 1970s and the slower-than-projected growth of nuclear power prompted President Carter to halt commercial reprocessing efforts in 1977, along with a federal demonstration breeder project. Under President Reagan, Congress provided funding to restart the breeder demonstration project, but then halted project funding in 1983 while continuing to fund breeder-related research and development by the Department of Energy (DOE). Under President Clinton, research on producing nuclear energy through reprocessing was largely halted, although some work on the technology continued for waste management purposes. Under the George W. Bush Administration there was renewed federal support for reprocessing, with a proposal to complete a pilot plant by the early 2020s. Under the Obama Administration, plans for the pilot plant were halted and DOE's Fuel Cycle Research and Development Program was redirected toward development of technology options for a wide range of nuclear fuel cycle approaches, including direct disposal of spent fuel (the "once through" cycle), deep borehole disposal, and partial and full recycling. The Trump Administration proposed deep reductions in Fuel Cycle R&D in FY2018 and FY2019. However, the Consolidated Appropriations Act for 2018 ( P.L. 115-141 ) increased the program's funding from $208 million in FY2017 to $260 million in FY2018—a 26% boost. Another DOE program related to reprocessing policy is the Mixed Oxide Fuel Fabrication Facility (MFFF) under construction at the Department's Savannah River Site in South Carolina. MFFF would produce fuel for commercial nuclear reactors using surplus nuclear weapons plutonium, as part of an agreement with Russia to reduce nuclear weapons material. Critics of the project contend that MFFF would subvert U.S. nonproliferation efforts by encouraging the use of plutonium fuel. Because of rising costs, the Obama Administration proposed to halt the MFFF project in FY2017 and pursue alternative plutonium disposition options. The Trump Administration's FY2018 budget request also called for terminating MFFF. The FY2018 National Defense Authorization Act ( P.L. 115-91 ) authorized DOE to pursue an alternative disposal option if its total costs were found to be less than half of those for completing and operating MFFF. The Consolidated Appropriations Act for 2018 conformed to the NDAA authorizing language. For Further Information [author name scrubbed], Specialist in Energy Policy CRS Report R42853, Nuclear Energy: Overview of Congressional Issues , by [author name scrubbed] CRS Report RL34234, Managing the Nuclear Fuel Cycle: Policy Implications of Expanding Global Access to Nuclear Power , coordinated by [author name scrubbed] CRS Report R43125, Mixed-Oxide Fuel Fabrication Plant and Plutonium Disposition: Management and Policy Issues , by [author name scrubbed] and [author name scrubbed] All currently operating commercial nuclear power plants in the United States are based on light water reactor (LWR) technology, in which ordinary water cools the reactor and acts as a neutron moderator to help sustain the nuclear chain reaction. DOE has long conducted research and development work on other, non-LWR nuclear technologies that could have advantages in safety, waste management, and cost. A growing number of private-sector firms are pursuing commercialization of advanced nuclear technologies as well. Advanced nuclear energy technologies include high-temperature gas-cooled reactors, liquid metal-cooled reactors, and molten salt reactors (in which the nuclear fuel is dissolved in the coolant), among a wide range of other concepts. Many of these concepts would involve nuclear chain reactions using fast neutrons, which are not slowed by a moderator. Research on advanced reactor coolants, materials, controls, and safety is carried out by DOE's Advanced Reactor Technologies program. The Trump Administration requested $64 million for the program in FY2018, a 28% reduction from the FY2017 level. The program received $155 million in the Consolidated Appropriations Act for 2018, a 78% increase over FY2017. Of that amount, $60 million is to provide support for engineering and design of non-LWR and advanced LWR technologies, and for "regulatory development," according to the bill's explanatory statement. Private-sector nuclear technology companies contend that a major obstacle to commercializing advanced reactors is that the Nuclear Regulatory Commission's (NRC's) licensing process is based on existing LWR technology. They have urged NRC to develop a licensing and regulatory framework that could apply to all nuclear concepts. They also have recommended a "staged review process" to provide conditional NRC approval for advanced reactor designs at key milestones toward the issuance of an operating license. NRC and DOE are currently implementing the Joint Advanced Non-Light Water Reactors Licensing Initiative to adapt existing general design criteria for LWRs for use by advanced reactor license applications. Under that initiative, NRC issued "Guidance for Developing Principal Design Criteria for Non-Light Water Reactors" on April 9, 2018. NRC is also supporting industry efforts to develop guidance for technology-neutral reactor licensing. Legislation to promote advanced nuclear power technologies is being considered in the 115 th Congress. The Senate passed the Nuclear Energy Innovation Capabilities Act ( S. 97 ) on March 7, 2018. A major provision of the bill would authorize DOE national laboratories or other DOE-owned sites to host reactor demonstration projects sponsored fully or partly by the private sector. It would also require DOE to determine the need for a fast-neutron test reactor and authorize grants to help pay for NRC licensing of advanced reactor designs. Similar provisions, except for the licensing grants, are included in the Department of Energy Research and Innovation Act ( H.R. 589 ), passed by the House on January 24, 2017, and reported by the Senate Committee on Energy and Natural Resources March 9, 2018. Some public-private R&D on advanced nuclear technology is already being conducted at national labs under DOE's Gateway for Accelerated Innovation in Nuclear (GAIN) program. The Consolidated Appropriations Act for 2018 provides $35 million for DOE to determine the need for a fast neutron test reactor. For Further Information [author name scrubbed], Specialist in Energy Policy CRS Insight IN10765, Small Modular Nuclear Reactors: Status and Issues , by [author name scrubbed] Biofuels—liquid transportation fuels produced from biomass feedstock—are often described as an alternative to conventional fuels. Some see promise in producing liquid fuels from a domestic feedstock that may reduce dependence on foreign sources of oil, contribute to improving rural economies, and lower greenhouse gas emissions. Others regard biofuels as potentially causing more harm to the environment (e.g., air and water quality concerns), encouraging landowners to put more land into production, and being prohibitively expensive to produce. The debate about the feasibility of biofuels is complex, as policymakers consider a multitude of factors (e.g., feedstock costs, timeframe to reach substantial commercial-scale advanced biofuel production). The debate can be even more complicated when considering that biofuels may be produced using numerous biomass feedstocks and conversion technologies. Thus, for each specific biofuel, a thorough assessment of the costs and benefits requires specific knowledge of the various factors involved. Congress has expressed interest in biofuels for decades, with most of its attention on the production of "first-generation" biofuels (e.g., cornstarch ethanol). Farm bills have had a significant effect on biofuel research and development. Starting in 2002, the farm bills have contained an energy title with several programs focused on assisting biofuel production (see " Agriculture " section for additional farm bill related research). While commercial-scale production of "first-generation" biofuels is well established, commercial-scale production for some advanced biofuels (e.g., cellulosic ethanol) is in its infancy. In 2007, Congress expanded one policy that has supported an increase in advanced biofuel production—the Renewable Fuel Standard (RFS). The RFS requires U.S. transportation fuel to contain a minimum volume of biofuel, a significant percentage of which is gradually to come from advanced biofuels. However, the RFS has been under scrutiny for various reasons, including the Environmental Protection Agency (EPA) exercising its regulatory authority to issue a waiver and reduce the total renewable fuel volume below what was required by statute and concerns about RFS compliance. This has created significant uncertainty for certain stakeholders, with the result that some of the advanced biofuel targets are not being met. An overarching issue is that the policy may require more biofuel to be produced than can be used given the existing motor fuel distribution infrastructure and the limited fleet of passenger vehicles that are built to run on higher percentage blends of biofuels. A continuing issue is whether a domestic biofuel industry is necessary for national defense, and what, if any, role the military might take regarding biofuel production and purchase. Congress could also consider whether to modify various biofuel promotional efforts, or to maintain the status quo. For Further Information [author name scrubbed], Specialist in Agricultural Conservation and Natural Resources Policy CRS Report R43325, The Renewable Fuel Standard (RFS): An Overview , by [author name scrubbed] CRS In Focus IF10842, The Renewable Fuel Standard: Is Legislative Reform Needed? , by [author name scrubbed] CRS In Focus IF10639, Farm Bill Primer: Energy Title , by [author name scrubbed] Technological innovations are key drivers of U.S. ocean energy development. They may facilitate exploration of previously inaccessible resources, provide cost efficiencies in a low-oil-price environment, address safety and environmental concerns, and resolve obstacles in emerging sectors such as U.S. offshore wind. Private industry, universities, and government are all involved in ocean energy R&D. At the federal level, the Department of Energy (DOE) and the Department of the Interior (DOI) both support ocean energy research. One area of interest involves deepwater oil and gas operations. Industry interest in expanding deepwater activities, improving efficiency, and reducing costs has prompted improvements in drilling technologies and steps toward automated monitoring and maintenance. The oil and gas industry and federal regulators also have focused on safety improvements to reduce the likelihood of catastrophic oil spills in deep water. In April 2016, DOI released final safety regulations that tighten requirements for offshore blowout preventer systems and other well control equipment. President Trump ordered DOI to review the regulations in Executive Order 13795. A 2018 timetable for revisions has been announced in the federal Regulatory Agenda . Issues include the cost to industry of meeting the rule's technological requirements and the time required to do so. Congress may also consider technology issues related to offshore drilling in the Arctic, where sea ice and infrastructure gaps pose challenges for the economic viability and safety of mineral exploration. A focus of industry R&D is on technology to extend the Arctic drilling season beyond the brief periods where sea ice is absent—for example, by developing ice-capable mobile offshore drilling units (MODUs). DOI finalized safety regulations for Arctic exploratory drilling in July 2016. President Trump's Executive Order 13795 ordered DOI to review these regulations, and DOI's 2018 Regulatory Agenda includes an anticipated rule revision. Some have argued that the regulations are too costly for industry and give inadequate weight to available technologies (such as those for well capping) that could reduce safety costs. Others question whether any rules or technologies can adequately ensure drilling safety in the Arctic given the environmental risks. Among renewable ocean energy sources, only wind energy is poised for commercial application in U.S. waters. In December 2016, the first U.S. offshore wind farm, off of Rhode Island, began regular operations. A focus of R&D is technology to increase offshore turbine efficiency and reduce costs, including floating turbines for deep waters, where resources may be more abundant and user conflicts fewer. Other research explores improvements to electrical infrastructure, such as integrating transmission networks for multiple projects. An issue for Congress is whether and how to support or incentivize offshore wind development and other ocean renewables. For Further Information Laura Comay, Analyst in Natural Resources Policy CRS Report R44692, Five-Year Program for Federal Offshore Oil and Gas Leasing: Status and Issues in Brief , by [author name scrubbed] CRS Report R42942, Deepwater Horizon Oil Spill: Recent Activities and Ongoing Developments , by [author name scrubbed] CRS Report R41153, Changes in the Arctic: Background and Issues for Congress , coordinated by [author name scrubbed] CRS In Focus IF10639, Farm Bill Primer: Energy Title , by [author name scrubbed] ITER (formerly known as the International Thermonuclear Experimental Reactor) is an international fusion energy research facility currently under construction in Cadarache, France. When completed, ITER is to be the world's largest fusion reactor and the first capable of producing more energy than it consumes. Although the energy output from ITER will not be harnessed to produce electricity, fusion researchers see ITER as the next step toward implementation of fusion energy as a power source. ITER is an international collaboration. Along with the United States, the partners are the European Union, China, India, Japan, Russia, and South Korea. The United States withdrew from the initial design phase of ITER in 1998 at congressional direction, largely because of concerns about cost and scope. The project was restructured, and the United States rejoined in 2003. The formal international agreement to build the facility was approved in 2006. The European Union, as host, is responsible for 45% of the construction cost, while the United States and the other participating countries are responsible for 9% each. Most of the U.S. share (which is $122 million in FY2018) is being contributed in kind, in the form of components and equipment sourced mostly from U.S. companies, universities, and national laboratories. In recent years, ITER management issues, schedule delays, and cost growth have led to repeated proposals in Congress to terminate U.S. participation. A central issue is that U.S. funding for ITER may be crowding out funding for the domestic fusion research program. DOE budget documents show the cost of U.S. participation in ITER in FY2020 and beyond as "to be determined" once the Administration decide whether to continue participating in the project. The construction phase of ITER is planned for completion in 2027. Once operational, the lifespan of the facility is expected to be 15-25 years. During the operation phase, and during subsequent deactivation and decommissioning, the agreed U.S. cost share is 13%. For More Information [author name scrubbed], Specialist in Science and Technology Policy Science and technology play an increasingly large role in environmental issues. Science- and technology-related environmental issues that may come before the 115 th Congress include climate change science, carbon sequestration, and water science. Climate change, including the policy questions of whether and how the federal government might address it, continues as a matter of discussion in the 115 th Congress. Science and technology considerations underpin the congressional deliberations on the topic. Despite portrayals in popular media about controversies in climate change science, almost all climate scientists agree on certain important points: the Earth's climate has been changing, with overall warming since the mid-20 th century; human-related emissions of greenhouse gases (GHG) are accumulating in the atmosphere and carbon dioxide is increasing acidity of the oceans; and rising GHG atmospheric concentrations will lead to additional global warming and other climate changes. The latest major U.S. assessment, the Climate Science Special Report (CSSR), was released in October 2017 by the U.S. Global Change Research Program (USGCRP). It stated It is extremely likely [>95% likelihood] that human influence has been the dominant cause of the observed warming since the mid-20 th Century. For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence. A large majority of scientists also agree that continued GHG emissions would lead to important adverse impacts—even catastrophic ones for some populations; some, however, consider that even under current GHG emission trajectories, the impacts would be modest and manageable. In the near term, the focus of climate change scientific research may shift increasingly toward greater precision in climate projections, localized climate projections, impacts on society, and probabilistic characterization of uncertainties, especially to assist local and regional impact assessment and risk management decision making. In light of the growing consensus on the science of human-induced climate change, Congress may shift attention more toward assessment of options to manage risks. Deliberations include the appropriate magnitude and emphasis of federal support for climate-related technology for GHG emission abatement, geoengineering, and adaptation or resilience to impacts. The U.S. Global Change Research Program (USGCRP) is an interagency mechanism, required by the Global Change Research Act of 1990 ( P.L. 101-606 ) that coordinates and integrates global change research across 10 government agencies. For FY2017, USGCRP expressed three thematic priorities: climate, water cycle extremes in the context of climate change, and methane cycling in the context of the carbon cycle. The current Administration has not reported priorities or budget proposals to Congress as required by the act. Most federal climate change-related funding is aimed at advancing "clean energy," the definition of which varies among interested groups. Most human-related GHG emissions come from production, distribution, and combustion of fossil fuels, particularly for electricity generation and transportation. Many analysts see a decades-long path to decarbonization of the world's energy economy as a primary option to halting the human influence on climate, while potentially providing security and health benefits. Some see potential carbon capture, utilization, and sequestration (CCUS) technologies as key to preventing carbon dioxide emissions while preserving a large place for coal and other fossil fuels in the energy economy. Still others advocate development of geoengineering technologies, and international governance regimes, to intentionally modify the climate, particularly should climate change rapidly and adversely. (Reducing GHG emissions would have a slower but more permanent effect on global climate.) Members may deliberate on the appropriate degree and means of federal support for advancing and deploying new technologies. Because some innovative technologies are still in the research phase, and because of market inefficiencies and barriers to economical uptake of some technologies, Congress has provided billions of dollars of federal support, including numerous tax incentives, for energy technologies, unevenly distributed across types of technologies. The programs range from basic research, through technology development and demonstration of selected technologies, to incentives to promote their commercial deployment. Some focus on "supply-push" of technologies, while others emphasize "demand-pull." Existing programs support technologies that would lower GHG emissions (e.g., more efficient and renewable energy technologies). Cleaner energy technologies can produce public health benefits additional to climate benefits, while shifts in the energy economy can also pose transitional challenges to employment and communities. The magnitude of federal expenditures for climate change, their effectiveness, and priorities may be topics for Congress, particularly in light of budget objectives. The 115 th Congress may consider legislation that affects existing programs or establishes new ones. A number of Members support existing and extended tax incentives that influence the types and rates of technology advance. In addition, legislation has been proposed prior to the 115 th Congress to levy GHG emission fees or "carbon taxes" to promote cleaner technologies, broaden the tax base, reduce the projected budget deficit, and assist workers and communities challenged by the ongoing transitions in the energy sector, among other proposed uses of revenues. Pricing of GHG emissions would promote demand for more efficient and lower-emitting technologies, potentially driving innovation and market-based technological change. Emission fees could also be used in part to finance basic research in which the private sector tends to underinvest because of its risks and the difficulty of capturing all the benefits of successful R&D. Federal programs for technologies to support adaptation or resilience to future climate change have also been proposed in the 115 th Congress. Because the climate will continue to change, due to both natural and human-related causes, Congress may address the federal role in facilitating effective state, local, and private decision making to anticipate and be resilient to changes. It may also consider efforts already begun to incorporate climate change projections into federal agency management of federal resources, infrastructure and operations, and requirements and incentives in federal programs that may encourage or impede adaptation. Effective decisions would all depend on the adequacy and appropriate use of scientific information and available technologies. For Further Information [author name scrubbed], Specialist in Energy and Environmental Policy CRS Report R45086, Evolving Assessments of Human and Natural Contributions to Climate Change , by [author name scrubbed] CRS Video WVB00209, Automobile Fuel Economy and Greenhouse Gas Standards , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] CRS Report R42532, Carbon Capture and Sequestration (CCS): A Primer , by [author name scrubbed] CRS Report R42731, Carbon Tax: Deficit Reduction and Other Considerations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] CRS Report R43915, Climate Change Adaptation by Federal Agencies: An Analysis of Plans and Issues for Congress , coordinated by [author name scrubbed] CRS Report R43199, Energy-Water Nexus: The Energy Sector's Water Use , by [author name scrubbed] CRS Report R44632, Sea-Level Rise and U.S. Coasts: Science and Policy Considerations , by [author name scrubbed] and [author name scrubbed] Carbon capture and sequestration (or storage)—known as CCS—is a physical process that involves capturing manmade carbon dioxide (CO 2 ) at its source and storing it indefinitely before its release to the atmosphere. CCS could reduce the amount of CO 2 emitted to the atmosphere while allowing the continued use of fossil fuels at power plants and other large industrial facilities. An integrated CCS system would include three main steps: (1) capturing CO 2 at its source and separating it from other gases; (2) purifying, compressing, and transporting the captured CO 2 to the sequestration site; and (3) injecting the CO 2 into subsurface geological reservoirs. Following its injection into a subsurface reservoir, the CO 2 would need to be monitored for leakage and to verify that it remains in the target geological reservoir. Once injection operations cease, a responsible party would need to take title to the injected CO 2 and ensure that it stays underground in perpetuity. Recently, CCS has been referred to as CCUS, carbon capture, utilization , and storage, to incorporate the use of captured CO 2 in addition to its permanent storage underground. Uses include manufacturing products using CO 2 , injecting CO 2 underground to enhance oil recovery, and other uses. The U.S. Department of Energy (DOE) has pursued research and development of aspects of the three main steps leading to an integrated CCS system since 1997. CCS-focused R&D has come to dominate the coal program area within DOE Fossil Energy Research and Development (FER&D) since 2010. Congress has appropriated more than $4 billion in total from FY2012-FY2018 for CCS-related research, development, and demonstration (RD&D) at DOE's Office of Fossil Energy. That total does not include $3.4 billion appropriated for CCS-related activities within the American Recovery and Reinvestment Act ( P.L. 111-5 ). Authority to expend Recovery Act funding expired at the end of FY2015. To date, no commercial ventures in the United States capture, transport, and inject large quantities of CO 2 (e.g., 1 million tons per year or more) solely for the purposes of carbon sequestration. Globally, however, two fossil-fueled power plants currently generate electricity and capture CO 2 in large quantities: the Boundary Dam plant in Canada and the Petra Nova plant in Texas. Both plants retrofitted post-combustion capture technology to units of existing plants. A third fossil-fueled electricity-generating operation, the Kemper County Energy Facility in Mississippi, was scheduled to begin CCS operations by now, but cost overruns and delays in construction and operations led to the suspension of the plant's CCS component on June 28, 2017. Congress continued to provide support for CCS R&D within DOE's FER&D program in FY2018, providing nearly $727 million to FER&D in total, an increase of nearly $59 million, a 9% increase compared to FY2017. The Trump Administration's FY2019 budget request, however, would shift away from CCS R&D to fund other priorities, and would cut the overall FER&D budget by nearly $225 million compared to what Congress enacted for FY2018. The FY2019 budget request cites early-stage research as its focus: "This budget request focuses DOE resources toward early-stage R&D and reflects an increased reliance on the private sector to fund later-stage research." Specifically, the carbon capture and carbon storage subprograms would receive $40 million total under the Administration's request, compared to nearly $200 million for FY2018, an 80% reduction. Given Congress' continued interest in supporting CCS-related R&D within DOE, it is likely that the Administration's proposed funding reductions will face congressional opposition in the FY2019 budget. For Further Information [author name scrubbed], Specialist in Energy and Natural Resources Policy CRS In Focus IF10589, FY2019 Funding for CCS and Other DOE Fossil Energy R&D , by [author name scrubbed] CRS Report R44902, Carbon Capture and Sequestration (CCS) in the United States , by [author name scrubbed] CRS Report R41325, Carbon Capture: A Technology Assessment , by [author name scrubbed] Reliable water quantity and quality is essential for the U.S. population and economy, including public and ecosystem health, agriculture (e.g., irrigation), and industry (e.g., energy production, fisheries, navigation, and manufacturing). The research issues related to developing, using, and protecting water supplies and aquatic ecosystems along the nation's coasts and in inland areas are diverse. Because of this diversity, federal research activities and facilities span numerous departments, agencies, and laboratories. The federal government also supports water research through grants to universities and other researchers. In recent years, federal agencies have sponsored various prize competitions related to water data, science, and technologies, and developed cooperative arrangement with various entities. Drinking water contamination incidents (e.g., algal toxins in Lake Erie and lead in drinking water in Flint, MI) and recent droughts, floods, and storms also have increased interest in innovative technologies and practices (including nature-based approaches often referred to as green infrastructure ) and the science to support them. The 115 th Congress may consider multiple water research and technology topics which can be broadly divided into water and aquatic ecosystem information, water infrastructure and use, and water quality. Information on water quantity, quality, and conditions and aquatic ecosystems and species include observations, forecasts, and associated modeling (including surface water and groundwater modeling under various climate scenarios). Science and research agencies collect data remotely and in situ ; they use a wide variety of traditional and new technologies and techniques that inform water-related decisions for infrastructure, agriculture, and drinking water and wastewater services. Some of the inland and coastal water and ecosystem research topics that may be before the 115 th Congress include the following: water monitoring infrastructure and programs, including water quality monitoring activities, stream gauges, and remote sensing investments (see " Earth-Observing Satellites "); water conditions along coasts (e.g., storm-surge forecasts; relative sea-level rise rates, causes, and effects such as groundwater salinization; coastal and estuarine monitoring and restoration; and nature-based coastal management); altering the operation of existing reservoirs (e.g., using seasonal forecasts to enhance water supply, and forecast-informed operations for flood management); monitoring and management of invasive species and harmful algal blooms; access to water data (e.g., the Open Water Data Initiative, National Water Center, Drought Monitor); and coordination and direction of the federal water science and research portfolio. Water infrastructure research encompasses how to prolong and improve the performance of existing coastal and inland water infrastructure as well as the development of next-generation infrastructure technologies. The demand for infrastructure is in part determined by how efficiently water is used (e.g., irrigation technologies, drinking water distribution, and household water products). Some infrastructure and water use research topics include water augmentation technologies and science to support their adoption, including groundwater recharge, stormwater capture, water reuse, and brackish and seawater desalination; technologies and materials for monitoring and rehabilitating aging infrastructure, such as materials selection, construction and repair techniques, and detection technologies (e.g., structural health monitors and leak detection); water efficiency technologies, practices, and programs (e.g., improved irrigation technologies (see " Agricultural Research "), and water-efficient product labeling); and technologies to enhance infrastructure resilience to droughts, floods, hurricanes, and other natural hazards (e.g., technologies and methods to sustain collection and distribution systems, treatment plants, and related infrastructure). Water quality in surface water, groundwater, and tap water is important for public health and environmental protection. Technologies for preventing contamination and for identifying and treating existing contamination is an ongoing research topic for the federal government. Some research topics include analytical methods and treatment technologies to detect and manage emerging contaminants (e.g., cyanotoxins associated with harmful algal blooms, and perfluoroalkyl substances [PFASs]); technologies to prevent and manage contamination issues at drinking water treatment plants and in distribution systems (e.g., real-time monitoring, treatment to minimize disinfection byproducts, and lead pipe corrosion control); and innovative water protection technologies and practices, including methods for protecting drinking water sources for public water system from contamination (e.g., nature-based stormwater management, watershed management approaches, and nonpoint source pollution management). For Further Information [author name scrubbed], Specialist in Natural Resources Policy [author name scrubbed], Specialist in Energy and Natural Resources Policy [author name scrubbed], Analyst in Natural Resources Policy [author name scrubbed], Specialist in Natural Resources Policy [author name scrubbed], Specialist in Environmental Policy CRS Report R43777, U.S. Geological Survey: Background, Appropriations, and Issues for Congress , by [author name scrubbed] and [author name scrubbed] CRS Report R43407, Drought in the United States: Causes and Current Understanding , by [author name scrubbed] CRS Report R40477, Desalination and Membrane Technologies: Federal Research and Adoption Issues , by [author name scrubbed] CRS Report R44632, Sea-Level Rise and U.S. Coasts: Science and Policy Considerations , by [author name scrubbed] and [author name scrubbed] CRS In Focus IF10719, Forecasting Hurricanes: Role of the National Hurricane Center , by [author name scrubbed] CRS In Focus IF10787, WaterSense®: Water-Efficiency Label and Partnership Program , by Keara B. Moore CRS In Focus IF10690, Freshwater Harmful Algal Blooms: An Overview , by [author name scrubbed] The federal government spends billions of dollars supporting research and development to protect the homeland. Some of the issues that the 115 th Congress may consider include how the Department of Homeland Security performs research and development and federal efforts to develop and procure new medical countermeasures against chemical, biological, radiological, and nuclear agents. The Department of Homeland Security (DHS) has identified five core missions: to prevent terrorism and enhance security, to secure and manage the borders, to enforce and administer immigration laws, to safeguard and secure cyberspace, and to ensure resilience to disasters. New technology resulting from research and development can contribute to all these goals. The Directorate of Science and Technology has primary responsibility for establishing, administering, and coordinating DHS R&D activities. The Domestic Nuclear Detection Office (DNDO) is responsible for R&D relating to nuclear and radiological threats. Several other DHS components, including the Coast Guard, also fund R&D and R&D-related activities related to their missions. Coordination of DHS R&D is a long-standing congressional interest. In 2012, GAO concluded that because so many components of the department are involved, it is difficult for DHS to oversee R&D department-wide. In January 2014, the joint explanatory statement for the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) directed DHS to implement and report on new policies for R&D prioritization. It also directed DHS to review and implement policies and guidance for defining and overseeing R&D department-wide. In July 2014, GAO reported that DHS had updated its guidance to include a definition of R&D and was conducting R&D portfolio reviews across the department, but that it had not yet developed policy guidance for DHS-wide R&D oversight, coordination, and tracking. In December 2015, the explanatory statement for the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) stated that DHS "lacks a mechanism for capturing and understanding research and development (R&D) activities conducted across DHS, as well as coordinating R&D to reflect departmental priorities." The Common Appropriations Structure that DHS introduced in February 2016 in its FY2017 budget request includes an account titled Research and Development for each DHS component. It remains to be seen whether this change will help to address congressional concerns about DHS-wide R&D coordination. DHS has reorganized its R&D-related activities several times. In December 2017, it established a new Countering Weapons of Mass Destruction Office (CWMDO), consisting of DNDO, most functions of the Office of Health Affairs (OHA), and some other elements. DNDO and OHA were themselves both created, more than a decade ago, largely by reorganizing elements of the S&T Directorate. The 115 th Congress may consider legislation to authorize the establishment and activities of CWMDO. Meanwhile, DNDO continues to conduct R&D as an office within CWMDO. For Further Information [author name scrubbed], Specialist in Science and Technology Policy The anthrax attacks of 2001 highlighted the nation's vulnerability to biological terrorism. The federal government responded to these attacks by increasing efforts to protect civilians against chemical, biological, radiological, and nuclear (CBRN) terrorism. Effective medical countermeasures, such as drugs or vaccines, could reduce the impact of a CBRN attack. Policymakers identified a lack of such countermeasures as a challenge to responding to the CBRN threat. To address this gap, the federal government created several programs to encourage private sector development of new CBRN medical countermeasures. Despite these efforts, the federal government still lacks medical countermeasures for many CBRN threats, including Ebola. The Biomedical Advanced Research and Development Authority (BARDA) and Project BioShield are two key pieces of the federal efforts supporting the development and procurement of new CBRN medical countermeasures. BARDA directly funds the advanced development of countermeasures through contracts with private sector developers. Project BioShield provides a procurement mechanism to remove market uncertainty for countermeasure developers. It allows the federal government to agree to buy a countermeasure up to 10 years before the product is likely to finish development. Congress has modified these and related programs to improve their performance, efficiency, and transparency to oversight. However, some key issues remain unresolved, including those related to appropriations, interagency coordination, and countermeasure prioritization. In addition to questions regarding the amount of funding, Congress may decide whether to return to funding Project BioShield through a multiyear advance appropriation. Policymakers may consider whether the new planning and transparency requirements have sufficiently enhanced coordination of the multiagency countermeasure development enterprise. Additionally, Congress may consider whether the countermeasure prioritization process appropriately balances the need to address traditional threats such as anthrax and smallpox with the threat posed by emerging infectious diseases such as Ebola. For Further Information [author name scrubbed], Specialist in Science and Technology Policy The rapid pace of advancements in information technology presents several issues for congressional policymakers, including those related to cybersecurity, artificial intelligence, broadband deployment, access to broadband networks and net neutrality, public safety networks, emergency alerting, the Internet of Things, cryptography and law-enforcement challenges, and federal networking R&D. During the 113 th and 114 th Congress, there were a number of legislative proposals relating to cybersecurity, including the enactment of several laws with provisions on the security of federal information systems and the sharing of cybersecurity information across critical infrastructure sectors, among other issues. Those laws, along with more than 50 other statutes, presidential directives, and related authorities, provide a complex federal policy framework for U.S. cybersecurity. The 115 th Congress has faced a number of significant issues related to cybersecurity, in addition to the oversight of enacted laws. Among those issues are cybersecurity for critical infrastructure, given that most of it is not owned by the federal government and sectors of concern such as the recently designated election infrastructure subsector are not subject to federal regulation; prevention of and response to cybercrime, especially given its substantially international character; the relationship between cyberspace and national security, including information operations aimed at election infrastructure and political campaigns; and ways that federal funding should be invested to protect information systems and networks. In addition to such short- and medium-term issues, Congress may consider responses to a number of long-term challenges, including the following: design— the degree to which information systems can be designed with security built in, in the face of economic obstacles and the other challenges; incentives— ways to correct an economic incentive structure for cybersecurity that has often been called distorted or even perverse, with cybercrime widely regarded as cheap, profitable, and comparatively safe for the criminals, while cybersecurity is often considered expensive and imperfect, with uncertain economic returns; consensus— finding consensus on a consistent and effective model for approaching cybersecurity, given stakeholders from different sectors and different work subcultures with varying needs, goals, and perspectives; and environment— a rapidly evolving cyberspace environment that both complicates the threat environment and may pose opportunities for shaping the direction of that evolution toward greater security, including, for example, the growth and influence of cloud computing, social media, disruptive technologies such as blockchain, and the "The Internet of Things." For Further Information [author name scrubbed], Senior Specialist in Science and Technology [author name scrubbed], Analyst in Cybersecurity Policy CRS Report R45127, Cybersecurity: Selected Issues for the 115th Congress , coordinated by [author name scrubbed] CRS Report R45142, Information Warfare: Issues for Congress , by [author name scrubbed] CRS In Focus IF10602, Cybersecurity: Federal Agency Roles , by [author name scrubbed] CRS In Focus IF10677, The Designation of Election Systems as Critical Infrastructure , by [author name scrubbed] CRS Video WVB00200, Understanding Blockchain Technology and Its Policy Implications , by [author name scrubbed] CRS Report R44923, FY2018 National Defense Authorization Act: Selected Military Personnel Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] The rapid development and growing use of artificial intelligence (AI) technologies has been of increasing interest to policymakers. Since January 2017, congressional activities on AI have included multiple committee hearings in both the House of Representatives and the Senate, the introduction of numerous AI-focused bills, and a variety of congressional briefings, including those conducted by the Congressional AI Caucus and the Congressional Middle Class Jobs Caucus. Activity related to AI is likely to continue in the 115 th Congress. Generally, AI is considered to be computerized systems that work and react in ways commonly thought to require intelligence, encompassing many methodologies and applications. Common examples include machine learning, computer vision, natural language processing, and applications in robotics and autonomous vehicles. In addition to transportation, AI is already being employed across a variety of sectors, including healthcare, agriculture, manufacturing, and finance. Current AI technologies fall into a category called "narrow AI," meaning that they are highly tailored to particular tasks. In contrast, potential future AI systems that exhibit adaptable intelligence across a range of cognitive tasks, often referred to as "general AI," are unlikely to be developed for at least decades, if ever, according to most researchers. Potential policy considerations for AI span cross-sector and sector-specific topics, in both the defense and non-defense spaces. For example, broad concerns have focused on workforce impacts from the implementation of AI and AI-driven automation, including potential job losses and the need for worker retraining; the balance of federal and private sector funding for AI; international competition in AI research and development (R&D) and deployment, particularly with China and Russia; the development of standards and testing for AI systems; the need for and effectiveness of federal coordination efforts in AI; and incorporation of privacy, security, transparency, and accountability considerations in AI systems. Particular considerations for AI in the defense space have included the balance of human and automated decisionmaking in military operations; potential changes to the Department of Defense's acquisitions processes for defense adaptation of commercially developed AI systems; and private sector concerns about the use of AI R&D in combat situations. For Further Information [author name scrubbed], Analyst in Science and Technology Policy CRS In Focus IF10608, Overview of Artificial Intelligence , by [author name scrubbed] Broadband—whether delivered via fiber, cable modem, mobile or fixed wireless, copper wire, or satellite—is increasingly the technology underlying telecommunications services such as voice, video, and data. Broadband technologies have been deployed throughout the United States primarily by the private sector. These providers include telephone, cable, wireless, and satellite companies as well as other entities that provide commercial telecommunications services to residential, business, and institutional customers. Since the initial deployment of broadband in the late 1990s, many in Congress have viewed broadband infrastructure deployment as a means to improve regional economic development, and in the long term, to create jobs. As such, Congress and successive Administrations have focused on addressing gaps related to broadband availability and adoption. Of particular concern is the lack of adequate broadband availability in rural and tribal areas, where the cost of serving large geographical areas, coupled with low population densities, often reduce economic incentives for telecommunications providers to invest in and maintain broadband infrastructure and service. Broadband adoption is also an issue, wherein approximately one in four Americans have broadband available, but choose not to subscribe. Populations continuing to lag behind in broadband adoption include people with low incomes, seniors, minorities, the less-educated, non-family households, and the non-employed. The 115 th Congress is addressing, considering, or may consider a range of broadband-related issues. These include infrastructure legislation that may include incentives for broadband buildout, reauthorization of the broadband loan program in the farm bill, the development of new wireless spectrum policies, and lowering or removing regulatory barriers to broadband infrastructure facilities deployment faced by private sector providers. Additionally, the 115 th Congress may choose to examine the existing regulatory structure and consider possible revision of the 1996 Telecommunications Act and its underlying statute, the Communications Act of 1934. Both the convergence of telecommunications providers and markets and the transition to an Internet Protocol (IP) based network have, according to a growing number of policymakers, made it necessary to consider revising the current regulatory framework. How a possible revision might create additional incentives for investment in, deployment of, and subscribership to U.S. broadband infrastructure may be among many issues under consideration. To the extent that Congress may consider various options for further enhancing broadband deployment, a key issue is how to develop and implement federal policies intended to increase the nation's broadband availability and adoption, while at the same time minimizing any deleterious effects that government intervention in the marketplace may have on competition and private sector investment. For Further Information [author name scrubbed], Specialist in Science and Technology Policy [author name scrubbed], Specialist in Telecommunications Policy CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal Assistance Programs , by [author name scrubbed] and [author name scrubbed] CRS In Focus IF10441, Broadband Deployment: Status and Federal Programs , by [author name scrubbed] CRS Report RL33816, Broadband Loan and Grant Programs in the USDA's Rural Utilities Service , by [author name scrubbed] As policymakers continue to debate telecommunications reform, a major point of contention is whether action is needed to ensure unfettered access to the internet. The move to place restrictions on the owners of the networks that compose and provide access to the internet, to ensure equal access and non-discriminatory treatment, is referred to as "net neutrality." While there is no single accepted definition of "net neutrality," most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the internet (i.e., broadband access providers) should not control how consumers lawfully use that network, and should not be able to discriminate against content provider access to that network. A focal point in the debate centers on whether it is necessary for policymakers to take steps to ensure "unfettered" access to the Internet for content, services, and applications providers, as well as consumers, and if so, what these steps should be. Some policymakers contend that more specific regulatory guidelines are necessary to protect the marketplace from potential abuses which could threaten the net neutrality concept. Others contend that existing laws and policies are sufficient to deal with potential anti-competitive behavior and that additional regulations would have negative effects on the expansion and future development of the internet. Broadband regulation and the Federal Communications Commission's (FCC) authority to implement such regulations is an issue of growing importance in the wide ranging policy debate over broadband access. What, if any, action should be taken to ensure "net neutrality" is part of the overall discussion? The FCC, in 2015, adopted rules (2015 Order) that established a comprehensive regulatory framework to address the regulation of broadband internet access providers. The 2015 Order contained among its provisions those that reclassified such services as a telecommunications service and established bright line conduct rules for providers. However, the FCC, in December 2017, adopted new rules (2017 Order) that largely reverse the 2015 regulatory framework and shift much of the oversight from the FCC to the Federal Trade Commission and the Department of Justice. The FCC's move to adopt the 2017 Order has reopened the debate over what the appropriate framework is to ensure an open internet and whether Congress should enact legislation to establish this framework. A consensus on what that framework should entail remains elusive. Some Members of Congress support the less regulatory approach contained in the 2017 Order, which they argue will stimulate broadband investment, deployment, and innovation. Others support the regulatory framework adopted in the 2015 Order, which provides for a more stringent regulatory framework, and is needed, they state, to protect content, services, and applications providers, as well as consumers, from potential discriminatory behaviors which conflict with net neutrality principles. Still others, while supporting a framework containing specific behavioral rules to address potential anticompetitive practices, do not support the telecommunications services classification. Whether Congress will take action to amend existing law to provide guidance and more stability to FCC authority remains to be seen. For Further Information [author name scrubbed], Specialist in Telecommunications Policy CRS Report R40616, The Net Neutrality Debate: Access to Broadband Networks , by [author name scrubbed] The Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) authorized the Federal Communications Commission (FCC) to allocate additional spectrum to public safety use, and created the First Responder Network Authority (FirstNet). The act also authorized FirstNet to establish a new, nationwide broadband network for public safety, and provided $7 billion in funding for the project. The network is intended to address the communication problems first responders experienced during September 11, 2001, whereby public safety systems and equipment were not interoperable, and responders could not communicate or coordinate an effective response. Congress authorized FirstNet to enter into a public-private partnership to deploy the network. In March 2017, FirstNet selected AT&T, through a competitive bidding process, as its partner. Congress has provided oversight of this important project for the past five years. The 115 th Congress has conducted oversight to ensure the requirements in the law are met and the network is deployed as intended. To ensure continued effective oversight, the 115 th Congress may consider requesting more detailed information on the FirstNet network. Details about the network (e.g., network deployment, use of federal funds, use of the spectrum, rural coverage agreements), were contained in the FirstNet/AT&T contract and in state deployment plans; both were deemed proprietary and were not available for public review. A concern for policymakers is that, without details on how the network is being deployed and how federal resources are being used, it will be difficult for Congress to ensure the requirements of the law are being met, and the network is being implemented as intended. Given the federal investment in the project ($6.5 billion and 20 MHz of valuable broadband spectrum, which some experts have valued at $8 billion), and the importance of the FirstNet network to the life of safety of first responders and citizens, congressional oversight of this project is likely to continue. The act requires the network to be self-sustaining, primarily through user fees, but does not require state and local public safety agencies to subscribe. AT&T has offered specialized features and services (e.g., priority access to the network, disaster support) to entice users to the network; however, some agencies have expressed a reluctance to join, citing uncertainties with the network's security, reliability, and resiliency; coverage (rural and non-rural); and costs. Other agencies have expressed a reluctance to join until FirstNet can provide mission critical voice features that will not be available on FirstNet devices until 2019. The 115 th Congress may address subscriptions to the FirstNet network (e.g., offer federal grant funding for equipment or devices), to ensure the network will be sustained and improved over time, as required in the act, and to achieve the intent of the law: to provide a single nationwide interoperable network that will enable all public safety users to communicate and coordinate during emergencies. The establishment of the FirstNet network will not, on its own, resolve the communication issues experienced during September 11, 2001. To operate as intended, state and local public safety agencies will need to subscribe to the FirstNet network; integrate FirstNet capabilities into response plans, procedures, training, and exercises; and use the network regularly to enhance coordination, communication, and response. The 115 th Congress may address public safety agencies that subscribe to the network to integrate FirstNet capabilities into state and local response. For Further Information Jill Gallagher, Analyst in Telecommunications Policy CRS Report R45179, The First Responder Network (FirstNet) and Next-Generation Communications for Public Safety: Issues for Congress , by [author name scrubbed] The false alert of an incoming ballistic missile to Hawaii on January 13, 2018, raised critical questions about alerting roles and responsibilities. While the national alerting system—the Integrated Public Alert and Warning System (IPAWS)—worked as intended, the roles and responsibilities for issuing alerts for incoming ballistic missiles gained the attention of Congress after this incident. In response to the incident, bills were introduced to redefine roles and responsibilities for issuing alerts for incoming ballistic missiles. The Authenticating Local Emergencies and Real Threats (ALERT) Act of 2018 ( S. 2385 ), and its companion in the House ( H.R. 4965 ) would restrict the authority to alert the public of a missile threat to the federal government. Sponsors of this legislation believe that the federal agencies responsible for detecting incoming missiles (e.g., Department of Defense) should serve as the sole alerting authority for incoming ballistic missiles, to ensure the alert sent is validated at the source, and to reduce the incidence of false alerts. The 115 th Congress may consider the role of DOD in alerting to increase the reliability of the alert, and to increase the trust of citizens in the alerting system. The recent wildfires in California presented different alerting issues. Counties in California used a commercial alerting system (versus IPAWS) that allowed officials to target alerts to county residents. However, the commercial system required residents to sign up for the service. With only a fraction of the residents subscribed, only a fraction received the wildfire alert. County officials considered issuing an alert through the federal IPAWS system, which would have alerted all residents in the area via television, radio, cell phone, social media, etc. However, county officials believed that the wireless emergency alerts (WEA)—cell phone alerts—that are issued through IPAWS could not be targeted to precise regions within the county. Officials feared that issuing a countywide alert would result in the unnecessary evacuation of some citizens, and congestion on evacuation routes. In January 2018, the FCC adopted rules to improve geo-targeting of wireless emergency alerts (WEA). The rules require carriers that participate in the WEA program to deliver WEA alerts in a more geographically precise manner so that the alerts are targeted to the communities impacted by an emergency, as defined by the alert originator (e.g., state or local emergency manager). The FCC required participating providers to reach all of the devices in the target area with not more than a 0.1 mile overshoot. Smaller, rural carriers whose legacy networks may be technically incapable of matching the specified target area are required to deliver the WEA to an area that best approximates the target area. Carriers must comply with these rules by November 30, 2019. Given the variation in alerting methods and capabilities, the 115 th Congress may address state and local investment in training and programs that educate officials and individuals on the various alerts and the appropriate response to different alerts in order to increase preparedness. While wireless emergency alerts are useful during emergencies, in California, where fires destroyed the majority of the communications infrastructure (e.g., towers), all electronic alerting systems would have been rendered useless. The 2018 California wildfires highlighted the need for back-up communications, education of officials on federal alerting capabilities, and the education of citizens on various alerts. The 115 th Congress may address supporting state and local investment in back-up communications, and back-up alerting capabilities in the event that communication systems fail. For Further Information Jill Gallagher, Analyst in Telecommunications Policy CRS In Focus IF10816, Emergency Alerting—False Alarm in Hawaii , by [author name scrubbed] The Internet of Things (IoT) may continue to be a focal point of far-reaching debates during the 115 th Congress. The term refers to networks of objects with two features—a unique identifier and Internet connectivity. Such "smart" objects can form systems that communicate among themselves, usually in concert with computers, allowing automated and remote control of many independent processes and potentially transforming them into integrated systems. Such objects may include vehicles, appliances, medical devices, electric grids, transportation infrastructure, manufacturing equipment, building systems, and so forth. The IoT is increasingly impacting homes and communities, factories and cities, and nearly every sector of the economy, both domestically and globally, among them agriculture (precision farming), health (medical devices), and transportation (self-driving automobiles and unmanned aerial vehicles). An increasing number of these systems require access to radio frequency spectrum in order to connect to the Internet or other networks. The development of fifth-generation (5G) wireless technologies is likely to develop in tandem with the IoT, potentially expanding substantially the opportunities for growth in use of IoT devices. Although the full extent and nature of impacts of the IoT remain uncertain, some economic analyses predict that it will contribute trillions of dollars to economic growth over the next decade. The IoT, for example, may be able to facilitate more integrated and functional infrastructure, especially in "smart cities," through improvements in transportation, utilities, and other municipal services. Sectors that may be particularly affected are agriculture, energy, government, health care, manufacturing, and transportation. The federal government may play an important role in enabling the development and deployment of the IoT, including R&D, standards, regulation, and support for testbeds and demonstration projects. No single federal agency has overall responsibility for the IoT. Various agencies have relevant regulatory, sector-specific, and other mission-related responsibilities, such as the Departments of Commerce, Health, Energy, Transportation, and Defense, the National Science Foundation, the Federal Communications Commission, and the Federal Trade Commission. The range of issues that might be the subject of congressional activity includes the following: security of objects and the systems and networks to which they are connected, given especially that many IoT devices are operational technology, the compromise of which can have physical impacts (see also " Cybersecurity "); privacy of the information gathered and transmitted by objects; standards for the IoT, especially with respect to connectivity; transition to a new Internet Protocol (IPv6) that can handle the anticipated exponential increase in the number of IP addresses required by the IoT, along with the growth of 5G wireless; methods for updating the software used by IoT objects in response to security and other needs; energy management for IoT objects, especially those not connected to the electric grid; and the role of the federal government in development and deployment, standards, regulation, and communications, including the impact of federal rules regarding "net neutrality." The Internet of Things represents more than devices connected through networks, and more than Internet or radio frequency spectrum policy. Its growth will likely require significant changes in—and coordination among—many government departments and agencies. For Further Information [author name scrubbed], Senior Specialist in Science and Technology CRS Report R44227, The Internet of Things: Frequently Asked Questions , by [author name scrubbed] Changing technology presents opportunities and challenges for U.S. law enforcement. Some technological advances have arguably opened a treasure trove of information for investigators and analysts. Others have presented unique hurdles. While some feel that law enforcement now has more information available to them than ever before, others contend that law enforcement is "going dark" as their investigative capabilities are outpaced by the speed of technological change. These hurdles for law enforcement include strong, end-to-end (or what law enforcement has sometimes called "warrant-proof") encryption; provider limits on data retention; bounds on companies' technological capabilities to provide specific data points to law enforcement; tools facilitating anonymity online; and a landscape of mixed wireless, cellular, and other networks through which individuals and information are constantly passing. As such, law enforcement cannot access certain information they otherwise may be authorized to obtain. The tension between law enforcement capabilities and technological change has received congressional attention for several decades. For instance, in the 1990s the "crypto wars" pitted the government against technology companies, and this tension was highlighted by proposals to build in vulnerabilities, or back doors, to certain encrypted communications devices as well as to restrict the export of strong encryption code. In addition, Congress passed the Communications Assistance for Law Enforcement Act (CALEA; P.L. 103-414 ) in 1994 to help law enforcement maintain their ability to execute authorized electronic surveillance as telecommunications providers turned to digital and wireless technology. The "going dark" debate originally focused on data in motion, or law enforcement's ability to intercept real-time communications. However, more recent technology changes have impacted law enforcement's capacity to access not only communications but stored content, or data at rest. Some officials have urged the technology community to develop a means to assist law enforcement in accessing encrypted data. At the same time, law enforcement entities have taken steps to bolster their technology capabilities. In addition, policymakers have been evaluating whether legislation may be an appropriate response to the problems posed by encryption. For Further Information Kristin M. Finklea, Specialist in Domestic Security CRS Report R44481, Encryption and the "Going Dark" Debate , by [author name scrubbed] CRS Report R44642, Encryption: Frequently Asked Questions , by [author name scrubbed] Congress passed the High-Performance Computing and Communications Program (HPCC) Act of 1991 ( P.L. 102-194 ) to enhance the effectiveness of federally funded information technology (IT) R&D programs and to encourage coordination among agencies conducting such research. Proponents of federal support of IT R&D assert that it has produced positive outcomes for the country and played a crucial role in supporting long-term research into fundamental aspects of computing. Such fundamentals may provide broad practical benefits, but generally take years to realize. Additionally, the unanticipated results of research are often as important as the anticipated results. Another aspect of government-funded IT research is that it often leads to open standards, something that many perceive as beneficial, encouraging deployment and further investment. Industry, on the other hand, is more inclined to invest in proprietary products and will diverge from a common standard when there is a potential competitive or financial advantage to do so. Supporters believe that the outcomes achieved through the various funding programs create a synergistic environment in which both fundamental and application-driven research are conducted, benefitting government, industry, academia, and the public. Critics, however, assert that the government, through its funding mechanisms, may be picking "winners and losers" in technological development, a role more properly residing with the market. For example, the size of the Networking and Information Technology Research and Development (NITRD) Program may encourage industry to follow the government's lead on research directions rather than selecting those directions itself. The NITRD Program is funded through appropriations to its individual agencies, so support for it will likely be part of the federal budget debate in Congress. For Further Information [author name scrubbed], Specialist in Internet and Telecommunications Policy CRS Report RL33586, The Federal Networking and Information Technology Research and Development Program: Background, Funding, and Activities , by [author name scrubbed] Some of the policy issues in the physical and material sciences that the 115 th Congress may address include funding and oversight of the National Science Foundation and the multiagency initiative supporting research and development in the emerging field of nanotechnology. The National Science Foundation (NSF) supports basic research and education in the non-medical sciences and engineering and is a primary source of federal support for U.S. university research. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support. Enacted funding for NSF in FY2018 was $7.767 billion. The NSF's funding levels and congressional direction of funding have been long-standing issues of congressional interest. At various points in NSF's history, some policymakers have pursued a policy of authorizing large increases in the NSF budget over a defined period of time (e.g., a 100% increase over seven years, sometimes referred to as a "doubling path policy"). Actual appropriations have rarely reached authorized levels, and growth in NSF's budget has slowed in recent years. Advocates of large funding increases assert that steep and fast increases in NSF funding are necessary to ensure U.S. competitiveness. Other analysts argue that steady, reliable funding increases over longer periods of time would be less disruptive to the U.S. scientific and technological enterprise. Alternatively, some policymakers seek no additional increases in NSF funding in light of the federal deficit and spending caps. Additionally, some policymakers prefer to direct federal funding to research with a more applied or mission-oriented focus than that which is typically funded at NSF. Policy issues of particular interest that the 115 th Congress may continue to address include the selection, funding, and management of large-scale construction projects, scientific instruments, and facilities, including the use of management fees and the construction of new large research vessels; the foundation's grant-making process, including its peer review process; and the effectiveness and costs of NSF's use of non-federal personnel—through the Intergovernmental Personnel Act (IPA) program—often called "rotators." Further, analysts and legislators have periodically debated questions about prioritizing NSF funding for the physical sciences and engineering over funding for the social, behavioral, and economic sciences, as well as expanding support for multidisciplinary funding. Other lasting federal policy issues for the NSF focus on the balance between scientific independence and accountability to taxpayers; the geographic distribution of grants; NSF's role in broadening participation in STEM fields; support for various STEM education programs; and the production of data about the U.S. scientific and technological enterprise. For Further Information [author name scrubbed], Analyst in Science and Technology Policy CRS Report R45009, The National Science Foundation: FY2018 Appropriations and Funding History , by [author name scrubbed] Nanoscale science, engineering, and technology—commonly referred to collectively as nanotechnology—is believed by many to offer extraordinary economic and societal benefits. Nanotechnology R&D is directed toward the understanding and control of matter at dimensions of roughly 1 to 100 nanometers (a nanometer is one-billionth of a meter). At this size, the properties of matter can differ in fundamental and potentially useful ways from the properties of individual atoms and molecules and of bulk matter. Many current applications of nanotechnology are evolutionary in nature, offering incremental improvements in existing products and generally modest economic and societal benefits. For example, nanotechnology is being used in automobile bumpers, cargo beds, and step-assists to reduce weight, increase resistance to dents and scratches, and eliminate rust; in clothes to increase stain- and wrinkle-resistance; and in sporting goods to improve performance. Other nanotechnology innovations play a central role in current applications with substantial economic value. For example, nanotechnology is a fundamental enabling technology in nearly all semiconductors and is key to improvements in chip speed, size, weight, and energy use. Similarly, nanotechnology has substantially increased the storage density of non-volatile flash memory and computer hard drives. In the longer term, some believe that nanotechnology may deliver revolutionary advances with profound economic and societal implications, such as detection and treatment of cancer and other diseases; clean, inexpensive, renewable power through energy transformation, storage, and transmission technologies; affordable, scalable, and portable water filtration systems; self-healing materials; and high-density memory devices. The development of this emerging field has been fostered by sustained public investments in nanotechnology R&D. In 2001, President Clinton launched the multi-agency National Nanotechnology Initiative (NNI) to accelerate and focus nanotechnology R&D to achieve scientific breakthroughs and to enable the development of new materials, tools, and products. More than 60 nations subsequently established programs similar to the NNI. Through FY2017, Congress has appropriated approximately $23.4 billion for nanotechnology R&D; the President requested $1.2 billion in FY2018 funding. In 2003, Congress enacted the 21 st Century Nanotechnology Research and Development Act ( P.L. 108-153 ), providing a legislative foundation for some of the activities of the NNI, establishing programs, assigning agency responsibilities, and setting authorization levels through FY2008. Legislation has been introduced in the 114 th and 115 th Congress to amend and reauthorize the act though none has been enacted into law. Congress has directed its attention primarily to three topics that may affect the realization of nanotechnology's hoped-for potential: R&D funding; U.S. competitiveness; and environmental, health, and safety (EHS) concerns. For Further Information [author name scrubbed], Specialist in Science and Technology Policy CRS Report RL34511, Nanotechnology: A Policy Primer , by [author name scrubbed] CRS Report RL34401, The National Nanotechnology Initiative: Overview, Reauthorization, and Appropriations Issues , by [author name scrubbed] CRS Report RL34614, Nanotechnology and Environmental, Health, and Safety: Issues for Consideration , by [author name scrubbed] Congress has historically had a strong interest in space policy issues. Space topics that may come before the 115 th Congress include the funding and oversight of the National Aeronautics and Space Administration (NASA) and issues related to the commercialization of space and to Earth-observing satellites. Spaceflight has attracted strong congressional interest since the establishment of NASA in 1958. Issues include the goals and strategy of NASA's human spaceflight program, the impact of constrained budgets on NASA's other missions, and the future of NASA's Earth Science program. In its first session, the 115 th Congress enacted the NASA Transition Authorization Act of 2017 ( P.L. 115-10 ). In the second session, it is continuing to address NASA reauthorization legislation. With the end of the space shuttle program in July 2011, the United States lost the capability to launch astronauts into space. Since that time, NASA has relied on Russian spacecraft for crew transport to the International Space Station (ISS). For ISS cargo transport, NASA-contracted U.S. commercial flights have been delivering payloads of supplies and equipment since October 2012. As directed by the NASA Authorization Act of 2010 ( P.L. 111-267 ), NASA is pursuing a two-track strategy for human spaceflight. First, for transport to low Earth orbit, including the ISS, NASA is supporting commercial development of a crew transport capability like the commercial cargo capability achieved in 2012. Commercial crew transportation services are likely to become operational in 2019. Second, for human exploration beyond Earth orbit, NASA is developing a new crew capsule called Orion and a new heavy-lift rocket called the Space Launch System (SLS). The first crewed test flight of Orion and the SLS is scheduled for 2023. Most details of the subsequent exploration missions of Orion and the SLS remain to be determined. In February 2018, NASA announced plans for a Lunar Orbital Platform–Gateway (LOP-G) in lunar orbit, to be accessed via Orion and the SLS, that would serve as a platform for deep-space human exploration. Rapid developments in the commercial space sector may change the relationship between NASA and industry. For example, SpaceX has announced plans for commercial flights carrying passengers around the Moon and back as well as, in the longer term, to Mars. Some observers see this sort of development as potentially competing with NASA's human spaceflight plans. More broadly, the emergence of new commercial capabilities in space may present NASA with new opportunities for public-private partnerships or may shift its R&D priorities. For example, NASA has announced plans to end direct funding for the International Space Station by 2025, instead relying on a combination of public-private partnerships and commercial service contracts. The 2010 authorization act authorized funding increases for NASA that were not subsequently appropriated. In considering reauthorization, the 115 th Congress may examine whether reduced budget expectations require corresponding changes to planned programs. One common concern is that the cost of planned human spaceflight activities may mean less funding for other NASA missions, such as unmanned science satellites, aeronautics research, and space technology development. NASA's Earth Science program, in which climate research is a major focus, is of particular congressional interest. Some in Congress have argued that other NASA activities should have higher priority or that some or all of NASA's Earth Science responsibilities should be transferred to other agencies. Supporters counter that space-based Earth observations are an integral part of NASA's science mission. For Further Information [author name scrubbed], Specialist in Science and Technology Policy CRS Report R43419, NASA Appropriations and Authorizations: A Fact Sheet , by [author name scrubbed] CRS In Focus IF10016, Space Exploration , by [author name scrubbed] CRS In Focus IF10828, The International Space Station (ISS) and the Administration's Proposal to End Direct NASA Funding by 2025 , by [author name scrubbed] A survey by the Department of Commerce found that U.S. companies had $62.9 billion in space-related sales in 2012. While U.S. government purchases provided much of this market, about one quarter of sales were within the commercial sector. Although the commercial space industry has existed for several decades, some observers have identified an emerging "new space" sector of relatively new companies focused on private spaceflight at low cost. One factor driving this trend is NASA's reliance on commercial providers for access to the ISS, but "new space" companies are also focused on other markets. These include the launch of national security satellites for the Department of Defense, the launch of commercial satellites for U.S. and foreign companies, and even space tourism. The Federal Aviation Administration (FAA) licenses commercial space launch and reentry, including commercial spaceports. As part of the FAA licensing process, the federal government indemnifies launch providers against certain third-party liabilities. The U.S. Commercial Space Launch Competitiveness Act ( P.L. 114-90 ) extended this indemnification policy (for the ninth time since 1988) through September 2025. The act also extended through September 2023 a statutory moratorium that restricts the FAA's authority to regulate the safety of crewed spaceflight. The status of human spaceflight safety regulations has been a focus of recent congressional interest because of NASA's plans for commercial crewed flights to the ISS. Several other federal agencies are also involved in the commercial space industry. The National Oceanographic and Atmospheric Administration (NOAA) licenses commercial remote sensing satellites. The Federal Communications Commission licenses the use of radio frequencies by commercial satellites and assigns locations for satellites in geostationary orbits. The National Transportation Safety Board investigates certain spacecraft accidents. The Department of Commerce Office of Space Commerce supports and promotes U.S. space commerce. Oversight of export controls on most aspects of commercial satellites shifted from the Department of State to the Department of Commerce in 2014. In February 2018, the National Space Council made recommendations for regulatory reforms at multiple agencies. Some of those recommendations are likely to result in legislative proposals from the Administration in 2018 and 2019. In response or on its own initiative, the 115 th Congress is likely to continue to address the commercial space regulatory and oversight framework. For More Information [author name scrubbed], Specialist in Science and Technology Policy CRS Report R44708, Commercial Space Industry Launches a New Phase , by [author name scrubbed] CRS In Focus IF10016, Space Exploration , by [author name scrubbed] The constellation of Earth-observing satellites launched and operated by the United States government performs a wide range of observational and data collecting activities, such as measuring the change in mass of polar ice sheets, wind speeds over the oceans, land cover change, as well as the more familiar daily measurements of key atmospheric parameters that enable modern weather forecasts and storm prediction. Satellite observations of the Earth's oceans and land surface help with short-term seasonal forecasts of El Niño and La Niña conditions, which are valuable to U.S. agriculture and commodity interests; identification of the location and size of wildfires, which can assist firefighting crews and mitigation activities; as well as long-term observational data of the global climate, which are used in predictive models that help assess the degree and magnitude of current and future climate change. Congress continues to be interested in the performance of NASA, NOAA, and the U.S. Geological Survey in building and operating U.S. Earth-observing satellites. Congress has been particularly interested in the agencies meeting budgets and time schedules so that critical space-based observations are not missed due to delays and cost overruns. Concerns have been raised in the past by Congress about the possibility of a "data gap" in the polar-orbiting weather satellite coverage. The successful launch of the first Joint Polar Satellite System satellite JPSS-1 (now NOAA-20) on November 18, 2017, has alleviated those concerns for the near-term. Congress provided full funding, about $776 million for the second polar-orbiting satellite, JPSS-2, in the FY2018 enacted appropriations. NOAA's program for future polar-orbiting weather satellites, the Polar Follow-On mission, is likely to be more controversial both within Congress and in the Trump Administration. On November 19, 2016, the GOES-R (Geostationary Operational Environmental Satellite-R) weather satellite launched and was placed into orbit. Renamed GOES-16, it is an advanced weather satellite with sensors that should help improve hurricane tracking and intensity forecasts, prediction and warning of severe weather events, and rainfall estimates that will lead to better flood warnings. GOES-16 also carries the first operational lightning mapper in geostationary orbit, and will better monitor space weather—perturbations to the Earth's magnetic field caused by intense bursts of energy from the sun. On March 1, 2017, GOES-S successfully launched carrying the same suite of instruments as its predecessor. Both satellites represent the first two in a series of four Earth-orbiting weather satellites planned by NOAA through 2036. For Further Information [author name scrubbed], Specialist in Energy and Natural Resources Policy CRS Report R44335, Minding the Data Gap: NOAA's Polar-Orbiting Weather Satellites and Strategies for Data Continuity , by [author name scrubbed]

Science and technology (S&T) have a pervasive influence over a wide range of issues confronting the nation. Public and private research and development spur scientific and technological advancement. Such advances can drive economic growth, help address national priorities, and improve health and quality of life. The constantly changing nature and ubiquity of science and technology frequently create public policy issues of congressional interest. The federal government supports scientific and technological advancement directly by funding and performing research and development and indirectly by creating and maintaining policies that encourage private sector efforts. Additionally, the federal government establishes and enforces regulatory frameworks governing many aspects of S&T activities. This report briefly outlines an array of science and technology policy issues that may come before the 115th Congress. Given the rapid pace of S&T advancement and its importance in many diverse public policy issues, S&T-related issues not discussed in this report may come before the 115th Congress. The selected issues are grouped into 10 categories: Overarching S&T Policy Issues, Agriculture, Biomedical Research and Development, Defense, Energy, Environment and Natural Resources, Homeland Security, Information Technology, Physical and Material Sciences, and Space. Each of these categories includes concise analysis of multiple policy issues. The material presented in this report should be viewed as illustrative rather than comprehensive. Each section identifies CRS reports, when available, and the appropriate CRS experts to contact for further information and analysis.

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This report tracks and provides an overview of actions taken by the Administration and Congress to provide FY2014 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. It also provides an overview of enacted FY2013 appropriations for agencies and bureaus funded as a part of the annual appropriation for CJS. The FY2013 post-sequestration amounts were provided by the Departments of Commerce and Justice, the science agencies (i.e., the Office of Science and Technology Policy, the National Aeronautics and Space Administration, the National Science Foundation), and each of the respective related agencies. The FY2014-requested appropriations were taken from S.Rept. 113-78 . The amounts recommended by the House Committee on Appropriations were taken from H.Rept. 113-171 and the amounts recommended by the Senate Committee on Appropriations were taken from S.Rept. 113-78 . FY2014-enacted appropriations were taken from the joint explanatory statement to accompany the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), printed in the January 15, 2015, Congressional Record . For FY2014, the Administration requested a total of $63.310 billion for the agencies and bureaus funded as a part of the annual CJS bill. The Administration's request included $8.596 billion for the Department of Commerce, $28.405 billion for the Department of Justice, $25.347 billion for the science agencies, and $962.1 million for the related agencies. On July 17, 2013, the House Committee on Appropriations approved its version of the FY2014 CJS appropriations bill ( H.R. 2787 ). The committee recommended a total of $58.601 billion for the CJS agencies and bureaus. The bill included $7.544 billion for the Department of Commerce, $26.658 billion for the Department of Justice, $23.599 billion for the science agencies, and $800.5 million for the related agencies. On July 18, 2013, the Senate Committee on Appropriations approved S. 1329 , the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2014. The committee recommended $63.586 billion for CJS. The bill included $8.679 billion for the Department of Commerce, $28.503 billion for the Department of Justice, $25.442 billion for the science agencies, and $962.1 million for the related agencies. On January 17, 2014, President Obama signed into law the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ). The act provides a total of $61.623 billion for CJS, of which $8.181 billion is for the Department of Commerce, $27.737 billion is for the Department of Justice, $24.824 billion is for the science agencies, and $881.8 million is for the related agencies. On March 26, 2013, President Obama signed into law the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 , hereinafter "Consolidated and Further Continuing Appropriations Act"). The act provided a total of $60.638 billion for CJS. After rescissions and sequestration, the act provided a total of $57.936 billion for CJS, of which $7.510 billion was for the Department of Commerce, $25.830 billion was for the Department of Justice, $23.769 billion was for the science agencies, and $827.9 million was for the related agencies. Section 3001 of the act provided for a series of rescissions of FY2013 budget authority. Discretionary non-security (as defined at 2 U.S.C. §900(c)(4)(A)) accounts were subject to a 1.877% rescission while discretionary security (as defined at 2 U.S.C. §900(c)(4)(B)) accounts were subject to a 0.1% rescission. Most accounts in the CJS appropriations act were subject to the 1.877% rescission. Only the Foreign Claims Settlement Commission and the International Trade Commission accounts were subject to the 0.1% rescission. Also, per Section 3001, rescissions were applied proportionately to each discretionary account and each item of budget authority and each program, project, or activity (PPA) within each account or item of budget authority (with PPAs being delineated in the act or the explanatory statement published in the March 11 edition of the Congressional Record ). Section 3004 of the act was intended to eliminate any amount by which the new budget authority provided in the act exceeded the FY2013 discretionary spending limits in Section 251(c)(2) of the Balanced Budget and Emergency Deficit Control Act, as amended by the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012. As enacted, this section provided two separate across-the-board rescissions—one for non-security budget authority and one for security budget authority—of 0%, to be applied at the program, project, and activity level. The section required the percentages to be increased if the Office of Management and Budget (OMB) estimated that additional rescissions are needed to avoid exceeding the limits. Subsequent to the enactment of P.L. 113-6 , OMB calculated that additional rescissions of 0.032% of security budget authority, and 0.2% of non-security budget authority, would be required. Only the Foreign Claims Settlement Commission and the International Trade Commission accounts were subject to the 0.032% rescission. The appropriations provided by the Consolidated and Further Continuing Appropriations Act for each CJS account do not reflect any reductions that resulted from the sequestration ordered by President Obama on March 1, 2013, pursuant to the Budget Control Act of 2011 ( P.L. 112-25 ). The Disaster Relief Appropriations Act, 2013 ( P.L. 113-2 , hereinafter "the Disaster Relief Appropriations Act"), included a total of $363.3 million in supplemental appropriations for CJS agencies. Of the $363.3 million appropriated pursuant to the act, $326.0 million was for the National Oceanic and Atmospheric Administration; $10.0 million was for the Federal Bureau of Investigation; $1.0 million was for the Drug Enforcement Administration; $230,000 was for the Bureau of Alcohol, Tobacco, Firearms, and Explosives; $10.0 million was for the Bureau of Prisons; $15.0 million was for the National Aeronautics and Space Administration; and $1.0 million was for the Legal Services Corporation. The FY2013-enancted amounts presented in the tables below reflect these supplemental appropriations. The amounts in this report reflect only new appropriations. Therefore, the amounts do not include any rescissions of unobligated or de-obligated balances that may be counted as offsets to newly enacted appropriations, nor do they include any scorekeeping adjustments, such as the balance on the Crime Victims Fund. Table 1 shows the FY2013-enated appropriations (after sequestration), the Administration's FY2014 request, the House and Senate Appropriations Committees' recommended amounts, and the FY2014-enacted appropriations for the Department of Commerce, the Department of Justice, the science agencies, and the related agencies. Table 14 shows enacted appropriations for these agencies, in detail, for FY2005 through FY2014 . Some issues Congress might have considered while debating FY2014 funding for the Department of Commerce include the following: Whether to have accepted the Administration's proposed $20.1 million increase for the International Trade Administration (ITA) to support the interagency Trade Enforcement Center for the purpose of strengthening U.S. government capacity to monitor and enforce U.S. trade rights under international agreements and other domestic and international trade enforcement authorities. Whether to have provided additional funding for ITA to support the Administration's Asia Rebalance and the U.S. strategy toward Sub-Saharan Africa and enable identification of more export opportunities for U.S. companies, more rapid and timely business counseling, and enhanced commercial diplomacy and advocacy support. Whether to have accepted the Administration's proposal for additional ITA funding to support implementation of the SelectUSA program, which was established in 2011 by presidential Executive Order to encourage, facilitate, and accelerate foreign direct investment in the United States to create jobs and spur economic growth. The progress of the President's Export Control Reform Initiative under the Bureau of Industry and Security (BIS), including oversight of the rebuilding of the control lists and the transfer of items previously controlled as munitions by the Department of State to BIS. Whether to have funded two new initiatives (the Investing in Manufacturing Communities Fund and Regional Export Challenge Grants) that would have been administered by the Economic Development Administration and would have supported private sector job creation through regional innovation clusters focusing on the export of manufactured goods and services. Whether to have funded a new program to assess technologies for sharing radio frequency spectrum under the National Telecommunications and Information Administration. The funding level for the Census Bureau as it seeks to complete data collection for the 2012 economic census, disseminate information from the 2012 census of governments, and continue research and testing in preparation for the 2020 decennial census. Whether to have accepted the Administration's request under the National Oceanic and Atmospheric Administration (NOAA) of $1.978 billion for environmental satellite acquisition, which is a significant portion (36.3%) of the request for NOAA. Some issues Congress might have considered while determining funding levels for DOJ accounts included the following: Does the Bureau of Prisons have the resources it needs to continue to safely confine a growing federal inmate population? Whether to have accepted the Administration's proposal to eliminate funding for several grant programs under the State and Local Law Enforcement Assistance account, including the State Criminal Alien Assistance Program (SCAAP), the Matching Grant Program for Bulletproof Vests, and the Paul Coverdell Forensic Sciences program. Whether to have combined the drug and mental health courts program into a problem solving justice program as proposed by the Administration. How to prioritize funding for juvenile justice programs—both the formula grant programs as well as the competitive grants? Whether to have funded the Administration's request for $150.0 million for a comprehensive school safety program under the Community Oriented Policing Services account. Whether to have accepted the Administration's proposal to set aside 7% of the amount appropriated under the State and Local Law Enforcement Assistance, Juvenile Justice Programs, and Research, Evaluation, and Statistics accounts for tribal criminal justice assistance. Whether to have accepted the Administration's proposal to increase the obligation limit on the Crime Victims Fund in order to provide support to the Vision 21 program. Among the issues facing the science agencies that Congress may have opted to address in the FY2014 appropriations process were the following: Whether the current direction for the U.S. human spaceflight program, established in October 2010 by the National Aeronautics and Space Administration Authorization Act of 2010 ( P.L. 111-267 ), can be implemented successfully in a period of increased budgetary constraint, as well as the potential impact of human spaceflight's funding needs on the availability of funding for other National Aeronautics and Space Administration (NASA) programs, such as science, aeronautics, and education. Whether and how to prioritize research initiatives at the National Science Foundation (NSF). Whether to have continued efforts to double funding at NSF and other targeted accounts as previously proposed by the Administration and authorized by Congress, and if so, at what pace. Whether to have adopted the Administration's proposed government-wide science, technology, engineering, and mathematics (STEM) education program reorganization and consolidation, including proposed changes at NSF, NASA, and the Department of Commerce. Whether to have continued to restrict the Office of Science and Technology Policy (OSTP) from engaging in certain activities with China or any Chinese-owned company by prohibiting, with limited exceptions, the use of appropriated funds for such activities. Some of the issues Congress might have considered while determining the FY2014 funding levels for the related agencies include the following: Whether to have adopted the Administration proposal to eliminate the Legal Service Corporation's restrictions on class action suits and attorneys' fees. Whether to have approved increased funding for U.S. Trade Representative to add resources and hire additional staff for the purpose of enhancing overall trade enforcement capabilities and supporting the Interagency Trade Enforcement Center (ITEC) to identify and address unfair trade practices among foreign trading partners. The Department of Commerce (Commerce Department) originated in 1903 with the establishment of the Department of Commerce and Labor. The separate Commerce Department was established on March 4, 1913. The department's responsibilities are numerous and quite varied; its activities center on five basic missions: (1) promoting the development of U.S. business and increasing foreign trade; (2) improving the nation's technological competitiveness; (3) encouraging economic development; (4) fostering environmental stewardship and assessment; and (5) compiling, analyzing, and disseminating statistical information on the U.S. economy and population. The following agencies within the Commerce Department carry out these missions: International Trade Administration (ITA) seeks to develop the export potential of U.S. firms and improve the trade performance of U.S. industry; Bureau of Industry and Security (BIS) enforces U.S. export laws consistent with national security, foreign policy, and short-supply objectives; Economic Development Administration (EDA) provides grants for economic development projects in economically distressed communities and regions; Minority Business Development Agency (MBDA) seeks to promote private- and public-sector investment in minority businesses; Economics and Statistics Administration (ESA) , excluding the Census Bureau, provides (1) information on the state of the economy through preparation, development, and interpretation of economic data and (2) analytical support to department officials in meeting their policy responsibilities; Census Bureau , a component of ESA, collects, compiles, and publishes a broad range of economic, demographic, and social data; National Telecommunications and Information Administration (NTIA) advises the President on domestic and international communications policy, manages the federal government's use of the radio frequency spectrum, and performs research in telecommunications sciences; United States Patent and Trademark Office (USPTO) examines and approves applications for patents for claimed inventions and registration of trademarks; National Institute of Standards and Technology (NIST) assists industry in developing technology to improve product quality, modernize manufacturing processes, ensure product reliability, and facilitate rapid commercialization of products on the basis of new scientific discoveries; and National Oceanic and Atmospheric Administration (NOAA) provides scientific, technical, and management expertise to (1) promote safe and efficient marine and air navigation; (2) assess the health of coastal and marine resources; (3) monitor and predict the coastal, ocean, and global environments (including weather forecasting); and (4) protect and manage the nation's coastal resources. Table 2 presents the following funding information for the Department of Commerce as a whole and for each of its agencies or bureaus: the amounts provided for FY2013, after sequestration; the Administration's FY2014 request; the amounts recommended by the House and Senate Committees on Appropriations; and the FY2014-enacted appropriation. The International Trade Administration (ITA) provides export promotion services, works to ensure compliance with trade agreements, administers trade remedies such as antidumping and countervailing duties, and provides analytical support for ongoing trade negotiations. ITA's mission is to improve U.S. prosperity by strengthening the competitiveness of U.S. industry, promoting trade and investment, and ensuring compliance with trade laws and agreements. ITA strives to accomplish this through several organizational units. ITA went through a major organizational change in October 2013 in which it consolidated four organizational units into three more functionally aligned units. The new organizational units consist of the following: (1) the Global Markets unit, which assists and advocates for U.S. businesses in international markets to help foster U.S. economic prosperity; (2) the Industry and Analysis unit, which brings together ITA's industry, trade, and economic experts to advance the competitiveness of U.S. industries through the development and execution of international trade and investment policies and export promotion strategies; and (3) the Enforcement and Compliance unit, which is responsible for safeguarding and enhancing the competitiveness of U.S. industries against unfair trade practices through the enforcement of U.S. trade laws and for ensuring compliance with U.S. free trade agreements. The Consolidated and Further Continuing Appropriations Act, 2013, provided $438.5 million for ITA in direct appropriations for FY2013 (after sequestration). The act anticipated the collection of $11.4 million in user fees, raising total FY2013 resources for ITA to $449.9 million. The Administration requested $519.8 million for ITA for FY2014 and anticipated the collection of $9.4 million in user fees, which would have raised available funds to $529.2 million. The House committee-reported bill would have provided $441.6 million in direct appropriations for this account. The Senate Committee on Appropriations recommended $490.6 million for ITA in direct appropriations. The Consolidated Appropriations Act, 2014, provides $460.6 million for ITA in direct appropriations. It anticipates the collection of $9.4 million in user fees, resulting in $470.0 million in total resources for ITA programs. The Bureau of Industry and Security (BIS) administers export controls on dual-use goods and technology through its licensing and enforcement functions. It cooperates with other nations on export control policy and provides assistance to the U.S. business community to comply with U.S. and multilateral export controls. BIS also administers U.S. anti-boycott statutes and is charged with monitoring the U.S. defense industrial base. Authorization for the activities of BIS, the Export Administration Act (50 U.S.C. App. 2401, et seq.), last expired in August 2001. On August 17, 2001, President George W. Bush invoked the authorities granted by the International Economic Emergency Powers Act (50 U.S.C. 1703(b)) to continue in effect the system of controls contained in the act and in the Export Administration Regulations (15 C.F.R., Parts 730-799), and these authorities have been renewed yearly. P.L. 113-6 provided $93.6 million ($99.7 million after rescissions, reduced to $93.6 million after sequestration) for BIS. The President proposed $112.1 million in FY2014 for BIS. The House Committee on Appropriations recommended $94.0 million, and the Senate Committee on Appropriations recommended the President's full proposal of $112.1 million. P.L. 113-76 provides $101.5 million. The Economic Development Administration (EDA) was created pursuant to the enactment of the Public Works and Economic Development Act of 1965, with the objective of fostering growth in economically distressed areas characterized by high levels of unemployment and low per-capita income levels. Federally designated disaster areas and areas affected by military base realignment or closure (BRAC) are also eligible for EDA assistance. EDA provides grants for public works, economic adjustment in case of natural disasters or mass layoffs, technical assistance, planning, and research. The Consolidated and Further Continuing Appropriations Act, 2013, appropriated $218.3 million in total funding for EDA (after sequestration), including $183.4 million in support of EDA programs and activities and $34.8 million for salaries and expenses. The Administration's FY2014 budget request proposed a reduction to what is EDA's most highly funded program, public works grants. The proposed budget would have placed greater emphasis on projects intended to support job creation through regional innovation clusters, including those that would support the export of manufactured goods and services. For FY2014, the Administration requested $320.9 million, including $282.0 million for EDA programs and activities and $38.9 million for salaries and expenses. The specific programs and their requested funding levels for FY2014 included $40.5 million for the Public Works Program; $66.0 million for the Economic Adjustment Assistance Program; $27.0 million for the Partnership Planning Grants Program (the proposed successor to the EDA Planning Program); $12.0 million for Technical Assistance; $1.5 million for Research and Evaluation; and $10.0 million for Trade Adjustment Assistance. The Administration also requested funding for two new initiatives that would have been administered by EDA: $113.0 million for the new Investing in Manufacturing Communities Fund; and $12.0 million for the new Regional Export Challenge Grants. The Administration described both programs as being consistent with the creation of regional innovation strategies authorized under 42 U.S.C. Section 3722 of the America COMPETES Act ( P.L. 111-358 ). H.R. 2787 , as reported by the House Committee on Appropriations, recommended $220.5 million in total appropriations for EDA, including salaries and expenses. A Senate measure, S. 1329 , as reported by the Senate Committee on Appropriations, recommended $276.2 million in total funding for EDA, including salaries and expenses. The bill reported by the Senate committee was $55.7 million more than recommended by the House committee. The additional funds recommended by the Senate committee included significantly higher amounts for Economic Adjustment Assistance and Trade Adjustment Assistance grants than recommended by the House committee. In addition, S. 1329 included $25.0 million for EDA's Regional Innovation Program (RIP), which awards grants and loan guarantees as authorized under the America COMPETES Reauthorization Act of 2010. RIP supports investments in science parks, regional innovation clusters, and the i6 Challenge program. The accompanying committee report ( S.Rept. 113-78 ) included language encouraging EDA to consider funding innovative manufacturing and export programs within this amount. The Consolidated Appropriations Act, 2014, P.L. 113-76 , appropriates $246.5 million for EDA, including $209.5 million for EDA programs and $37.0 million for salaries and expenses. P.L. 113-76 requires that the $15.0 million appropriated for the Innovative Manufacturing Loan Guarantee and the RIP programs is to be administered and awarded in accordance with the requirements of Section 26 and Section 27 of the Stevenson-Wydler Technology Innovation Act (15 U.S.C. 3721 and 3722) rather than EDA's authorizing statute, the Public Works and Economic Development Act (42 U.S.C. 3121, et seq.). The Minority Business Development Agency (MBDA), established by Executive Order 11625 on October 13, 1971, is charged with the lead role in coordinating all of the federal government's minority business programs. As part of its strategic plan, MBDA seeks to develop an industry-focused, data-driven, technical assistance approach to give minority business owners the tools essential for becoming first- or second-tier suppliers to private corporations and the federal government in the new procurement environment. Progress is measured in increased gross receipts, number of employees, and size and scale of firms associated with minority business enterprise. The Consolidated and Further Continuing Appropriations Act, 2013, provided $27.5 million for the MBDA account (after sequestration). For FY2014, the Administration requested $29.3 million in support of MBDA. According to the budget justification document, the proposed MBDA funding level would have assisted in the creation of 5,000 new jobs and $2 billion in contracts and financing. The House Committee on Appropriations recommended $27.0 million for MBDA funding, while the Senate Committee on Appropriations recommended $29.3 million for MBDA activities. The Consolidated Appropriations Act, 2014, appropriates $28.0 million for MBDA activities. The Economics and Statistics Administration (ESA) provides economic data, analysis, and forecasts to government agencies and, when appropriate, to the public. ESA includes the Census Bureau (discussed separately) and the Bureau of Economic Analysis (BEA). ESA has three core missions: to maintain a system of economic data, to interpret and communicate information about the forces at work in the economy, and to support the information and analytical needs of the executive branch. Funding for ESA includes two primary accounts: ESA headquarters and BEA. ESA headquarters staff provide economic research and policy analysis in support of the Secretary of Commerce, as well as oversight of the Census Bureau and BEA. The BEA account funds BEA activities, among which are producing estimates of national gross domestic product and related measures. P.L. 113-6 provided $93.3 million for the Economics and Statistics Administration (after sequestration). The Administration's budget request for ESA in FY2014 was $104.0 million. The House Committee on Appropriations recommended $93.4 million, and the Senate Committee on Appropriations recommended the amount requested. Under P.L. 113-76 , ESA receives $99.0 million for FY2014. The U.S. Constitution requires a population census every 10 years, to serve as the basis for apportioning seats in the House of Representatives. Decennial census data also are used for within-state redistricting and in certain formulas that determine the annual distribution of more than $450 billion in federal funds to states and localities. The Census Bureau, established as a permanent office on March 6, 1902, conducts the decennial census under Title 13 of the U.S. Code , which also authorizes the Bureau to collect and compile a wide variety of other demographic, economic, housing, and governmental data. P.L. 113-6 provided $840.6 million for the Census Bureau for FY2013 (after sequestration), including $238.2 million in the salaries and expenses account and $620.4 million in the periodic censuses and programs account. In FY2014, the Bureau expects, among other activities, to complete data collection for the 2012 economic census, disseminate information from the 2012 census of governments, and continue research and testing in preparation for the 2020 decennial census. The Administration's FY2014 budget request for the Bureau was $982.5 million. Of this amount, $256.0 million was for salaries and expenses, and $726.4 million was for periodic censuses and programs. The House Committee on Appropriations recommended $844.7 million for the Bureau in FY2014, with $238.9 million for salaries and expenses and $605.9 million for periodic programs. Of the $605.9 million, $390.9 million was to be used for 2020 census preparation. In the view of the ranking Members of the committee and the Subcommittee on Commerce, Justice, Science, and Related Agencies, this amount, "a reduction of $95.7 million (20%) below the request," threatened "research efforts that would allow the 2020 Census to be conducted at a lower cost." The Senate Committee on Appropriations' FY2014 recommendation for the Bureau was $972.5 million, of which $256.0 million was for salaries and expenses and $716.4 million was for periodic censuses and programs. The committee directed "the Bureau to continue to use the WCF only as a repository for reimbursable funds from other agencies and to obligate and execute that funding expeditiously." The committee further directed the Bureau to provide, no later than 120 days after enactment of the act, an updated report on "efforts to evaluate" American Community Survey (ACS) questions "and the steps being taken by the ombudsman position" established by the Bureau in FY2013 "to ensure that the ACS is conducted as efficiently and unobtrusively as possible." H.R. 2787 and S. 1329 contained identical language stating that $1.0 million of the Census Bureau's appropriation would "be transferred to the 'Office of Inspector General' account for activities associated with carrying out investigations and audits related to the Bureau.... " P.L. 113-76 provides $945.0 million for the Bureau in FY2014. The total includes $252.0 million for salaries and expenses and $693.0 million for periodic censuses and programs. The National Telecommunications and Information Administration (NTIA) is the executive branch's principal advisory office on domestic and international telecommunications and information technology policies. Its mandate is to provide greater access for all Americans to telecommunications services, support U.S. attempts to open foreign markets, advise on international telecommunications negotiations, and fund grants for new technologies and their applications. Its role in federal spectrum management includes acting as a facilitator and mediator in negotiations among the various federal agencies regarding usage, priority access, causes of interference, and other radio spectrum questions. In recent years, one of the responsibilities of the NTIA has been to oversee the transfer of some radio frequencies from the federal domain to the commercial domain. Many of these frequencies have subsequently been auctioned to the commercial sector and the proceeds paid into the U.S. Treasury. The NTIA administers some grant programs created by Congress, including the Broadband Technology Opportunities Program (BTOP). BTOP grant programs are in the final stages of completion. The NTIA is managing a $135 million grant program to help states plan for participation in a new, nationwide public safety broadband network, as required by the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). To deploy the new network, the act established the First Responder Network Authority, or FirstNet, as an independent agency within the NTIA and assigned the agency various responsibilities to support FirstNet. FirstNet is funded through the Public Safety Trust Fund, established by Congress to receive revenues from auctions of certain spectrum licenses. FirstNet received an advance of nearly $2 billion from the U.S. Treasury against expected proceeds of sales of spectrum licenses. Another $5 billion in funding is expected from the Public Safety Trust Fund as auction revenues are deposited in the account. The NTIA will also be responsible for collecting auction proceeds and making distributions from the Public Safety Trust Fund until the authorization expires at the end of FY2022. P.L. 113-6 provided $42.7 million for the NTIA for FY2013 (after sequestration). The President's budget request for FY2014 was $52.1 million for salaries and expenses, which included $7.5 million for a new program to assess technologies for sharing radio frequency spectrum. The program would encompass pilot projects over a period of two years in 10 major metropolitan areas. The FY2014 request for broadband grant program oversight was for $24.7 million, roughly 40% of the total budget request. The House Committee on Appropriations recommended an appropriation of $42.9 million for FY2014. The Senate Committee on Appropriations recommended an appropriation of $52.1 million, the amount requested by the President. The Consolidated Appropriations Act provides $46.0 million to the NTIA for salaries and expenses and enacts a rescission of $8.5 million for unexpended grants from the Public Telecommunications Facilities Program (PTFP). The PTFP was last funded in FY2010 with an appropriation of $20.0 million, half the NTIA's enacted appropriation for that fiscal year. The U.S. Patent and Trademark Office (USPTO) examines and approves applications for patents on claimed inventions and administers the registration of trademarks. It also helps other federal departments and agencies protect American intellectual property in the international marketplace. The USPTO is funded by user fees paid by customers that are designated as "offsetting collections" and subject to spending limits established by Congress. For FY2013, P.L. 113-6 provided the USPTO with new budget authority of $2.784 billion (after sequestration). Before sequestration, the enacted budget authority for the USPTO was $2.931 billion (which includes a $2.0 million transfer to the Office of the Inspector General); offsetting fees (not subject to sequestration) were $2.933 billion, so that the offsetting fees exceeded the new budget authority. The President's FY2014 budget request included $3.071 billion in budget authority for the USPTO, the full amount of fees expected to be collected (as determined by the Administration). All fees collected by the USPTO are to be used only for the USPTO, per P.L. 112-29 . Both the House Committee on Appropriations' report to accompany H.R. 2787 and the Senate Committee on Appropriations' report to accompany S. 1329 recommended providing the USPTO with the budget authority to spend $3.024 billion, the "full amount of fiscal year 2014 fee collections estimated by the Congressional Budget Office." This amount was 1.5% below the figure in the President's request. The Consolidated Appropriations Act, 2014, provides $3.024 billion in budget authority for the USPTO in FY2014 for user fee collections. The National Institute of Standards and Technology (NIST) is a laboratory of the Department of Commerce with a mandate to increase the competitiveness of U.S. companies through appropriate support for industrial development of pre-competitive, generic technologies and the diffusion of government-developed technological advances to users in all segments of the American economy. NIST research also provides the measurement, calibration, and quality assurance techniques that underpin U.S. commerce, technological progress, improved product reliability, manufacturing processes, and public safety. P.L. 113-6 appropriated $769.3 million in FY2013 funding for NIST (after sequestration). Of this amount, $579.8 million was for in-house research under the Scientific and Technical Research and Services (STRS) account; $120.0 million was for the Manufacturing Extension Partnership (MEP) program; $13.5 million was for the Advanced Manufacturing Technology Consortia (AMTech); and $56.0 million was for the Construction of Research Facilities (CRF) account. The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), provides $850.0 million for NIST in FY2014. This figure includes $651.0 million for the STRS account, $128.0 million for the MEP program, $15.0 million for AmTech, and $56.0 million for the CRF account. The funding provided for the STRS account includes increases for advanced manufacturing initiatives at the NIST labs ($30.0 million), cyber security research ($5.0 million), and disaster resilience research ($1.0 million). The STRS funding also includes $15.0 million for the establishment and operation of two centers, one focused on advanced manufacturing competitiveness and commercialization technology in carbon nanomanufacturing and the other focused on forensic measurement science, technology, and standards. The President's FY2014 budget request would have provided $928.3 million for NIST. The request included $693.7 million for the STRS account, $153.1 million for the MEP program, $21.4 million for AMTech, and $60.0 million for the CRF account. In addition to the appropriations included in the budget proposal that were to be addressed through the annual appropriations process, the Administration included two new programs that were to be funded through mandatory appropriations (spending that is typically "provided in permanent or multi-year appropriations contained in the authorizing law, and therefore, the funding becomes available automatically each year, without legislative action by Congress"). According to the budget request, NIST was to receive $100.0 million generated by the proceeds of the spectrum auction to "conduct public safety research and development" as part of the Wireless Innovation (WIN) Fund (under provisions of the Middle Class Tax Relief and Job Creation Act of 2012). In addition, the President proposed $1.000 billion for the establishment of a National Network for Manufacturing Innovation. The House Committee on Appropriations' report to accompany H.R. 2787 recommended funding NIST at $784.0 million, 15.5% below the budget request. The $609.0 million provided for the STRS account was 12.2% less than the Administration's proposal, while the $120.0 million for MEP was 21.6% below the President's figure. No funding was provided for AMTech. The $55.0 million for construction was 8.3% less than the budget request. The Senate Committee on Appropriations' report to accompany S. 1329 included $947.5 million for NIST, 2.1% more than proposed by the President. Funding for the STRS account would have amounted to $703.0 million, 1.3% higher than the budget request. Support for MEP would have totaled $153.1 million, the same as the Administration's proposal; however, the $31.4 million for AMTech represented a 46.7% increase over the President's recommendation. The $60.0 million for the CRF account was identical to the budget request. The National Oceanic and Atmospheric Administration (NOAA) conducts scientific research in areas such as ecosystems, climate, global climate change, weather, and oceans; supplies information on the oceans and atmosphere; and manages coastal and marine resources. NOAA was created in 1970 by Reorganization Plan No. 4. The reorganization plan was designed to unify a number of the nation's environmental activities and to provide a systematic approach for monitoring, analyzing, and protecting the environment. NOAA's current administrative structure has evolved into five line offices, which include the National Environmental Satellite, Data, and Information Service (NESDIS); the National Marine Fisheries Service (NMFS); the National Ocean Service (NOS); the National Weather Service (NWS); and the Office of Oceanic and Atmospheric Research (OAR). In addition to NOAA's five line offices, Program Support (PS), a cross-cutting budget activity, includes the NOAA Education Program, Corporate Services, Facilities, and the Office of Marine and Aviation Operations (OMAO). The FY2013-enacted appropriation for NOAA (after sequestration) was $5.051 billion. NOAA's budget is divided into two main accounts, Operations, Research, and Facilities (ORF) and Procurement, Acquisition, and Construction (PAC). P.L. 113-6 included (after sequestration) $2.891 billion for ORF, $1.794 billion for PAC, $60.4 million for the Pacific Coastal Salmon Recovery Fund, $324,000 for the Fishermen's Contingency Fund, and negative $4.0 million for the Fisheries Finance Program account. In addition, the Disaster Relief Appropriations Act, 2013 ( P.L. 113-2 ), included $309.7 million for NOAA (after sequestration). For FY2014, the Administration requested a total of $5.440 billion for NOAA. The Administration proposed funding ORF at $3.278 billion, PAC at $2.118 billion, the Pacific Coastal Salmon Recovery Fund at $50.0 million, the Fishermen's Contingency Fund at $350,000, and the Fisheries Finance Program at negative $6.0 million. The House Committee on Appropriations recommended a total of $4.916 billion for NOAA. The House committee-reported bill would have funded ORF at $2.907 billion, PAC at $1.979 billion, the Pacific Coastal Salmon Recovery Fund at $35.0 million, the Fishermen's Contingency Fund at $350,000, and the Fisheries Finance Program at negative $6.0 million. The Senate Committee on Appropriations recommended a total of $5.590 billion for NOAA. The Senate committee-reported bill would have funded ORF at $3.296 billion, PAC at $2.084 billion, the Pacific Coastal Salmon Recovery Fund at $65.0 million, the Fishermen's Contingency Fund at $350,000, and the Fisheries Finance Program at negative $6.0 million. The Senate bill also would have provided $150.0 million for a new Fisheries Disaster Mitigation Fund. The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), provides a total of $5.315 billion for NOAA. It funds ORF at $3.157 billion, PAC at $2.023 billion, the Pacific Coastal Salmon Recovery Fund at $65.0 million, the Fishermen's Contingency Fund at $350,000, and the Fisheries Finance Program at negative $6.0 million. P.L. 113-76 also provides $75.0 million for Fisheries Disaster Assistance. Funding will be used for fishery disasters declared by the Secretary of Commerce in calendar years 2012 and 2013. The Administration's FY2014 request for NESDIS satellite systems acquisition was $1.976 billion, which was 93.3% of the Administration's request for the entire PAC account and 36.3% of the total request for NOAA. The Senate Committee on Appropriations recommended $1.943 billion for NESDIS systems acquisition funding, while the House Committee on Appropriations recommended $1.855 billion. P.L. 113-76 provides $1.895 billion for NESDIS systems acquisition. Established by an act of 1870 with the Attorney General at its head, DOJ provides counsel for the government in federal cases and protects citizens through law enforcement. It represents the federal government in all proceedings, civil and criminal, before the Supreme Court. In legal matters, generally, the department provides legal advice and opinions, upon request, to the President and executive branch department heads. The major functions of DOJ agencies and offices are described below. United States Attorneys prosecute criminal offenses against the United States; represent the federal government in civil actions; and initiate proceedings for the collection of fines, penalties, and forfeitures owed to the United States. United States Marshals Service (USMS) provides security for the federal judiciary, protects witnesses, executes warrants and court orders, manages seized assets, detains and transports unsentenced prisoners, and apprehends fugitives. Federal Bureau of Investigation (FBI) investigates violations of federal criminal law; helps protect the United States against terrorism and hostile intelligence efforts; provides assistance to other federal, state, and local law enforcement agencies; and shares jurisdiction with Drug Enforcement Administration over federal drug violations. Drug Enforcement Administration (DEA) investigates federal drug law violations; coordinates its efforts with state, local, and other federal law enforcement agencies; develops and maintains drug intelligence systems; regulates legitimate controlled substances activities; and conducts joint intelligence-gathering activities with foreign governments. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces federal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. It was transferred from the Department of the Treasury to DOJ by the Homeland Security Act of 2002 ( P.L. 107-296 ). Federal Prison System ( Bureau of Prisons, BOP ) provides for the custody and care of the federal prison population, the maintenance of prison-related facilities, and the boarding of sentenced federal prisoners incarcerated in state and local institutions. Office on Violence Against Women (OVW) coordinates legislative and other initiatives relating to violence against women and administers grant programs to help prevent, detect, and stop violence against women, including domestic violence, sexual assault, and stalking. Office of Justice Programs (OJP) manages and coordinates the activities of the Bureau of Justice Assistance, Bureau of Justice Statistics, National Institute of Justice, Office of Juvenile Justice and Delinquency Prevention, and the Office of Victims of Crime. Community Oriented Policing Services (COPS) advances the practice of community policing by awarding grants to law enforcement agencies to hire and train community policing professionals, acquire and deploy crime-fighting technologies, and develop and test innovative policing strategies. Most crime control has traditionally been a state and local responsibility. With the passage of the Crime Control Act of 1968 (P.L. 90-351), however, the federal role in the administration of criminal justice has increased incrementally. Since 1984, Congress has approved five major omnibus crime control bills, designating new federal crimes, penalties, and additional law enforcement assistance programs for state and local governments. The FY2013-enacted appropriation (after sequestration) for the DOJ was $25.830 billion. This included $25.808 billion the DOJ received under the Consolidated and Further Continuing Appropriations Act (after sequestration) and $21.3 million in supplemental appropriations under the Disaster Relief Appropriations Act. The Administration requested a total of $28.405 billion for DOJ for FY2014 (see Table 4 ). The House committee-reported bill included a total of $26.658 billion for the DOJ while the Senate committee-reported bill included $28.503 billion. P.L. 113-76 includes $27.737 billion for the DOJ. For FY2014, Congress funded all of the DOJ's law enforcement agencies (the USMS, FBI, DEA, and ATF) at a rate below the Administration's request. In addition, the FY2014 appropriation for the U.S. Attorneys Office and the federal prison system were below the Administration's request. The General Administration account provides funds for salaries and expenses for the Attorney General's office, the Inspector General's office, and other programs designed to ensure that the collaborative efforts of DOJ agencies are coordinated to help represent the government and fight crime as efficiently as possible. For FY2013, the General Administration account received $503.3 million, after sequestration. The Administration's FY2014 request included $563.0 million for General Administration. The House Committee on Appropriations recommended nearly $514.3 million for this account. The Senate committee-reported bill would have provided $567.0 million for General Administration. P.L. 113-76 includes $533.2 million for the General Administration account. The General Administration account includes funding for Salaries and Expenses for DOJ administration as well as for Justice Information Sharing Technology. Prior to the National Drug Intelligence Center's (NDIC's) closure, it was funded through the General Administration account. In addition, this account previously funded Law Enforcement Wireless Communications before funding for related activities was shifted to the FBI. After sequestration, General Administration received $135.7 million for FY2013. The Administration's FY2014 request included almost $152.1 million for these activities. The House committee-reported bill would have provided $129.7 million for General Administration. The Senate Committee on Appropriations recommended nearly $152.1 million for this account. P.L. 113-76 includes $135.8 million for General Administration. Administrative Review and Appeals (ARA) includes the Executive Office of Immigration Review (EOIR) and the Office of the Pardon Attorney (OPA). The Attorney General is responsible for the review and adjudication of immigration cases in coordination with the Department of Homeland Security's (DHS's) efforts to secure the nation's borders. The EOIR handles these matters, and the OPA receives and reviews petitions for executive clemency. The FY2013 appropriation for Administrative Review and Appeals was 287.9 million (after sequestration). The Administration's FY2014 request included $329.1 million for this account. The House Committee on Appropriations recommended $303.0 million for Administrative Review and Appeals. The Senate committee-reported bill would have provided $329.1 million for this account. The Consolidated Appropriations Act, 2014 provides $311.0 million for Administrative Review and Appeals. The Office of the Inspector General (OIG) is responsible for detecting and deterring waste, fraud, and abuse involving DOJ programs and personnel; promoting economy and efficiency in DOJ operations; and investigating allegations of departmental misconduct. For FY2013, the OIG's appropriation was $80.0 million, after sequestration. The Administration's FY2014 request included $85.8 million for OIG activities. The House Committee on Appropriations recommended $81.5 million for this account. The Senate committee-reported bill would have provided $85.8 million for OIG activities. The Consolidated Appropriations Act, 2014 provides $86.4 million for the OIG. The U.S. Parole Commission adjudicates parole requests for prisoners who are serving felony sentences under federal and District of Columbia code violations. The Parole Commission received a total of $11.9 million for FY2013 (after sequestration). The Administration's FY2014 request for the commission was $13.0 million. The House Committee on Appropriations recommended $12.0 million for the commission for FY2014 while the Senate Committee on Appropriations recommended $13.0 million. The commission's FY2014-enacted appropriation is $12.6 million. The Legal Activities account includes several subaccounts: general legal activities, U.S. Attorneys, and other legal activities. For FY2013, Congress provided, after sequestration, approximately $2.990 billion for Legal Activities. The Administration's FY2014 request included nearly $3.282 billion for this account. The House committee-reported bill would have provided $3.077 billion for Legal Activities. The Senate Committee on Appropriations recommended $3.284 billion for this account. P.L. 113-76 includes nearly $3.181 billion for Legal Activities. The General Legal Activities account funds the Solicitor General's supervision of the department's conduct in proceedings before the Supreme Court. It also funds several departmental divisions (tax, criminal, civil, environment and natural resources, legal counsel, civil rights, INTERPOL, and dispute resolution). The General Legal Activities account received $819.3 million for FY2013 (after sequestration). The Administration requested $902.6 million for this account for FY2014. The House Committee on Appropriations recommended $822.2 million for General Legal Activities. The Senate committee-reported bill would have provided $905.6 million for this account. P.L. 113-76 includes $867.0 million for General Legal Activities. The U.S. Attorneys enforce federal laws through prosecution of criminal cases and represent the federal government in civil actions in all of the 94 federal judicial districts. For FY2013, Congress appropriated $1.830 billion (after sequestration) for the U.S. Attorneys. For FY2014, the Administration's request included $2.008 billion. The FY2014 request included an increase of $26.5 million to address a rise in financial and mortgage fraud cases. While the House-reported bill included $1.887 billion for the U.S. Attorneys, the Senate-reported bill included the same amount as requested by the Administration. Under P.L. 113-76 , for FY2014, Congress has appropriated $1.944 billion for the U.S. Attorneys, or $63.7 million less than the Administration's request. In the joint explanatory statement accompanying the act, Congress has directed the U.S. Attorneys to prosecute financial and mortgage fraud and sexual exploitation of children cases at a level of effort not less than the FY2013 level. For FY2014, Congress has also directed the U.S. Attorneys to report to the House and Senate Committee on Appropriations on at least a semi-annual basis on their work in support of human trafficking task forces. Other Legal Activities includes the Antitrust Division, the Vaccine Injury Compensation Trust Fund, the U.S. Trustee System Fund (which is responsible for maintaining the integrity of the U.S. bankruptcy system by, among other things, prosecuting criminal bankruptcy violations), the Foreign Claims Settlement Commission, the Fees and Expenses of Witnesses, the Community Relations Service, and the Assets Forfeiture Fund. After sequestration, the Other Legal Activities accounts received $340.0 million for FY2013. The Administration's FY2014 request included almost $370.9 million for these accounts. The House Committee on Appropriations recommended $367.9 million for Other Legal Activities. The Senate committee-reported bill would have provided nearly $370.9 million for these accounts. P.L. 113-76 includes $369.8 million for Other Legal Activities. The U.S. Marshals Service (USMS) is responsible for the protection of the federal judicial process, including protecting judges, attorneys, witnesses, and jurors. In addition, the USMS provides physical security in courthouses, safeguards witnesses, transports prisoners from court proceedings, apprehends fugitives, executes warrants and court orders, and seizes forfeited property. Under the Consolidated and Further Continuing Appropriations Act, Congress eliminated funding for the Office of the Federal Detention Trustee account and instead provided funding for a Federal Prisoner Detention account under the USMS. Funding under this account will be used to cover the costs associated with the care of federal detainees. For FY2013, Congress appropriated a total of $2.656 billion for the USMS (after sequestration), which included $1.112 billion for its Salaries and Expenses (S&E) account, $9.8 million for its Construction account, and $1.534 billion for the Federal Prisoner Detention account. The Administration requested $2.850 billion for the USMS for FY2014, which included $1.204 billion for the S&E account, $10.0 million for the Construction account, and $1.636 billion for the Federal Prisoner Detention account. The House Committee on Appropriations recommended a total of $2.685 billion for the USMS, which includes $1.155 billion for the S&E account and $1.520 billion for the Federal Prisoner Detention account. The Senate Committee on Appropriations recommended a total of $2.857 billion for the USMS for FY2014, which includes $1.212 billion for the S&E account and $1.636 billion for the Federal Prisoner Detention account. For FY2014, Congress appropriated $2.728 billion for the USMS, which includes $1.185 billion for the Marshals' S&E account and $1.533 billion for the Federal Prisoner Detention account. The National Security Division (NSD) coordinates DOJ's national security and terrorism missions through law enforcement investigations and prosecutions. The NSD was established in DOJ in response to the recommendations of the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction (WMD Commission), and authorized by Congress on March 9, 2006, in the USA PATRIOT Improvement and Reauthorization Act of 2005. Under the NSD, the DOJ resources of the Office of Intelligence Policy and Review and the Criminal Division's Counterterrorism and Counterespionage Sections were consolidated to coordinate all intelligence-related resources and to ensure that criminal intelligence information is shared, as appropriate. For FY2013, Congress appropriated, after sequestration, $83.8 million for the NSD. For FY2014, the Administration requested $96.2 million for the NSD. While the House-reported bill would have provided $91.8 million, the Senate-reported bill would have provided the same amount as requested by the Administration. For FY2014, Congress has appropriated $91.8 million for the NSD, the same amount included in the House-reported bill, but $4.4 million less than the Administration's request. The Interagency Law Enforcement account reimburses departmental agencies for their participation in the Organized Crime Drug Enforcement Task Force (OCDETF) program. Organized into nine regional task forces, this program combines the expertise of federal agencies with the efforts of state and local law enforcement to disrupt and dismantle major narcotics-trafficking and money-laundering organizations. From DOJ, the federal agencies that participate in OCDETF are the DEA; the FBI; the ATF; the USMS; the Tax and Criminal Divisions of DOJ; and the U.S. Attorneys. From the Department of Homeland Security, Immigration and Customs Enforcement and the U.S. Coast Guard participate in OCDETF. In addition, from the Department of the Treasury, the Internal Revenue Service and Treasury Office of Enforcement also participate in OCDETF. Moreover, state and local law enforcement agencies participate in approximately 90% of all OCDETF investigations. The FY2013 appropriation for the Interagency Law Enforcement account was $484.4 million (after sequestration). For FY2014, the Administration requested $523.0 million for this account. The House Committee on Appropriations recommended $486.0 million for the Interagency Law Enforcement. The Senate committee-reported bill would have provided $523.0 million for this account. P.L. 113-76 includes $514.0 million for the OCDETF program. The FBI is the lead federal investigative agency charged with defending the country against foreign terrorist and intelligence threats; enforcing federal laws; and providing leadership and criminal justice services to federal, state, municipal, tribal, and territorial law enforcement agencies and partners. Since the September 11, 2001 (9/11), terrorist attacks, the FBI has reorganized and reprioritized its efforts to focus on preventing terrorism and related criminal activities. From FY2001 through FY2012, Congress has more than doubled direct appropriations for the FBI from $3.32 billion to $8.118 billion, or a 144.5% increase. For FY2013, Congress appropriated $7.559 billion for the FBI (after sequestration). This amount includes a supplemental appropriation for disaster relief the FBI received under P.L. 113-2 . For FY2014, the Administration's request included $8.443 billion: this amount included $8.362 billion for FBI salaries and expenses and $81.0 million for construction. The amount for salaries and expenses included the following increases: $86.6 million for next generation cyber initiative; $100.0 million for the National Instant Criminal Background Check System (NICS); $7.4 million to support the FBI Biometric Center of Excellence and the Department of Defense Biometrics Fusion Center; $6.0 million to improve surveillance requirements; and $15.0 million to bolster financial and mortgage fraud crimes. The requested $100 million increase for NICS anticipated that Congress will pass legislation to require background checks for intrastate, private firearms transfers, as proposed by the President under his gun violence reduction plan. While the Senate considered such legislation, a final vote has not been taken on this legislation. And, to date, it has not been passed. The House-reported bill included $8.122 billion for the FBI; the Senate-reported bill, $8.473 billion. Under P.L. 113-76 , for FY2014, Congress has appropriated $8.343 billion for the FBI, or $99.4 million less than the Administration's request. This amount includes $8.246 billion for salaries and expenses, of which $4.9 billion is allocated for counter-intelligence and national security programs. It also includes $97.5 million for construction In the joint explanatory statement accompanying the act, Congress has directed to the FBI to sustain its FY2013 levels of effort with the amount appropriated for FY2014 in the following areas: (1) cybercrime, (2) anti-gang efforts, (3) mortgage and other financial fraud, and (4) child exploitation. Congress has also noted that the FY2014 appropriation included $30.0 million to continue FBI efforts to counter improvised explosive devices and $60 million to expand the capacity of NICS to meet the rising volume of gun-related background checks. Congress has further directed the FBI to meet the level of funding and effort as envisioned in the Senate report language (and the FY2014 request) to improve surveillance capabilities (a $6 million increase over FY2013). Congress has the adopted Senate report language that addressed FBI headquarters consolidation. And, Congress has called on FBI to report back to the House and Senate Committees on Appropriations on its efforts to (1) thwart human trafficking, (2) counter insider threats, (3) liaison with other law enforcement agencies, (4) implement 9/11 Commission recommendations, and (5) assess potential threats posed by in-flight use of mobile phones. The Drug Enforcement Administration (DEA) is the only single-mission federal agency tasked with enforcing the nation's controlled substance laws in order to reduce the availability and abuse of illicit drugs and the diversion of licit drugs for illicit purposes. DEA's enforcement efforts include the disruption and dismantling of drug trafficking and money laundering organizations through drug interdiction and seizures of illicit revenues and assets derived from these organizations. DEA continues to face evolving challenges in limiting the supply of illicit drugs as well as reducing drug trafficking across the Southwest border with Mexico into the United States. DEA plays a key role in the Administration's Southwest Border Initiative to counter drug-related border violence, focusing on the convergent threats of illegal drugs, drug-related violence, and terrorism in the region. DEA also has an active role in the Administration's Prescription Drug Abuse Prevention Plan, targeting improper prescribing practices and promoting proper disposal of unused prescription drugs. For FY2013, the DEA received a total of $1.907 billion (after sequestration). This amount includes supplemental disaster funding the DEA received under P.L. 113-2 . The President's FY2014 budget request for the DEA included $2.068 billion. The House Committee on Appropriations recommended $1.970 billion for the DEA account, while the Senate Committee on Appropriations recommended $2.068 billion. The Consolidated Appropriations Act, 2014 provides $2.018 billion for the DEA. The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. ATF works independently and through partnerships with industry groups; international, state, and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. From FY2001 through FY2012, Congress has increased the direct appropriation for ATF, from $771.0 million to $1.152 billion, a 49.4% increase. For FY2013, Congress appropriated $1.072 billion for ATF (after sequestration), which includes supplemental funding the ATF received under P.L. 113-2 . For FY2014, the Administration's request included $1.23 billion for ATF. The FY2013 request included $51.1 million to improve the capabilities of the National Tracing Center (NTC), and $22.0 million to upgrade National Integrated Ballistics Information Network (NIBIN). While the House-reported bill would have provided ATF with $1.142 billion, the Senate-reported bill would have matched the Administration's request. As part of P.L. 113-76 , for FY2014, Congress has appropriated $1.179 billion for ATF, or $50.5 million less than the Administration's request. In the joint explanatory statement accompanying the act, Congress has directed ATF to improve both its enforcement and regulatory efforts, and upgrade NIBIN, with the amount appropriated for FY2014. In addition, Congress has directed ATF to report back to both the House and Senate Committees on Appropriations within 60 days of enactment (March 18, 2014) on its funding allocations for violent crime reduction, regulatory efforts, firearms tracing, and ballistic imaging. Also, the Administration requested the elimination of two long-standing provisos, in the ATF salaries and expenses appropriations language, that prohibit ATF from altering the regulatory definition of "curios and relics," and requiring federally licensed gun dealers to conduct physical inventories. Under P.L. 113-6 , Congress included futurity language (in the current fiscal year and any fiscal year thereafter) in both of these provisions that appears to be intended to make these provisos permanent law. Neither the House- nor Senate-reported bill addresses either of these provisions, nor were they addressed by Congress in P.L. 113-76 . The House-reported bill, however, included additional "futurity language" (in the current fiscal year and any fiscal year thereafter) in two other standalone provisions, which also appears to be intended to make these provisions permanent law: Section 517 would address the export of certain firearms parts and accessories to Canada, and Section 518 would address the importation of "curios or relics" firearms, parts, or ammunition. As in years past, the Senate-reported bill included similar provisions, but they did not include "futurity language." In P.L. 113-76 , Congress has included the Senate language and omitted the House futurity language (in the current fiscal year and any fiscal year thereafter). Also, in response to a controversial Southwest border gun trafficking investigation conducted by ATF, known as Fast and Furious, Section 216 of both bills would have prohibited any federal agent from facilitating the transfer of an operable firearm to any individual associated with a drug cartel, unless that firearm were to be continuously monitored or under the federal agent's control at all times. Congress has included this provision in P.L. 113-76 . The Bureau of Prisons (BOP) was established in 1930 to house federal inmates, to professionalize the prison service, and to ensure consistent and centralized administration of the federal prison system. The mission of the BOP is to protect society by confining offenders in prisons and community-based facilities that are safe, humane, cost-efficient, and appropriately secure, and that provide work and other self-improvement opportunities for inmates so that they can become productive citizens after they are released. The BOP currently operates 119 correctional facilities across the country. The BOP also contracts with Residential Re-entry Centers (RRCs) (i.e., halfway houses) to provide assistance to inmates nearing release. RRCs provide inmates with a structured and supervised environment along with employment counseling, job placement services, financial management assistance, and other programs and services. Congress funds the BOP's operations through two accounts under the Federal Prison System heading: Salaries and Expenses (S&E) and Buildings and Facilities (B&F). The S&E account (i.e., the operating budget) provides for the custody and care of federal inmates and for the daily maintenance and operations of correctional facilities, regional offices, and BOP's central office in Washington, DC. It also provides funding for the incarceration of federal inmates in state, local, and private facilities. The B&F account (i.e., the capital budget) provides funding for the construction of new facilities and the modernization, repair, and expansion of existing facilities. In addition to appropriations for the S&E and B&F accounts, Congress usually places a cap on the amount of revenue generated by the Federal Prison Industries (FPI) that can be used for administrative expenses in the annual CJS appropriations bill. Although Congress does not appropriate funding for the administrative expenses of FPI, the administrative expenses cap is scored as enacted budget authority. For FY2013, the BOP received a total of $6.447 billion (after sequestration), which includes disaster supplemental funding under P.L. 113-2 . The Administration requested $6.939 billion for the BOP for FY2014, of which $6.831 billion is for the S&E account and $105.2 million is for the B&F account. For FY2014 the Administration requested $97.1 million under the BOP's S&E account to staff and open three prisons (Thomson, IL; Hazelton, WV; and Yazoo City, MS) and $43.0 million to expand residential drug treatment, prisoner re-entry, and rehabilitative programs. The House Committee on Appropriations recommended $6.673 billion for the BOP, which includes $6.580 billion for the S&E account and $90.0 million for the B&F account. The Senate Committee on Appropriations recommended a total of $6.939 billion for the BOP, which included $6.831 billion for the S&E account and $105.2 million for the B&F account. The Senate committee-reported bill would have fully funded the Administration's request to staff and open new prisons and expand residential drug treatment, prisoner re-entry, and rehabilitative programs. The Consolidated Appropriations Act, 2014 provides $6.862 billion for the BOP, which includes $6.769 billion for the BOP's S&E account and $90.0 million for the B&F account. The joint explanatory statement to accompany the act directed the BOP to submit a plan to address prison population growth using currently authorized programs and policies. Congress also directs the BOP to continue efforts, within the funding provided, to expand prisoner reentry and drug abuse treatment programs. A recurring issue is whether the BOP has adequate resources, both in terms of personnel and infrastructure, to properly manage the burgeoning federal prison population. Prison population growth and prison crowding continue to be a major concern for the BOP. The number of inmates held in BOP facilities grew from 125,560 in FY2000 to 176,849 in FY2014. During that same time period, prison crowding grew from 32% over rated capacity to 36% over rated capacity, even though the number of facilities operated by BOP increased from 97 to 119. The BOP estimates that by FY2018 the federal prison system will be operating at 41% over rated capacity. The growing federal prison population has not only resulted in more crowded prisons, but it has also strained the BOP's ability to properly manage and care for federal inmates. The BOP reports that the staff-to-inmate ratio has increased from 3.57 to 1 in FY1997 to 4.84 to 1 in FY2012. As a point of comparison, in FY2009 the five states with the highest prison populations had an average inmate-to-staff ratio of 3.1 to 1. The growing federal prison population has also required the BOP to dedicate more resources to caring (e.g., providing health care, food, and clothing) and providing programming (e.g., substance abuse treatment, educational programming, and work/vocational opportunities) for inmates. In addition, the Second Chance Act of 2007 ( P.L. 110-199 ) required BOP to develop comprehensive reentry planning for federal inmates. The Office on Violence Against Women (OVW) was created to administer programs created under the Violence Against Women Act (VAWA) of 1994 and subsequent legislation. These programs provide financial and technical assistance to communities around the country to facilitate the creation of programs, policies, and practices designed to improve criminal justice responses related to domestic violence, dating violence, sexual assault, and stalking. The FY2013 appropriation for the OVW, after sequestration, was $387.9 million. The President's FY2014 budget request for OVW included $412.5 million for OVW. The House committee-reported bill would have provided $413.0 million for this account, and the Senate Committee on Appropriations would have provided $417.0 million for the OVW account. The Consolidated Appropriations Act, 2014 provides $417.0 million for OVW. The Office of Justice Programs (OJP) manages and coordinates the National Institute of Justice, Bureau of Justice Statistics, Office of Juvenile Justice and Delinquency Prevention, Office of Victims of Crimes, Bureau of Justice Assistance, and related grant programs. For FY2013, Congress appropriated, after sequestration, $1.518 billion for OJP. The Administration's request for OJP for FY2014 was $1.553 billion. The House Committee on Appropriations recommended $1.472 billion for OJP while the Senate Committee on Appropriations recommended $1.642 billion. The FY2014-enacted appropriation for OJP is $1.569 billion. The Research, Evaluation, and Statistics account (formerly the Justice Assistance account), among other things, funds the operations of the Bureau of Justice Statistics and the National Institute of Justice. The post-sequestration FY2013 appropriation for the Research, Evaluation, and Statistics account was $119.1 million. The Administration's FY2014 request for this account was $134.4 million. The House committee-reported bill included $114.0 million for this account. The Senate Committee on Appropriations recommended $129.0 million for the Research, Evaluation, and Statistics account. Congress provides $120.0 million for this account for FY2014. The State and Local Law Enforcement Assistance account includes funding for a variety of grant programs to improve the functioning of state, local, and tribal criminal justice systems. Some examples of programs that have traditionally been funded under this account include the Edward Byrne Memorial Justice Assistance Grant (JAG) program, the Drug Courts program, the State Criminal Alien Assistance Program (SCAAP), and DNA backlog reduction grants. The State and Local Law Enforcement Assistance account received a total of $1.060 billion for FY2013 (after sequestration). The Administration requested $1.005 billion for this account for FY2014. The House committee-reported bill included $1.065 billion for State and Local Law Enforcement Assistance while the Senate committee-reported bill included $1.137 billion. The FY2014-enacted appropriation for this account is $1.172 billion. As a part of the FY2014 request for the State and Local Law Enforcement Assistance account, the Administration proposed eliminating funding for a variety of programs, including the State Criminal Alien Assistance Program (SCAAP), the border prosecution initiative, the John R. Justice program, the Paul Coverdell Forensic Science program, and the Matching Grant Program for Bulletproof Vests. In its FY2014 congressional budget submission, OJP stated that the proposed elimination of these programs is "to ensure that OJP's limited funding is focused on addressing the nation's most important criminal justice priorities." One issue Congress might have considered during deliberations of the FY2014 CJS appropriations bill was whether it should adopt the Administration's proposal to eliminate funding for these programs. Both the House and Senate committee-reported bills included funding for SCAAP (see Table 7 ), but the House Appropriations Committee adopted the Administration's proposal to eliminate funding for the John R. Justice program, border prosecution initiatives, Paul Coverdell Forensic Science program, and the Matching Grant Program for Bulletproof Vests. The Senate committee-reported bill included funding for the John R. Justice program, border prosecution initiatives, the Paul Coverdell Forensic Science program, and the Matching Grant Program for Bulletproof Vests. The Consolidated Appropriations Act, 2014 did not include funding for the border prosecution initiative, but it did include funding for SCAAP, the John R. Justice program, the Paul Coverdell Forensic Sciences program, and the Matching Grant Program for Bulletproof Vests. The Administration proposed consolidating funding for the drug and mental health courts into a "problem solving justice" program. The Administration requested $44.0 million for this program. The proposed program would assist state, local, and tribal governments with developing and implementing strategies, including specialized courts, which can divert offenders with drug, mental health, and special needs away from prosecution and incarceration. The proposed program would provide grants, training, and technical assistance to help state, local, and tribal governments develop and implement drug, mental health, and other problem solving courts. As Congress moved forward with its consideration of the CJS appropriations bill, policy makers might have considered whether to adopt the Administration's proposal to replace the drug and mental health court programs with the proposed problem solving courts program. Both the House and the Senate Committees on Appropriations rejected the Administration's proposal. Both committees recommended funding for both the drug and mental health court programs. Congress ultimately decided to fund each program separately for FY2014. The Administration requested $85.0 million to expand its Justice Reinvestment Initiative (JRI). The proposed JRI would have three elements: It would provide targeted technical assistance to help units of state, local, and tribal governments analyze data on their criminal justice systems, identify what factors are driving prison and jail population growth and develop strategies to reduce costs, improve public safety, reduce unnecessary confinement, and help ex-offenders with the transition back into mainstream society. The proposed funding would be used to award implementation grants to the jurisdictions which have adopted significant policy and legislative changes resulting from in-depth data analyses and consensus-based recommendations. Funding would also be used to provide incentive grants to participating states to encourage investments in evidence-based criminal justice activities. OJP reports that 17 states are currently engaged in JRI, a public/private partnership involving OJP's Bureau of Justice Assistance (BJA), the Pew Center on the States, the Vera Institute of Justice, and the Council of State Governments Justice Center. Five states (Kansas, Missouri, Oregon, South Dakota, and West Virginia) are receiving assistance with initial data analysis and policy recommendation development. In the past year, six states (Delaware, Georgia, Hawaii, Louisiana, Oklahoma, and Pennsylvania) have passed criminal justice reform packages and are currently developing detailed implementation plans and requests for implementation funding. An additional six states (Arkansas, Kentucky, New Hampshire, North Carolina, Ohio, and South Carolina) that have previously passed criminal justice reform laws and developed implementation plans have been approved for funding by BJA to implement their plans. The House committee-reported bill included $25.0 million for JRI while the Senate committee-reported bill included $30.0 million. For FY2014, Congress appropriated $27.5 million for JRI. The Administration also requested $50.0 million for the National Criminal History Improvement Program (NCHIP). The NCHIP helps states and territories improve the quality, timeliness, and immediate accessibility of criminal history and related records for use by federal, state, and local law enforcement. According to OJP, "these records play a vital role in supporting criminal investigations, background checks related to firearm purchases, licensing, employment, and the identification of persons subject to protective orders or wanted, arrested, or convicted for stalking and/or domestic violence." The Administration requested $50.0 million for the NCHIP to "provide states [with] stronger incentives to make available several key categories of relevant records and data, including criminal history records and records of persons prohibited from having guns for mental health reasons." In addition to the request for NCHIP, the Administration requested $5.0 million for National Instant Criminal Background Check System (NICS) Act Record Improvement Program (NARIP) grants. NARIP grants seeks to "improve the quality of ... background checks and eliminate gaps in records that might allow unauthorized individuals to legally purchase firearms." The House Committee on Appropriations proposed to consolidate NCHIP and NARIP under a proposed "National Instant Criminal Background Check System (NICS) Initiative grants" program. The House committee-reported bill included $55.0 million for this proposed program. The Senate Committee on Appropriations recommended $50.0 million for NCHIP and $12.0 million for NARIP. Congress provided at total of $58.5 million for National Instant Criminal Background Check System (NICS) Initiative grants, of which not less than $12.0 million is to be made available for states meeting the requirements of NARIP. In the joint explanatory statement, Congress specified that it was consolidating the authorities of both the NCHIP and NARIP programs under the new NICS Initiative, so that grants under the program could be made pursuant to both authorities. The Administration did not request funding for a tribal assistance grant program for FY2014. However, the Administration's request for OJP included a proposal to set aside 7% of the amount made available for grant or reimbursement programs under the State and Local Law Enforcement Assistance, Juvenile Justice Programs, and Research, Evaluation, and Statistics accounts for tribal justice assistance. The Senate committee-reported bill included language that would have allowed OJP to set aside up to 5% of the amount made available for grant or reimbursement programs under the State and Local Law Enforcement Assistance, Juvenile Justice Programs, and Research, Evaluation, and Statistics accounts for tribal justice assistance. The House committee-reported bill did not include comparable language. Rather, the House Committee on Appropriations recommended $30.0 million under the State and Local Law Enforcement Assistance account for tribal assistance. For FY2014, Congress provides $30.0 million under the State and Local Law Enforcement Assistance account for tribal assistance. The Juvenile Justice Programs account includes funding for grant programs to reduce juvenile delinquency and help state, local, and tribal governments improve the functioning of their juvenile justice systems. For FY2013, Congress appropriated, after sequestration, $261.0 million for juvenile justice programs. The Administration's FY2014 request included $332.5 million for juvenile justice programs. Within this request, the Administration requested additional funding for existing programs as well as for establishing new programs and initiatives. For instance, the Administration requested additional funding for the Title V Incentive Grants to establish the Juvenile Justice Education Collaboration Assistance (JJECA) initiative. This initiative is proposed to, among other things, provide funding for evidence-based practices and programs to create positive school environments (including in correctional education settings) and enhance student behavior and academic success. The Administration also proposed a competitive grant focusing on the gender-specific needs of girls in the juvenile justice system. The FY2014 request also included funding for a proposed Juvenile Justice Realignment Incentive Grants program to provide competitive grants to states that use their Juvenile Accountability Block Grant (JABG) funding for evidence-based programs. In addition, the FY2014 request included funding for a projected web portal to support children of incarcerated parents. The House Committee on Appropriations recommended $196.0 million for Juvenile Justice Programs. This proposal would have eliminated funding for a number of programs including the Title V Incentive Grants program and the JABG program. The Senate committee-reported bill would have provided $279.0 million for this account. P.L. 113-76 includes $254.5 million for Juvenile Justice Programs. The act eliminates funding for the long-funded Juvenile Accountability Block Grant Program. In addition, while it does not provide funding for the proposed Juvenile Justice Realignment Incentive Grants program, the act does, among other things, provide funding for the proposed competitive grant focusing on the gender-specific needs of girls in the juvenile justice system and for the web portal to support children of incarcerated parents. The Public Safety Officers Benefits (PSOB) program provides three different types of benefits to public safety officers and their survivors: death, disability, and education. The PSOB program is intended to assist in the recruitment and retention of law enforcement officers, firefighters, and first responders and to offer peace of mind to men and women who choose careers in public safety. The FY2013 appropriation for PSOB was $77.9 million (after sequestration). The Administration requested $97.3 million for this account for FY2014. Both the House and the Senate Appropriations Committees recommend funding the PSOB program at a level equal to the Administration's request. The Consolidated Appropriations Act, 2014 includes $97.3 million for PSOB. The Community Oriented Policing Services (COPS) Office awards grants to state, local, and tribal law enforcement agencies throughout the United States so they can hire and train law enforcement officers to participate in community policing, purchase and deploy new crime-fighting technologies, and develop and test new and innovative policing strategies. The COPS program received $209.7 million for FY2013 (after sequestration). The Administration requested $439.5 million for this account for FY2014. The House Committee on Appropriations recommended eliminating the COPS account. The Senate Committee on Appropriations recommended $393.5 million for this account. Congress provides $214.0 million for the COPS account for FY2014. The Administration's FY2014 request for COPS included $150.0 million for a proposed comprehensive schools safety program. The proposed program would provide funding for hiring school safety personnel, including school resource officers, civilian public safety positions, school psychologists, social workers, and counselors. Funding would also be available for purchasing school safety equipment; developing and updating public safety plans; conducting threat assessments; and training crisis intervention teams. The stated purpose of the program is to "bring the law enforcement, mental health, and education disciplines together to provide a comprehensive approach to school safety." The Administration reported that the program would require law enforcement and school districts, in consultation with school mental health professionals, to apply for funding together and use the grant to fill the gaps in their own school safety and security efforts. The House committee-reported bill included $75.0 million for the proposed school safety program as a set aside from appropriations for the Edward Byrne Memorial Justice Assistance Grant (JAG) program (see Table 7 ). Language in H.Rept. 113-171 directed the National Institute of Justice to develop and implement the school safety program. The Senate Committee on Appropriations included $150.0 million for the proposed program under the COPS account (see Table 9 ). P.L. 113-76 includes $75.0 million for a comprehensive school safety initiative under the State and Local Law Enforcement Assistance account. Congress describes the comprehensive school safety initiative as a "research-focused initiative to increase the safety of schools nationwide." Funding under the program would be used for "research[ing] the root causes of school violence, develop[ing] technologies and strategies for increasing school safety, and provid[ing] pilot grants to test innovative approaches to enhance school safety across the [n]ation." The Crime Victims Fund (CVF) was established by the Victims of Crime Act of 1984 ( P.L. 98-473 , VOCA). It is administered by the Office for Victims of Crime (OVC), and provides funding to the states and territories for victim compensation and assistance programs. This account does not receive appropriations (thus the amount for the CVF is not included in Table 4 ) but instead is largely funded by criminal fines, forfeited bail bonds, penalties, and special assessments that are collected by U.S. Attorneys' Offices, U.S. courts, and the BOP. For FY2013, P.L. 113-6 set the obligation limit at $730.0 million. The obligation limit for the CVF was not subject to sequestration. For FY2014, the Administration requested that the obligation limit on the Crime Victims Fund be set at $800.0 million. In the FY2014 request, the Administration specified that $45.0 million was for the Vision 21 Initiative, and $10.0 million was for Victims of Trafficking Grants. Of the $45.0 million for Vision 21, $20.0 million would have been allotted for Tribal Assistance for Victims of Violence and $25.0 million would have been allotted for additional victims' services and initiatives. The House committee-reported bill would have set the CVF obligation limit at 745.0 million. The House Committee on Appropriations specified that OVC could implement Vision 21 within available resources. The Senate Committee on Appropriations recommended $765.0 million for the obligation limit and proposed $25.0 million in support of the Vision 21 Initiative; however, the Senate committee-reported bill would have provided funding for Vision 21 through discretionary sources instead of the CVF (see Table 7 ). The Consolidated Appropriations Act, 2014 sets the obligation limit on the Crime Victims Fund at 745.0 million and provides $21.0 million in discretionary funding under the State and Local Law Enforcement Assistance account for the Vision 21 Initiative. The Science Agencies fund and otherwise support research and development (R&D) and related activities across a wide variety of federal missions, including national competitiveness, energy and the environment, and fundamental discovery. The Consolidated and Further Continuing Appropriations Act ( P.L. 113-6 ) provided $23.755 billion in FY2013 funding for the Science Agencies after sequestration. The Administration requested a total of $25.347 billion for the Science Agencies for FY2014. The House Committee on Appropriations recommended a total of $23.599 billion for the science agencies; the Senate committee-reported bill would have provided $25.442 billion. The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) provides $24.824 billion for the science agencies in FY2014. Congress established the Office of Science and Technology Policy (OSTP) through the National Science and Technology Policy, Organization, and Priorities Act of 1976 ( P.L. 94-282 ). The act states that "the primary function of the OSTP director is to provide, within the Executive Office of the President, advice on the scientific, engineering, and technological aspects of issues that require attention at the highest level of Government." The OSTP director, often referred to informally as the President's science advisor, also manages the National Science and Technology Council (NSTC), which coordinates science and technology policy across the executive branch of the federal government, and co-chairs the President's Council of Advisors on Science and Technology (PCAST), a council of external advisors that provides advice to the President on matters related to science and technology policy. OSTP is one of two offices in the Executive Office of the President (EOP) that is funded in the CJS appropriations bill. The Consolidated and Further Continuing Appropriations Act, 2013, ( P.L. 113-6 ) provided $5.5 million for OSTP in FY2013 (after sequestration). The Administration had requested $5.7 million for FY2014. The House committee-reported bill would have provided $5.5 million for OSTP. The Senate committee-reported bill would have provided $5.7 million. The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) includes $5.6 million for OSTP in FY2014. According to the Administration, its request would have restored "funding to levels that enables [sic] OSTP to carry out its significant national security emergency preparedness communications responsibilities that must be performed in times of national crisis," and supported the director of OSTP, the federal Chief Technology Officer, three Senate-confirmed associate directors, and other professional staff members. Congress has for several years restricted OSTP from engaging in certain activities with China or any Chinese-owned company by prohibiting the use of appropriated funds for these activities. The OSTP may proceed with activities that it certifies pose no risk of transferring technology or information with security implications to China and will not involve knowing interactions with officials who have been determined by the United States to have direct involvement with violations of human rights. Such certification must be submitted to the House and Senate Committees at least 30 days prior to such activities. Congress may continue its interest in the debate over its ability to restrict the activities of OSTP and the scope of such restrictions. The joint explanatory statement continues these restrictions. The House committee-reported bill would have extended the current restrictions on OSTP use of funds to "develop, design, plan, promulgate, implement, or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company." The Senate committee-reported bill lacked comparable language. In its FY2014 budget, the Administration proposed a reorganization of federal STEM education programs. The joint explanatory statement for P.L. 113-6 directed OSTP to produce a federal STEM education strategic plan within 45 days of enactment of the law. According to OSTP, the strategy document informed the proposed reorganization plan, though OSTP had not yet published the strategy document at the time of the President's FY2014 budget release. The National Science and Technology Council released the federal STEM education strategic plan on May 31, 2013. Neither the House nor Senate committee supported the proposed reorganization, and the joint explanatory statement explicitly does not adopt the proposed reorganization. The joint explanatory statement directs that all STEM activities be funded in their existing programmatic structures unless explicitly noted elsewhere in the joint explanatory statement or through unmodified or non-superseded language in the House or Senate report. The joint explanatory statement directs OSTP to reexamine other possible reorganizations of federal STEM programs after engaging in an inclusive development process and taking into consideration evaluations and other evidence of program success. The joint explanatory statement also directs that OSTP report within 90 days of passage on the resources and authorities necessary to develop a "one stop" style website containing findings from federal research on STEM education. In addition, the House committee identified flaws in the subsequent federal STEM strategic plan, including the proposed mechanism for dissemination of federal STEM education research and findings. The Senate committee report would defer action on such consolidation until OSTP finalizes STEM program assessments and require OSTP to work with non-federal education and outreach communities on any subsequent reorganization proposal. In February 2013, OSTP directed federal agencies with more than $100 million in research and development expenditures to "develop plans to make the published results of federally funded research freely available to the public within one year of publication and requiring researchers to better account for and manage the digital data resulting from federally funded scientific research." The joint explanatory statement directs OSTP to report on each agency's progress in developing and implementing its plan for public access to federally funded research findings. This OSTP report is due within 45 days of enactment with semi-annual updates thereafter. The House report would have directed OSTP to report semiannually to the committee on the status of agencies' plan development and implementation. The Senate report would have directed OSTP to report to the committee and appropriate authorizing committees regarding the Administration's coordinated plan to support increased public access as well as implementation guidelines across the affected agencies and scientific disciplines. The joint explanatory statement incorporates language from the House report that expresses support for OSTP-mediated federal agency collaboration on neuroscience and directs OSTP to identify possible opportunities for international collaboration. In addition, the House report would encourage OSTP to report to the committee semi-annually on its efforts in this area. The House report also expresses support for OSTP efforts to reassess and update the criticality of strategic mineral supply chains. The House report urges leverage of these results into an interagency plan to reduce dependence on foreign sources and would direct OSTP to report to the committee regarding the results of these efforts. The Consolidated and Further Continuing Appropriations Act, 2013, included $2.8 million for the Science and Technology Policy Institute (STPI), a federally funded research and development center that supports OSTP. The National Science Foundation requested $4.9 million in FY2014 funding for STPI. Of this $4.9 million, $1.5 million was to support OSTP leadership, in coordination with the U.S. Group on Earth Observations Subcommittee of the NSTC, of a new interagency Big Earth Data initiative to improve coordination and management of federal Earth system observations, data, and information. The National Aeronautics and Space Administration (NASA) was created by the 1958 National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. The agency is managed from headquarters in Washington, DC. It has nine major field centers around the country, plus the Jet Propulsion Laboratory, which is operated under contract by the California Institute of Technology. The Administration requested $17.715 billion for NASA for FY2014. The FY2013 appropriation (after sequestration) was $16.880 billion. For FY2014, the House committee recommended $16.598 billion, while the Senate committee recommended $18.010 billion. The final appropriation is $17.647 billion. See Table 11 for a breakdown of these amounts by appropriations account. There is no authorized level for NASA funding in FY2014; the most recent authorization act (the NASA Authorization Act of 2010, P.L. 111-267 ) authorized appropriations through FY2013. The FY2014 request for Science was $5.018 billion. The FY2013 appropriation (after sequestration) was $4.782 billion. The House and Senate committees recommended $4.781 billion and $5.154 billion respectively. The final appropriation is $5.151 billion. Within the Science account, the request for Planetary Science ($1.218 billion) included $40.5 million for observation of near-Earth objects and $50 million for management of a Department of Energy (DOE) program to produce plutonium-238, which some spacecraft use for power generation. In the past, congressional policy makers disagreed about whether NASA or DOE should fund DOE production of plutonium-238 for NASA. The House and Senate committee recommendations for Planetary Science were respectively $1.315 billion and $1.318 billion. Among other differences relative to the request, the House committee recommended increases for exploration of Mars and the outer planets and no funding for plutonium-238 production. The Senate committee's recommended increase was entirely for Mars exploration. The final appropriation for planetary science is $1.345 billion. This total included increases for exploration of Mars the outer planets and up to the requested amount for plutonium-238 production. Also in the Science account, the request for Earth Science was $1.846 billion. The FY2013 appropriation for Earth Science (after sequestration) was $1.659 billion. The Earth Science request included $30 million to begin development of future land imaging capabilities to replace the current Landsat satellites, operated by the U.S. Geological Survey, as well as funds to assume responsibility for certain Earth-observing satellite instruments previously held by the National Oceanographic and Atmospheric Administration (NOAA). The House committee recommended $1.659 billion for Earth Science, and its report stated that no funds should be spent on the proposed Landsat and NOAA-related activities. The Senate committee recommended approximately the requested amount for Earth Science, including the requested funds for land imaging, but its report expressed concern about the Administration's approach and directed NASA to submit a plan for implementing future Landsat satellites at substantially lower cost. The final appropriation for Earth Science is $1.826 billion. The explanatory statement took the Senate report's position on land imaging and directed NASA to submit a plan to Congress before expending funds on some of the disputed sensors for NOAA. The request for the James Webb Space Telescope (JWST), also funded in the Science account, was $658.2 million. NASA expects FY2014 to be the peak funding year for JWST and states that the budget and schedule for the JWST program remain consistent with the 2011 revised plan. In the FY2012 appropriations conference report, Congress capped the formulation and development cost of JWST and mandated annual reports on the program by the Government Accountability Office. The House committee recommended $584.0 million for JWST in FY2014. The Senate committee recommended the requested amount. The final appropriation is the requested amount. The request for Aeronautics was $565.7 million. The FY2013 appropriation (after sequestration) was $529.5 million. The request for Integrated Systems Research included a new program on advanced composite materials and structures. In the Fundamental Aeronautics program, NASA planned to explore options for the future of its rotorcraft research; this planning was to be coordinated with other government agencies and industry partners. The House committee recommended $566.0 million for Aeronautics, while the Senate committee recommended $558.7 million. The final appropriation is $566.0 million. For Space Technology, the Administration requested $742.6 million. The FY2013 appropriation (after sequestration) was $614.5 million. The requested increase was to support existing projects that are moving from the planning and design phase to the more expensive tasks of hardware manufacture and demonstration. The request also included funds to accelerate the development of high-power solar electric propulsion technology for future spacecraft. The House and Senate committee recommendations were respectively $576.0 million and $670.1 million. The final appropriation is $576.0 million. The Administration's request for Exploration in FY2014 was $3.916 billion. The FY2013 appropriation (after sequestration) was $3.706 billion. This account funds development of the Orion Multipurpose Crew Vehicle (MPCV) and the Space Launch System (SLS) heavy-lift rocket, mandated by the 2010 authorization act for human exploration beyond Earth orbit. The account also funds development of a commercial crew transportation capability for future U.S. astronaut access to the International Space Station. The request of $821.4 million for commercial crew was more than the FY2013 appropriation, while the request of $2.730 billion for Orion, the SLS, and related ground systems (known collectively as Exploration Systems Development) was less than the FY2013 appropriation. As in previous years, this apparent difference in human spaceflight priorities between Congress and the Administration was controversial. According to NASA, the amounts requested were consistent with the planned schedules for both Orion/SLS and commercial crew. NASA officials stated that the request for commercial crew was necessary to make commercial crew transportation services available in 2017, while the request for Orion and SLS was sufficient for an uncrewed flight of the SLS in 2017 and a crewed flight in 2021. The House committee recommended $3.612 billion, including $500 million for commercial crew and $2.825 billion for Exploration Systems Development. The Senate committee recommended $4.209 billion, including $775 million for commercial crew and $3.118 billion for Exploration Systems Development. The final appropriation is $4.113 billion, including $696 million for commercial crew and $3.115 billion for Exploration Systems Development. The FY2014 request for Space Operations was $3.883 billion. The FY2013 appropriation (after sequestration) was $3.725 billion. The Space Operations account funds the International Space Station (ISS) and the Space and Flight Support program. The House committee recommended $3.670 billion, while the Senate committee recommends the requested amount. The final appropriation is $3.778 billion. The request for Education was $94.2 million. The FY2013 appropriation (after sequestration) was $116.3 million. The Administration proposed to consolidate NASA education programs as part of a government-wide reorganization of programs in science, technology, engineering, and mathematics (STEM) education. Among the programs included in the FY2014 request for the Education account were the National Space Grant College and Fellowship Program ($24 million), the Experimental Program to Stimulate Competitive Research (EPSCoR, $9 million), and the Minority University Research Education Program (MUREP, $30 million). In the past, other NASA accounts also funded some education activities; in most cases, these additional education funds were not included in the FY2014 request for those accounts. The House committee recommended $122.0 million for Education, including the requested amounts for Space Grant, EPSCoR, and MUREP. The House report mandated the internal consolidation of NASA education activities, whereby the Education account would be NASA's "exclusive source of appropriated funds for education and public outreach activities"; it stated that this would improve coordination, efficiency, and accountability and reduce fragmentation. The Senate committee recommended $116.6 million for Education, including $40 million for Space Grant, $18 million for EPSCoR, and $30 million for MUREP. The Senate report stated that while the committee encouraged the streamlining and consolidation of education activities within NASA, it did not support the Administration's proposal to terminate certain NASA education activities in order to fund additional STEM education activities at other agencies. The final appropriation for Education is $116.6 million, including the same amounts as the Senate report for Space Grant, EPSCoR, and MUREP. In addition, the explanatory statement maintained funding for education and public outreach within the Science account, "consistent with longstanding NASA practice." The Administration has proposed a NASA mission to capture a small asteroid robotically, redirect it into orbit around the Moon, and explore it with astronauts as one of the first destinations for Orion and the SLS. The FY2014 budget request included initial funding for this mission in three different accounts: $20 million in Science for identification and characterization of a suitable asteroid, $45 million in Exploration for mission definition and planning and development of capture mechanisms, and $40 million in Space Technology for development of the solar electric propulsion technology that would be used to redirect the asteroid's orbit. The House report called the proposed asteroid mission "premature" and stated that the House committee's recommendation "does not include any of the requested increases associated with the asteroid retrieval proposal." The Senate report was silent about this mission. Noting that the proposed mission was "still an emerging concept," the joint explanatory statement stated that "NASA has not provided Congress with satisfactory justification materials," and additional groundwork "is needed ... prior to NASA and Congress making a long-term commitment to this mission concept." The National Science Foundation (NSF) supports basic research and education in the non-medical sciences and engineering. Congress established the foundation as an independent federal agency in 1950 and directed it to "promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes." The NSF is a primary source of federal support for U.S. university research. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support. For FY2014 the Administration sought $7.626 billion in funding for the NSF. NSF indicated that its overarching priorities for FY2014 would include six programs: Cyber-enabled Materials, Manufacturing, and Smart Systems (CEMMS, $300.4 million); Cyberinfrastructure Framework for 21 st Century Science, Engineering, and Education (CIF21, $155.5 million); NSF Innovation Corps (I-Corps, $24.9 million); Integrated NSF Support Promoting Interdisciplinary Research and Education (INSPIRE, $63.0 million); Science, Engineering, and Education for Sustainability (SEES, $222.8 million); and Secure and Trustworthy Cyberspace (SaTC, $110.3 million). Congress has not enacted specific funding authorization levels for NSF in FY2014. FY2013 current plan funding for NSF was $6.884 billion. The House Committee on Appropriations recommended a total of $6.995 billion for NSF in FY2014. The Senate Committee on Appropriations recommended a total of $7.426 billion. The Consolidated Appropriations Act, 2014 provides $7.172 billion to NSF in FY2014. Since FY2006, overall increases in the NSF budget have been at least partially driven by the so-called "doubling path policy." Under the doubling path policy, Congress and successive Administrations have sought to double funding for the NSF, Department of Energy's Office of Science, and National Institute of Standards and Technology's core laboratory and construction accounts (collectively "the targeted accounts"). However, actual funding for the targeted accounts did not typically reach authorized levels during the authorization period, which ended in FY2013. It is unclear if policy makers will seek to continue the doubling path policy in FY2014 or beyond. Congress typically appropriates to NSF at the major account level. NSF's major accounts are Research and Related Activities (R&RA), Education and Human Resources (E&HR), Major Research Equipment and Facilities Construction (MREFC), Agency Operations and Awards Management (AOAM), the National Science Board (NSB), and the Office of Inspector General (IG). In some cases, such as the Graduate Research Fellowship (GRF), program funding may come from two or more of these accounts. R&RA is the largest NSF account and the primary source of research funding at the NSF. The Administration sought $6.212 billion in funding for R&RA in FY2014 noting "strong support for cross-cutting research priorities such as advanced manufacturing, clean energy and sustainability, break-through materials, robotics, cyberinfrastructure, and cybersecurity." NSF consolidated certain R&RA sub-accounts in FY2013, moving from 11 directorates and offices to 8. FY2013 current plan funding for R&RA was $5.544 billion. The Consolidated Appropriations Act, 2014 provides $5.809 billion to R&RA in FY2014. The House Committee on Appropriations recommended $5.676 billion for R&RA in FY2014. The Senate Committee on Appropriations recommended $6.018 billion. The House report would have provided $13.9 million for new investments in cognitive science and neuroscience research, offered the requested levels for various (unspecified) R&RA advanced manufacturing proposals, and supported a temporary reduction in Antarctic research funding in order to provide funds for the implementation of certain recommended safety and management changes. The Senate report directed NSF to apply the $194.0 million reduction to R&RA (from the requested level) to the so-called OneNSF initiatives. Among other things, the Senate report also would have provided the full request for SEES ($222.8 million). The Joint Explanatory Statement that accompanied the Consolidated Appropriations Act, 2014—referred to hereafter as the "explanatory statement"—incorporates the Administration's proposed R&RA reductions, provides the requested amount for the International Ocean Discovery Program ($50.0 million) and rejects Senate report limitations on OneNSF initiatives. The FY2014 request for R&RA's Experimental Program to Stimulate Competitive Research (EPSCoR) program was $163.6 million. FY2013 current plan funding for EPSCoR was $147.8 million. The Senate report would have provided the requested level to EPSCoR in FY2014. The House report was silent on the question. The Consolidated Appropriations Act, 2014 provides $158.2 million to EPSCoR in FY2014. The Administration sought $880.3 million in funding for E&HR in FY2014. E&HR is the primary source of funding for science, technology, engineering, and mathematics (STEM) education at the NSF. FY2013 current plan funding for E&HR was $833.3 million. The House Committee on Appropriations recommended $825.0 million for E&HR in FY2014. The Senate Committee on Appropriations recommended $880.3 million. The Consolidated Appropriations Act, 2014 provides $846.5 million to E&HR in FY2014. For FY2014 the Administration proposed a reorganization and consolidation of many federal STEM education programs. Under the Administration's plan, NSF would have played a leadership role in federal undergraduate and graduate STEM education efforts. (The Department of Education and Smithsonian Institution would focus on K-12 education and informal STEM education, respectively.) The House and Senate reports both rejected the proposed reorganization plan for programs within the purview of the FY2014 Commerce, Justice, Science, and Related Agencies appropriations act. The House report noted that there may be ind ividual instances in which the c ommittee accepts a change. The Senate report deferred action on the reorganization until the Office of Science and Technology Policy (OSTP) finalizes STEM education program assessments as required by the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ). The explanatory statement rejects the proposed reorganization (unless expressly noted) and directs OSTP to examine—in consultation with federal agencies and major external stakeholders—other possible reorganizations of the federal STEM education effort. The foundation's FY2014 budget request for E&HR highlighted several changes associated with the Administration's plan for STEM education: establishment of the Catalyzing Advances in Undergraduate STEM Education (CAUSE) program; expansion of the GRF to serve the whole of the federal enterprise; and creation of the NSF Research Traineeship (NRT), which would have replaced the Integrative Graduate Education Research Traineeship (IGERT). The House report specifically rejected the establishment of the CAUSE program or the change to a federal government-wide GRF program. The Senate report asked NSF to work with OSTP to determine "how NSF could implement a broader program for graduate and undergraduate programs across the entire Federal Government, and to identify which programs across Government could benefit from such a program." The FY2014 NSF request also sought to shift certain programs between E&HR divisions and to merge the Mathematics and Science Partnership (MSP) and Computing Education for the 21 st Century (CE21) programs. The merged program would be called, "Science, Technology, Engineering, Mathematics, including Computing Partnerships (STEM-C Partnerships)." The FY2014 request for STEM-C was $57.1 million. The Senate report accepted the proposed changes to these programs and would have provided $57.1 million for STEM-C Partnerships. Other E&HR accounts in the FY2014 budget request included Advanced Technological Education (ATE, $64.0 million), Robert Noyce Scholarship (Noyce, $60.9 million), and CyberCorps: Scholarships for Service (SFS, $25.0 million). Both House and Senate reports would have provided the requested level for ATE. The Senate report would have provided $60.9 million for Noyce and $45.0 million for the SFS program. The Senate report would have provided the FY2012 level for the Advancing Informal STEM Learning (AISL) program ($61.4 million); however, the explanatory statement reduces this amount to $55.0 million. The House report directed NSF to continue disseminating the findings of a report on best practices in STEM education and to develop methods to track and evaluate the implementation of recommendations from that report. Selected broadening participation programs from the FY2014 request include Historically Black Colleges and Universities Undergraduate Program (HBCU-UP, $31.9 million), Tribal Colleges and Universities Program (T-CUP,$13.3 million), Louis Stokes Alliances for Minority Participation (LSAMP, $45.6 million), and Centers for Research Excellence in Science and Technology (CREST, $20.2 million). Both House and Senate reports would have provided the requested level for HBCU-UP and LSAMP. The House report also would have provided the requested level for T-CUP; the Senate report would have provided $190,000 more. The Senate report would have provided the requested levels for CREST and Alliances for Graduate Education and the Professoriate (AGEP). The explanatory statement provides Senate levels for HBCU-UP ($31.9 million), LSAMP ($45.6 million), T-CUP ($13.3 million), and AGEP ($7.8 million) in FY2014. It also provides the FY2013 current plan funding level for CREST ($23.0 million). Provisions in the explanatory statement direct NSF to comply with both House and Senate report provisions related to (1) the foundation's efforts to meet the needs of Hispanic-Serving Institutions (HSIs) through existing programs, and (2) to consider establishment of an HSI-specific program similar to other NSF broadening participation programs. The FY2014 request for the MREFC account was $210.1 million. NSF indicated that this amount would provide a final year of funding for the Advanced Interferometer Gravitational-Wave Observatory (AdvLIGO) and Ocean Observatories Initiative (OOI), as well as the first year of funding for the Large Synoptic Survey Telescope (LSST). Funding for the Advanced Technology Solar Telescope and National Ecological Observatory Network (NEON) would continue. The House report would have provided an amount ($182.6 million) that is equal to the funding request for continuing projects, but that would not have covered costs of the first year of construction for the LSST. The Senate report would have provided the requested level and welcomed the start of LSST construction. The Consolidated Appropriations Act, 2014 provides $200.0 million to MREFC in FY2014. The explanatory statement notes that funds are provided for all projects for which construction has begun and directs any remainder to the LSST project. Additionally, the explanatory statement authorizes the foundation to submit a transfer proposal to provide additional funds for the LSST if such funds become necessary. The FY2014 NSF budget request also included funding for three multi-agency initiatives: National Nanotechnology Initiative (NNI, $430.9 million), Networking and Information Technology Research and Development (NITRD, $1.227 billion), and U.S. Global Change Research Program (USGCRP, $326.4 million). On September 7, 2012, the NSF announced the realignment of four directorates and offices within the Research and Related Activities account. Under the new account structure, the Office of Cyberinfrastructure became a division within the Directorate for Computer and Information Science and Engineering. The Office of Polar Programs became a division within the Geosciences directorate. The Office of International Science and Engineering and the Office of Integrative Activities merged to become the Office of International and Integrative Activities. The related agencies received a total of $827.9 million, after sequestration, for FY2013. For FY2014, the Administration requested a total of $962.1 million for the related agencies. The House Committee on Appropriations recommended $800.5 million for the related agencies while the Senate Committee on Appropriations recommended $962.1 million. The Consolidated Appropriations Act, 2014 includes $881.8 million for the related agencies. Established by the Civil Rights Act of 1957, the U.S. Commission on Civil Rights (the Commission) investigates allegations of citizens who may have been denied the right to vote based on color, race, religion, or national origin; studies and gathers information on legal developments constituting a denial of the equal protection of the laws; assesses the federal laws and policies in the area of civil rights; and submits reports on its findings to the President and Congress when the Commission or the President deems it appropriate. For FY2013, the Commission received $8.7 million, after sequestration. The Administration requested $9.4 million for the Commission for FY2014. The House Committee on Appropriations recommended $8.8 million for the Commission while the Senate Committee on Appropriations recommended $9.4 million, the same as the Administration's request. The FY2014-enacted appropriation for the Commission is $9.0 million. The Equal Employment Opportunity Commission (EEOC) enforces several laws that ban employment discrimination based on race, color, national origin, sex, age, or disability. In recent years, appropriators were particularly concerned about the agency's ability to reduce the pending inventory of charges due to rising caseloads and limited staff. Due to new hires of enforcement staff and developments in technology, the EEOC continues to reduce the pending inventory of cases. The pending inventory of private sector cases filed with the EEOC reduced from 78,136 at the end of FY2011 to 70,312 at the end of FY2012, a 10% decline. According to the EEOC, the decline reflects investments in staffing, training, and technology. The EEOC federal sector hearings workload reduced from 8,847 in FY2011 to 8,687 hearings in FY2012. The EEOC continues to implement strategies to reduce both federal and private sector cases by implementing a new case management system as outlined in the EEOC Strategic Plan for FY2012-FY2016. The FY2013 appropriation (after sequestration) for the EEOC was $344.2 million. The Administration's FY2014 request for the EEOC was $372.9 million, which included $29.5 million for payments to state and local entities with which the agency has work-sharing agreements to address workplace discrimination within their jurisdictions (i.e., Fair Employment Practices Agencies, FEPAs, and Tribal Employment Rights Organizations, TEROs). The House committee-reported bill would have provided $355.0 million for the EEOC. The Senate Committee on Appropriations would have provided $372.9 million for the EEOC. The Consolidated Appropriations Act, 2014 includes $364.0 million for the EEOC, which includes $29.5 million for payments to state and local entities. The Consolidated Appropriations Act, 2014, requires the EEOC to publish a report within 90 days of enactment on the effect of a new EEOC rule on age discrimination on public safety personnel. The U.S. International Trade Commission (ITC) is an independent, quasi-judicial agency established by Congress that advises the President and Congress on U.S. foreign economic policies. In its Strategic Plan for 2009-2014, the ITC identified the following five strategic operations, which define the functions of the agency: (1) import injury investigations, (2) intellectual property-based imports investigations, (3) industry and economic analysis, (4) tariff and trade information services, and (5) trade policy support. As a matter of policy, its budget request is submitted to Congress by the President without revision. Congress appropriated $78.9 million (after sequestration) for the ITC for FY2013. The Administration's FY2014 request for the ITC was $85.1 million. The House committee-reported bill would have provided $79.0 million for this account. The Senate Committee on Appropriations recommended $85.1 million for the ITC. The Consolidated Appropriations Act, 2014, provides $83.0 million for the ITC. The Legal Services Corporation (LSC) is a private, nonprofit, federally funded corporation that provides grants to local offices that, in turn, provide legal assistance to low-income people in civil (noncriminal) cases. The LSC has been controversial since its incorporation in the early 1970s and has been operating without authorizing legislation since 1980. There have been ongoing debates over the adequacy of funding for the agency and the extent to which certain types of activities are appropriate for federally funded legal aid attorneys to undertake. In annual appropriations bills, Congress traditionally has included legislative provisions restricting the activities of LSC-funded grantees, such as prohibiting any lobbying activities or prohibiting representation in certain types of cases. Although the authorization of appropriations for the LSC expired at the end of FY1980, the LSC has operated for the past 34 years under annual appropriations laws. After sequestration, the LSC received $340.9 million for FY2013. This amount includes supplemental funding the LSC received pursuant to P.L. 113-2 . For FY2014, the Obama Administration requested $430.0 million for the LSC. The Administration's FY2014 budget request included $400.3 million for basic field programs and required independent audits, $19.5 million for management and grants oversight, $3.5 million for client self-help and information technology, $4.2 million for the Office of the Inspector General, $1.5 million for a new Pro Bono Innovation Fund, and $1.0 million for loan repayment assistance. The Obama Administration also proposed that LSC restrictions on class action suits and attorneys' fees be eliminated. The House Committee on Appropriations recommended $300.0 million for the LSC for FY2014. This recommendation included $271.9 million for basic field programs and required independent audits, $17.0 million for management and grants oversight, $3.4 million for client self-help and information technology, $4.2 million for the Office of the Inspector General, $2.5 million for a Pro Bono Innovation Fund, and $1.0 million for loan repayment assistance. The Senate Committee on Appropriations included $430.0 million for the LSC for FY2014. This recommendation included $400.0 million for basic field programs and required independent audits, $19.5 million for management and grants oversight, $3.5 million for client self-help and information technology, $4.5 million for the Office of the Inspector General, $1.5 million for a Pro Bono Innovation Fund, and $1.0 million for loan repayment assistance. The Consolidated Appropriations Act, 2014 provides $365.0 million for the LSC for FY2014. This amount includes $335.7 million for basic field programs and required independent audits, $18.0 million for management and grants oversight, almost $3.5 million for client self-help and information technology, almost $4.4 million for the Office of the Inspector General, $2.5 million for a new Pro Bono Innovation Fund, and $1.0 million for loan repayment assistance. The Marine Mammal Commission (MMC) is an independent agency of the executive branch, established under Title II of the Marine Mammal Protection Act (MMPA; P.L. 92-522). The MMC and its Committee of Scientific Advisors on Marine Mammals provide oversight and recommend actions on domestic and international topics to advance policies and provisions of the Marine Mammal Protection Act. As funding permits, the Marine Mammal Commission supports research to further the purposes of the MMPA. After sequestration, the MMC received $2.9 million for FY2013. For FY2014, the Administration requested $3.4 million for the MMC. The House committee-reported bill included $2.9 million for the MMC. The Senate committee-reported bill would have provided $3.4 million for the MMC. Congress provided $3.3 million for the MMC for FY2014. The Office of the U.S. Trade Representative (USTR), located in the Executive Office of the President, is responsible for developing and coordinating U.S. international trade and direct investment policies. The USTR is the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations. USTR also conducts U.S. affairs related to the World Trade Organization. The USTR is leading the negotiations for the United States for the ongoing talks for the proposed Trans-Pacific Partnership agreement (TPP) and for the Transatlantic Trade and Investment Partnership (TTIP). Congress appropriated $47.6 million (after sequestration) for the USTR for FY2013. The Administration's FY2014 request for this account was $56.2 million. The House committee-reported bill recommended $50.0 million for this account. The Senate Committee on Appropriations recommended $56.2 million. The Consolidated Appropriations Act, 2014, includes $52.6 million for USTR. The State Justice Institute (SJI) is a nonprofit corporation that makes grants to state courts and funds research, technical assistance, and informational projects aimed at improving the quality of judicial administration in state courts across the United States. It is governed by an 11-member board of directors appointed by the President and confirmed by the Senate. Under the terms of its enabling legislation, SJI is authorized to present its budget request directly to Congress, apart from the President's budget. After sequestration, the FY2013 appropriation for the SJI was $4.8 million. For FY2014, the Administration requested $5.1 million for SJI. For FY2014, the House Committee on Appropriations recommended $4.8 million for SJI. The Senate committee-reported bill would have provided $5.1 million, the same as the Administration's request. The Consolidated Appropriations Act, 2014 includes $4.9 million for the SJI.

On March 26, 2013, President Obama signed into law the Consolidated and Further Continuing Appropriations Act, 2013 (P.L. 113-6). The act provides a total of $60.638 billion for Commerce, Justice, Science, and Related Agencies (CJS). After rescissions and sequestration, the act provided a total of $57.936 billion for CJS, of which $7.510 billion was for the Department of Commerce, $25.830 billion was for the Department of Justice, $23.769 billion was for the science agencies, and $827.9 million was for the related agencies. On April 10, 2013, President Obama submitted his FY2014 budget to Congress. The Administration requested a total of $63.310 billion for the agencies and bureaus funded as a part of the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations bill. The Administration's request included $8.596 billion for the Department of Commerce, $28.405 billion for the Department of Justice, $25.347 billion for the science agencies, and $962.1 million for the related agencies. On July 17, 2013, the House Committee on Appropriations approved its version of the FY2014 CJS appropriations bill (H.R. 2787). The committee recommended a total of $58.601 billion for the CJS agencies and bureaus. The bill included $7.544 billion for the Department of Commerce, $26.658 billion for the Department of Justice, $23.599 billion for the science agencies, and $800.5 million for the related agencies. On July 18, 2013, the Senate Committee on Appropriations approved S. 1329, the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2014. The committee recommended a total of $63.586 billion for CJS. The bill included $8.679 billion for the Department of Commerce, $28.503 billion for the Department of Justice, $25.442 billion for the science agencies, and $962.1 million for the related agencies. On January 17, 2014, President Obama signed into law the Consolidated Appropriations Act, 2014 (P.L. 113-76). The act provides a total of $61.623 billion for CJS, of which $8.181 billion is for the Department of Commerce, $27.737 billion is for the Department of Justice, $24.824 billion is for the science agencies, and $881.8 million is for the related agencies. This report tracks and describes actions taken by the Administration and Congress to provide FY2014 appropriations for CJS accounts. It also provides an overview of FY2013 appropriations for agencies and bureaus funded as a part of the annual appropriation for CJS. The FY2013-enacted and the FY2014-requested appropriations were taken from S.Rept. 113-78. The amounts recommended by the House Committee on Appropriations were taken from H.Rept. 113-171 and the amounts recommended by the Senate Committee on Appropriations were taken from S.Rept. 113-78. FY2014-enacted appropriations were taken from the joint explanatory statement to accompany the Consolidated Appropriations Act, 2014 (P.L. 113-76), printed in the January 15, 2015, Congressional Record.

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1. Why do countries trade? Economic theory states that trade occurs because it is mutually enriching . It is asserted that it has a positive economic effect like that caused by technological change, whereby economic efficiency is increased, allowing greater output from the same amount of scarce productive resources. By allowing each participant to specialize in producing what it is relatively more efficient at and trading for what it is relatively less efficient at, trade (according to economic theory) can increase economic well-being above what would be possible without trade. The benefit of trade is attached to the product received (the import), not in the product given (the export). Hence, countries export in order to pay for imports. There is a broad consensus among economists that trade expansion has a favorable effect on overall economic well-being, but the gains will not necessarily be distributed equitably. Although most economists hold that the benefits to the overall economy exceed the costs incurred by workers who lose their jobs to increased trade, others argue that the benefits are often overestimated and the costs are often underestimated. Some goods that are imported into the United States, such as bananas, cannot be produced economically in sufficient quantities to satisfy domestic demand. Many other products (including intermediate goods) and services are imported because they can be produced less expensively or more efficiently by firms in other countries. Many imports into the United States contain U.S.-made components (such as semiconductors inside a computer) or U.S.-grown raw materials (such as cotton used to make t-shirts). Consumers can benefit through access to a wider variety of goods at lower costs. This raises consumer welfare (i.e., consumers have more money to spend on other goods and services) and helps control the rate of U.S. inflation. Producers can benefit through access to lower priced components or inputs that can be utilized in the production process. Longer term, import competition can also pressure companies to reduce costs through innovation, research, and development, leading to growth in economic output and productivity. 2. What is comparative advantage? The idea of comparative advantage was developed by David Ricardo early in the 19 th century and its insight remains relevant today. Ricardo argued that specialization and trade are mutually beneficial even if a country finds that it is more efficient at producing everything than its trading partners. If one country produces a given good at a lower resource cost than another country, it has an absolute advantage in its production. (The other country has an absolute disadvantage in its production.) If all productive resources were highly mobile between countries, absolute advantage would be the criterion governing what a country produces and the pattern of any trade between countries. But Ricardo demonstrated that because resources, particularly labor and the skills and knowledge it embodies, are highly immobile, a comparison of a good's absolute cost of production in each country is not relevant for determining whether specialization and trade should occur. Rather, the critical comparison within each country is the opportunity cost of producing any good— how much output of good Y must be forgone to produce one more unit of good X . If the opportunity costs of producing X and Y are different in each economy, then each country has a comparative advantage in the production of one of the goods. In this circumstance, Ricardo predicts that each country can realize gains from trade by specializing in producing what it does relatively well and in which it has a comparative advantage and trading for what it does relatively less well and in which it has a comparative disadvantage. 3. What determines comparative advantage? Most often, differences in comparative advantage between countries occur because of differences in the relative abundance of the factors of production: land, labor, physical capital (plant and equipment), human capital (skills and knowledge including entrepreneurial talent), and technology. Standard economic theory predicts that comparative advantage will be in activities that make intensive use of the country's relatively abundant factor(s) of production. For example, the United States has a relative abundance of high-skilled labor and a relative scarcity of low-skilled labor. Therefore, the United States' comparative advantage will be in goods produced using high-skilled labor intensively, such as aircraft, and comparative disadvantage will be in goods produced using low-skilled labor intensively, such as apparel. In addition to differences in factor endowments, differences in productive technology among countries create differences in relative efficiency and may be a basis for comparative advantage. Nevertheless, some high-skilled services jobs, such as computer programming and graphic design, can today be easily done in a country such as India because of the revolution in telecommunications. 4. Can governments shape or distort comparative advantage? Government actions to influence comparative advantage can be grouped in two broad categories: policies that indirectly nurture comparative advantage, most often by compensating for some form of market failure, but not targeted at any specific industry or activity; and policies that aim to directly create and nurture comparative advantage in particular industries. Indirect influence on comparative advantage can emanate from government policies that eliminate corruption, enforce property rights, remove unnecessary impediments to domestic market transactions, liberalize trade and foreign investment barriers, assure macroeconomic stability, build transport and communication infrastructure, support mass education, and assist technological advance. Policies that try to exert a direct influence on comparative advantage may include policies to promote and protect certain industries (such as through subsidies or trade protection) that are thought to have significant economic potential. In this view, realizing that potential requires initial government support to help a country obtain its economic targets. Some economists contend that direct government policies may often distort a country's trade and investment flows, reduce economic efficiency, undermine more economically competitive industries that do not receive government help, and diminish potential economic growth. 5. What is the terms of trade ? A nation's terms of trade— the ratio of an index of export prices to an index of import prices—is a measure of the export cost of acquiring desired imports. Increases and decreases in its terms of trade indicate whether a nation's gains from trade are rising or falling. A sustained improvement in the terms of trade expands what a nation's income will buy on the world market and can make a significant contribution to the long-term growth of its economic welfare. When that occurs, a nation's economy as a whole is often said to have become more globally competitive. Similarly, a falling terms of trade raises the export cost of acquiring imports, which reduces real income and the domestic living standard. Although trade is considered a process of mutual benefit, each trading partner's share of those benefits can change over time, and movement of the terms of trade is an indicator of that changing share. 6. What are the costs of trade expansion? Like technological change and other market forces, international trade creates wealth by inducing a reallocation of the economy's scarce resources (capital and labor) into relatively more efficient industries that have a comparative advantage and away from less efficient activities that have a comparative disadvantage. This reallocation of economic resources is often characterized as a process of "creative destruction," generating a net economic gain to the overall economy, but also being disruptive and costly to workers in adversely affected industries that compete with imports. Many of these displaced workers bear significant adjustment costs and may find work only at a lower wage. Although economic analysis almost always indicates that the economy-wide gains from trade exceed the costs, the perennially tough policy issue is how or whether to secure those gains for the wider community while dealing equitably with those who are hurt by the process. Economists generally argue that facilitating the adjustment and compensating for the losses of those harmed by market forces, including trade, is economically less costly than policies to protect workers and industries from the negative impacts of trade. While it is debatable how well existing worker assistance policies have worked, funding is also a long-standing issue. A 2008 study by the Peterson Institute for International Economics, for example, estimated the lifetime costs of worker displacement that were triggered by expanded trade in 2003 to be as high as $54 billion, but calculated that the United States spent less than $2 billion that year to address the costs for workers connected to that displacement. 7. Does trade " destroy " jobs? Trade "creates" and "destroys" jobs in the economy just as other market forces do. Economy-wide, trade creates jobs in industries that have a growing comparative advantage and destroys jobs in industries that have a growing comparative disadvantage. In the process, the economy's composition of employment changes, but there may not be a net loss of jobs due to trade. Consider that over the course of the rapid economic expansion that occurred from 1992 to 2000, U.S. imports increased nearly 240%, but total employment grew by 22 million jobs and the unemployment rate fell from 7.5% to 4.0% (the lowest unemployment rate in more than 30 years). From 2001 to 2007 (before the global financial crisis), U.S. employment grew by 7.1 million jobs and the unemployment rate dropped from 4.7% to 4.6%, while U.S. imports over the period increased by 70.8%. From 2007 to 2010, the U.S. unemployment rate rose to 9.6% and employment fell by 7 million, but U.S. imports declined by 2.0%. In times of economic hardship, when unemployment is high, governments will sometimes try to stimulate some domestic industries by protecting them from foreign competition. However, such measures are unlikely to increase total employment and could be costly. The near-term cost can be an exacerbation of weakness in the economy as foreign governments may retaliate with their own protective measures, causing a decline in exports. In the long run, trade protection may tend to reallocate employment from unprotected domestic industries toward protected domestic industries, but not increase total employment. However, more than just a transfer of well-being between sectors occurs, as there will be a permanent cost to the whole economy arising from the less efficient allocation of these resources. 8. Does trade reduce the wages of U.S. workers? International trade can have strong effects, good and bad, on the wages of American workers. Concurrent with the large expansion of trade over the past 25 years, real wages (i.e., inflation adjusted wages) of American workers grew more slowly than in the earlier post-war period, and inequality of wages between the skilled and less skilled worker rose sharply. Trade based on comparative advantage tends to increase the return to the abundant factors of production—capital and high-skilled workers in the United States—and decrease the return to the less-abundant factor—low-skilled labor in the United States. Therefore, it is reasonable to expect that, other factors constant, a large increase in imports, particularly from economies with vast supplies of low-skilled labor (such as China), could negatively affect the wages of low-skilled U.S. workers in import-sensitive industries. U.S. low-skilled workers have increasingly faced competition from lower-cost producers, largely in developing countries. In many instances, economic globalization (discussed below) has led U.S. multinational firms to source a significant share of their labor-intensive production to lower-wage countries, which, to some extent, has put downward pressure on the wages of U.S. workers in some import-sensitive industries. On the other hand, U.S. workers in export-oriented industries on average are estimated to earn more than workers in non-exporting industries. Overall, the evidence on whether or not trade has contributed to growing income inequality in the United States is mixed and inconclusive. This is due in part because a number of other factors, such as advancing technology (where the jobs that are generated may require more advanced skills and higher education than was required in the past), may have had a significantly larger impact on relative wages than foreign trade. For this reason, many economists contend that the United States should implement policies that seek to enhance U.S. education and skill levels to better enable U.S. workers to respond more effectively to the rapidly changing nature of the global economy as well as technological advancements. 9. What is intra-industry trade? A sizable portion of world trade sees countries exporting and importing goods from the same industry to each other. This phenomenon is called intra-industry trade. This type of trade is particularly characteristic of the large flows of products between advanced economies, which have very similar resource endowments. This suggests that there is another basis for trade than comparative advantage behind intra-industry trade: the use of economies of scale. Economies of scale exist when a production process is more efficient (i.e., has lower unit costs) the larger the scale at which it takes place. This scale economy becomes a basis for trade because while the United States and Germany, for example, could be equally proficient at producing any of a wide array of goods such as automobiles and pharmaceuticals that consumers want, neither has the productive capacity to produce the full range of goods at the optimal scale. Therefore, a pattern of specialization tends to occur with countries producing and trading some sub-set of these goods at the optimal scale. 1 0 . What is economic globalization? Globalization has come to represent many things. In general, economic globalization refers specifically to the increasing integration of national economies into a worldwide trading system. Economic globalization involves trade in goods and services, and trade in assets (i.e., currency, stocks, bonds, and real property), as well as the transfer of technology, and the international flows (migration) of labor. Since 1950, global trade has consistently grown faster than world production. For example, from 1980 to 2014, global exports of goods and services grew at an average annual rate of 5.4% compared to average annual global GDP growth of about 3.5%. In addition, global exports as a percent of world GDP over this period rose from 20.9% to 31.3%. These data indicate that trade has been a driving force in the global economy. Global integration in the United States (discussed in more detail in the next section) has advanced quickly, with imports of goods and services as a share of GDP rising from 4.3% in 1950 to about 16.5% in 2014. More recent but far more dramatic has been the growth of international trade in assets. From 1990 to 2007 (before the 2008 global financial crisis hit), gross capital flows to and from the United States leaped by 1,495% as compared to a 248% advance of U.S. trade in goods and services. The rising economic integration of the world economy has been facilitated by two types of events: the myriad of technical advances in transport and communication, which have reduced the natural barriers of time and space that separate national economies, and national and multi-national policy actions that have steadily lowered various man-made barriers (i.e., tariffs, quotas, subsidies, and capital controls) to international exchange. 1 1 . What are global supply chain s and how do they relate to economic globalization? A supply chain is the interrelated organizations, resources, and processes that create and deliver a product to the final consumer. A global supply chain organized mostly by multinational corporations (MNCs) means that products that were once produced in one country may now be produced by assembling components fabricated in several countries. To illustrate, the WTO estimates that in 2011, intermediate manufactured products accounted for 55% of global non-fuel trade, and that on average about 26% of the value of national exports in 2008 included foreign content in the form of imported inputs used to produce these exports. Not only does such geographically fragmented production raise the level of trade associated with a particular final product, it also tends to raise the level of trade with both developing countries and developed countries. The expansion of global supply chains (in both value terms and as a percent of total global trade) has facilitated lower trade barriers and technological advances that have increased the speed and lowered the cost of international transport and, perhaps most importantly, accelerated the international flow of information that allows firms to coordinate geographically fragmented production with relative ease. (The effect of globalization on U.S. trade flows are discussed in the section on U.S. trade performance.) Global supply chains present both challenges and opportunities for U.S. small- and medium-sized enterprises (SMEs). On the one hand, SMEs face increased foreign competition because of globalization. At the same time, SMEs have gained business opportunities by the increase in outsourcing by U.S. and foreign MNCs. According to one study, U.S. SMEs accounted for 28% of U.S. direct exports in 2007. However, this figure rises to 41% when the value of U.S. SME sales to large U.S. exporting firms is included. 1 2 . How does globalization affect job security? A greater degree of international economic integration and specialization can add to disruptive forces in the marketplace, including concerns that over time high-wage and high-skilled U.S. service sector jobs may now be vulnerable to "outsourcing" (i.e., shifting business functions from the United States to countries with lower labor costs). Although most economists maintain that globalization is unlikely to have a negative effect on overall U.S. employment rate or the average U.S. worker wage, greater volatility of U.S. worker incomes and employment in some sectors is a possible effect. For example, some U.S. MNCs have focused on performing high-end activities associated with innovating products such as research and development (R&D), while outsourcing component production and final product assembly to numerous overseas suppliers. Such activities may reduce the number of U.S. manufacturing jobs in some industries, but boost the number of service-related jobs in other industries. Some contend that globalization has increased volatility in employment and earnings for many U.S. workers and argue that trade adjustment assistance programs should be expanded to assist individuals negatively impacted by imports in order to help them more rapidly obtain employment in other sectors. Others contend that a broader challenge for the United States is to implement policies that promote a highly educated and skilled work force and boost domestic innovation in order to help the U.S. labor force to respond more quickly to the challenges and opportunities presents by the globalization process. 1 3 . Wh ich are the largest global trading economies? The largest trading economies for total trade in goods and services in 2014 were the United States, China, Germany, Japan, the United Kingdom, and France. China was the largest exporter of goods and services, while the United States was the largest importer (see Table 1 ). In terms of the largest merchandise trading economies in 2014, the top five were China, the United States, Germany, Japan, France, and the Netherlands. The United States was the largest merchandise importer and the second-largest merchandise exporter. While the United States is a major global trader, the size of that trade relative to the size of the U.S. economy is much smaller than that of other major trading economies. U.S. exports and imports of goods and services as a percent of GDP in 2015 were 28.1%. This compares with 37.2% for Japan, 39.3% for China, 56.39% for the United Kingdom, and 83.5% for Germany. The U.S. share of global merchandise exports has changed significantly over the past five decades or so, due largely to the rapid increase of global trade, especially among developing countries. The U.S. share of global merchandise exports over this period was as follows: 15.1% in 1960, 13.6% in 1970, 11.1% in 1980, 11.3% in 1990, 12.1% in 2000, 8.4% in 2010, and 8.8% in 2014. Various organizations have developed indexes to assess the "openness" or "competitiveness" of the U.S. economy relative to other global economies. For example, the Heritage Foundation publishes an "Index of Economic Freedom." Its 2014 report ranked the United States as the 12 th "freest" economy out of 186 economies (Hong Kong, Singapore, New Zealand, Australia, and Switzerland ranked as the top 5). Similarly, the World Economic Forum (WEF) produces an annual "Global Competitiveness Index." The WEF's 2014-2015 report ranked the United States third (up from fifth from the 2013-2014 report) after Switzerland and Singapore. 14 . What is meant by the trade deficit? A trade deficit occurs when a country's imports are greater than its exports. There are various measurements of the U.S. trade deficit. In general, most media reports on the U.S. trade deficit refer to the balance of U.S. trade in goods (merchandise). In 2015, the U.S. merchandise trade deficit was $759.3 billion, down from a peak of $816 billion in 2006. However, a large and growing level of U.S. trade is in services, where the United States usually runs large annual surpluses. In 2015, that surplus was $219.6 billion. By adding net exports of services to the calculation, the U.S. trade deficit on goods and services was $464 billion in 2014. Further adding in net transfer payments (such as investment income and dividends) and net transfer payments (such as foreign aid) gives the broadest measure of a nation's trade balance—the current account balance. In 2015, the United States recorded a $484.1 billion current account deficit, down from its historic peak of $807 billion in 2006 (see Table 2 ). The decline in the U.S. trade deficit was largely caused by two major factors: the global economic crisis (which, for example, significantly reduced U.S. demand for imports) and a decline in U.S. oil imports. 15 . Wh y does the United States run a trade deficit? The most significant cause of the U.S. trade deficit is the low rate of U.S. domestic savings relative to its investment needs. In order to make up for that shortfall, Americans must borrow from countries abroad (such as China) with excess savings. Such borrowing enables Americans to enjoy a higher rate of economic growth than would be obtained if the United States had to rely solely on domestic savings. This in turn boosts U.S. consumption and the demand for imports, producing a trade deficit. The U.S. trade deficit is an indicator that Americans consume more than they produce. As long as foreigners (both governments and private entities) are willing to loan the United States the funds to finance the lack of savings in the U.S. economy (such as by buying U.S. Treasury securities), the trade deficit can continue. The United States, however, accumulates more debt. As of March 2014, the U.S. public debt was $18.2 trillion, up from $7.1 trillion in March 2004. 16 . How significant is the size of the U.S. trade deficit and how does it compare with other major economies ? Economists often look at the size of the U.S. trade deficit relative to the size of the U.S. economy (gross domestic product, or GDP). This measurement is particularly useful in examining trends over time or comparing U.S. data with those of other countries. As can be seen in Figure 1 , the U.S. balance on the current account relative to GDP deteriorated sharply from 1991 to 2006; it reached a record high 5.8% of GDP in 2006. Since that time, the U.S. current deficit as a percent of GDP has generally declined, due in large part to the effects of the global economic slowdown that began around 2008. Table 3 lists current account balances as a percent of GDP for the top 10 largest global economies in 2014 (based on GDP on a purchasing power parity basis), along with data on the ratio of domestic savings to total investment for each country. The countries with the largest current account surpluses as a percent of GDP included Germany (8.0%), Russia (5.4%), and China (2.7%). The largest economies with the biggest current account deficits as a percent of GDP included the United Kingdom (4.7%), Brazil (3.3%) and the United States (2.5%). 17 . What role do foreign trade barriers play in causing bilateral trade deficits? Some policymakers view the size of the U.S. trade deficit with certain countries (such as China, where the U.S. merchandise trade deficit totaled $343 billion in 2014—by far the largest U.S. bilateral trade imbalance) as an indicator that the trade relationship is "unfair" and the result of distortive policies, such as subsidies, trade barriers, currency intervention, discriminatory regulations, investment restrictions, and failure to establish an effective mechanism for protecting intellectual property rights (IPR)—to name a few. Such policies tend to affect bilateral trade in specific products and with particular countries and can negatively affect the profitability of U.S. exporters and overseas investors. To some extent, such policies may also affect bilateral trade balances, but do not necessarily affect the size of the overall (global) U.S. trade deficit, which, as noted earlier, is largely a reflection of the level of U.S. savings. If distortive measures were reduced in certain countries, U.S. exporters would sell more of their products to them. But if U.S. consumption/savings behavior did not change, an increase in U.S. exports would likely result in an increased demand for imports, and the overall U.S. trade deficit would likely remain relatively unchanged (all things being equal). Similarly, the reduction of distortive trade policies in one country might raise manufacturing costs to such an extent as to cause firms to move production to another country. As a result, U.S. imports from the first country would fall, while imports from the second country would rise. This would lower the U.S. trade deficit with the first country and increase it with the other, and the overall U.S. trade deficit would be relatively unchanged. 18 . How does the trade deficit affect the exchange value of the dollar? Without sufficient inflows of capital, a trade deficit causes other parts of the economy to adjust, particularly the country's exchange rate—for the United States, this is the value of the dollar relative to that of the Japanese yen, Canadian dollar, British pound, or European euro. The way the adjustment mechanism works is that the excess of U.S. imports causes a surplus of U.S. dollars to flow abroad. If these dollars are then converted to other national currencies, the dollar's excess supply tends to lower the price of the dollar relative to other currencies (exchange rate), and the value of the dollar depreciates. This causes imports to be more expensive for American consumers and U.S. exports to be cheaper for foreign buyers. This process will gradually cause U.S. imports to decrease and exports to increase, thereby decreasing the trade deficit. Foreign holders of U.S. dollars may not always exchange them for other currencies because the dollar holds a special status in global financial markets and because the U.S. economy is viewed both as a safe haven for storing wealth and as an attractive destination for investments. In some countries, the dollar is used as a medium of exchange, and in most countries it is used as a reserve currency by central banks. Foreign governments can intervene to keep the value of their currency from appreciating relative to the dollar by buying dollars and essentially sending them back to the United States through purchasing U.S. Treasury securities or other U.S. assets. China, for example, has been doing this since 1994, and, as a result, it has become the largest foreign holder of U.S. Treasury securities (at nearly $1.3 trillion as of March 2015) and the largest holder of foreign exchange reserves (at $37.3 trillion as of July 2014). Efforts by Japan in recent years to boost economic growth by expanding its money supply have led some critics to charge that such policies are largely aimed at depreciating the yen in order to boost Japanese exports. Some analysts contend that several countries have intervened in currency markets to hold down the value of their currencies and that this has hampered, to some extent, the realignment of global trade balances, which in turn has negatively affected the U.S. economy. For example, a July 2012 study by the Peterson Institute for International Economics contends that "currency manipulation," based on "excessive" levels of foreign exchange reserves (FERs), is widespread, especially in developing and newly industrialized countries. The study identified 22 economies that "manipulate their currency" based on the size of their FERs as a percent of GDP and the cumulative increase in FERs as a percent of GDP in 2012, the most significant of which were China, Denmark, Hong Kong, South Korea, Malaysia, Singapore, Switzerland, and Taiwan. The Peterson Institute estimated that currency intervention by the 22 economies increased the U.S. current account trade deficit by $200 billion to $500 billion and caused the loss of 1 million to 5 million U.S. jobs. 19 . How is the trade deficit financed? The U.S. trade deficit is financed by borrowing from abroad. This takes the form of net financial inflows into the United States (which is reflected in the U.S. current account data). In 2013, U.S. net financial inflows amounted to $93 billion. Foreigners acquired $906 billion in assets in the United States (excluding financial derivatives), while Americans acquired $553 billion in assets abroad. Within these totals, foreigners purchased an additional $141.8 billion in Treasury securities and $44 billion in other government securities. Foreigners also invested $193 billion in their companies located in the United States. 20 . Is the trade deficit a problem for the U.S. economy? Many economists view the U.S. trade deficit as a dual problem for the economy. In the long term, it generates debt that must be repaid by future generations. Meanwhile, the current generation must pay interest on that debt. Whether the current borrowing to finance imports is worthwhile for Americans depends on whether those funds are used for investment that raises future standards of living or whether they are used for current consumption. If American consumers, business, and government are borrowing to finance new technology, equipment, or other productivity-enhancing products, the borrowing results in a deficit and can be paid off because such investments will boost the level of economic growth in the long run. If the borrowing is to finance consumer purchases of clothes, household electronics, or luxury items, it pushes the repayment of funds for current consumption on to future generations without investments to raise their ability to finance those repayments, which implies that in the future, consumption levels will have to fall in order to pay for the debt, which lowers future economic growth. Some economists warn that, under certain circumstances, a continually rising U.S. trade deficit could spark a large and sudden fall in the value of the dollar and financial turmoil in both the United States and abroad. The U.S. current account deficit as a percent of GDP reached a peak of 5.8% in 2006 and has fallen significantly since, declining to 2.4% in 2014, although much of that decline was the result of the effects of the global economic slowdown. Although the U.S. economy has not yet fully recovered to pre-crisis levels, foreign investors continue to look to the United States as a safe haven for their money. As a result, the U.S. Treasury has had no problem selling securities to fund the U.S. budget deficit. Eventually, however, if foreign investors stop offsetting the trade deficit by buying dollar-denominated assets, U.S. interest rates would have to rise to attract more foreign funds into U.S. investments. Rising interest rates could cause a crisis in financial markets and may also raise inflationary pressures. Since global financial markets are now so closely intertwined, turmoil in one market can quickly spread to other markets in the world. 21 . How long can the United States keep running trade deficits? U.S. deficits in trade can continue for as long as foreign investors are willing to buy and hold U.S. assets, particularly government securities and other financial assets. Their willingness depends on a complicated array of factors, including the perception of the United States as a safe haven for capital, relative rates of return on investments, interest rates on U.S. financial assets, actions by foreign central banks, and the savings and investment decisions of businesses, governments, and households. The policy levers that influence these factors that affect the trade deficit are held by the Federal Reserve (interest rates) as well as both Congress and the Administration (government budget deficits and trade policy), and their counterpart institutions abroad. 22 . How can the trade deficit be further reduced? In reducing the U.S. trade deficit, the policy tool kit includes direct measures (trade policy) that are aimed at imports, exports, and the exchange rate, and indirect measures (monetary and fiscal policies) aimed at U.S. interest rates, saving rates, budget deficits, and capital flows. Monetary and fiscal policies, however, usually address conditions in the U.S. macro-economy and generally consider the trade deficit only as a secondary target. 23 . How important is trade to the U.S. economy? As indicated in Figure 2 , the level of U.S. trade in goods in services relative to GDP has risen markedly over the past three decades. U.S. exports of goods and services as a percent of GDP rose from 9.8% in 1980 to 12.6% in 2015, while imports of goods and services increased from 10.3% to 15.5%. According to the U.S. Department of Commerce, in 2014, U.S. exports "supported" 11.7 million jobs in the United States, which was 53.9% higher than 1993 levels. 24 . Who are the leading U.S. trade partners? As shown in Table 4 , in 2015, China was America's largest merchandise trading partner, followed by Canada, Mexico, and Japan. China was the largest source of U.S. imports, followed by Canada, Mexico, and Japan. Canada was the largest destination of U.S. exports, followed by Mexico, China, and Japan. 25 . How does economic globalization " complicate " interpretation of U.S. trade data? Trade is becoming increasingly complex. In the past, companies tended to source most or all of their production in one country, using inputs that were largely made domestically. Today, MNCs produce worldwide, often using inputs that are sourced from the United States and worldwide. China is a good example of this phenomenon. Since initiating free market reforms in 1979 and opening up its economy to global trade and investment, China has emerged as a major center for global supply chains. Because of China's large pool of low-cost labor, many export-oriented multinational corporations have moved production from other countries (primarily in Asia) to China. In many cases, products that are "made in China" are actually products that are "assembled in China," using imported inputs (such as components) that are designed and produced globally. The value added that occurs in China is often quite small relative to the total value of the finished product when it is imported into the United States and elsewhere, and a significant level of the profits from the sale of the product is estimated to accrue to the multinational company that owns the brand. The rapidly changing nature of global supply chains has made it increasingly difficult to understand and interpret the implications of trade data for the U.S. economy. To illustrate, when the United States imports such products as iPhones and iPads, it attributes the full value of those imports as occurring in China, even though the value added that occurred there is quite small. Apple Inc., (the U.S. firm that developed these products) is the largest beneficiary in terms of the profits generated by the sale of its products, and most of its product design, software development, product management, marketing, and other high-wage functions and employment occur in the United States. In other words, U.S. trade data may show where products are being imported from, but they often fail to reflect who ultimately benefits from that trade. In many instances, U.S. imports from China are really imports from many countries. Yet, the full value of the final imported product is attributed to China, which results in what one might consider to be an inflated trade deficit figure. A joint study by the Organization for Economic Cooperation and Development (OECD) and the WTO estimated that the U.S trade deficit with China would be reduced by 25% in 2009 if bilateral trade flows were measured according to the value-added that occurred in each country before it was exported. Additionally, one study estimated that 24.7% of U.S. imports from Canada, and 39.8% of U.S. final merchandise imports from Mexico, consist of value added from the United States. 26 . Is the U.S. manufacturing sector shrinking? Media reports of factory closings and worker layoffs, and the plethora of labels indicating that merchandise was made in China, Mexico, or any of a number of foreign countries, often reinforce the perception that the U.S. manufacturing sector is shrinking. Two ways of examining this issue are to look at U.S. manufacturing output and manufacturing employment. Such data paint a mixed picture. To illustrate: From 1987 to 2015, the value of real output by U.S. manufacturing increased by 83.1% ( Figure 3 ). From 1980 to 2014, the value-added of U.S. manufacturing as a percent of GDP fell from 20.5% to 12.0%, while services grew from 56.0% to 68.5% of GDP ( Figure 4 ). From 1987 to 2014, U.S. manufacturing became more efficient as labor productivity (measured by output per hour) increased by 152.4% ( Figure 3 ). U.S. employment in manufacturing peaked at 19.4 million in 1979, but fell to 12.3 million by 2015, while jobs in private services during this time increased from 48.9 million to 100.3 million. In addition, U.S. employment in manufacturing as a percent of total non-agricultural employment fell from 21.6% in 1979 to 8.8% in 2014, while the level for private services grew from 54.3% to 70.5%. Business services employment within U.S. manufacturing has increased in recent years, growing from 29.8% in 2002 to 32.6% of total U.S. manufacturing jobs in 2012; computer and electronic products had the largest increase, with business services accounting for 67.2% of those manufacturing jobs in 2012. These data indicate that, while U.S. manufacturing output has increased, its importance relative to the economy has declined. U.S. employment in manufacturing has declined in both the number of workers and as a percent of non-agricultural employment. The decline in U.S. manufacturing employment was likely partly caused by the increase in labor productivity (such as the introduction of new technologies) as fewer workers are now needed for a given level of production than were needed in the past. In addition, the jobs in the service sector increased sharply, both in numbers and as a percent of non-agricultural employment. As noted earlier, globalization may have impacted the U.S. manufacturing in some industries. Apple Inc. designs its products in the United States but outsources most of its production to firms in China. Apple's main source of its profits stems from its ability to innovate new products and intellectual property and engineering, not from the production of these products. In addition, many U.S. manufacturing firms use imported inputs (such as parts) from low-wage countries in their production to lower costs as part of global supply chain production. Also, from a statistical standpoint, some of the "decline" in manufacturing may have resulted from reclassification of jobs in U.S. employment data, that is, jobs that used to be classified under manufacturing are now classified under services. Manufacturing remains an important component of the U.S. economy. U.S. manufacturers are estimated to perform 70% of all private-sector R&D and account for 60% of U.S. exports. According to the United Nations, in 2012, the United States ranked second after China in terms of gross value added of manufacturing (i.e., the actual value of manufacturing that occurred in the country, excluding inputs and raw materials used in production). The value for manufacturing in China was $2.6 trillion versus $2.0 trillion for the United States. 27. What is trade in services , and how is it different from goods trade? The term "services" refers to an expanding range of economic activities, such as audiovisual, construction, computer and related services, energy, express delivery, e-commerce, financial, professional, retail and wholesaling, transportation, tourism, and telecommunications. Services account for a majority of U.S. economic activity—68% of U.S. gross domestic product (GDP) and 80% of U.S. civilian employment. Services are 30% of U.S. exports but, unlike trade in goods, every year the United States exports more services than it imports. Surpluses in services trade have partially offset U.S. trade deficits in goods trade. Services not only function as end-use products, but also act as the "lifeblood" of the rest of the economy. For example, transportation services move intermediate products along global supply chains and final products to consumers; telecommunications services open e-commerce channels; and financial services provide credits for the manufacture and consumption of goods. Intermediate services embedded within a global value chain can include services such as research and development, design and engineering, and business services, such as legal and accounting. As with trade in goods, foreign government barriers may prevent U.S. trade in services from expanding to their full potential, but services barriers are often different from those faced by goods suppliers. Many impediments in goods trade—tariffs and quotas, for example—are at the border. By contrast, restrictions on services trade occur largely within the importing country and serve as "behind the border" barriers. Some of these restrictions are in the form of government regulations. One concern in international trade is ensuring that partner countries' regulations are applied in a nondiscriminatory and transparent manner that does not that favor domestic over foreign service providers. Because services transactions more often require direct contact between the consumer and provider than is the case with goods trade, many of the "trade barriers" that foreign companies face pertain to the ability to establish a commercial presence in the consumers' country in the form of direct investment or to the temporary movement of providers and consumers across borders. 28. How is digital trade different from other trade in goods and services? Non-tariff barriers related to digital trade establish restrictions that may impact what a firm offers in a market or how it operates. Because digital trade is intangible and does not require direct interaction between individuals, the trade barriers confronted are often in the form of localization requirements that restrict the flow of commercial data. For example, data transfer regulations that restrict cross-border data flows ("forced" localization barriers to trade), or require use of locally based servers or infrastructure, may limit the type of financial transactions and services that a firm can sell in a given country. Restrictions on cross-border data flow may prohibit the ability of a provider that offers or relies on cloud-computing to enter a market. Similarly, country-specific data regulations may create a disincentive for U.S. firms to invest in certain markets if a firm is hindered in its ability to export its own data from a foreign affiliate to a U.S.-based headquarters in order to aggregate and analyze information from across its global operations or to transfer customer or human resources records. The proponents of data localization seek to ensure privacy of citizens, security, and domestic control. However, others point out that maintaining data within a country does not necessarily guarantee security or protect a country from exposure to foreign attacks. Opponents of localization restrictions on digital trade also point to lost efficiencies and increased costs of not allowing a free flow of information across borders, and they support policies that protect privacy without creating trade barriers. Other non-tariff barriers to digital trade may come in the form of regulations that require the use of national standards or certification in order to operate. 29 . What role does Congress play in the making of trade policy? The role of Congress in formulating international economic policy and regulating international trade is based on express powers set out in Article 1, Section 8, of the U.S. Constitution, "To lay and collect Taxes, Duties, Imposts and Excises" and "To regulate Commerce with foreign Nations, and among the several States," as well as the general provision "To make all Laws which shall be necessary and proper" to carry out these specific authorities. Congress exercises this power in many ways, such as through the enactment of tariff schedules and trade remedy laws, and the approval and implementation of reciprocal trade agreements. 30 . What committees take the lead in exercising congressional authority over trade? Because of the revenue implications inherent in most trade agreements and policy changes, the House Ways and Means Committee and Senate Finance Committee have primary responsibility for trade matters. Each committee has a subcommittee dedicated exclusively to trade issues. Other committees may have a role should trade agreements, policies, and other trade issues include matters under their jurisdiction. 31 . In w hat explicit ways does Congress make trade policy? U.S. trade policy is founded on statutory authorities, as passed by Congress. These include laws authorizing trade programs and governing trade policy generally in areas such as tariffs, non-tariff barriers, trade remedies, import and export policies, political and economic security, and trade policy functions of the federal government. Congress also sets trade negotiating objectives in law; requires formal consultation from, and opportunity to provide advice on trade negotiations with the executive branch; and conducts oversight hearings on trade programs and agreements to assess their conformity to U.S. law and congressional intent. 32 . How can individual Member s affect trade policy decisions? Individual Members affect trade policy first as voting representatives who determine collectively the statutes governing trade matters. They may also exercise influence as sitting members on relevant committees, in testimony before those committees, whether as members of them or not, and in exercising informal influence over other Members through the exercise of the political authority and power invested in them by the electorate. 33 . What is meant by fast track or Trade Promotion Authority (TPA)? TPA (formerly known as fast track) refers to a statutory mechanism under which Congress (1) defines trade negotiating objectives, (2) authorizes the President to enter into reciprocal trade agreements governing tariff and non-tariff barriers, and (3) allows implementing bills to be considered under expedited legislative procedures, provided the President observes certain statutory obligations in negotiating trade agreements, including notifying and consulting Congress. The purpose of TPA is to preserve the constitutional role of Congress with respect to consideration of implementing legislation for trade agreements that require changes in domestic law, while also bolstering the negotiating credibility of the executive branch by assuring that the trade implementing bill will receive expedited and unamended consideration. The last TPA expired in 2007. Legislation to renew TPA—the "Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015)—was introduced by Senators Hatch and Wyden and Representative Ryan on April 16, 2015. The legislation, as reported by the Senate Finance Committee, was joined with legislation extending Trade Adjustment Assistance (TAA) into a substitute amendment to H.R. 1314 (an unrelated revenue measure), and the legislation passed on May 22 by a vote of 62-37. In the House, the measure was voted on under a procedure known as "division of the question," which requires separate votes on each component, but approval of both for the bill to pass. Voting on June 12, TPA (Title I) passed by a vote of 219-211, but TAA (Title II) was defeated 126-302. On June 18, the House again voted on identical TPA language as an amendment attached to H.R. 2146 , an unrelated House bill. This amendment did not include TAA. This legislation passed the House 218-206, and by the Senate 60-38. The President signed the legislation ( P.L. 114-26 ) on June 29, 2015. Current negotiations on the proposed Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (T-TIP), the Trade in Services (TISA), and the World Trade Organization (WTO) Doha Round agreements may require TPA in order to pass implementing legislation. 34 . Who is in charge of U.S. trade policy ? The President directs overall trade policy in the executive branch and performs specific trade functions granted to him by statute. The chief adviser to the President on trade matters is the United States Trade Representative (USTR), a Cabinet-level appointment that has primary responsibility for developing, coordinating, and implementing U.S. trade policy, as well as negotiating trade agreements and enforcing U.S. trade laws (see 19 U.S.C. 2171). 35 . Why was the USTR created? Congress created the USTR in 1962 (originally as the Office of the Special Representative for Trade Negotiations) to heighten the profile of trade and provide better balance between competing domestic and international interests in the formulation and implementation of U.S. trade policy and negotiations, which were previously managed by the U.S. Department of State. 36 . How are trade decisions made? The USTR has primary responsibility for trade negotiation and trade policy decisions within the executive branch. However, such decisions often involve areas of responsibility that fall under other Cabinet-level departments, at times requiring a multi-department interagency process. To implement this process, Congress established the Trade Policy Committee, chaired by the USTR and consisting of the Secretaries of the Treasury, Commerce, State, Agriculture, Labor, and other department heads as the USTR deems appropriate. The USTR subsequently established two sub-Cabinet groups—the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC). The executive branch also solicits advice from a three-tiered congressionally established trade advisory committee system that consists of private sector and non-federal government representatives. 37 . What are the functions of the executive branch in U.S. trade? The executive branch executes trade policy in a variety of ways. It negotiates, implements, and monitors trade agreements, and has responsibility for customs enforcement, collection of duties, implementation of trading remedy laws, budget proposals for trade programs and agencies, export and import policies, and agricultural trade, among others. 38 . When does the President get involved in trade decisions? The President is responsible for influencing the direction of trade legislation, signing trade legislation into law, and making other specific decisions on U.S. trade policies and programs where he deems the national interest or political environment requires his direct participation. This can take place in many areas of trade policy, such as requesting TPA/fast track authority, initiating critical trade remedy cases, meeting or communicating with foreign heads of state or government, and other areas subject to or requiring high political visibility. 39 . What is the formal role of the private sector? The formal role of the private sector in the formulation of U.S. trade policy is embodied in a three-tiered committee system that Congress has provided in Section 135 of the Trade Act of 1974, as amended. Currently there are 28 committees (with about 700 citizen advisors), which are administered by the USTR's Office of Intergovernmental Affairs & Public Engagement (IAPE) in cooperation with a number of other federal agencies. The three-tier system consists of (1) the President's Advisory Committee for Trade Policy and Negotiations (ACTPN); (2) five general policy advisory committees dealing with environment, labor, agriculture, Africa, and intergovernmental issues; and (3) 22 technical advisory committees in the areas of industry and agriculture. These committees have been set up in order to ensure that private sector views are known and considered in the formulation and implementation of U.S. trade policies and programs. 40 . What is the informal role that the private sector plays in the formulation of U.S. trade policy? The private sector helps shape U.S. trade policy in a number of informal ways. For example, representatives from industry and non-government organizations may be invited to testify before congressional committees on trade matters. Private sector representatives are also invited or requested to testify before the United States International Trade Commission (USITC), the U.S. Department of Commerce, or other government bodies to provide assessments of the potential impact of pending trade actions, such as an antidumping or countervailing duty order, on their industries and sectors. Private sector organizations also lobby Congress and the executive branch to promote their interests in U.S. trade policy actions and agreements. 41 . Why do groups attempt to lobby on trade decisions? Trade is becoming a larger and increasingly integral part of the U.S. economy. Virtually all kinds of agricultural and manufactured goods are tradeable—they can be exported and imported. In addition, a growing number of services—once considered non-tradeable because of their intangibility—can be bought and sold across borders because of technology advancements, such as the Internet. As a result, how U.S. trade policy is shaped and implemented can affect a broad spectrum of people in the United States. For some industries, firms, and workers, congressional decisions to support a particular trade agreement or Department of Commerce rulings on antidumping cases, subsidies, and other cases could affect both employment and growth. Those decisions could also influence product choices of U.S. consumers. Such groups are also concerned with obtaining greater market access in various countries. Consequently, groups representing businesses, farmers, workers, consumers, and other segments of the economy strive to make sure that their views on trade policy decisions are represented. 42 . How do federal courts get involved in trade? Legal challenges may be brought in federal court by importers, exporters, domestic manufacturers, and other parties affected by governmental actions and decisions concerning trade. Cases may involve, for example, customs classification decisions, agency determinations in antidumping and countervailing duty (CVD) proceedings, presidential decisions to (or not to) restrict imports under trade remedy statutes, or the constitutionality of state economic sanctions. The federal government may also initiate legal proceedings against individuals and firms to enforce customs laws or statutory restrictions on particular imports and exports. Some trade statutes may preclude judicial review. For example, most preliminary determinations in antidumping and CVD proceedings and governmental actions involving the implementation of WTO and free trade agreements may not be challenged in federal court. While most federal cases involving trade laws are heard in the U.S. Court of International Trade (see below), cases may also be filed in other federal courts depending on the cause of action or proceeding involved. Court decisions may significantly affect U.S. trade policy when they examine whether an agency has properly interpreted its statutory mandate, determine whether an agency has acted outside the scope of its statutory authority, decide how much deference should be granted the executive branch under a particular statute, or rule on whether a trade statute violates the U.S. Constitution. 43 . What is the U.S. Court of International Trade? The U.S. Court of International Trade (USCIT) is an Article III federal court located in New York City with exclusive jurisdiction over a number of trade-related matters, including customs decisions, antidumping and countervailing duty determinations, import embargoes imposed for reasons other than health and safety, and the recovery of customs duties and penalties. Formerly known as the Customs Court, the USCIT was renamed in the Customs Court Act of 1980, which also significantly enlarged its jurisdiction. The court consists of nine judges, no more than five of whom may be from the same political party. Judges are appointed by the President with the consent of the Senate. USCIT decisions are appealable to the U.S. Court of Appeals for the Federal Circuit and to the U.S. Supreme Court. Statutory provisions related to the USCIT may be found at 28 U.S.C. Sections 251-258 (establishment) and 28 U.S.C. Sections 1581-1585 (jurisdiction). 44 . Why does the United States negotiate trade liberalizing agreements? The United States negotiates trade liberalizing agreements for economic and commercial reasons, including to encourage foreign trade partners to reduce or eliminate tariffs and non-tariff barriers and, in so doing, increase market access for U.S. exporters; gain an advantage for U.S. exporters over foreign competitors in a third-country market; increase access to lower cost imports that help to control inflation and offer domestic and industrial consumers a wider choice of products; and encourage trading partners, especially developing countries, to rationalize their trade regimes, and thereby improve the efficiency of their economies. The United States also negotiates trade liberalizing agreements for foreign policy/national security reasons, including to strengthen established alliances; forge new strategic relationships; and establish a presence in a geographic region. 45 . What are the various types of trade liberalizing agreements? In general, reciprocal trade agreements can be categorized by the number of countries involved: bilateral agreements , such as free trade agreements (FTAs), are between two countries; regional agreements , such as the North American Free Trade Agreement (NAFTA) and the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), involve three or more countries in a geographic region; plurilateral agreements involve a number of countries (not always from the same region) that often negotiate to liberalize trade in a specific sector, such as the proposed Trade in Services Agreement (TISA); and multilateral agreements , such as those negotiated in the World Trade Organization (WTO), cover a significant share of global trade. Among major trade agreements, the TPP is currently a major focus, in that it is a proposed comprehensive and high-standard free trade agreement (FTA) among 12 countries to liberalize trade and investment through enhanced rules and disciplines and greater market access. It may become a vehicle to advance a wider Asia-Pacific free trade area as well as a U.S. policy response to the rapidly increasing economic and strategic linkages among Asian-Pacific states. It is portrayed by the Administration as the key economic component of the "rebalance" to the Asia-Pacific. The TPP has slowly evolved from a more limited agreement among four countries concluded in 2006 into the current 12-country FTA negotiations, with the United States joining the negotiations in 2008. Japan, the most recent country to participate, joined the negotiations in 2013. The United States has existing FTAs with 6 of the 11 countries participating—Australia, Canada, Chile, Mexico, Peru, and Singapore. The five TPP countries without existing FTAs with the United States are Brunei, Japan, Malaysia, New Zealand, and Vietnam. Views on the agreement vary widely. Proponents argue that the TPP has the opportunity to expand trade and investment opportunities with negotiating partners that make up 37% of total U.S. goods and services trade, and establish trade and investment disciplines on new issues such as supply chain management, state-owned enterprises (SOEs), regulatory coherence, and digital trade barriers, in a region of strategic economic and geopolitical importance. Proponents argue that the TPP has the opportunity to expand trade and investment opportunities with negotiating partners that make up 37% of total U.S. goods and services trade, and establish trade and investment disciplines on new issues such as supply chain management, state-owned enterprises (SOEs), regulatory coherence, and digital trade barriers, in a region of strategic economic and geopolitical importance. Opponents voice concerns over greater competition in import sensitive industries, and how the potential TPP agreement might impact U.S. sovereignty in establishing future U.S. regulations in areas such as health, food safety, and environment. Ambassador Froman signed the concluded TPP on February 4, 2016, but Congress must pass implementing legislation for the agreement to enter into force in the United States. Recently signed Trade Promotion Authority (TPA) legislation guarantees certain legislative procedures for congressional consideration of TPP implementing legislation, including an up or down vote by Congress. Such procedures, however, are contingent on Congress's determination that the Administration has made sufficient progress in advancing congressional negotiating objectives established in TPA and has followed TPA notification and consultation requirements. 46 . Who benefits from trade liberalizing agreements? Who loses? Economic theory suggests and empirical studies have generally concluded that economies as a whole benefit when trade barriers are removed because economic resources (land, labor, and capital) are employed more efficiently. However, economic theory and studies also point out that the benefits of trade liberalization are not distributed evenly within an economy and not even among economies. Some industries, firms, and workers "lose" if they cannot adjust to the increased foreign competition resulting from the trade agreement or if particular provisions of the trade agreement disadvantage their interests. Other industries, firms, and workers "win" if they can take advantage of new market opening opportunities presented by the trade agreement or if particular provisions of the trade agreement favor or promote their interests. 47 . What is the World Trade Organization ( WTO ) ? The WTO is a 160-member body that establishes through negotiations and implements the multilateral system of rules on trade in goods, services, agriculture, IPR, trade remedies, and on other trade-related matters and adjudicates disputes under the rules. Fundamental principles of the WTO include non-discrimination and national treatment in trade among the members. The WTO was established in January 1995 as a part of the agreements reached by the signatories to the General Agreement on Tariffs and Trade (GATT). The WTO administers the roughly 60 agreements and separate commitments made by its members as part of the GATT (for trade in goods), the General Agreement on Trade in Services (GATS—for trade in services), and the agreement on trade-related aspects of intellectual property rights (TRIPS). It also oversees multilateral and plurilateral negotiations among its members. 48 . How are disputes resolved under WTO agreements? If a WTO member believes that another member has adopted a law, regulation, or practice that violates a WTO agreement, the member may initiate dispute settlement proceedings under the WTO Dispute Settlement Understanding. The process begins with consultations and, if these fail to resolve the dispute, the member may request that the WTO establish a dispute panel. A panel report may be appealed to the WTO Appellate Body by either disputing party. If the defending member is found to have violated a WTO obligation, the member will be expected to remove the challenged measure. If this is not done by the end of the established compliance period, the prevailing member may request authorization from the WTO to take temporary retaliatory action. In most cases, retaliation consists of tariff increases on selected products from the defending member. From January 1995 to June 2014, 496 dispute settlement complaints have been filed in the WTO, with the majority of disputes resolved through consultations and negotiations rather than through a ruling by a WTO dispute settlement panel (or the WTO's Appellate Body). WTO members have an obligation to comply with WTO dispute resolution rulings, and if such compliance is not forthcoming, the WTO member that filed the complaint can request authorization to impose trade sanctions against, or seek compensation from, the defending WTO member. WTO decisions do not have direct effect in U.S. law. Thus, in the event a U.S. statute is found to be inconsistent with U.S. obligations in the WTO, the dispute findings may not be implemented except through U.S. legislative action. Where an administrative action is successfully challenged, the USTR decides what, if any, compliance action will be taken. If sufficient statutory authority exists to amend or modify a regulation or practice or to issue a new determination in a challenged administrative proceeding, the USTR may direct the agency involved to make the change, provided that certain statutory procedures for such actions are followed. As a matter of policy, the United States generally seeks to comply with WTO dispute settlement rulings that go against it, as doing so helps ensure that other WTO members comply with rulings that have gone against them, including those brought by the United States. 49 . What is the Doha Round? Since the GATT was signed in 1947, its signatories (member countries) have revised and expanded the trade rules in various rounds of negotiations to liberalize global trade. The Doha Development Agenda (DDA) is the ninth round and the first under the WTO. It is named after the city where it was launched in November 2001—Doha, Qatar. The WTO members included "development" in the title to reflect their intention to include issues of importance to developing countries. The negotiations have primarily focused on three areas—agriculture, non-agricultural goods, and services, although members have conducted negotiations in other areas as well, such as rules. As of this writing, negotiators have not been able to reach agreement and conclude the round. In December 2013, WTO members reached consensus on a Trade Facilitation Agreement (TFA) to remove customs obstacles at the border. However, beginning in July 2014, implementation of the agreement has been held up by India because of its concerns over food security issues. On November 13, 2014, the USTR announced that the United States and India had resolved their differences. As of March 2015, WTO members have reported on new efforts made to formally accept the new TFA, with delegations outlining target dates for securing approval seeing that the agreement enter the WTO's 10 th Ministerial Conference in Nairobi next December. 50 . What are free trade agreements (FTAs)? At a minimum, FTAs are agreements between/among two or more countries under which they agree to eliminate tariffs and non-tariff barriers on trade in goods and services among them, but each country maintains its own trade policies and regulations, including tariffs, on trade outside the FTA. FTA partner countries may also agree to reduce barriers or otherwise establish rules of behavior in other economic activities—investment, IPR, government procurement, worker rights, and environmental protection. 51 . How do FTAs that the United States negotiate s generally differ from those negotiated among other countries? The United States currently has 14 FTAs in force that include 20 countries. The FTAs that the United States negotiates are often more comprehensive and high standard than those that are negotiated among other countries, particularly developing countries. The standard U.S. FTA model includes not only the elimination of tariffs on trade in goods among the FTA partners, but also reduction of barriers on trade in services, rules on foreign investment, requirements for IPR protection, government procurement, and provisions on labor and environment, and several other issues. The United States is currently negotiating a number of FTAs, including the TPP, involving the United States and 11 other countries in the Asia-Pacific region; and the Transatlantic Trade and Investment Partnership (T-TIP) between the United States and the European Union. The United States has sought to make the TPP a comprehensive high standard free trade agreement that can serve as template for future FTA negotiations, especially through addressing issues that have not traditionally been address in other trade agreements, such as the development of new rules on state-owned enterprises (SOEs) and digital trade. 52 . What are Trade and Investment Framework Agreements (TIFAs)? A TIFA is an agreement between the United States and another country (for example Egypt) or group of countries (for example, ASEAN) to consult on issues of mutual interest in order to promote trade and investment among the participants. Most U.S. TIFAs are with developing countries. The United States and its TIFA partner(s) agree to establish a joint ministerial-level council as the overall mechanism for consultation with the possibility of establishing issue-oriented working groups. A TIFA is a non-binding agreement and does not involve changes in U.S. law; therefore, TIFAs do not require congressional approval. In some cases, TIFAs have led to FTA negotiations. As noted earlier, countries export in order to obtain imports, which benefit various parts of the economy. Lower-priced imports generally benefit the U.S. economy as a whole. However, in some instances, imports may harm certain import-sensitive U.S. firms, in particular when foreign firms or governments seek to employ trade-distorting measures. The federal government seeks to use a number of trade tools to combat unfair foreign trade policies and assist those injured by foreign trade. In some cases, such policies are intended to help create a "level playing field" for U.S. producers and workers, induce foreign countries to eliminate trade-distortive policies, or to help import-sensitive firms adjust to the changing nature of global competitive through the use of Trade Adjustment Assistance (TAA). 53 . What are other benefits of imports? Consumers can benefit through access to a wider variety of goods at lower costs. This raises consumer welfare (which means consumers have more money to spend on other goods and services) and helps control the rate of U.S. inflation. Producers can benefit through access to lower priced components or inputs that can be utilized in the production process. Longer term, import competition can also pressure companies to reduce costs through innovation, research, and development, leading to growth in economic output and productivity. 54 . What are the costs of imports? By affording increased competition to U.S. companies producing similar products, imports can contribute to U.S. job losses and business failures. In some cases, import competition can cause job losses and company failures that are concentrated in a region or sector, which can cause considerable economic distress in a community. The use of unfair trade policies (such as export subsidies) to boost sales in the United States can result in trade tensions. 55 . What are the main U.S. trade remedy laws? Two primary trade remedy laws aimed at unfair trade practices are the antidumping (AD) and countervailing duty (CVD) statutes. Other trade remedy laws include Section 201 (see below), Section 301 (focuses on violations of trade agreements or other foreign practices that are unjustifiable and restrict U.S. commerce), and Section 337 (focuses on unfair practices in import trade such as patent and copyright infringement). 56 . What is the purpose of the countervailing duty law? The purpose of the CVD law is to offset any unfair and injurious competitive advantage that foreign manufacturers or exporters might enjoy over U.S. producers as a result of receiving a government subsidy. As defined by the WTO, a subsidy is a financial contribution, such as a loan, grant, or tax credit, provided by a government or other public entity that confers a specific benefit to manufacturers or exporters of a product. Countervailing duties, if imposed, are designed to equal the net amount of the foreign subsidy and are levied upon importation of the subsidized goods into the United States. 57 . What is the purpose of the antidumping law? Dumping generally refers to an unfair trade practice in which an exporter sells goods in one export market at lower prices than comparable goods sold in the home market or in other export markets. Companies may dump products to gain market share or deter competition. U.S. law provides for the assessment and collection of antidumping duties when an administrative determination is made that foreign goods are being dumped or sold at less than fair value in the United States, and that such imports cause or threaten to cause material injury to a U.S. industry. 58 . What is the import relief (safeguards) law? Chapters 1 and 2 of the Trade Act of 1974, as amended, provide the President with the authority to apply safeguard measures temporarily (increased tariffs or quotas) to restrict imports if they threaten or cause serious injury to a domestic industry. Safeguard measures apply to products that are not necessarily traded unfairly. This provision recognizes that liberalization of trade barriers can change competitive conditions and that in certain cases domestic industries should be provided a temporary period of relief to allow time for adjustment. The U.S. International Trade Commission investigates and recommends on import relief cases, and the President takes final action. Safeguard measures are permitted under WTO rules. 59 . What is the Trade Adjustment Assistance (TAA) Program? Congress passed the first trade adjustment assistance program as part of the Trade Expansion Act of 1962 (P.L. 87-794) and it has extended and changed the TAA provisions over time. TAA was developed to provide certain types of temporary assistance to workers, firms, farmers, and communities that may be negatively impacted by foreign trade. Funding for TAA was $797 million in FY2013, down from $1.8 billion in FY2010. Recent legislation in regards to TAA was introduced March 4, 2015, the Trade Preferences Extension Act of 2015 ( H.R. 1295 ) reauthorizes TAA through June 30, 2021, and restores some benefits under the program that had been allowed to expire by extending the termination provisions of the Trade Act of 1974; authorizing $450 million in funding; extending the reemployment trade adjustment assistance; and authorizing appropriations for trade adjustment assistance for workers, firms, and farmers. It was signed into law June 29, 2015 ( P.L. 114-27 ). 60 . What is the rationale for TAA? In proposing the program, supporters in Congress argued that those injured by increased trade competition as a result of public policy should not be required to bear the full cost of the impact. Justification rested on arguments for (1) economic efficiency, by speeding the adjustment process and returning idle resources to work more quickly, (2) equity, by compensating the losers of free trade while spreading the cost of freer trade to society as a whole, and (3) as a way to defuse domestic opposition to trade liberalizing agreements and measures. TAA skeptics argue that such assistance is costly and economically inefficient, reduces worker and firm incentives to relocate and adjust, and may not be equitable given that many economic groups hurt by changing economic circumstances caused by factors other than trade policies are not afforded special economic assistance. Despite disagreement, Congress has consistently found compromise positions to maintain the program over the past five decades. The federal government maintains a number of programs and policies to promote certain U.S. exports. Some programs provide direct assistance to U.S. exporters, such as financing or trade counselling. Other U.S. policies attempt to promote exports by negotiating trade liberalization measures, such as through FTAs, or agreements to enhance trade rules and disciplines. In some instances, the federal government seeks to restrict certain exports. 61 . What are the benefits of exports? From the perspective of individual companies, export markets provide opportunities to expand production and increase efficiency by taking advantage of economies of scale and access to growing markets overseas. Companies may also be able to sell goods and services at higher prices than they can obtain at home. From the perspective of individual workers, jobs in export-oriented industries often provide higher than average wages. 62 . What are some costs of exporting? From an economic perspective that views higher levels of consumption as being the goal of economic activity, countries export goods and services in order to earn the foreign currency with which they can buy imports. Exports, according to this view, are foregone production that could have been consumed domestically (and instead are used to acquire and consume imports). 63 . What factors most determine U.S. export levels? Economists maintain that the overall level of U.S. exports is determined primarily by the same macroeconomic conditions that generate the U.S. trade deficit. These include the level of savings and investment, the foreign exchange rate, and willingness of foreigners to invest in U.S. assets. U.S. exports also depend on economic growth rates in major markets. The higher the rate of economic growth in Asia (particularly Japan and China), Europe (particularly Germany, the UK, and France), Canada, and Latin America, the more people in those markets are likely to buy U.S. exports, other things being equal. 64 . What factors determine the exporting success of specific sectors? The level of American exports in specific sectors depends both on the overall level of exports and on an interplay of factors such as the relative competitiveness of the American industry, trade barriers abroad, and sometimes the degree of U.S. export promotion. The higher the overall level of exports, the more individual sectors are likely to sell abroad, but given the impact of macroeconomic factors, export surges by a particular sector often are offset by a decline in exports by other sectors. In a world of (mostly) floating exchange rates, a large export surge will cause foreigners to buy more dollars to pay for those exports. This raises the demand for dollars and increases its price relative to other currencies. Since the United States does not intervene in currency markets to fix its exchange rate, the higher value of the dollar makes U.S. exports more expensive and may reduce their sales. 65 . How does the U.S. government promote exports? There are at least 20 federal agencies involved in promoting U.S. exports and supporting U.S. investment. For example, the Export-Import Bank (Ex-Im Bank), the Department of Agriculture, and the Overseas Private Investment Corporation (OPIC) administer various finance programs aimed at helping U.S. firms export and invest in certain developing countries, including through fee-based services. These agencies have mandates that vary in their direct emphasis on U.S. commercial interests and U.S. foreign policy, but their activities can have both U.S. commercial and/or foreign policy implications. In some cases, U.S. trade financing is provided to help U.S. firms obtain a "level playing field" against certain foreign firms that may be receiving subsidized financing from their respective governments. In addition, the Department of Commerce, through the International Trade Administration (ITA), acts to promote U.S. exports of goods and services (particularly by small and medium-sized companies) by providing a number of support services, such as export counselling. Boosting U.S. exports was elevated as a priority issue with the Obama Administration's introduction of the National Export Initiative (NEI) in the 2010 State of the Union Address. The NEI set a strategy to double U.S. exports by 2015 in an effort to boost the economy and generate employment growth. The next phase of NEI is NEI/NEXT, which has five objectives: to connect more American businesses to more global customers; to make the exporting process easier and less expensive; to expand access for businesses to export financing and insurance; to promote exports and the attraction and retention of investment as a priority for American communities; and to create, foster, and ensure more exporting opportunities. NEI/NEXT, among other things, also has a cross-cutting objective to improve government data to support companies' exporting decisions across all five specific objectives. As the official U.S. export credit agency (ECA), Ex-Im Bank finances and insures U.S. exports of goods and services with the goal of supporting U.S. jobs. On a demand-driven basis, it seeks to support exports that the private sector is unwilling or unable to finance alone at commercially viable terms for exporting; and/or to counter government-backed financing offered by foreign countries through their ECAs. The rationales behind Ex-Im Bank's activities remain subject to congressional debate. Ex-Im Bank operates under a renewable general statutory charter (Export-Import Bank Act of 1945, as amended), extended through the end of FY2109 by the Export-Import Bank Reform and Reauthorization Act of 2015 (Division E, P.L. 114-94 ). This act lowered the Bank's statutory lending authority ("exposure cap" for outstanding portfolio) to $135 billion for each of FY2015-FY2019 subject to certain conditions, and made reforms including to its policies or operations in risk management, fraud controls, and ethics, as well as the U.S. approach to international negotiations on disciplines on government-backed export credit financing. 6 6 . Are U.S. export promotion programs beneficial to the U.S. economy? This is a hotly debated question. A number of economic justifications have been given for supporting or opposing government export promotion programs and policies. Economic theory generally holds that free markets should determine the most efficient allocation of scarce resources, based on supply and demand factors. However, market failures may prevent the market from operating at its "optimal" or most efficient level, causing the market to either over-allocate or under-allocate resources to various economic activities and leading to economic waste. Thus, in order to remove such market failures and promote economic efficiency, some form of government intervention may be warranted. The existence of imperfect information in the market, spillovers, and imperfect competition are examples of market failures that often are cited as justifying government export promotion programs, the presumption being that either the composition or level of U.S. exports is below that which would maximize U.S. living standards. From an economic perspective, much of the debate over export promotion involves whether some market failure actually has occurred, and whether government intervention can produce net benefits for the economy as a whole. Supporters of export promotion programs assume that market failures have occurred and have led to significant misallocation of resources in the economy. Some view export promotion as a corrective tool to ensure that resources are directed to their most efficient use. Proponents argue that these policies can boost exports substantially, improve national living standards, and (during periods of less than full employment) increase output and employment. An additional justification used involves instances when U.S. firms find themselves unable to compete in certain overseas markets because their foreign competitors have received significant levels of government support, including subsidized export financing. U.S. policies to counter or offset such subsidies, it is argued, will create a level playing field for U.S. firms and possibly induce other countries to discontinue providing export subsidies. Opponents of export promotion programs dispute that significant market failures have occurred, and warn that government intervention may interfere with the efficient operation of the market. Such critics argue that export promotion policies are little more than distortive subsidies that favor some firms over others, reduce efficiency within the economy, result in terms-of-trade losses, and diminish national living standards. In addition, while critics concede that trade promotion programs may help boost employment and production during periods of less than full employment, they question why exporting firms should be favored for assistance over other U.S. firms. Some argue that broad monetary and fiscal policies aimed at stimulating domestic demand may provide a more effective means of boosting the economy. Many economists would argue that addressing market failures could boost U.S. economic efficiency. However, various factors, such as global macroeconomic policies and the economic growth rates of the United States and its major U.S. trading partners, trends in global trade policies (such as expansion of trade liberalization policies or, conversely, increased trade protectionism), and international exchange rates will likely be among the most significant forces determining the level and composition of U.S. exports in the long run. 67 . What does the U.S. government do to restrict exports and why ? Congress has authorized the President to control the export of various items for national security, foreign policy, and economic reasons. Separate programs and statutes for controlling different types of exports exist for nuclear materials and technology, defense articles and services, and dual-use goods and technology. Under each program, licenses of various types are required before an export can be undertaken. The U.S. Departments of Commerce, State, Energy, and the Treasury administer these programs. 68 . What are the main kinds of capital flows? Generally, the two main kinds of capital flows are foreign direct investment (FDI) and foreign portfolio investment (FPI). FDI involves the acquisition of real assets such as real estate, a manufacturing plant, or controlling interest in an ongoing enterprise by a person or entity from another country. Foreign portfolio investment involves the purchase of foreign equities or bonds, loans to foreign residents, or the opening of foreign bank accounts. FDI often involves a long-term commitment and can have direct employment stimulation advantages for the host country, while portfolio investments are extremely liquid and can be withdrawn oftentimes at the click of a computer mouse. In addition, there are official capital flows generated by governments for various purposes, such as humanitarian assistance and other foreign aid. 69 . Which is larger—trade or capital flows? It depends. Recent data indicate that from 1985 to 2012, global trade in goods and services, as measured by exports, tripled from $6 trillion a year to $19 trillion a year. During the same period, capital flows, as measured in the balance of payments accounts (direct, portfolio, and other official investments), more than quadrupled from $1.1 trillion a year to $7.0 trillion a year. But during this time period, there also has been an explosion in growth in other types of capital flows, known as foreign exchange and over-the-counter derivatives markets. These markets facilitate trade in foreign exchange and other types of assets. While the capital flows associated with these markets do not directly relate to transactions in the balance of payments, they do affect the international exchange value of the dollar, which in turn affects the prices of goods and services and the cost of securities. A survey of the world's leading central banks indicated that the total daily trading of foreign currencies was more than $5.3 trillion in April 2013. 70 . Why do companies invest abroad? For the most part, firms invest abroad to increase their profits. Economists and other experts generally conclude, however, that a broad range of factors influences a firm's decision to invest abroad. The major determinants of FDI are the presence of ownership-specific competitive advantages in a transnational corporation; the presence of locational advantages, such as resource endowments or low-cost labor in a host country; and the presence of superior commercial benefits in an intra-firm relationship as opposed to an arm's-length relationship between investor and host country. Multinational firms apparently are motivated by more than a single factor, and likely invest abroad not only to gain access to a low-cost resource, but also to improve their efficiency or their market share. In addition, many firms often find it advantageous to operate close to their customers in foreign countries, where tastes and preferences may differ from those in the home market. Foreign markets may also enable multinational firms to access various resources, such as a well-educated work force, which might contribute to the firm's R&D activities. Some FDI activities involve mergers and acquisitions that may help a firm become more globally competitive. 71 . Why has foreign investment increased so dramatically in recent decades? From 1990 to 2012, the stock, or the cumulative amount, of foreign direct investment in the world grew by more than tenfold from $1.8 trillion to $23 trillion. This rapid growth arises from a number of factors. One of the most important factors has been a change in public policies toward foreign direct investment among most countries. Foreign direct investment (FDI) has come to be viewed favorably not only by the economically advanced countries, but also by developing economies, which now often compete to bring in much-needed capital, technology, and technical expertise. Currently, about three-fourths of all direct investment is placed among the highly developed economies where consumer tastes and workers' wages are comparable. 72 . What are the levels of U.S. FDI outflows and inflows? FDI flows to and from the United States have increased rapidly over the past few decades. From 1990 to 2014, the stock of U.S. FDI abroad rose from $431 billion to nearly $4.9 trillion, while the stock of FDI in the United States increased from $395 billion to nearly $2.9 trillion (see Figure 5 ). The largest destination for total (or the stock of) U.S. FDI outflows through 2013 included the Netherlands, Luxembourg, Canada, Ireland, and the United Kingdom, while the largest sources of total FDI inflows included the United Kingdom, Japan, the Netherlands, Canada, and Luxembourg. 73 . What are some of the benefits of FDI ? Generally, economists argue in favor of unimpeded international flows of capital, such as direct investment, because they estimate that such flows positively affect both the domestic (home) and foreign (host) economies. For the home country, direct investment benefits the individual firms that invest abroad, because they are better able to exploit their existing competitive advantages and to acquire additional skills and advantages. Direct investment also seems to be associated with a strengthened competitive position, a higher level of skills of the employees, and higher incomes of firms that invest abroad. Host countries benefit from inward FDI because the investment adds permanently to the capital stock and often to the skill set of the nation. Direct investment also brings technological advances, since firms that invest abroad generally possess advanced technology, processes, and other advantages. Such investment also boosts capital formation and contributes to a growth in a competitive business environment and productivity. In addition, direct investment contributes to international trade and integration into the global trading community, since most firms that invest abroad are established multinational firms. 74 . Are there costs associated with FDI ? Concerned observers argue that U.S. FDI in production facilities abroad supplants U.S. exports, thereby reducing employment and wages in the U.S. economy. While it appears unlikely that the overall U.S. employment level is affected by direct investment flows, jobs in particular companies and sectors can be adversely affected when a company decides to produce similar products abroad. For example, if a U.S. auto company closed an assembly line in the United States and opened one in Mexico assembling the same product line, U.S. auto assembly jobs are lost. Similarly, while inward flows of foreign direct investment tend to create new jobs, there sometimes is concern that the new foreign owners may not serve as stable and dependable community partners, as did the previous nationally based ownership. 75 . What are Bilateral Investment Treaties ( BITs ) ? BITs are agreements between two countries for the reciprocal encouragement, promotion, and protection of investments in each other's territories. Most treaties contain basic provisions that cover the following areas: scope and definition of investment, admission and establishment, national (or non-discriminatory) treatment (often referred to as most-favored-nation treatment), compensation in the event of expropriation or damage to the investment, guarantees of free transfers of funds, and dispute settlement mechanisms, both state-state and investor-state. U.S. BITs have to be ratified by the Senate. 76 . What is the Committee on Foreign Investment in the United States ( CFIUS ) and what does it do ? CFIUS is an interagency committee that serves the President in overseeing foreign investment transactions that could affect the national security of the country. CFIUS was established initially by an executive order of President Ford in 1975 with broad responsibilities and few powers. The authority to review foreign investments, known as the Exon-Florio provision, was formally established in 1988 with the passage of P.L. 100-418 . In 2007, the Foreign Investment and National Security Act ( P.L. 110-49 ) established CFIUS itself in statute and expanded the role of the committee in reviewing foreign investment transactions that could affect "homeland security" and "critical industries." Some foreign investors and foreign governments have objected to the expanded role of CFIUS as being counter to the long-standing U.S. position of an open investment climate. The authority granted to the President to block foreign investment transactions, however, has been invoked only twice since 1988, although in a few instances, issues and concerns raised by CFIUS have led foreign investors to cancel a planned purchase or to divest itself of the purchase if the deal had had already been completed. CRS Report R43841, International Trade and Finance: Key Policy Issues for the 114th Congress, 2nd Session , coordinated by [author name scrubbed] and [author name scrubbed]. 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CRS In Focus IF10161, International Trade Agreements and Job Estimates , by [author name scrubbed]. CRS In Focus IF10112, Introduction to Financial Services: The International Foreign Exchange Market , by [author name scrubbed]. CRS In Focus IF10156, U.S. Trade Policy: Background and Current Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS In Focus IF10052, U.S. International Investment Agreements (IIAs) , by [author name scrubbed] and [author name scrubbed]. CRS In Focus IF10149, African Growth and Opportunity Act (AGOA) , by [author name scrubbed]. CRS In Focus IF10000, The Trans-Pacific Partnership (TPP): An Overview , by [author name scrubbed] and [author name scrubbed]. CRS In Focus IF10038, Trade Promotion Authority (TPA) , by [author name scrubbed]. CRS In Focus IF10041, Reductions to Mandatory Agricultural Conservation Programs in Appropriations Law , by [author name scrubbed]. CRS In Focus IF10049, Debates over "Currency Manipulation" , by [author name scrubbed]. CRS In Focus IF10046, Worker Rights Provisions in Free Trade Agreements (FTAs) , by [author name scrubbed] and [author name scrubbed]. CRS In Focus IF10002, The World Trade Organization , by [author name scrubbed] and [author name scrubbed]. CRS In Focus IF10030, U.S.-China Trade Issues , by [author name scrubbed]. CRS In Focus IF10119, U.S.-China Relations , by [author name scrubbed] and [author name scrubbed]. CRS In Focus IF10110, China as the World's "Largest Economy" , by [author name scrubbed]. CRS In Focus IF10139, China's Currency Policy , by [author name scrubbed]. CRS In Focus IF10045, Cuba: President Obama's New Policy Approach , by [author name scrubbed]. CRS In Focus IF10047, North American Free Trade Agreement (NAFTA) , by [author name scrubbed]. Office of the United States Trade Representative, 2014 Trade Policy Agenda and 2013 Annual Report, March 2014 , at http://www.ustr.gov . Office of the United States Trade Representative, 2014 National Trade Estimate Report on Foreign Trade Barriers , March 2014, at http://www.ustr.gov . Office of the United States Trade Representative, 2014 Special 301 Report , April 2014, at http://www.ustr.gov . U.S. Congress, House Ways and Means Committee, Overview and Compilation of U.S. Trade Statutes, 2013 Edition, January 2013, at http://waysandmeans.house.gov/uploadedfiles/2013_blue_book_.pdf . The White House, Council of Economic Advisers, 2014 Economic Report of the President, at http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President/2014 . 1. Why do countries trade? 2. What is comparative advantage? 3. What determines comparative advantage? 4. Can governments shape or distort comparative advantage? 5. What is the terms of trade? 6. What are the costs of trade expansion? 7. Does trade destroy jobs? 8. Does trade reduce the wages of U.S. workers? 9. What is intra-industry trade? 10. What is economic globalization? 11. What are global supply chains and how do they relate to economic globalization? 12. How does globalization affect job security? 13. Which are the largest global trading economies? 14. What is meant by the trade deficit? 15. Why does the United States run a trade deficit? 16. How significant is the size of the U.S. trade deficit and how does it compare with other major economies? 17. What role do foreign trade barriers play in causing bilateral trade deficits? 18. How does the trade deficit affect the exchange value of the dollar? 19. How is the trade deficit financed? 20. Is the trade deficit a problem for the U.S. economy? 21. How long can the United States keep running trade deficits? 22. How can the trade deficit be further reduced? 23. How important is trade to the U.S. economy? 24. Who are the leading U.S. trade partners? 25. How does "economic globalization" complicate interpretation of U.S. trade data? 26. Is the U.S. manufacturing sector shrinking? 27. What is trade in services and how is it different from goods trade? 28. How is digital trade different from other trade in goods and services? 29. What role does Congress play in the making of trade policy? 30. What committees take the lead in exercising congressional authority over trade? 31. In what explicit ways does Congress make trade policy? 32. How can individual Members affect trade policy decisions? 33. What is meant by fast track or Trade Promotion Authority (TPA)? 34. Who is in charge of U.S. trade policy? 35. Why was the USTR created? 36. How are trade decisions made? 37. What are the functions of the executive branch in U.S. trade? 38. When does the President get involved in trade decisions? 39. What is the formal role of the private sector? 40. What is the informal role that the private sector plays in the formulation of U.S. trade policy? 41. Why do groups attempt to lobby on trade decisions? 42. How do federal courts get involved in trade? 43. What is the U.S. Court of International Trade? 44. Why does the United States negotiate trade liberalizing agreements? 45. What are the various types of trade liberalizing agreements? 46. Who benefits from trade liberalizing agreements? Who loses? 47. What is the World Trade Organization (WTO)? 48. How are disputes resolved under WTO agreements? 49. What is the Doha Round? 50. What are free trade agreements (FTAs)? 51. How do FTAs that the United States has negotiated generally differ from those negotiated among other countries? 52. What are Trade and Investment Framework Agreements (TIFAs)? 53. What are other benefits of imports? 54. What are the costs of imports? 55. What are the main U.S. trade remedy laws? 56. What is the purpose of the countervailing duty law? 57. What is the purpose of the antidumping law? 58. What is the import relief (safeguards) law? 59. What is the Trade Adjustment Assistance (TAA) Program? 60. What is the rationale for TAA? 61. What are the benefits of exports? 62. What are some costs of exporting? 63. What factors most determine U.S. levels? 64. What factors determine the exporting success of specific sectors? 65. How does the U.S. government promote exports? 66. Are U.S. export promotion programs beneficial to the U.S. economy? 67. What does the U.S. government do to restrict exports and why? 68. What are the main kinds of capital flows? 69. Which is larger—trade or capital flows? 70. Why do companies invest abroad? 71. Why has foreign investment increased so dramatically in recent decades? 72. What are the levels of U.S. FDI outflows and inflows? 73. What are some of the benefits of FDI? 74. Are there costs associated with FDI? 75. What are Bilateral Investment Treaties (BITs)? 76. What is the Committee on Foreign Investment in the United States (CFIUS) and what does it do? This appendix provides a list of acronyms used throughout the report.

Congress plays a major role in U.S. trade policy through its legislative and oversight authority. There are a number of major trade issues that are currently the focus of Congress. For example, bills were introduced in the 113th Congress to reauthorize Trade Promotion Authority (TPA), the U.S. Generalized System of Preferences (GSP), and the U.S. Export-Import Bank, and legislative action on these issues could be forthcoming in the 114th Congress. Additionally, Congress has been involved with proposed free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP) involving the United States and 11 other countries and the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union (EU). Also of interest to Congress are current plurilateral negotiations for a Trade in Services Agreement (TISA) and an updated multilateral Information Technology Agreement (ITA) in the World Trade Organization (WTO). Trade and investment policies of major U.S. trading partners (such as China), especially when they are deemed harmful to U.S. economic interests, are also of continued concern to Congress. Recent improved U.S. relations with Cuba have resulted in the introduction of several bills to boost bilateral commercial ties. The costs and benefits of trade to the U.S. economy, firms, workers, and constituents, and the future direction of U.S. trade policy, are the subject of ongoing debates in Congress. This report provides information and context for these and many other trade topics. It is intended to assist Members and staff who may be new to trade issues. The report is divided into four sections in a question-and-answer format: trade concepts; U.S. trade performance; formulation of U.S. trade policy; and trade and investment issues. Additional suggested readings are provided in an appendix. The first section, "Trade Concepts," deals with why countries trade, the consequences of trade expansion, and the relationship between globalization and trade. Key questions address the benefits of specialization in production and trade, efforts by governments to influence a country's comparative advantage, how trade expansion can be costly and disruptive to workers in some industries, and some unique characteristics of trade between developed countries. The second section, "U.S. Trade Performance," lists data on U.S. trade flows and focuses on the U.S. trade deficit, including its implications for the U.S. economy. Questions address the causes of trade deficits, the role of foreign trade barriers, and how the trade deficit might be reduced. The third section, "Formulation of U.S. Trade Policy," deals with the roles played by the executive branch, Congress, the private sector, and the judiciary in the formulation of U.S. trade policy. Information on how trade policy functions are organized in Congress and the executive branch, as well as the respective roles of individual Members and the President, is provided. The roles of the private sector and the judiciary are also discussed. The fourth section, "U.S. Trade and Investment Policy Issues," lists questions related to trade negotiations and agreements and to imports, exports, and investments. The justification, types, and consequences of trade liberalization agreements, along with the role of the WTO, are treated in this section. The costs and benefits of imports, exports, and investments are also discussed, including how the government deals with disruption and injury to workers and companies caused by imports and its efforts to both restrict and promote exports. The motivations and consequences of foreign direct investment flows are also discussed.

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On October 26, 2001, President George W. Bush signed P.L. 107-56 , the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act or the USA PATRIOT Act. Among its provisions are a number which impacted or amended the Foreign Intelligence Surveillance Act (FISA), 50 U.S.C. § 1801 et seq. , an act which provides a statutory structure for the use of electronic surveillance, physical searches, pen registers, trap and trace devices, and orders requiring production of tangible things within the United States to gather foreign intelligence information or to assist in specified types of investigations. The changes made to FISA by P.L. 107-56 were far reaching. For example, the law expanded the number of United States district court judges on the Foreign Intelligence Surveillance Court and provided for roving or multipoint electronic surveillance authority under FISA. It amended FISA provisions with respect to pen registers and trap and trace devices, and substantially expanded the reach of the business records provisions to provide a mechanism for production of any tangible thing pursuant to a FISA court order. The amended language changed the certification demanded of a federal officer applying for a FISA order for electronic surveillance or a physical search from requiring a certification that the purpose of the surveillance or physical search is to obtain foreign intelligence information to requiring certification that a significant purpose of the surveillance or search is to obtain foreign intelligence information. As implemented, this has made it possible for FISA to be used where the primary purpose of the investigation is criminal investigation, so long as a significant foreign intelligence purpose is also present. FISA, as amended, also affords a private right of action to persons aggrieved by inappropriate use or disclosure of information gathered in or derived from a FISA surveillance or physical search or through the use of a pen register or trap and trace device. Of the amendments made by the USA PATRIOT Act, all but the section which increased the number of judges on the Foreign Intelligence Surveillance Court were set by that Act to sunset on December 31, 2005. P.L. 109-160 and P.L. 109-170 extended the sunset of certain FISA provisions, among others, to February 3, 2006, and March 10, 2006, respectively. The USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , replaced the sunset provisions of P.L. 107-56 , as amended, with new provisions extending the application of the affected amendments to December 31, 2009. Amendments to FISA were also made by the Intelligence Authorization Act for Fiscal Year 2003, P.L. 107-108 ; the Homeland Security Act of 2002, P.L. 107-296 ; and the Intelligence Reform and Terrorism Protection Act of 2004, P.L. 108-458 . In the 109 th Congress, two measures, the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , and the USA PATRIOT Act Additional Reauthorizing Amendments Act of 2006, P.L. 109-178 , made significant changes to FISA. P.L. 109-177 extended the duration of FISA electronic surveillance, physical searches, and pen register and trap and trace devices. It also added requirements to applications for production of certain sensitive types of records, and expanded the requirements for applications for FISA orders for production of tangible things and for orders authorizing such production. This Act created a new petition review pool within the U.S. Foreign Intelligence Surveillance Court (FISC) to address challenges to such production orders or to related nondisclosure orders, and established a detailed procedure for review of such orders. Further, it directed the Inspector General of the U.S. Department of Justice to perform a comprehensive audit of the effectiveness and use, including improper or illegal use, of the investigative authority under title V of FISA, 50 U.S.C. § 1861 et seq. , for fiscal years 2002-2006. The measure modified the requirements for multipoint electronic surveillance under FISA. It also expanded congressional oversight of FISA electronic surveillance, physical searches, and use of pen registers and trap and trace devices. P.L. 109-178 amends the procedures for judicial review of production and nondisclosure orders under 50 U.S.C. § 1861. On May 17, 2002, the U.S. Foreign Intelligence Surveillance Court issued an opinion and order written by the then Presiding Judge of the court, U.S. District Judge Royce C. Lamberth. All of the other judges then on the FISC concurred in the order. The opinion was provided by the current Presiding Judge of the FISC, U.S. District Judge Colleen Kollar-Kotelly, to the Senate Judiciary Committee in response to a July 31 letter from Senator Leahy, Senator Grassley and Senator Specter. On August 22, 2002, the unclassified opinion was released to the public by Senator Leahy, Senator Grassley and Senator Specter. In the memorandum opinion and order, the FISC considered a motion by the U.S. Department of Justice "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." In its memorandum and accompanying order, the FISC granted the Department of Justice's motion, but modified the second and third paragraphs of section II.B of the proposed minimization procedures. The FISC's May 17 th memorandum opinion and order were not appealed directly. However, the Justice Department sought review in the U.S. Foreign Intelligence Court of Review (Court of Review) of an FISC order authorizing electronic surveillance of an agent of a foreign power, subject to restrictions flowing from the May 17 th decision, and of an FISC order renewing that surveillance subject to the same restrictions. The Court of Review reversed and remanded the FISC orders. This opinion, the first issued by the U.S. Foreign Intelligence SurveillanceCourt of Review since its creation in 1978, was also released to the public. This report will provide background on the Foreign Intelligence Surveillance Act, discuss its statutory framework, and review these two decisions. Investigations for the purpose of gathering foreign intelligence give rise to a tension between the Government's legitimate national security interests and the protection of privacy interests. The stage was set for legislation to address these competing concerns in part by Supreme Court decisions on related issues. In Katz v. United States , 389 U.S. 347 (1967), the Court held that the protections of the Fourth Amendment extended to circumstances involving electronic surveillance of oral communications without physical intrusion. The Katz Court stated, however, that its holding did not extend to cases involving national security. In United States v. United States District Court , 407 U.S. 297 (1972) (the Keith case), the Court regarded Katz as "implicitly recogniz[ing] that the broad and unsuspected governmental incursions into conversational privacy which electronic surveillance entails necessitate the application of Fourth Amendment safeguards." Mr. Justice Powell, writing for the Keith Court, framed the matter before the Court as follows: The issue before us is an important one for the people of our country and their Government. It involves the delicate question of the President's power, acting through the Attorney General, to authorize electronic surveillance in internal security matters without prior judicial approval. Successive Presidents for more than one-quarter of a century have authorized such surveillance in varying degrees, without guidance from the Congress or a definitive decision of this Court. This case brings the issue here for the first time. Its resolution is a matter of national concern, requiring sensitivity both to the Government's right to protect itself from unlawful subversion and attack and to the citizen's right to be secure in his privacy against unreasonable Government intrusion. The Court held that, in the case of intelligence gathering involving domestic security surveillance, prior judicial approval was required to satisfy the Fourth Amendment. Justice Powell emphasized that the case before it "require[d] no judgment on the scope of the President's surveillance power with respect to the activities of foreign powers, within or without the country." The Court expressed no opinion as to "the issues which may be involved with respect to activities of foreign powers or their agents." However, the guidance which the Court provided in Keith with respect to national security surveillance in a domestic context to some degree presaged the approach Congress was to take in foreign intelligence surveillance. The Keith Court observed in part: ...We recognize that domestic surveillance may involve different policy and practical considerations from the surveillance of "ordinary crime." The gathering of security intelligence is often long range and involves the interrelation of various sources and types of information. The exact targets of such surveillance may be more difficult to identify than in surveillance operations against many types of crime specified in Title III [of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. § 2510 et seq. ]. Often, too, the emphasis of domestic intelligence gathering is on the prevention of unlawful activity or the enhancement of the Government's preparedness for some possible future crisis or emergency. Thus, the focus of domestic surveillance may be less precise than that directed against more conventional types of crimes. Given these potential distinctions between Title III criminal surveillances and those involving domestic security, Congress may wish to consider protective standards for the latter which differ from those already prescribed for specified crimes in Title III. Different standards may be compatible with the Fourth Amendment if they are reasonable both in relation to the legitimate need of Government for intelligence information and the protected rights of our citizens. For the warrant application may vary according to the governmental interest to be enforced and the nature of citizen rights deserving protection.... It may be that Congress, for example, would judge that the application and affidavit showing probable cause need not follow the exact requirements of § 2518 but should allege other circumstances more appropriate to domestic security cases; that the request for prior court authorization could, in sensitive cases, be made to any member of a specially designated court...; and that the time and reporting requirements need not be so strict as those in § 2518. The above paragraph does not, of course, attempt to guide the congressional judgment but rather to delineate the present scope of our own opinion. We do not attempt to detail the precise standards for domestic security warrants any more than our decision in Katz sought to set the refined requirements for the specified criminal surveillances which now constitute Title III. We do hold, however, that prior judicial approval is required for the type of domestic surveillance involved in this case and that such approval may be made in accordance with such reasonable standards as the Congress may prescribe. Court of appeals decisions following Keith met more squarely the issue of warrantless electronic surveillance in the context of foreign intelligence gathering. In United States v. Brown , 484 F.2d 418 (5 th Cir. 1973), cert. denied , 415 U.S. 960 (1974), the Fifth Circuit upheld the legality of a warrantless wiretap authorized by the Attorney General for foreign intelligence purposes where the conversation of Brown, an American citizen, was incidentally overheard. The Third Circuit in United States v. Butenko , 494 F.2d 593 (3 rd Cir. 1974), cert. denied sub nom, Ivanov v. United States , 419 U.S. 881 (1974), concluded that warrantless electronic surveillance was lawful, violating neither Section 605 of the Communications Act nor the Fourth Amendment, if its primary purpose was to gather foreign intelligence information. In its plurality decision in Zweibon v. Mitchell , 516 F.2d 594, 613-14 (D.C. Cir. 1975), cert. denied , 425 U.S. 944 (1976), the District of Columbia Circuit took a somewhat different view in a case involving a warrantless wiretap of a domestic organization that was not an agent of a foreign power or working in collaboration with a foreign power. Finding that a warrant was required in such circumstances, the plurality also noted that "an analysis of the policies implicated by foreign security surveillance indicates that, absent exigent circumstances, all warrantless electronic surveillance is unreasonable and therefore unconstitutional." With the passage of the Foreign Intelligence Surveillance Act (FISA), P.L. 95-511 , Title I, October 25, 1978, 92 Stat. 1796, codified as amended at 50 U.S.C. § 1801 et seq. , Congress sought to strike a delicate balance between these interests when the gathering of foreign intelligence involved the use of electronic surveillance. Collection of foreign intelligence information through electronic surveillance is now governed by FISA and E.O. 12333. This report will examine the provisions of FISA which deal with electronic surveillance in the foreign intelligence context, as well as those applicable to physical searches, the use of pen registers and trap and trace devices under FISA, and access to business records and other tangible things for foreign intelligence purposes. As the provisions of E.O. 12333 to some extent set the broader context within which FISA operates, we will briefly examine its pertinent provisions first. Executive Order 12333, 46 Fed. Reg. 59,941 (December 4, 1981), as amended, 50 U.S.C. § 401 note, deals with "United States Intelligence Activities." Under Section 2.3 of E.O. 12333, the agencies within the Intelligence Community are to "collect, retain or disseminate information concerning United States persons only in accordance with procedures established by the head of the agency concerned and approved by the Attorney General, consistent with the authorities provided by Part 1 of this Order...." Among the types of information that can be collected, retained or disseminated under this section are: (a) Information that is publicly available or collected with the consent of the person concerned; (b) Information constituting foreign intelligence or counterintelligence, including such information concerning corporations or other commercial organizations. Collection within the United States of foreign intelligence not otherwise obtainable shall be undertaken by the FBI or, when significant foreign intelligence is sought, by other authorized agencies of the Intelligence Community, provided that no foreign intelligence collection by such agencies may be undertaken for the purpose of acquiring information concerning the domestic activities of United States persons; (c) Information obtained in the course of a lawful foreign intelligence, counterintelligence, international narcotics or international terrorism investigation; (d) Information needed to protect the safety of any persons or organizations, including those who are targets, victims or hostages of international terrorist organizations; (e) Information needed to protect foreign intelligence or counterintelligence sources or methods from unauthorized disclosure. Collection within the United States shall be undertaken by the FBI except that other agencies of the Intelligence Community may also collect such information concerning present or former employees, present or former intelligence agency contractors or their present or former employees, or applicants for any such employment or contracting; (f) Information concerning persons who are reasonably believed to be potential sources or contacts for the purpose of determining their suitability or credibility; (g) Information arising out of a lawful personnel, physical or communications security investigation; ... (i) Incidentally obtained information that may indicate involvement in activities that may violate federal, state, local or foreign laws; and (j) Information necessary for administrative purposes. In addition, agencies within the Intelligence Community may disseminate information, other than information derived from signals intelligence, to each appropriate agency within the Intelligence Community for purposes of allowing the recipient agency to determine whether the information is relevant to its responsibilities and can be retained by it. In discussing collections techniques, Section 2.4 of E.O. 12333 indicates that agencies within the Intelligence Community are to use the least intrusive collection techniques feasible within the United States or directed against United States persons abroad. Agencies are not authorized to use such techniques as electronic surveillance, unconsented physical search, mail surveillance, physical surveillance, or monitoring devices unless they are in accordance with procedures established by the head of the agency concerned and approved by the Attorney General. Such procedures shall protect constitutional and other legal rights and limit use of such information to lawful governmental purposes.... Section 2.5 of the Executive Order 12333 states that: The Attorney General hereby is delegated the power to approve the use for intelligence purposes, within the United States or against a United States person abroad, of any technique for which a warrant would be required if undertaken for law enforcement purposes, provided that such techniques shall not be undertaken unless the Attorney General has determined in each case that there is probable cause to believe that the technique is directed against a foreign power or an agent of a foreign power. Electronic surveillance, as defined in the Foreign Intelligence Surveillance Act of 1978 [section 1801 et seq. of this title], shall be conducted in accordance with that Act, as well as this Order. The Foreign Intelligence Surveillance Act (FISA), P.L. 95-511 , Title I, October 25, 1978, 92 Stat. 1796, codified at 50 U.S.C. § 1801 et seq. , as amended, provides a framework for the use of electronic surveillance and physical searches to obtain foreign intelligence information. It also provides a statutory structure for the installation and use of pen registers and trap and trace devices and for orders requiring production of tangible things for use in federal investigations to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. Such an investigation of a United States person may not be conducted solely on the basis of activities protected by the First Amendment to the Constitution. This measure seeks to strike a balance between national security needs in the context of foreign intelligence gathering and privacy rights. FISA establishes two special courts, the U.S. Foreign Intelligence Surveillance Court (FISC) and the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review), comprised of federal judges to address applications for court orders authorizing such electronic surveillance, physical searches, installation and use of pen registers and trap and trace devices, and production of tangible things. Under 50 U.S.C. § 1803(a), the Chief Justice of the United States must publicly designate eleven U.S. district court judges from seven of the United States judicial circuits, of whom no fewer than three must reside within 20 miles of the District of Columbia. These eleven judges constitute the U.S. Foreign Intelligence Surveillance Court (FISC), which has jurisdiction over applications for and orders approving electronic surveillance, physical searches, pen registers or trap and trace devices or orders for production of tangible things anywhere within the United States under FISA. If an application for electronic surveillance or a physical search under this Act is denied by one judge of this court, it may not then be considered by another judge on the court. If a judge denies such an application, he or she must immediately provide a written statement for the record of the reason(s) for this decision. The Chief Justice also publicly designates the three U.S. district court or U.S. court of appeals judges who together make up the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review). This court has jurisdiction to review any denial of an order under FISA. If the United States appeals an FISC denial of an application, the record from the FISC must be transmitted under seal to the Court of Review established. If the Court of Review determines that an application was properly denied, again a written statement of the reason(s) for the court's decision must be provided for the record. The United States may petition for a writ of certiorari to the United States Supreme Court for review of that decision. All proceedings under FISA must be conducted expeditiously, and the record of all proceedings including applications and orders granted, must be maintained under security measures established by the Chief Justice in consultation with the Attorney General and the Director of National Intelligence. Three FISC judges who reside within 20 miles of the District of Columbia, or, if all of such judges are unavailable, other judges of the FISC designated by the presiding judge of such court, comprise a petition review pool which has jurisdiction to review petitions filed pursuant to 50 U.S.C. § 1861(f)(1) challenging production orders and non-disclosure orders. The judges of the FISC and the Court of Review serve for seven year terms and may not be redesignated. The FISC and the Court of Review may establish rules and procedures, and may take such actions, as are reasonably necessary to administer their responsibilities under FISA. The FISC has established the Foreign Intelligence Surveillance Court Rules of Procedure, and Procedures for Review of Petitions filed pursuant to Section 501(f) of the Foreign Intelligence Surveillance Act of 1978, as Amended have also been adopted. Rules of procedure for the Court of Review have not been identified. Any such rules and procedures, and any modifications thereto, must be recorded and transmitted in an unclassified form (although they may include a classified annex) to all of the judges on the FISC; all of the judges on the Court of Review; the Chief Justice of the United States; the Committee on the Judiciary of the Senate and of the House of Representatives; and the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. Electronic surveillance under title I of FISA, 50 U.S.C. § 1801 et seq ., is generally conducted under an FISC order, unless the surveillance fits within one of three statutory exceptions. The first of these exceptions is electronic surveillance of certain foreign powers without a court order upon Attorney General certification that specific criteria have been met. Under section 101(g) of FISA, 50 U.S.C. § 1801(g), as amended by Subsection 506(a)(5) of P.L. 109-177 , the term "Attorney General" is defined to mean "the Attorney General of the United States (or Acting Attorney General), the Deputy Attorney General, or, upon the designation of the Attorney General, the Assistant Attorney General designated as the Assistant Attorney General for National Security under section 507A of title 28, United States Code." Under 50 U.S.C. § 1802, the President, through the Attorney General, may authorize electronic surveillance to acquire foreign intelligence information for up to one year without a court order if two criteria are satisfied. First, to utilize this authority, the Attorney General must certify in writing under oath that: (A) the electronic surveillance is solely directed at— (i) the acquisition of the contents of communications transmitted by means of communications used exclusively between or among foreign powers, as defined in [50 U.S.C. § 1801(a)(1), (2), or (3)]; or (ii) the acquisition of technical intelligence, other than the spoken communications of individuals, from property or premises under the open and exclusive control of a foreign power, as defined in [50 U.S.C. § 1801(a)(1), (2) or (3)]; (B) there is no substantial likelihood that the surveillance will acquire the contents of any communication to which a United States person is a party; and (C) the proposed minimization procedures with respect to such surveillance meet the definition of minimization procedures under [50 U.S.C. § 1801(h)]; .... Second, in order for the President, through the Attorney General, to use this authority ... the Attorney General [must report] such minimization procedures and any changes thereto to the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence at least thirty days prior to their effective date, unless the Attorney General determines immediate action is required and notifies the committees immediately of such minimization and the reason for their becoming effective immediately. Such electronic surveillance must be conducted only in accordance with the Attorney General's certification and minimization procedures adopted by him. A copy of his certification must be transmitted by the Attorney General to the FISC. This certification remains under seal unless an application for a court order for surveillance authority is made under 50 U.S.C. §§ 1801(h)(4) and 1804, or the certification is necessary to determine the legality of the surveillance under 50 U.S.C. § 1806(f). In connection with electronic surveillance so authorized, the Attorney General may direct a specified communications common carrier to furnish all information, facilities, or technical assistance needed for the electronic surveillance to be accomplished in a way that would protect its secrecy and minimize interference with the services provided by the carrier to its customers. 50 U.S.C. § 1802(a)(4)(A). In addition, the Attorney General may direct the specified communications common carrier to maintain any records, under security procedures approved by the Attorney General and the Director of National Intelligence, concerning the surveillance or the assistance provided which the carrier wishes to retain. 50 U.S.C. § 1802(a)(4)(B). Compensation at the prevailing rate must be made to the carrier by the Government for providing such aid. If the President, by written authorization, empowers the Attorney General to approve applications to the FISC, an application for a court order may be made pursuant to 50 U.S.C. § 1802(b). A judge receiving such an application may grant an order under 50 U.S.C. § 1805 approving electronic surveillance of a foreign power or an agent of a foreign power to obtain foreign intelligence information. There is an exception to this, however. Under 50 U.S.C. § 1802(b), a court does not have jurisdiction to grant an order approving electronic surveillance directed solely as described in 50 U.S.C. § 1802(a)(1)(A) (that is, at acquisition of the contents of communications transmitted by means of communications used exclusively between or among foreign powers, or acquisition of technical intelligence, other than the spoken communications of individuals, from property or premises under the open and exclusive control of a foreign power), unless the surveillance may involve the acquisition of communications of a United States person. 50 U.S.C. § 1802(b). An application for a court order authorizing electronic surveillance for foreign intelligence purposes may be sought under 50 U.S.C. § 1804. An application for such a court order must be made by a federal officer in writing on oath or affirmation to an FISC judge. The application must be approved by the Attorney General based upon his finding that the criteria and requirements set forth in 50 U.S.C. § 1801 et seq . have been met. Section 1804(a) sets out what must be included in the application: (1) the identity of the Federal officer making the application; (2) the authority conferred on the Attorney General by the President of the United States and the approval of the Attorney General to make the application; (3) the identity, if known, or a description of the specific target of the electronic surveillance; (4) a statement of the facts and circumstances relied upon by the applicant to justify his belief that— (A) the target of the electronic surveillance is a foreign power or an agent of a foreign power; and (B) each of the facilities or places at which the electronic surveillance is directed is being used, or is about to be used, by a foreign power or an agent of a foreign power; (5) a statement of the proposed minimization procedures; (6) a detailed description of the nature of the information sought and the type of communications or activities to be subjected to the surveillance; (7) a certification or certifications by the Assistant to the President for National Security Affairs or an executive branch official or officials designated by the President from among those executive officers employed in the area of national security or defense and appointed by the President with the advice and consent of the Senate — (A) that the certifying official deems the information sought to be foreign intelligence information; (B) that a significant purpose of the surveillance is to obtain foreign intelligence information; (C) that such information cannot reasonably be obtained by normal investigative techniques; (D) that designates the type of foreign intelligence information being sought according to the categories described in 1801(e) of this title; and (E) including a statement of the basis for the certification that— (i) the information sought is the type of foreign intelligence information designated; and (ii) such information cannot reasonably be obtained by normal investigative techniques; (8) a statement of the means by which the surveillance will be effected and a statement whether physical entry is required to effect the surveillance; (9) a statement of the facts concerning all previous applications that have been made to any judge under this subchapter involving any of the persons, facilities, or places specified in the application, and the action taken on each previous application; (10) a statement of the period of time for which the electronic surveillance is required to be maintained, and if the nature of the intelligence gathering is such that the approval of the use of electronic surveillance under this subchapter should not automatically terminate when the described type of information has first been obtained, a description of facts supporting the belief that additional information of the same type will be obtained thereafter; and (11) whenever more that one electronic, mechanical or other surveillance device is to be used with respect to a particular proposed electronic surveillance, the coverage of the devices involved and what minimization procedures apply to information acquired by each device. The application for a court order need not contain the information required in Subsections 1804(6), (7)(E), (8), and (11) above if the target of the electronic surveillance is a foreign power and each of the facilities or places at which surveillance is directed is owned, leased, or exclusively used by that foreign power. However, in those circumstances, the application must indicate whether physical entry is needed to effect the surveillance, and must also contain such information about the surveillance techniques and communications or other information regarding United States persons likely to be obtained as may be necessary to assess the proposed minimization procedures. 50 U.S.C. § 1804(b). Where an application for electronic surveillance under 50 U.S.C. § 1804(a) involves a target described in 50 U.S.C. § 1801(b)(2), the Attorney General must personally review the application if requested to do so, in writing, by the Director of the Federal Bureau of Investigation, the Secretary of Defense, the Secretary of State, or the Director of National Intelligence. The authority to make such a request may not be delegated unless the official involved is disabled or otherwise unavailable. Each such official must make appropriate arrangements, in advance, to ensure that such a delegation of authority is clearly established in case of disability or other unavailability. If the Attorney General determines that an application should not be approved, he must give the official requesting the Attorney General's personal review of the application written notice of the determination. Except in cases where the Attorney General is disabled or otherwise unavailable, the responsibility for such a determination may not be delegated. The Attorney General must make advance plans to ensure that the delegation of such responsibility where the Attorney General is disabled or otherwise unavailable is clearly established. Notice of the Attorney General's determination that an application should not be approved must indicate what modifications, if any, should be made in the application needed to make it meet with the Attorney General's approval. The official receiving the Attorney General's notice of modifications which would make the application acceptable must modify the application if the official deems such modifications warranted. Except in cases of disability or other unavailability, the responsibility to supervise any such modifications is also a non-delegable responsibility. If a judge makes the findings required under 50 U.S.C. § 1805(a), then he or she must enter an ex parte order as requested or as modified approving the electronic surveillance. The necessary findings must include that: (1) the President has authorized the Attorney General to approve applications for electronic surveillance for foreign intelligence information; (2) the application has been made by a Federal officer and approved by the Attorney General; (3) on the basis of the facts submitted by the applicant there is probable cause to believe that— (A) the target of the electronic surveillance is a foreign power or an agent of a foreign power: Provided , That no United States person may be considered a foreign power or an agent of a foreign power solely upon the basis of activities protected by the first amendment to the Constitution of the United States; and (B) each of the facilities or places at which the electronic surveillance is directed is being used, or is about to be used, by a foreign power or an agent of a foreign power; (4) the proposed minimization procedures meet the definition of minimization procedures under section 1801(h) of this title; and (5) the application which has been filed contains all statements and certifications required by section 1804 of this title and, if the target is a United States person, the certification or certifications are not clearly erroneous on the basis of the statement made under section 1804(a)(7)(E) of this title and any other information furnished under section 1804(d) of this title. In making a probable cause determination under 50 U.S.C. § 1805(a)(3), the judge may consider past activities of the target as well as facts and circumstances relating to the target's current or future activities. Section 1805(c) sets out particular specifications and directions which must be included in an order approving a FISA electronic surveillance: (1) Specifications.—An order approving an electronic surveillance under this section shall specify (A) the identity, if known, or a description of the specific target of the electronic surveillance identified or described in the application pursuant to [50 U.S.C. § 1804(a)(3)]; (B) the nature and location of each of the facilities or places at which the electronic surveillance will be directed , if known ; (C) the type of information sought to be acquired and the type of communications or activities to be subjected to the surveillance; (D) the means by which the electronic surveillance will be effected and whether physical entry will be used to effect the surveillance; (E) the period of time during which the electronic surveillance is approved; and (F) whenever more than one electronic, mechanical, or other surveillance device is to be used under the order, the authorized coverage of the device involved and what minimization procedures shall apply to information subject to acquisition by each device. (2) Directions.—An order approving an electronic surveillance under this section shall direct (A) that the minimization procedures be followed; (B) that, upon the request of the applicant a specified communication or other common carrier, landlord, custodian, or other specified person, or in circumstances where the Court finds , based upon specific facts provided in the application, that the actions of the target of the application may have the effect of thwarting the identification of a specified person, such other persons, furnish the applicant forthwith all information, facilities, or technical assistance necessary to accomplish the electronic surveillance in such a manner as will protect its secrecy and produce a minimum of interference with the services that such carrier, landlord, custodian, or other person is providing that target of electronic surveillance; (C) that such carrier, landlord, custodian, or other person maintain under security procedures approved by the Attorney General and the Director of National Intelligence any records concerning the surveillance or the aid furnished that such person wishes to retain; and (D) that the applicant compensate, at the prevailing rate, such carrier, landlord, custodian, or other person for furnishing such aid. (3) Special directions for certain orders An order approving an electronic surveillance under this section in circumstances where the nature and location of each of the facilities or places at which the surveillance will be directed is unknown shall direct the applicant to provide notice to the court within ten days after the date on which surveillance begins to be directed at any new facility or place, unless the court finds good cause to justify a longer period of up to 60 days, of— (A) the nature and location of each new facility or place at which the electronic surveillance is directed; (B) the facts and circumstances relied upon by the applicant to justify the applicant's belief that each new facility or place at which the electronic surveillance is directed is or was being used, or is about to be used, by the target of the surveillance; (C) a statement of any proposed minimization procedures that differ from those contained in the original application or order, that may be necessitated by a change in the facility or place at which the electronic surveillance is directed; and (D) the total number of electronic surveillances that have been or are being conducted under the authority of the order. The italicized portions of Section 1805(c)(1)(B) and Section 1805(c)(2)(B) reflect changes, added by P.L. 107-108 and P.L. 107-56 respectively, intended to provide authority for "multipoint" or "roving" electronic surveillance where the actions of the target of the surveillance, such as switching phones and locations repeatedly, may thwart that surveillance. The Conference Report on H.R. 2338 , the Intelligence Authorization Act for Fiscal Year 2002 (which became P.L. 107-108 ), H.Rept. 107-328 , at page 24, provided the following explanation of these changes: The multipoint wiretap amendment to FISA in the USA PATRIOT Act (section 206) allows the FISA court to issue generic orders of assistance to any communications provider or similar person, instead of to a particular communications provider. This change permits the Government to implement new surveillance immediately if the FISA target changes providers in an effort to thwart surveillance. The amendment was directed at persons who, for example, attempt to defeat surveillance by changing wireless telephone providers or using pay phones. Currently, FISA requires the court to "specify" the "nature and location of each of the facilities or places at which the electronic surveillance will be directed." 50 U.S.C. § 105(c)(1)(B). Obviously, in certain situations under current law, such a specification is limited. For example, a wireless phone has no fixed location and electronic mail may be accessed from any number of locations. To avoid any ambiguity and clarify Congress' intent, the conferees agreed to a provision which adds the phrase, "if known," to the end of 50 U.S.C. § 1805(c)(1)(B). The "if known" language, which follows the model of 50 U.S.C. § 1805(c)(1)(A), is designed to avoid any uncertainty about the kind of specification required in a multipoint wiretap case, where the facility to be monitored is typically not known in advance. The underlined portions of subsection 1805(c) reflect changes made by P.L. 109-177 , Section 108. If the target of the electronic surveillance is a foreign power and each of the facilities or places at which the surveillance is directed is owned, leased, or exclusively used by that foreign power, the order does not need to include the information covered by Section 1805(c)(1)(C), (D), and (F), but must generally describe the information sought, the communications or activities subject to surveillance, the type of electronic surveillance used, and whether physical entry is needed. 50 U.S.C. § 1805(d). Such an order may approve an electronic surveillance for the period of time necessary to achieve its purpose or for ninety days, whichever is less, unless the order is targeted against a foreign power as defined in 50 U.S.C. § 1801(a)(1), (2), or (3), or against an agent of a foreign power who is not a United States person. In the case of an order targeted against a such a foreign power, the order shall approve an electronic surveillance for the period specified in the order or for one year, whichever is less. An order under FISA for surveillance targeted against an agent of a foreign power who is not a U.S. person may be for the period specified in the order or 120 days, whichever is less. Generally, upon application for an extension, a court may grant an extension of an order on the same basis as an original order. An extension must include new findings made in the same manner as that required for the original order. However, an extension of an order for a surveillance targeted against a foreign power as defined in 50 U.S.C. § 1801(a)(5) (a foreign-based political organization, not substantially composed of United States persons) or (6) (an entity that is directed and controlled by a foreign government or governments), or against a foreign power as defined in 50 U.S.C. § 1801(a)(4) (a group engaged in international terrorism or activities in preparation therefor) that is not a United States person, may be for a period of up to one year if the judge finds probable cause to believe that no communication of any individual United States person will be acquired during the period involved. In addition, an extension of an order for surveillance targeted at an agent of a foreign power who is not a U.S. person may be extended to a period not exceeding one year. Certifications made by the Attorney General pursuant to 50 U.S.C. § 1802(a) and applications made and orders granted for electronic surveillance under title I of FISA, must be retained for a period of at least ten years from the date of the certification or application. Emergency Authorization of Electronic Surveillance upon Attorney General Certification while an FISC Order Is Pursued . Emergency situations are addressed in 50 U.S.C. § 1805(f). Notwithstanding other provisions of this subchapter, if the Attorney General reasonably determines that an emergency situation exists with respect to the employment of electronic surveillance to obtain foreign intelligence information before an order authorizing such surveillance can with due diligence be obtained and that the factual basis for issuance of an order under this subchapter to approve such surveillance exists, he may authorize electronic surveillance if specified steps are taken. At the time of the Attorney General's emergency authorization, he or his designee must inform an FISC judge that the decision to employ emergency electronic surveillance has been made. An application for a court order under Section 1804 must be made to that judge as soon as practicable, but not more than 72 hours after the Attorney General authorizes such surveillance. If the Attorney General authorizes emergency electronic surveillance, he must require compliance with the minimization procedures required for the issuance of a judicial order under this subchapter. Absent a judicial order approving the emergency electronic surveillance, the surveillance must terminate when the information sought is obtained, when the application for the order is denied, or after 72 hours from the time of the Attorney General's authorization, whichever is earliest. If no judicial order approving the surveillance is issued, the information garnered may not be received in evidence or otherwise disclosed in any court proceeding, or proceeding in or before any grand jury, department, office, agency, regulatory body, legislative committee, or other authority of the United States, a State, or political subdivision thereof. No information concerning any United States person acquired through such surveillance may be disclosed by any Federal officer or employee without the consent of that person, unless the Attorney General approves of such disclosure or use where the information indicates a threat of death or serious bodily harm to any person. Notwithstanding any other provision of title I of FISA, under Section 1805(g), federal officers, employees, or agents are authorized in the normal course of their official duties to conduct electronic surveillance not targeted against the communications of any particular person or persons, under procedures approved by the Attorney General, solely to: (1) test the capability of electronic equipment, if— (A) it is not reasonable to obtain the consent of the persons incidentally subjected to the surveillance; (B) the test is limited in extent and duration to that necessary to determine the capability of the equipment; (C) the contents of any communication acquired are retained and used only for the purpose of determining the capability of the equipment, are disclosed only to test personnel, and are destroyed before or immediately upon completion of the test; and: (D) Provided, That the test may exceed ninety days only with the prior approval of the Attorney General; (2) determine the existence and capability of electronic surveillance equipment being used by persons not authorized to conduct electronic surveillance, if— (A) it is not reasonable to obtain the consent of persons incidentally subjected to the surveillance; (B) such electronic surveillance is limited in extent and duration to that necessary to determine the existence and capability of such equipment; and (C) any information acquired by such surveillance is used only to enforce chapter 119 of Title 18, or section 605 of Title 47, or to protect information from unauthorized surveillance; or (3) train intelligence personnel in the use of electronic surveillance equipment, if— (A) it is not reasonable to— (i) obtain the consent of the persons incidentally subjected to the surveillance; (ii) train persons in the course of surveillances otherwise authorized by this subchapter; or (iii) train persons in the use of such equipment without engaging in electronic surveillance; (B) such electronic surveillance is limited in extent and duration to that necessary to train the personnel in the use of the equipment; and (C) no contents of any communication acquired are retained or disseminated for any purpose, but are destroyed as soon as reasonably possible. Section 1805(i) bars any cause of action in any court against any provider of a wire or electronic communication service, landlord, custodian, or other person (including any officer, employee, agent, or other specified person thereof) that furnishes any information, facilities, or technical assistance in accordance with a court order or request for emergency assistance under FISA for electronic surveillance or a physical search. The uses to which information gathered pursuant to electronic surveillance under FISA may be put are addressed under 50 U.S.C. § 1806. Under this section, disclosure, without the consent of the person involved, of information lawfully acquired under FISA electronic surveillance which concerns a United States person must be in compliance with the statutorily mandated minimization procedures. Communications which were privileged when intercepted remain privileged. Where information acquired under FISA electronic surveillance is disclosed for law enforcement purposes, neither that information nor any information derived therefrom may be used in a criminal proceeding without prior authorization of the Attorney General. If the United States Government intends to disclose information acquired under FISA electronic surveillance or derived therefrom in any proceeding before a court, department, officer regulatory body or other authority of the United States against an aggrieved person, then the Government must give prior notice of its intent to disclose to the aggrieved person and to the court or other authority involved. Similarly, a State or political subdivision of a State that intends to disclose such information against an aggrieved person in a proceeding before a State or local authority must give prior notice of its intent to the aggrieved person, the court or other authority, and the Attorney General. 50 U.S.C. § 1806(c)-(f)—U.S. District Court Consideration of Notices, Motions to Suppress or Discovery Motions . Section 1806 also sets out in camera and ex parte U.S. district court review procedures to be followed where such notification is received, or where the aggrieved person seeks to discover or obtain orders or applications relating to FISA electronic surveillance, or to discover, obtain, or suppress evidence or information obtained or derived from the electronic surveillance, and the Attorney General files an affidavit under oath that such disclosure would harm U.S. national security. The focus of this review would be to determine whether the surveillance was lawfully conducted and authorized. Only where it is needed to make an accurate determination of these issues does the section permit the court to disclose to the aggrieved person, under appropriate security measures and protective orders, parts of the application, order, or other materials related to the surveillance. If, as a result of its review, the district court determines that the surveillance was unlawful, the resulting evidence must be suppressed. If the surveillance was lawfully authorized and conducted, the motion of the aggrieved person must be denied except to the extent that due process requires discovery or disclosure. Resultant court orders granting motions or requests of the aggrieved person for a determination that the surveillance was not lawfully conducted or authorized and court orders requiring review or granting disclosure are final orders binding on all Federal and State courts except a U.S. Court of Appeals and the U.S. Supreme Court. If the contents of any radio communication are unintentionally acquired by an electronic, mechanical, or other surveillance device in circumstances where there is a reasonable expectation of privacy and where a warrant would be required if the surveillance were to be pursued for law enforcement purposes, then the contents must be destroyed when recognized, unless the Attorney General finds that the contents indicate a threat of death or serious bodily harm to any person. As noted above, Section 1805 provides for emergency electronic surveillance in limited circumstances, and requires the subsequent prompt filing of an application for court authorization to the FISC in such a situation. Under Section 1806, if the application is unsuccessful in obtaining court approval for the surveillance, notice must be served upon any United States person named in the application and such other U.S. persons subject to electronic surveillance as the judge determines, in the exercise of his discretion, is in the interests of justice. This notice includes the fact of the application, the period of surveillance, and the fact that information was or was not obtained during this period. Section 1806 permits postponement or suspension of service of notice for up to ninety days upon ex parte good cause shown. Upon a further ex parte showing of good cause thereafter, the court will forego ordering such service of notice. 50 U.S.C. § 1806(k)—Consultation by Federal Officers Conducting FISA Electronic Surveillance with Federal Law Enforcement Officers . P.L. 107-56 , Section 504, added a new subsection 1806(k)(1). Under this subsection, federal officers who conduct electronic surveillance to acquire foreign intelligence under FISA are permitted to consult with Federal law enforcement officers to coordinate investigative efforts or to protect against— (A) actual or potential attack or other grave hostile acts of a foreign power or an agent of a foreign power; (B) sabotage or international terrorism by a foreign power or an agent of a foreign power; or (C) clandestine intelligence activities by an intelligence service or network of a foreign power or by an agent of a foreign power. This subsection indicates further that such coordination would not preclude certification as required by 50 U.S.C. § 1804(a)(7)(B) or entry of a court order under 50 U.S.C. § 1805. Reporting requirements are included in Sections 1807 and 1808. Under Section 1807, each year in April, the Attorney General is directed to transmit to the Administrative Office of the United States Courts and to the Congress a report covering the total number of applications made for orders and extensions of orders approving electronic surveillance under FISA during the previous year, and the total number of orders and extensions granted, modified, or denied during that time period. Section 1808(a) requires the Attorney General to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the Senate Judiciary Committee semiannually about all electronic surveillance under FISA. Each such report must contain a description of the total number of applications made for orders and extensions of orders approving electronic surveillance under this subchapter where the nature and location of each facility or place at which the electronic surveillance will be directed is unknown; each criminal case in which information acquired by electronic surveillance under FISA has been authorized for use at trial during the period covered by the report; and the total number of emergency employments of electronic surveillance under section 1805(f) of this title and the total number of subsequent orders approving or denying such electronic surveillance. Section 1809 provides criminal sanctions for intentionally engaging in electronic surveillance under color of law except as authorized by statute; or for disclosing or using information obtained under color of law by electronic surveillance, knowing or having reason to know that surveillance was not authorized by statute. The provision makes it a defense to prosecution under this subsection if the defendant is a law enforcement officer or investigative officer in the course of his official duties and the electronic surveillance was authorized by and conducted under a search warrant or court order of a court of competent jurisdiction. Section 1809 provides for Federal jurisdiction over such an offense if the defendant is a Federal officer or employee at the time of the offense. Civil liability is also provided for under Section 1810, where an aggrieved person, who is neither a foreign power nor an agent of a foreign power, has been subjected to electronic surveillance, or where information gathered by electronic surveillance about an aggrieved person has been disclosed or used in violation of Section 1809. Finally, Section 1811 provides that, notwithstanding any other law, the President, through the Attorney General, may authorize electronic surveillance without a court order to acquire foreign intelligence information for up to 15 calendar days following a declaration of war by Congress. Physical searches for foreign intelligence purposes are addressed in 50 U.S.C. § 1821 et seq . While tailored for physical searches, the provisions in many respects follow a pattern similar to that created for electronic surveillance. The definitions from 50 U.S.C. § 1801 for the terms "foreign power," "agent of a foreign power," "international terrorism," "sabotage," "foreign intelligence information," "Attorney General," "United States person," "United States," "person," and "State" also apply to foreign intelligence physical searches except where specifically provided otherwise. Minimization procedures also apply to physical searches for foreign intelligence purposes. Those defined under 50 U.S.C. § 1821(4) are tailored to such physical searches and, like those applicable to electronic surveillance under 50 U.S.C. § 1801(h), these procedures are designed to minimize acquisition and retention, and to prohibit dissemination, of nonpublicly available information concerning unconsenting U.S. persons, consistent with the needs of the United States to obtain, produce and disseminate foreign intelligence. Under 50 U.S.C. § 1822, the President, acting through the Attorney General, may authorize physical searches to acquire foreign intelligence information without a court order for up to one year if the Attorney General certifies under oath that the search is solely directed at premises, property, information or materials owned by or under the open and exclusive control of certain foreign power or powers. For these purposes, "foreign power or powers" means a foreign government or component of a foreign government, whether or not recognized by the United States, a faction of a foreign nation or nations, not substantially composed of U.S. persons; or an entity that is openly acknowledged by a foreign government or governments to be directed and controlled by such foreign government or governments. In addition, the Attorney General must certify that there is no substantial likelihood that the physical search will involve the premises, information, material or property of a U.S. person, and that the proposed minimization procedures with respect to the physical search are consistent with 50 U.S.C. § 1821(4)(1)-(4). Under normal circumstances, these minimization procedures and any changes to them are reported to the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence by the Attorney General at least 30 days before their effective date. However, if the Attorney General determines that immediate action is required, the statute mandates that he advise these committees immediately of the minimization procedures and the need for them to become effective immediately. In addition, the Attorney General must assess compliance with these minimization procedures and report such assessments to these congressional committees. The certification of the Attorney General for a search under 50 U.S.C. § 1822 is immediately transmitted under seal to the Foreign Intelligence Surveillance Court, and maintained there under security measures established by the Chief Justice of the United States with the Attorney General's concurrence, in consultation with the Director of National Intelligence. Such a certification remains under seal unless one of two circumstances arise: (1) either an application for a court order with respect to the physical search is made to the Foreign Intelligence Surveillance Court under 50 U.S.C. § 1821(4) (dealing with minimization procedures) and § 1823 (dealing with the process by which a federal officer, with the approval of the Attorney General, may apply for an order from the FISC approving a physical search for foreign intelligence gathering purposes); or (2) the certification is needed to determine the legality of a physical search under 50 U.S.C. § 1825 (dealing with use of the information so gathered). In connection with physical searches under 50 U.S.C. § 1822, the Attorney General may direct a landlord, custodian or other specified person to furnish all necessary assistance needed to accomplish the physical search in a way that would both protect its secrecy and minimize interference with the services such person provides the target of the search. Such person may also be directed to maintain any records regarding the search or the aid provided under security procedures approved by the Attorney General and the Director of National Intelligence. The provision of any such aid must be compensated by the Government. As in the case of applications for electronic surveillance under FISA, the Foreign Intelligence Surveillance Court (FISC) has jurisdiction to hear applications and grant applications with respect to physical searches under 50 U.S.C. § 1821 et seq. No FISC judge may hear an application already denied by another FISC judge. If an application for an order authorizing a physical search under FISA is denied, the judge denying the application must immediately provide a written statement of reasons for the denial. If the United States so moves, the record is then transmitted under seal to the court of review established under 50 U.S.C. § 1803(b). If the court of review determines that the application was properly denied, it, in turn, must provide a written statement of the reasons for its decision, which must be transmitted under seal to the Supreme Court upon petition for certiorari by the United States. Any of the proceedings with respect to an application for a physical search under FISA must be conducted expeditiously, and the record of such proceedings must be kept under appropriate security measures. The requirements for application for an order for a physical search under FISA are included in 50 U.S.C. § 1823. While tailored to a physical search, the requirements strongly parallel those applicable to electronic surveillance under 50 U.S.C. § 1804(a)(1)-(9). Like Section 1804(a)(7)(B) with respect to required certifications for an application for electronic surveillance under FISA, Section 1823(a)(7)(B) was amended by P.L. 107-56 , Section 218, to require that the Assistant to the President for National Security Affairs or designated Executive Branch official certify, among other things, that a significant purpose (rather than "that the purpose") of the physical search is to obtain foreign intelligence information. Section 1823(d) also parallels Section 1804(e) (dealing with requirements for some applications for electronic surveillance under FISA), in that, if requested in writing by the Director of the FBI, the Secretary of Defense, the Secretary of State, or the Director of National Intelligence, the Attorney General must personally review an application for a FISA physical search if the target is one described by Section 1801(b)(2). 50 U.S.C. § 1801(b)(2) deals with targets who knowingly engage in clandestine intelligence gathering activities involving or possibly involving violations of federal criminal laws by or on behalf of a foreign power; targets who, at the direction of an intelligence service or network of a foreign power, engage in other clandestine intelligence activities involving or potentially involving federal crimes by or on behalf of a foreign power; targets who knowingly engage in sabotage or international terrorism, activities in preparation for sabotage or international terrorism, or activities on behalf of a foreign power; targets who knowingly aid, abet, or conspire with anyone to engage in any of the previously listed categories of activities; or targets who knowingly enter the United States under false identification by or on behalf or a foreign power or who assume a false identity on behalf of a foreign power while present in the United States. Should the Attorney General, after reviewing an application, decide not to approve it, he must provide written notice of his determination to the official requesting the review of the application, setting forth any modifications needed for the Attorney General to approve it. The official so notified must supervise the making of the suggested modifications if the official deems them warranted. Unless the Attorney General or the official involved is disabled or otherwise unable to carry out his or her respective responsibilities under Section 1823, those responsibilities are non-delegable. As in the case of the issuance of an order approving electronic surveillance under 50 U.S.C. § 1805(a), certain findings by the FISC judge are required before an order may be forthcoming authorizing a physical search for foreign intelligence information under 50 U.S.C. § 1824(a). Once an application under Section 1823 has been filed, an FISC judge must enter an ex parte order, either as requested or as modified, approving the physical search if the requisite findings are made. These include findings that: (1) the President has authorized the Attorney General to approve applications for physical searches for foreign intelligence purposes; (2) the application has been made by a Federal officer and approved by the Attorney General; (3) on the basis of the facts submitted by the applicant there is probable cause to believe that— (A) the target of the physical search is a foreign power or an agent of a foreign power, except that no United States person may be considered an agent of a foreign power solely on the basis of activities protected by the first amendment to the Constitution of the United States; and (B) the premises or property to be searched is owned, used, possessed by, or is in transit to or from an agent of a foreign power or a foreign power; (4) the proposed minimization procedures meet the definition of minimization contained in this subchapter; and (5) the application which has been filed contains all statements and certifications required by section 1823 of this title, and, if the target is a United States person, the certification or certifications are not clearly erroneous on the basis of the statement made under section 1823(a)(7)(E) of this title and any other information furnished under section 1823(c) of this title. Like Section 1805(b) regarding electronic surveillance under FISA, an FISC judge making a probable cause determination under Section 1824 may consider the target's past activities, plus facts and circumstances pertinent to the target's present or future activities. As in the case of an order under 50 U.S.C. § 1805(c) with respect to electronic surveillance, an order granting an application for a physical search under FISA must meet statutory requirements in 50 U.S.C. § 1824(c) as to specifications and directions. An order approving a physical search must specify: (A) the identity, if known, or a description of the target of the physical search; (B) the nature and location of each of the premises of property to be searched; (C) the type of information, material, or property to be seized, altered, or reproduced; (D) a statement of the manner in which the physical search is to be conducted and, whenever more than one physical search is authorized under the order, the authorized scope of each search and what minimization procedures shall apply to the information acquired by each search; and (E) the period of time during which the physical searches are approved; .... In addition, the order must direct: (A) that the minimization procedures be followed; (B) that, upon the request of the applicant, a specified landlord, custodian, or other specified person furnish the applicant forthwith all information, facilities, or assistance necessary to accomplish the physical search in such a manner as will protect its secrecy and produce a minimum of interference with the services that such landlord, custodian, or other person is providing to the target of the physical search; (C) that such landlord, custodian, or other person maintain under security procedures approved by the Attorney General and the Director of National Intelligence any records concerning the search or the aid furnished that such person wishes to retain; (D) that the applicant compensate, at the prevailing rate, such landlord, custodian, or other person for furnishing such aid; and (E) that the federal officer conducting the physical search promptly report to the court the circumstances and results of the physical search. Subsection 1824(d) sets the limits on the duration of orders under this section and makes provision for extensions of such orders if certain criteria are met. 50 U.S.C. § 1824(e)—Emergency Authorization of a Physical Search upon Attorney General Certification while FISC Order Is Pursued . Subsection 1824(e) deals with emergency orders for physical searches. It permits the Attorney General, under certain circumstances, to authorize execution of a physical search if the Attorney General or his designee informs an FISC judge that the decision to execute an emergency search has been made, and an application under 50 U.S.C. § 1821 et seq. is made to that judge as soon as possible, within 72 hours after the Attorney General authorizes the search. The Attorney General's decision to authorize such a search must be premised upon a determination that "an emergency situation exists with respect to the execution of a physical search to obtain foreign intelligence information before an order authorizing such search can with due diligence be obtained," and "the factual basis for issuance of an order under this title [50 U.S.C. § 1821 et seq. ] to approve such a search exists." If such an emergency search is authorized by the Attorney General, he must require that the minimization procedures required for issuance of a judicial order for a physical search under 18 U.S.C. § 1821 et seq. be followed. If there is no judicial order for a such a physical search, then the search must terminate on the earliest of the date on which the information sought is obtained, the date on which the application for the order is denied, or the expiration of the 72 hour period from the Attorney General's authorization of the emergency search. If an application for approval is denied or if the search is terminated and no order approving the search is issued, then neither information obtained from the search nor evidence derived from the search may be used in evidence or disclosed in any ... trial, hearing, or other proceeding in or before any court, grand jury, department, office, agency, regulatory body, legislative committee, or other authority of the United States, a State, or political subdivision thereof, and no information concerning any United States person acquired from such search shall subsequently be used or disclosed in any other manner by Federal officers or employees without the consent of such person, except with the approval of the Attorney General, if the information indicates a threat of death or serious bodily harm to any person. A denial of the application made under this subsection may be reviewed as provided in section 302 [50 U.S.C. § 1822]. Subsection 1824(f) requires retention of applications made and orders granted under 50 U.S.C. § 1821 et seq. , for a minimum of ten years from the date of the application. Like 50 U.S.C. § 1806 with respect to electronic surveillance under FISA, 50 U.S.C. § 1825 restricts and regulates the uses of information secured under a FISA physical search. Such information may only be used or disclosed by Federal officers or employees for lawful purposes. Federal officers and employees must comply with minimization procedures if they use or disclose information gathered from a physical search under FISA concerning a United States person. If a physical search involving the residence of a United States person is authorized and conducted under 50 U.S.C. § 1824, and at any time thereafter the Attorney General determines that there is no national security interest in continuing to maintain the search's secrecy, the Attorney General must provide notice to the United States person whose residence was searched. This notice must include both the fact that the search pursuant to FISA was conducted and the identification of any property of that person which was seized, altered, or reproduced during the search. Disclosure for law enforcement purposes of information acquired under 50 U.S.C. § 1821 et seq ., must be accompanied by a statement that such information and any derivative information may only be used in a criminal proceeding with advance authorization from the Attorney General. The notice requirements relevant to intended use or disclosure of information gleaned from a FISA physical search or derivative information, are similar to those applicable where disclosure or use of information garnered from electronic surveillance is intended. If the United States intends to use or disclose information gathered during or derived from a FISA physical search in a trial, hearing, or other proceeding before a court, department, officer, agency, regulatory body or other authority of the United States against an aggrieved person, the United States must first give notice to the aggrieved person, and the court or other authority. Similarly, if a State or political subdivision of a state intends to use or disclose any information obtained or derived from a FISA physical search in any trial, hearing, or other proceeding before a court, department, officer, agency, regulatory body, or other State or political subdivision against an aggrieved person, the State or locality must notify the aggrieved person, the pertinent court or other authority where the information is to be used, and the Attorney General of the United States of its intention to use or disclose the information. 50 U.S.C. §§ 1825(d)-(g)—U.S. District Court Consideration of Notices, Motions to Suppress, or Discovery Motions . An aggrieved person may move to suppress evidence obtained or derived from a FISA physical search on one of two grounds: that the information was unlawfully acquired; or that the physical search was not made in conformity with an order of authorization or approval. Such a motion to suppress must be made before the trial, hearing or other proceeding involved unless the aggrieved person had no opportunity to make the motion or was not aware of the grounds of the motion. In camera, ex parte review by a United States district court may be triggered by receipt of notice under Subsections 1825(d) or (e) by a court or other authority; the making of a motion to suppress by an aggrieved person under Subsection 1825(f); or the making of a motion or request by an aggrieved person under any other federal or state law or rule before any federal or state court or authority to discover or obtain applications, orders, or other materials pertaining to a physical search authorized under FISA or to discover, obtain, or suppress evidence or information obtained or derived from a FISA physical search. If the Attorney General files an affidavit under oath that disclosure of any adversary hearing would harm U.S. national security, the U.S. district court receiving notice or before whom a motion or request is pending, or, if the motion is made to another authority, the U.S. district court in the same district as that authority, shall review in camera and ex parte the application, order, and such other materials relating to the physical search at issue needed to determine whether the physical search of the aggrieved person was lawfully authorized and conducted. If the court finds it necessary to make an accurate determination of the legality of the search, the court may disclose portions of the application, order, or other pertinent materials to the aggrieved person under appropriate security procedures and protective orders, or may require the Attorney General to provide a summary of such materials to the aggrieved person. If the U.S. district court makes a determination that the physical search was not lawfully authorized or conducted, then it must "suppress the evidence which was unlawfully obtained or derived from the physical search of the aggrieved person or otherwise grant the motion of the aggrieved person." If, on the other hand, the court finds that the physical search was lawfully authorized or conducted, the motion of the aggrieved person will be denied except to the extent that due process requires discovery or disclosure. If the U.S. district court grants a motion to suppress under 50 U.S.C. § 1825(h); deems a FISA physical search unlawfully authorized or conducted; or orders review or grants disclosure of applications, orders or other materials pertinent to a FISA physical search, that court order is final and binding on all federal and state courts except a U.S. Court of Appeals or the U.S. Supreme Court. As a general matter, where an emergency physical search is authorized under 50 U.S.C. § 1824(d), and a subsequent order approving the resulting search is not obtained, any U.S. person named in the application and any other U.S. persons subject to the search that the FISC judge deems appropriate in the interests of justice must be served with notice of the fact of the application and the period of the search, and must be advised as to whether information was or was not obtained during that period. However, such notice may be postponed or suspended for a period not to exceed 90 days upon an ex parte showing of good cause to the judge, and, upon further good cause shown, the court must forego such notice altogether. 50 U.S.C. § 1825(k)—Consultation by Federal Officers Doing FISA Searches with Federal Law Enforcement Officers . Section 504(b) of P.L. 107-56 , added a new 50 U.S.C. § 1825(k) to the statute, which deals with consultation by federal officers doing FISA searches with federal law enforcement officers. Section 899 of the Homeland Security Act of 2002, P.L. 107-296 expanded this authority to also permit consultation with "law enforcement personnel of a State or political subdivision of a State (including the chief executive officer of that State or political subdivision who has the authority to appoint or direct the chief law enforcement officer of that State or political subdivision)." Under this new language, as amended, federal officers "who conduct physical searches to acquire foreign intelligence information" under 50 U.S.C. § 1821 et seq. , may consult with federal law enforcement officers or state or local law enforcement personnel: ... to coordinate efforts to investigate or protect against (A) actual or potential attack or other grave hostile acts of a foreign power or an agent of a foreign power; (B) sabotage or international terrorism by a foreign power or an agent of a foreign power; or (C) clandestine intelligence activities by an intelligence service or network of a foreign power or by an agent of a foreign power. Such coordination does not preclude certification required under 50 U.S.C. § 1823(a)(7) or entry of an order under 50 U.S.C. § 1824. 50 U.S.C. § 1826 provides for semiannual congressional oversight of physical searches under FISA. The Attorney General is directed to "fully inform" the Permanent Select Committee on Intelligence of the House of Representatives, the Select Committee on Intelligence of the Senate, and the Senate Judiciary Committee with respect to all physical searches conducted under 50 U.S.C. § 1821 et seq . Also on a semiannual basis, the Attorney General is required to provide a report to "those committees" and to the House Judiciary Committee setting forth: the total number of applications for orders approving FISA physical searches during the preceding six month period; the total number of those orders granted, modified, or denied; the number of such physical searches involving the residences, offices, or personal property of United States persons; the number of occasions, if any, the Attorney General gave notice under 50 U.S.C. § 1825(b); and the total number of emergency physical searches authorized by the Attorney General under section 1824(e) of this title and the total number of subsequent orders approving or denying such physical searches. Section 1827 imposes criminal sanctions for intentionally executing a physical search for foreign intelligence gathering purposes under color of law within the United States except as authorized by statute. In addition, criminal penalties attach to a conviction for intentionally disclosing or using information obtained by a physical search under color of law within the United States for the purpose of gathering intelligence information, where the offender knows or has reason to know that the information was obtained by a physical search not authorized by statute. In either case, this section provides that a person convicted of such an offense faces a fine of not more than $10,000, imprisonment for not more than five years or both. Federal jurisdiction attaches where the offense is committed by an officer or employee of the United States. It is a defense to such a prosecution if the defendant was a law enforcement or investigative officer engaged in official duties and the physical search was authorized and conducted pursuant to a search warrant or court order by a court of competent jurisdiction. In addition, an aggrieved person other than a foreign power or an agent of a foreign power as defined under section 1801(a) or 1801(b)(1)(A), whose premises, property, information, or material within the United States was physically searched under FISA; or about whom information obtained by such a search was disclosed or used in violation of 50 U.S.C. § 1827, may bring a civil action for actual damages, punitive damages, and reasonable attorney's fees and other investigative and litigation costs reasonably incurred. In times of war, the President, through the Attorney General, may authorize physical searches under FISA without a court order to obtain foreign intelligence information for up to 15 days following a declaration of war by Congress. Title IV of FISA, 50 U.S.C. § 1841 et seq ., was added in 1998, amended by P.L. 107-56 , and amended further by Section 314(5) of P.L. 107-108 . Under 50 U.S.C. § 1842(a)(1), notwithstanding any other provision of law, the Attorney General or a designated attorney for the Government may apply for an order or extension of an order authorizing or approving the installation and use of a pen register or trap and trace device " for any investigation to protect against international terrorism or clandestine intelligence activities, provided such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution " conducted by the Federal Bureau of Investigation (FBI) under guidelines approved by the Attorney General pursuant to E.O. 12333 or a successor order. This authority is separate from the authority to conduct electronic surveillance under 50 U.S.C. § 1801 et seq . Each such application is made in writing upon oath or affirmation to an FISC judge or to a U.S. magistrate judge publicly designated by the Chief Justice of the United States to hear such applications and grant orders approving installation of pen registers or trap and trace devices on behalf of an FISC judge. The application must be approved by the Attorney General or a designated attorney for the Government. Each application must identify the federal officer seeking to use the pen register or trap and trace device covered by the application. It must also include a certification by the applicant " that the information likely to be obtained is relevant to an ongoing investigation to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution. " Under 50 U.S.C. § 1842, as amended by P.L. 107-56 , pen registers and trap and trace devices may now be installed and used not only to track telephone calls, but also other forms of electronic communication such as e-mail. Once an application is made under Section 1842, the judge must enter an ex parte order as requested or as modified approving the installation and use of a pen register or trap and trace device if the application meets the requirements of that section. Generally, an order issued under 50 U.S.C. § 1842 may authorize the installation and use of a pen register or trap and trace device for a period not to exceed 90 days. Extensions of such an order may also be granted for up to 90 days. However, in the case of an application under subsection 1842(c) where the applicant has certified that the information likely to be obtained is foreign intelligence information not concerning a United States person, an order, or an extension of an order for a FISA pen register or trap and trace device may be up to one year. Section 1842(f) bars any cause of action in any court against any provider of a wire or electronic communication service, landlord, custodian, or other person (including any officer, employee, agent, or other specified person thereof) that furnishes any information, facilities, or technical assistance under subsection 1842(d) in accordance with the terms of an order issued under this section. Section 1843 of Title 18 of the United States Code focuses upon authorization for installation and use of a pen register or trap and trace device under FISA during specified types of emergencies. This provision applies when the Attorney General makes a reasonable determination that: (1) an emergency requires the installation and use of a pen register or trap and trace device to obtain foreign intelligence information not concerning a United States person or information to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution before an order authorizing the installation and use of the pen register or trap and trace device, as the case may be, can with due diligence be obtained under section 1842 of this title; and (2) the factual basis for issuance of an order under section 1842(c) of this title to approve the installation and use of the pen register or trap and trace device, as the case may be, exists. Upon making such a determination, the Attorney General may authorize the installation and use of a pen register or trap and trace device for this purpose if two criteria are met. First, the Attorney General or his designee must inform a judge referred to in Section 1842(b) at the time of the emergency authorization that the decision to install and use the pen register or trap and trace device has been made. Second, an application for a court order authorizing a pen register or trap and trace device under 50 U.S.C. § 1842(a)(1) must be made to the judge as soon as practicable, but no later that 48 hours after the emergency authorization. If no order approving the installation and use of a pen register or trap and trace device is forthcoming, then the installation and use of such pen register or trap and trace device must terminate at the earlier of the time when the information sought is obtained, the time when the application for the order is denied under 50 U.S.C. § 1842, or the expiration of 48 hours from the time the Attorney General made his emergency authorization. If an application for an order sought under Section 1843(a)(2) is denied, or if the installation and use of the pen register or trap and trace device is terminated, and no order approving it is issued under 50 U.S.C. § 1842(b)(2), then no information obtained or evidence derived from the use of the pen register or trap and trace device may be received in evidence or disclosed in any trial, hearing or other proceeding in any court, grand jury, department, office, agency, regulatory body, legislative committee or other federal state or local authority. Furthermore, in such circumstances, no information concerning a United States person acquired from the use of the pen register or trap and trace device may later be used or disclosed in any other way by federal officers or employees without consent of the U.S. person involved, with one exception. If the Attorney General approves the disclosure because the information indicates a threat of death or serious bodily harm to anyone, then disclosure without consent of the U.S. person involved is permitted. If Congress declares war, then, notwithstanding any other provision of law, the President, through the Attorney General, may authorize use of a pen register or trap and trace device without a court order to acquire foreign intelligence information for up to 15 calendar days after the declaration of war. 50 U.S.C. § 1845 sets parameters with respect to the use of information obtained through the use of a pen register or trap and trace device under 50 U.S.C. § 1841 et seq . Federal officers and employees may only use or disclose such information with respect to a U.S. person without the consent of that person in accordance with Section 1845. Any disclosure by a Federal officer or employee of information acquired pursuant to FISA from a pen register or trap and trace device must be for a lawful purpose. Disclosure for law enforcement purposes of information acquired under 50 U.S.C. § 1841 et seq . is only permitted where the disclosure is accompanied by a statement that the information and any derivative information may only be used in a criminal proceeding with the advance authorization of the Attorney General. Under 50 U.S.C. § 1845(c), when the United States intends to enter into evidence, use, or disclose information obtained by or derived from a FISA pen register or trap and trace device against an aggrieved person in any federal trial, hearing, or proceeding, notice requirements must be satisfied. The Government, before the trial, hearing, or proceeding or a reasonable time before the information is to be proffered, used or disclosed, must give notice of its intent both to the aggrieved person involved and to the court or other authority in which the information is to be disclosed or used. If a state or local government intends to enter into evidence, use, or disclose information obtained or derived from such a trap and trace device against an aggrieved person in a state or local trial, hearing or proceeding, it must give notice to the aggrieved person and to the Attorney General of the United States of the state or local government's intent to disclose or use the information. 50 U.S.C. §1845(c)-(f)—U.S. District Court Consideration of Notices, Motions to Suppress, or Discovery Motions . The aggrieved person in either case may move to suppress the evidence obtained or derived from a FISA pen register or trap and trace device on one of two grounds: that the information was unlawfully acquired; or that the use of the pen register or trap and trace device was not made in conformity with an order of authorization or approval under 50 U.S.C. § 1841 et seq . If notice is given under 50 U.S.C. §§ 1845(c) or (d), or a motion or request is made to suppress or to discover or obtain any applications, orders, or other materials relating to use of a FISA pen register or trap and trace device or information obtained by or derived from such use, the Attorney General may have national security concerns with respect to the effect of such disclosure or of an adversary hearing. If he files an affidavit under oath that disclosure or any adversary hearing would harm the national security of the United States, the United States district court in which the motion or request is made, or where the motion or request is made before another authority, the U.S. district court in the same district, shall review in camera and ex parte the application, order, and other relevant materials to determine whether the use of the pen register or trap and trace device was lawfully authorized and conducted. In so doing, the court may only disclose portions of the application, order or materials to the aggrieved person or order the Attorney General to provide the aggrieved person with a summary of these materials if that disclosure is necessary to making an accurate determination of the legality of the use of the pen register or trap and trace device. Should the court find that the pen register or trap and trace device was not lawfully authorized or conducted, it may suppress the unlawfully obtained or derived evidence or "otherwise grant the motion of the aggrieved person." On the other hand, if the court finds the pen register or trap and trace device lawfully authorized and conducted, it may deny the aggrieved person's motion except to the extent discovery or disclosure is required by due process. Any U.S. district court orders granting motions or request under Section 1845(g), finding unlawfully authorized or conducted the use of a pen register or trap and trace device, or requiring review or granting disclosure of applications, orders or other materials regarding installation and use of a pen register or trap and trace device are deemed final orders. They are binding on all federal and state courts except U.S. courts of appeals and the U.S. Supreme Court. Section 1846 deals with congressional oversight of the use of FISA pen registers and trap and trace devices. It requires the Attorney General semiannually to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the House and Senate Judiciary Committees regarding all FISA uses of pen registers and trap and trace devices. In addition, the Attorney General, on a semi-annual basis, must report to the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, the House Judiciary Committee and the Senate Judiciary Committee on the total number of applications made for orders approving the use of such pen registers and trap and trace devices; the total number of such orders granted, modified, or denied during the previous six month period; the total number of pen registers and trap and trace devices whose installation and use was authorized by the Attorney General on an emergency basis under section 1843 of this title, and the total number of subsequent orders approving or denying the installation and use of such pen registers and trap and trace devices. Added in 1998, Title V of FISA, 50 U.S.C. § 1861 et seq ., was substantially changed by P.L. 107-56 , and modified further by P.L. 107-108 , P.L. 109-177 , and P.L. 109-178 . Although denominated "access to certain business records for foreign intelligence and international terrorism investigations," the reach of Section 1861, as amended by the USA PATRIOT Act, P.L. 107-108 , P.L. 109-177 , and P.L. 109-178 , is now substantially broader than business records alone. Under 50 U.S.C. § 1861(a)(1), subject to Subsection 1861(a)(3), the Director of the FBI, or his designee (who must be at the Assistant Special Agent in Charge level or higher in rank) may apply for an order requiring ... the production of any tangible things (including books, records, papers, documents, and other items) for an investigation to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution. Subsection 1861(a)(2) requires that such an investigation must be conducted under guidelines approved by the Attorney General under E.O. 12333 or a successor order and prohibits such an investigation of a United States person based solely upon First Amendment protected activities. Under Subsection 1861(a)(3), which was added by Section 106(a)(2) of P.L. 109-177 , if the application is for an order requiring production of library circulation records, library patron lists, book sales records, book customer lists, firearms sales records, tax return records, educational records, or medical records containing information that would identify a person, the Director of the Federal Bureau of Investigation may delegate the authority to make such application to either the Deputy Director of the Federal Bureau of Investigation or the Executive Assistant Director for National Security (or any successor position). The Deputy Director or the Executive Assistant Director may not further delegate such authority. An application for an order under Section 1861 must be made to an FISC judge or to a U.S. magistrate judge publicly designated by the Chief Justice of the United States to hear such applications and grant such orders for the production of tangible things on behalf of an FISC judge. The application must contain a statement of facts showing that there are reasonable grounds to believe that the tangible things sought are relevant to an authorized investigation (other than a threat assessment) conducted in accordance with 50 U.S.C. § 1861(a)(2) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. When such an application is made, if the judge finds that the application meets the requirements of subsections 1861(a) and (b), he or she must enter an ex parte order as requested, or as modified, approving the release of tangible things. The order must direct that minimization procedures adopted pursuant to subsection 1861(g) be followed. An order issued under 50 U.S.C. § 1861(c) must: describe the tangible things that are ordered to be produced with sufficient particularity to permit them to be fairly identified; include the date on which the tangible things must be provided, which must allow a reasonable period of time within which the tangible things can be assembled and made available; and provide recipients with clear and conspicuous notice of nondisclosure requirements under Subsection 1861(d). The order may only require the production of a tangible thing which may be subject to a subpoena duces tecum issued by a court of the United States in aid of a grand jury investigation or to any other order issued by a court of the United States directing the production of records or tangible things. An order issued under 50 U.S.C. § 1861(c) shall not disclose that it is issued for purposes of an investigation described in Subsection 1861(a). Subsection 1861(d) prohibits any person to disclose that the FBI has sought or obtained tangible things under Section 1861, except where the disclosure is made to persons necessary to the production of tangible things involved, to an attorney to obtain legal advice or assistance with respect to the production of things in response to the order, or to other persons as permitted by the Director of the FBI or his designee. A person to whom such disclosure is made is also subject to these nondisclosure requirements, and must be put on notice of the nondisclosure requirements by the person making such disclosures to him or her. At the request of the Director of the FBI or his designee, anyone making or intending to make such a disclosure must identify to the Director or his designee the person to whom the disclosure was or is to be made. Subsection 1861(e) precludes liability for persons who, in good faith, produce tangible things under such a Section 1861 order. It further indicates that production does not constitute a waiver of any privilege in any other proceeding or context. Subsection 1861(f), which was added by Subsection 106(f) of P.L. 109-177 and amended by Section 3 of P.L. 109-178 , gives a person in receipt of a production order under 50 U.S.C. § 1861 a means by which to challenge the legality of such order by filing a petition before the petition review pool of the FISC established by 50 U.S.C. § 1803(e)(1). The recipient of a production order must wait at least one year after issuance of that order to challenge the nondisclosure order imposed in connection with the production order by filing a petition to modify or set aside the nondisclosure order before the petition review pool. The presiding judge must assign a petition filed with the pool under subsection 1861(f)(2)(A)(i) to one of the FISC judges in the pool immediately, and the judge receiving such petition must conduct an initial review of it within 72 hours. If the petition is deemed frivolous, the assigned judge must immediately deny it and affirm the production order or nondisclosure order at issue. If the assigned judge does not find the petition frivolous, he or she must promptly consider it under the Procedures for Review of Petitions filed pursuant to Section 501(f) of the Foreign Intelligence Surveillance Act of 1978, as Amended, established under 50 U.S.C. § 1803(e)(2), and provide a written statement for the record of the reasons for any determination made. An order setting aside a nondisclosure order may be stayed, upon request of the Government, pending review by the Court of Review. A petition to modify or set aside a production order may only be granted if the judge finds the order does not meet the requirements of 50 U.S.C. § 1861 or is otherwise unlawful. If the judge does not modify or set aside the production order, he or she must immediately affirm the order and order the recipient to comply with it. A petition to modify or set aside a nondisclosure order may only be granted if the judge finds that there is no reason to believe that disclosure may endanger U.S. national security; interfere with a criminal, counterterrorism, or counterintelligence investigation; interfere with diplomatic relations; or endanger the life or physical safety of any person. If, upon the filing of a petition to modify or set aside a nondisclosure order, the Attorney General, Deputy Attorney General, an Assistant Attorney General, or the Director of the FBI certifies that disclosure may endanger the national security of the United States or interfere with diplomatic relations, that certification will be treated as conclusive unless the judge finds that the certification was made in bad faith. If a petition to modify or set aside a nondisclosure order is denied, the recipient may not file another petition to modify or set aside that nondisclosure order for one year. A production order or nondisclosure order that is not explicitly modified or set aside under Section 1861 remains in full effect. The Government or any person receiving a production or nondisclosure order may file a petition before the Court of Review to review a decision by a petition review pool judge to affirm, modify, or set aside such order. The Court of Review must provide a written statement of the reasons for its decision for the record. The record will be transmitted under seal to the U.S. Supreme Court for review on a petition for certiorari by the Government or any person receiving such order. Judicial proceedings under 50 U.S.C. § 1861(f) are to be concluded as expeditiously as possible, and the record of such proceedings is to be maintained under security measures established by the Chief Justice of the United States, in consultation with the Attorney General and the Director of National Intelligence. Petitions are to be filed under seal. Upon the request of the Government, the court in proceedings under Subsection 1861(f) shall review ex parte and in camera any Government submissions, or portions thereof, which may contain classified information. Subsection 1861(g), as added by Subsection 106(g) of P.L. 109-177 , requires the Attorney General to adopt specific minimization procedures governing retention and dissemination by the FBI or any tangible things, or information in those things, received by the FBI in response to an order under 50 U.S.C. § 1861. Subsection 1861(h), also added by Subsection 106(g) of P.L. 109-177 , provides that information acquired from tangible things received by the FBI pursuant to an order under 50 U.S.C. § 1861 concerning any U.S. person may be used and disclosed by federal officers and employees without that U.S. person's consent only in accordance with these minimization procedures. Otherwise privileged information acquired from tangible things received by the FBI title V of FISA, 50 U.S.C. §§ 1861-1862, retains its privileged character. Information acquired by the FBI under Section 1861 orders may only be used or disclosed by federal officers or employees for lawful purposes. 50 U.S.C. § 1862 deals with congressional oversight. Subsection 1862(a), as amended by Subsection 106(h) of P.L. 109-177 , requires the Attorney General annually to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the House and Senate Committees on the Judiciary regarding all request for production of tangible things under Section 1861. Subsection 1862(b) requires the Attorney General, in April of each year, to report to the House and Senate Judiciary Committees with respect to the previous calendar year on the total number of applications for Section 1861 orders for production of tangible things; the total number of such orders granted, modified, or denied; and the number of such orders either granted, modified, or denied for the production of each of the following: library circulation records, library patron lists, book sales records, or book customer lists; firearms sales records; tax return records; educational records; and medical records containing information that would identify a person. Under Subsection 1862(c), in April of each year, the Attorney General is required to submit an unclassified report to Congress with respect to the preceding year setting forth the total number of applications made for orders approving requests for the production of tangible things under 50 U.S.C. § 1861; and the total number of such orders either granted, modified, or denied. Section 106A of P.L. 109-177 directs the Inspector General of the U.S. Department of Justice to perform a comprehensive audit of the effectiveness and use, including improper or illegal use, of the investigative authority under title V of FISA, 50 U.S.C. § 1861 et seq. , for fiscal years 2002-2006, and sets out detailed requirements for the audit. The results of the audit are to be submitted in two unclassified reports (one for 2002-2004 and one for 2005-2006) to the House and Senate Judiciary Committees, the House Permanent Select Committee on Intelligence, and the Senate Select Committee on Intelligence. Section 6002 of P.L. 108-458 , the Intelligence Reform and Terrorism Prevention Act of 2004, created additional semiannual reporting requirements under FISA. Under the new language, the Attorney General, on a semiannual basis, must submit to the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, the House Judiciary Committee and the Senate Judiciary Committee, in a manner consistent with protection of national security, reports setting forth with respect to the preceding six month period: (1) the aggregate number of persons targeted for orders issued under this Act, including a breakdown of those targeted for— (A) electronic surveillance under section 105 [50 U.S.C. § 1805]; (B) physical searches under section 304 [50 U.S.C. § 1824]; (C) pen registers under section 402 [50 U.S.C. § 1842]; and (D) access to records under section 501 [50 U.S.C. § 1861]; (2) the number of individuals covered by an order issued pursuant to section 101(b)(1)(C) [50 U.S.C. § 1801(b)(1)(C)]; (3) the number of times that the Attorney General has authorized that information obtained under this Act may be used in a criminal proceeding or any information derived therefrom may be used in a criminal proceeding; (4) a summary of significant legal interpretations of this Act involving matters before the Foreign Intelligence Surveillance Court or the Foreign Intelligence Surveillance Court of Review, including interpretations presented in applications or pleadings filed with the Foreign Intelligence Surveillance Court or the Foreign Intelligence Court of Review by the Department of Justice; and (5) copies of all decisions (not including orders) or opinions of the Foreign Intelligence Surveillance Court or Foreign Intelligence Surveillance Court of Review that include significant construction or interpretation of the provisions of this Act. In addition to provisions which amended FISA explicitly, other provisions of the USA PATRIOT Act, P.L. 107-56 , touched upon FISA, at least tangentially. For example, Section 223 of P.L. 107-56 , among other things, created a new 18 U.S.C. § 2712. This new section, in part, created an exclusive private right of action for any person aggrieved by any willful violation of sections 106(a), 305(a), or 405(a) of FISA (50 U.S.C. §§ 1806(a), 1825(a), 1845(a), respectively) to be brought against the United States in U.S. district court to recover money damages. Such monetary relief would amount to either actual damages or $10,000, whichever is greater; and reasonably incurred litigation costs. It also set forth applicable procedures. Section 224 of the USA PATRIOT Act set a sunset for many of the provisions in P.L. 107-56 of December 31, 2005, including all of the FISA amendments except that in Section 208 of P.L. 107-56 , which increased the number of FISC judges from 7 to 11. Section 224 was repealed by the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , Subsection 102(a). Subsection 102(b) of P.L. 109-177 provided that Sections 105(c)(2) of FISA, 50 U.S.C. § 1805(c)(2) (dealing with multipoint or roving wiretaps under FISA), 501 of FISA, 50 U.S.C. § 1861 (dealing with production of any tangible thing under FISA), and 502 of FISA, 50 U.S.C. § 1862 (dealing with congressional oversight of such production under FISA) will sunset on December 31, 2009. However, Subsection 102(b) of P.L. 109-177 excepts from the application of the sunset provision any particular foreign intelligence investigations that began before December 31, 2009, or any criminal offenses or potential offenses which began or occurred before December 31, 2009. As to those particular investigations or offenses, applicable provisions would continue in effect after December 31, 2009. Section 6001(a) of the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458 , expanded the definition of "agent of a foreign power" in 50 U.S.C. § 1801(b)(1)(C) to include any person other than a U.S. person who engages in international terrorism or activities in preparation for international terrorism. Under Section 103 of P.L. 109-177 , this so-called "lone wolf" terrorist provision will also sunset on December 31, 2009, except with respect to any particular foreign intelligence investigation that began before that date, or with respect to any particular offense or potential offense that began or occurred before that date. In its May 17, 2002, decision, the FISC considered a government motion for the court "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." The court viewed the new intelligence sharing procedures under review as proposed new Attorney General minimization procedures. In a memorandum and order written by the then Presiding Judge, U.S. District Court Judge Royce Lamberth, issued on the last day of his tenure on the FISC, and concurred in by all of the judges then sitting on the FISC, the FISC granted the Department of Justice (DOJ) motion with significant modifications to section II.B. of what the FISC characterized as the proposed minimization procedures. The court required a continuation of the Attorney General's 1995 minimization procedures, as subsequently modified by the Attorney General and the Deputy Attorney General, and preservation of a "wall" procedure to maintain separation between FBI criminal investigators and DOJ prosecutors and raw FISA investigation data regarding the same facts or individuals, so as to prevent these law enforcement personnel from becoming "de facto partners in FISA surveillances and searches," while permitting extensive sharing of information between such investigations. The FISC was particularly concerned with those aspects of section II.B. of the proposed procedures which would permit criminal prosecutors and law enforcement officers to initiate, direct or control electronic surveillance or physical searches under FISA, with an eye towards law enforcement objectives, rather than foreign intelligence information gathering. The FISC set the stage for its analysis by recounting a significant number of past instances where FISA applications had included false, inaccurate or misleading information regarding information sharing or compliance with "wall" procedures in FBI affidavits or, in one case, in a statutorily required certification by the FBI Director; and past occasions where the FISC's orders had been violated in regard to information sharing and unauthorized dissemination of FISA information to criminal investigators and prosecutors. While both the FBI's and DOJ's Offices of Professional Responsibility had been investigating these incidents for over a year at the time of the writing of the opinion, the court had not been advised of any explanations as to how such misrepresentations had occurred. The court's dissatisfaction with these irregularities formed a backdrop for its analysis of the motion and applications before it. Its analysis was based upon its reading of the statutory language and premised, in part, on the fact that the USA PATRIOT Act had not amended the provisions of FISA dealing with minimization requirements, although other FISA provisions had been modified. The minimization provisions with respect to both electronic surveillance and physical searches under FISA continue to be designed to "minimize the acquisition and retention, and prohibit the dissemination, of non-publicly available information concerning unconsenting United States persons, consistent with the need of the United States to obtain, produce, and disseminate foreign intelligence information ." The court regarded the standard it applied to the proposed procedures before it as "mandated in [50 U.S.C.] § 1805(a)(4) and § 1824(a)(4), which state that 'the proposed minimization procedures meet the definition of minimization procedures under § 101(h), [§ 1801(h) and §1824(4)] of the act.'" In its memorandum opinion, the FISC first discussed the court's jurisdiction, noting that the text of the statute "leaves little doubt that the collection of foreign intelligence information is the raison d ' etre for the FISA." The court found support for this conclusion in a review of pertinent provisions of the act. It found further support in E.O. 12139 and E.O. 12949, which give the Attorney General authority to approve the filing of applications for orders for electronic surveillances and physical searches and authorize the Director of the FBI and other senior executives to make required certifications under FISA for the "purpose of obtaining foreign intelligence information." The FISC therefore concluded that its jurisdiction was limited to granting FISA orders for electronic surveillance and physical searches for the collection of foreign intelligence information under the standards and procedures prescribed in the act. In reaching this conclusion, the FISC, in a footnote, characterized the issue before it as "whether the FISA authorizes electronic surveillance and physical searches primarily for law enforcement purposes so long as the Government also has 'a significant' foreign intelligence purpose." Rejecting the approach taken by the Government in its supplemental brief in the case, the Court stated that "its decision is not based on the issue of its jurisdiction but on the interpretation of minimization procedures." Maintaining its focus upon the minimization procedures, the FISC also declined to reach the question raised by the Attorney General "whether FISA may be used primarily for law enforcement purposes." The court also regarded the scope of its findings regarding minimization as applicable "only to communications concerning U.S. persons as defined in § 1801(i) of the act: U.S. citizens and permanent resident aliens whether or not they are named targets in the electronic surveillance and physical searches." It emphasized that its opinion was not applicable to communications of foreign powers as defined under 50 U.S.C. § 1801(a), or to non-U.S. persons. After stating its continued approval of the "Standard Minimization Procedures for a U.S. Person Agent of a Foreign Power," the court turned its attention to two sections of supplementary minimization procedures adopted by the Attorney General on March 6, 2002, regarding "II. Intelligence sharing procedures concerning the Criminal Division," and "III. Intelligence sharing procedures concerning a USAO [U.S. Attorney's Office]." The FISC regarded these procedures as minimization procedures as that term is defined under FISA by virtue of the fact that they were adopted by the Attorney General and were "designed to minimize the acquisition and retention, and prohibit the dissemination, of nonpublicly available information concerning unconsenting United States persons." Therefore, these procedures were measured against the standard for minimization procedures set forth in 50 U.S.C. §§ 1805(a)(4) and 1824(a)(4): ... The operative language of each section to be applied by the Court provides that minimization procedures must be reasonably designed in light of their purpose and technique, and mean— specific procedures, which shall be adopted by the Attorney General, that are reasonably designed in light of the purpose and technique of the particular surveillance, [search] to minimize the acquisition and retention, and prohibit the dissemination, of nonpublicly available information concerning unconsenting United States persons consistent with the need of the United States to obtain, produce, and disseminate foreign intelligence information. §1801(h)(1) and §1821(4)(A). The court then reviewed the minimization procedures upon which it had been relying prior to the application before it, to wit, the Attorney General's 1995 "Procedures for Contacts between the FBI and Criminal Division Concerning FI [Foreign Intelligence] and Foreign Counterintelligence Investigations,"as augmented by the Attorney General in January 2000 and expanded further by the Deputy Attorney General in August 2001. The FISC indicated that these procedures permitted the following "substantial consultation and coordination": a. reasonable indications of significant federal crimes in FISA cases are to be reported to the Criminal Division of the Department of Justice; b. [t]he Criminal Division may then consult with the FBI and give guidance to the FBI aimed at preserving the option of criminal prosecution, but may not direct or control the FISA investigation toward law enforcement objectives; c. the Criminal Division may consult further with the appropriate U.S. Attorney's Office about such FISA cases; d. on a monthly basis senior officials of the FBI provide briefings to senior officials of the Justice Department, including OIPR [Office of Intelligence Policy and Review] and the Criminal Division, about intelligence cases, including those in which FISA is or may be used; e. all FBI 90-day interim reports and annual reports of counterintelligence investigations, including FISA cases, are being provided to the Criminal Division, and must now contain a section explicitly identifying any possible federal criminal violations; f. all requests for initiation or renewal of FISA authority must now contain a section devoted explicitly to identifying any possible federal criminal violations ; g. the FBI is to provide monthly briefings directly to the Criminal Division concerning all counterintelligence investigations in which there is a reasonable indication of a significant federal crime; h. prior to each briefing the Criminal Division is to identify (from FBI reports) those intelligence investigations about which it requires additional information and the FBI is to provide the information requested; and i. since September 11, 2001, the requirement that OIPR be present at all meetings and discussions between the FBI and Criminal Division involving certain FISA cases has been suspended; instead, OIPR reviews a daily briefing book to inform itself and this Court about those discussions. The FISC indicated further that it "routinely approved the use of information screening 'walls' proposed by the government in its applications" to maintain both the appearance and the fact that FISA surveillances and searches were not being used " sub rosa for criminal investigations." In March 2000, September 2000, and March 2001, the FISC was advised by the Department of Justice of a significant number of erroneous statements or omissions of material facts in FISA applications, almost all of which involved misstatements or omissions as to information sharing and unauthorized disseminations to criminal investigators and prosecutors. Although the FBI and the Department of Justice Office of Professional Responsibility had been investigating the circumstances involved in these misstatements and omissions for over a year, as of the date of the opinion, the court had not been advised of the reasons for these erroneous statements. The court responded to these concerns in 2001 by instituting supervisory measures to assess compliance with "wall" procedures. In the case before the FISC, the government moved that all "wall" procedures be eliminated in international terrorism surveillances and physical searches under FISA. The FISC indicated that the new 2002 procedures proposed by the Attorney General would apply to two types of cases in which " FISA is the only effective tool available to both counterintelligence and criminal investigators" (emphasis supplied)—those involving overlapping investigations (which the court described as cases, usually international terrorism cases, in which separate intelligence and criminal investigations of the same FISA target who is a U.S. person are conducted by different FBI agents, where separation can easily be maintained) and those involving overlapping interests (i.e., cases in which one investigation of a U.S. person FISA target is conducted by a team of FBI agents with both intelligence and criminal interests "usually involving espionage and similar cases in which separation is impractical"). In both types of investigations, the FISC indicated that the 2002 proposed minimization procedures provided authority for "extensive consultations between the FBI and criminal prosecutors 'to coordinate efforts to investigate or protect against actual or potential attack, sabotage, international terrorism and clandestine intelligence activities by foreign powers and their agents....'" Such consultation is expressly provided for in 50 U.S.C. §§ 1806(k)(1) and 1825(k)(1). Under the proposed minimization procedures, those consultations would include providing prosecutors with access to "all information" developed in FBI counterintelligence investigations, including through FISA, among other information. Section II.B. of the proposed minimization techniques would authorize criminal prosecutors to "consult extensively and provide advice and recommendations to intelligence officials about 'all issues necessary to the ability of the United States to investigate or protect against foreign attack, sabotage, terrorism, and clandestine intelligence activities.'" The FISC was particularly concerned about the authority given criminal prosecutors under Section II.B. "to advise FBI intelligence officials concerning ' the initiation, operation, continuation, or expansion of FISA searches or surveillance .'" The court regarded this provision as "designed to use this Court's orders to enhance criminal investigation and prosecution, consistent with the government's interpretation of the recent amendments that FISA may now be 'used primarily for a law enforcement purpose.'" Under section III of the proposed procedures, U.S. attorneys are given the authority to engage in consultations to the same extent as the Criminal Division of DOJ under parts II.A. and II.B. in cases involving international terrorism. The FISC interpreted these procedures as giving criminal prosecutors "a significant role directing FISA surveillances and searches from start to finish in counterintelligence cases involving overlapping intelligence and criminal investigations or interests, guiding them to criminal prosecution." In light of the court's past experience with FISA searches and surveillances, the FISC found the proposed procedures to be "designed to enhance the acquisition, retention and dissemination of evidence for law enforcement purposes, instead of being consistent with the need of the United States to 'obtain, produce, and disseminate foreign intelligence information ' (emphasis added [by the FISC]) as mandated in § 1801(h) and § 1821(4)." The court regarded the procedures as, in effect, an effort by the government to amend FISA's definition of minimization procedures in ways that Congress had not and to substitute FISA for the electronic surveillance requirements of Title III of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. § 2510 et seq. , and for the search warrant requirements in Rule 41 of the Federal Rules of Criminal Procedure. The court found this unacceptable. Nor was the court persuaded by the government's contention that the 1995 procedures' prohibition against criminal prosecutors "directing or controlling" FISA cases should be revoked. "If criminal prosecutors direct both the intelligence and criminal investigations, or a single investigation having combined interests, coordination becomes subordination of both investigations or interests to law enforcement objectives." The FISC stated: Advising FBI intelligence officials on the initiation, operation, continuation or expansion of FISA surveillances and searches of U.S. persons means that criminal prosecutors will tell the FBI when to use FISA (perhaps when they lack probable cause for a Title III electronic surveillance), what techniques to use, what information to look for, what information to keep as evidence and when use of FISA can cease because there is enough evidence to arrest and prosecute. The 2002 minimization procedures give the Department's criminal prosecutors every legal advantage conceived by Congress to be used by U.S. intelligence agencies to collect foreign intelligence information, ... based on a standard that the U.S. person is only using or about to use the places to be surveilled or searched, without any notice to the target unless arrested and prosecuted, and, if prosecuted, no adversarial discovery of the FISA applications and warrants. All of this may be done by use of procedures intended to minimize collection of U.S. person information, consistent with the need of the United States to obtain and produce foreign intelligence information. If direction of counterintelligence cases involving the use of highly intrusive FISA surveillances and searches by criminal prosecutors is necessary to obtain and produce foreign intelligence information, it is yet to be explained to the Court. Having found section II.B. of the proposed minimization procedures inconsistent with the statutory standard for minimization procedures under 50 U.S.C. §§ 1801(h) and 1821(4), the court substituted its own language in place of the second and third paragraphs of II.B. as submitted by the Attorney General. The substitute language permitted consultation between the FBI, the Criminal Division of DOJ, and the Office of Intelligence Policy and Review of DOJ (OIPR) "to coordinate their efforts to investigate or protect against foreign attack or other grave hostile acts, sabotage, international terrorism, or clandestine intelligence activities by foreign powers or [agents of foreign powers]," so that the goals and objectives of both the intelligence and law enforcement investigations or interests may be achieved. However, it prohibited law enforcement officials from making recommendations to intelligence officials regarding initiation, operation, continuation, or expansion of FISA surveillances and searches. In addition, the substitute language foreclosed law enforcement officials from directing or controlling the use of FISA procedures to enhance criminal prosecution; nor was advice intended to preserve the option of criminal prosecution to be permitted to inadvertently result in the Criminal Division directing or controlling an investigation involving FISA surveillance or physical searches to achieve law enforcement objectives. While direct consultation and coordination were permitted, the substitute language required OIPR to be invited to all such consultations and, where OIPR was unable to attend, the language required OIPR to be apprized forthwith in writing of the substance of the consultations, so that the FISC could be notified at the earliest opportunity. In its order accompanying the FISC memorandum opinion, the court held that the proposed minimization procedures, so modified, would be applicable to all future electronic surveillances and physical searches under FISA, subject to the approval of the court in each instance. In this order, the court also adopted a new administrative rule to monitor compliance. The new Rule 11 regarding criminal investigations in FISA cases provided: All FISA applications shall include informative descriptions of any ongoing criminal investigations of FISA targets, as well as the substance of any consultations between the FBI and criminal prosecutors at the Department of Justice or a United States Attorney's Office. The FISC memorandum opinion and order discussed above were not appealed directly. Rather, the Department of Justice sought review in the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review) of an FISC order which authorized electronic surveillance of an agent of a foreign power, but imposed restrictions on the government flowing from the FISC's May 17 th decision, and of an order renewing that surveillance subject to the same restrictions. Because of the electronic surveillance context of these orders, the Court of Review's analysis was cast primarily in terms of such surveillance, although some aspects of its analysis may have broader application to other aspects of FISA. In its first decision ever, the Court of Review, in a lengthy per curiam opinion issued on November 18, 2002, reversed and remanded the FISC orders. In so doing the Court of Review emphasized that the May 17 th decision, although never appealed, was "the basic decision before us and it [was] its rationale that the government challenge[d]." After reviewing the briefs of the government and two amici curiae, the American Civil Liberties Union (joined on the brief by the Center for Democracy and Technology, the Center for National Security Studies, the Electronic Privacy Information Center, and the Electronic Frontier Foundation) and the National Association of Criminal Defense Lawyers, the Court of Review concluded that "FISA, as amended by the Patriot Act, supports the government's position, and that the restrictions imposed by the FISA court are not required by FISA or the Constitution." The Court of Review began its analysis by articulating its view of the May 17 th FISC decision. The Court of Review stated that the FISC appeared to proceed in its opinion from the assumption that FISA constructed a barrier between counterintelligence/intelligence officials and law enforcement officers in the Executive Branch, but did not support that assumption with any relevant language from the statute. The Court of Review opined that this "wall" was implicit in the FISC's "apparent" belief that "it can approve applications for electronic surveillance only if the government's objective is not primarily directed toward criminal prosecution of the foreign agents for their foreign intelligence activity," while referencing neither statutory language in FISA nor USA PATRIOT Act amendments, which the government argued altered FISA to permit an application even if criminal prosecution was the primary goal. Instead, the Court of Review noted that the FISC relied upon its statutory authority to approve "minimization procedures" in imposing the restrictions at issue. The Court of Review stated that the government raised two main arguments: First, DOJ contended that the restriction, recognized by several courts of appeals prior to the enactment of the USA PATRIOT Act, that FISA could only be used if the government's primary purpose in gathering foreign intelligence information was not criminal prosecution, was not supported by the statutory language or the legislative history of FISA. This argument was not presented to the FISC, but the Court of Review indicated that it could entertain the argument, because proceedings before the FISC and before the Court of Review were ex parte . Second, the government argued that, even if the primary purpose test was appropriate prior to the passage of the USA PATRIOT Act, the amendments made by that act eliminated that concept. The government also argued that the FISC's interpretation of the minimization procedures provisions misconstrued those provisions and amounted to "an end run" around the USA PATRIOT Act amendments. DOJ argued further that the FISC minimization procedures so intruded into the Department's operations as to be beyond the constitutional authority of Article III judges. Finally, DOJ contended that application of the primary purpose test in a FISA case was not constitutionally compelled under the Fourth Amendment. The Court of Review noted that, as enacted in 1978, FISA authorized the grant of an application for electronic surveillance to obtain foreign intelligence information if there is probable cause to believe that "the target of the electronic surveillance is a foreign power or an agent of a foreign power," and that "each of the facilities or places at which the surveillance is directed is being used, or is about to be used by a foreign power or an agent of a foreign power." The reviewing court focused upon the close connection between criminal activity and the definitions of "agent of a foreign power" applicable to United States persons contained in 50 U.S.C. §§ 1801(b)(2)(A) and (C), to wit: "any person who 'knowingly engages in clandestine intelligence activities ... which activities involve or may involve a violation of the criminal statutes of the United States,' or 'knowingly engages in sabotage or international terrorism, or activities that are in preparation therefor.'" The court noted further that FISA defined "international terrorism" to mean "activities that 'involve violent acts or acts dangerous to human life that are a violation of the criminal laws of the United States or of any State, or that would be a criminal violation if committed within the jurisdiction of the United States or any State.'" "Sabotage," as defined by FISA, covers activities that "'involve a violation of chapter 105 of [the criminal code] [18 U.S.C. §§ 2151-2156], or that would involve such a violation if committed against the United States.'" For purposes of its opinion, the Court of Review described these types of crimes as "foreign intelligence crimes." The court observed that, as passed in 1978, 50 U.S.C. §1804 required a national security official of the Executive Branch, usually the FBI Director, to certify that "the purpose" of the electronic surveillance under FISA was to obtain foreign intelligence information, and opined that "it is virtually impossible to read the 1978 FISA to exclude from its purpose the prosecution of foreign intelligence crimes, most importantly because, as we have noted, the definition of an agent of a foreign power—if he or she is a U.S. person—is grounded on criminal conduct." It found further support for its view that "foreign intelligence information" included evidence of "foreign intelligence crimes" from the legislative history as reflected in H.Rept. 95-1283 and S.Rept. 95-701, while acknowledging that the House report also stated that FISA surveillances "are not primarily for the purpose of gathering evidence of a crime. They are to obtain foreign intelligence information, which when it concerns United States persons must be necessary to important national concerns." The Court of Review regarded the latter statement as an observation rather than a proscription. The Court of Review saw the U.S. Court of Appeals for the Fourth Circuit's decision in United States v. Truong Dinh Hung , 629 F.2d 908 (4 th Cir. 1980), a decision based upon constitutional analysis rather than FISA provisions, as the springboard for the "primary purpose" test cases interpreting FISA and upholding FISA surveillances against Fourth Amendment challenges. After reviewing a number of the FISA cases applying the primary purpose test, the Court of Review concluded that a dichotomy between foreign intelligence gathering and criminal investigations implicit in the application of the primary purpose test was not statutorily compelled. The court found that FISA, as originally passed, did not "preclude or limit the government's use or proposed use of foreign intelligence information, which included evidence of certain kinds of criminal activity, in a criminal prosecution." In addition, the Court of Review, relying on arguments of the Department of Justice and the language of subsection 1805(a)(5), interpreted 50 U.S.C. §§ 1805 of FISA as originally enacted as not contemplating that the [FISC] would inquire into the government's purpose in seeking foreign intelligence information. Further, the court rejected the FISC's characterization of the Attorney General's 1995 procedures, as modified and augmented in January 2000 and August 2001, as minimization procedures. These procedures were formally adopted by the FISC as minimization procedures defined in 50 U.S.C. §§ 1801(h) and 1821(4) in November 2001, after passage of the USA PATRIOT Act, and were incorporated in all applicable orders and warrants granted since their adoption by the FISC. On March 6, 2002, the Attorney General adopted new "Intelligence Sharing Procedures," intended to supercede prior procedures, to "allow complete exchange of information and advice between intelligence and law enforcement officials," to "eliminate the 'direction and control' test," and to permit "exchange of advice between the FBI, OIPR, and the Criminal Division regarding 'the initiation, operation, continuation, or expansion of FISA searches or surveillance." The following day, the government filed a motion with the FISC advising the court of the Attorney General's adoption of the 2002 procedures, seeking to have that court adopt the new procedures in all matters before the FISC and asking the court to vacate its orders adopting the prior procedures as minimization procedures and imposing "wall" procedures in certain types of cases. That motion led to the FISC decision to adopt the 2002 procedures with modifications that was, by reference, before the Court of Review in its November 18, 2002, decision. The Court of Review characterized the FISC's adoption of the Justice Department's 1995 procedures, as modified and augmented, as minimization procedures as follows: Essentially, the FISA court took portions of the Attorney General's augmented 1995 Procedures—adopted to deal with the primary purpose standard—and imposed them generically as minimization procedures. In doing so, the FISA court erred. It did not provide any constitutional basis for its action—we think there is none—and misconstrued the main statutory provision on which it relied. The court mistakenly categorized the augmented 1995 Procedures as FISA minimization procedures and then compelled the government to utilize a modified version of those procedures in a way that is clearly inconsistent with the statutory purpose. The Court of Review interpreted "minimization procedures" under 50 U.S.C. § 1801(h) to be designed to protect, as far as reasonable, against the acquisition, retention, and dissemination of nonpublic information which is not foreign intelligence information. In light of the Court of Review's interpretation of "minimization procedures" under 50 U.S.C. § 1801(h), the court found no basis for the FISC's reliance upon that section "to limit criminal prosecutors' ability to advise FBI intelligence officials on the initiation, operation, continuation, or expansion of FISA surveillances to obtain foreign intelligence information, even if such information includes evidence of a foreign intelligence crime." In addition, the Court of Review found that the FISC had misconstrued its authority under 50 U.S.C. § 1805 and misinterpreted the definition of minimization procedures under 50 U.S.C. § 1801(h). The Court of Review expressed approbation for the Government's argument that the FISC, in imposing the modified 1995 procedures upon the Department of Justice as minimization procedures, "may well have exceeded the constitutional bounds that restrict an Article III court. The FISA court asserted authority to govern the internal organization and investigative procedures of the Department of Justice which are the province of the Executive Branch (Article II) and the Congress (Article I)." The Court of Review deemed the FISC's "refusal ... to consider the legal significance of the Patriot Act's crucial amendments [to be] error." The appellate court noted that, as amended by the USA PATRIOT Act, the requirement in 50 U.S.C. § 1804(a)(7)(B) that the Executive Branch officer certify that "the purpose" of the FISA surveillance or physical search was to gather foreign intelligence information had been changed to "a significant purpose." The court noted that floor statements indicated that this would break down traditional barriers between law enforcement and foreign intelligence gathering, making it easier for law enforcement to obtain FISA court orders for surveillance or physical searches where the subject of the surveillance "is both a potential source of valuable intelligence and the potential target of a criminal prosecution." The court noted that some Members raised concerns about the Fourth Amendment implications of this language change which permitted the Government to obtain a court order under FISA "even if the primary purpose is a criminal investigation." Interestingly, although the Court of Review did not regard a dichotomy between foreign intelligence gathering and law enforcement purposes as necessarily implied by the 1978 version of 50 U.S.C. § 1804(a)(7)(B), the court viewed the statutory change from "the purpose" to "a significant purpose" in the USA PATRIOT Act as recognizing such a dichotomy. The Court of Review disagreed with the FISC interpretation of the consultation authority under 50 U.S.C. § 1806(k). The Court of Review saw this provision as one which reflected the elimination of barriers between law enforcement and intelligence or counterintelligence gathering, without a limitation on law enforcement officers directing or controlling FISA surveillances. "[W]hen Congress explicitly authorizes consultation and coordination between different offices in the government, without even suggesting a limitation on who is to direct and control, it necessarily implies that either could take the lead." In analyzing the "significant purpose" amendment to 50 U.S.C. § 1804(a)(7)(B), the Court of Review deemed this a clear rejection of the primary purpose test. If gathering foreign intelligence information is a significant purpose, another purpose such as criminal prosecution could be primary. Further, the court found that the term "significant" "imposed a requirement that the government have a measurable foreign intelligence purpose, other than just criminal prosecution of even foreign intelligence crimes.... Although section 1805(a)(5) ... may well have been intended to authorize the FISA court to review only the question whether the information sought was a type of foreign intelligence information, in light of the significant purpose amendment of section 1804, it seems section 1805 must be interpreted as giving the FISA court the authority to review the government's purpose in seeking the information." The Court of Review saw the "significant purpose" language as "excluding from the purpose of gaining foreign intelligence information a sole objective of criminal prosecution." If the government, at the commencement of a FISA surveillance has not yet determined whether to prosecute the target, "[s]o long as the government entertains a realistic option of dealing with the agent other than through criminal prosecution, it satisfies the significant purpose test." Under the Court of Review's analysis: If the certification of the application's purpose articulates a broader objective than criminal prosecution—such as stopping an ongoing conspiracy—and includes other potential non-prosecutorial responses, the government meets the statutory test. Of course, if the court concluded that the government's sole objective was merely to gain evidence of past criminal conduct—even foreign intelligence crimes—to punish the agent rather than halt ongoing espionage or terrorist activity, the application should be denied. The court stated further that, while ordinary crimes may be intertwined with foreign intelligence crimes, the FISA process may not be utilized to investigate wholly unrelated ordinary crimes. The Court of Review emphasized that the government's purpose as reflected in the Section 1804(a)(7)(B) certification is to be judged by the FISC on the basis of ...the national security officer's articulation and not by a FISA court inquiry into the origins of an investigation nor an examination of the personnel involved. It is up to the Director of the FBI, who typically certifies, to determine the government's national security purpose, as approved by the Attorney General or Deputy Attorney General.... That means, perforce, if the FISA court has reason to doubt that the government has any real non-prosecutorial purpose in seeking foreign intelligence information it can demand further inquiry into the certifying officer's purpose—or perhaps even the Attorney General's or Deputy Attorney General's reasons for approval. The important point is that the relevant purpose is that of those senior officials in the Executive Branch who have the responsibility of appraising the government's national security needs." Turning from its statutory analysis to its examination of whether the statute, as amended, satisfied Fourth Amendment parameters, the Court of Review compared the FISA procedures with those applicable to criminal investigations of "ordinary crimes" under Supreme Court jurisprudence and under the wiretap provisions of Title III of the Omnibus Crime Control and Safe Streets Act. Relying upon Dalia v. United States , 441 U.S. 238, 255 (1979), the court indicated that in criminal investigations, beyond requiring that searches and seizures be reasonable, the Supreme Court has interpreted the Fourth Amendment's warrant requirement to demand satisfaction of three criteria: a warrant must be issued by a neutral, detached magistrate; those seeking the warrant must demonstrate to the magistrate that there is probable cause to believe that the evidence sought will assist in a particular apprehension or conviction for a particular offense; and the warrant must describe with particularity the things to be seized and the place to be searched. The Court of Review compared the procedures in Title III with those in FISA, finding in some respects that Title III had higher standards, while in others FISA included additional safeguards. In both, there was provision for a detached, neutral magistrate. The probable cause standard in Title III for criminal investigations was deemed more demanding than that in FISA. Title III requires a showing of probable cause that a specific individual has committed, is committing, or is about to commit a particular criminal offense. FISA requires a showing of probable cause that the target of the FISA investigative technique is a foreign power or an agent of a foreign power. A foreign power is not defined solely in terms of criminal activity. In the case of a target who is a U.S. person, the definition of "agent of a foreign power" contemplates, in part, the involvement of or, in the case of clandestine intelligence activities for a foreign power, the possibility of criminal conduct. The court regarded the lesser requirement with respect to criminal activity in the context of clandestine intelligence activities as to some extent balanced by the safeguard provided by FISA's requirement that there be probable cause to believe that the target is acting "for or on behalf of a foreign power." With regard to the particularity requirement, as to the first element, Title III requires a finding of probable cause to believe that the interception will obtain particular communications regarding a specified crime. In contrast, FISA requires an official to designate the type of foreign intelligence information being sought and to certify that the information being sought is foreign intelligence information. When the target of the FISA investigation is a U.S. person, the standard of review applied by the FISC is whether there is clear error in the certification, a lower standard that a judicial finding of probable cause. While the FISC can demand that the government provide further information needed for the court to make its determination as to whether the certification is clearly erroneous, the statute relies also upon internal checks on Executive Branch decisions through the requirement that the certification must be made by a national security officer and approved by the Attorney General or Deputy Attorney General. In connection with the second particularity element, Title III ... requires probable cause to believe that the facilities subject to surveillance are being used or are about to be used in connection with commission of a crime or are leased to, listed in the name of, or used by the individual committing the crime, 18 U.S.C. § 2518(3)(d), [while] FISA requires probable cause to believe that each of the facilities or places at which the surveillance is directed is being used, or is about to be used by a foreign power or agent [of a foreign power]. 50 U.S.C. § 1805(a)(3)(B). ... Simply put, FISA requires less of a nexus between the facility and the pertinent communications that Title III, but more of a nexus between the target and the pertinent communications." The Court of Review also compared Title III to FISA with respect to necessity (both statutes require that the information sought is not available through normal investigative procedures, although the standards differ somewhat), duration of surveillance (30 days under Title III, 18 U.S.C. § 2518(3)(c), as opposed to 90 days under FISA for U.S. persons, 50 U.S.C. § 1805(e)(1)), minimization and notice. With respect to minimization, the Court of Review noted that Title III, under 18 U.S.C. § 2518(5), required minimization of what was acquired, directing that surveillance be carried out "in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter." FISA, on the other hand, "requires minimization of what is acquired, retained, and disseminated." Observing that the FISC had found "in practice FISA surveillance devices are normally left on continuously, and the minimization occurs in the process of indexing and logging the pertinent communications," the Court of Review deemed the reasonableness of such an approach to be dependent upon the facts and circumstances of each case: Less minimization in the acquisition stage may well be justified to the extent the intercepted communications are "ambiguous in nature or apparently involve[] guarded or coded language," or "the investigation is focusing on what is thought to be a widespread conspiracy [where] more extensive surveillance may be justified in an attempt to determine the precise scope of the enterprise." ... Given the targets of FISA surveillance, it will often be the case that intercepted communications will be in code or a foreign language for which there is no contemporaneously available translator, and the activities of foreign agents will involve multiple actors and complex plots.... With respect to notice, the Court of Review observed that under 18 U.S.C. § 2518(8)(d), Title III mandated notice to the target of the surveillance and, in the judge's discretion, to other persons whose communications were intercepted, after the surveillance has expired. In contrast, under 50 U.S.C. § 1806(c) and (d), FISA does not require notice to a person whose communications were intercepted unless the government intends to use, disclose, or enter into evidence those communications or derivative information in a trial, hearing, or other proceeding in or before any court, department, officer, agency, regulatory body, or other federal, state or local authority against that person. The Court of Review noted that where such information was to be used against a criminal defendant, he or she would be given notice, and stated that "where such evidence is not ultimately going to be used for law enforcement," Congress had observed that "[t]he need to preserve secrecy for sensitive counterintelligence sources and methods justifies elimination of the notice requirement." In a footnote, the court noted that the Amici had drawn attention to the difference in the nature of the notice given the defendant or aggrieved person under Title III as opposed to FISA. Under Title III, a defendant is generally entitled under 18 U.S.C. § 2518(9) to obtain the application and order to challenge the legality of the surveillance. However, under FISA, the government must give the aggrieved person and the court or other authority (or in the case of a state or local use, the state or political subdivision must give notice to the aggrieved person, the court or other authority, and the Attorney General) of their intent to so disclose or use communications obtained from the surveillance or derivative information. In addition, under 50 U.S.C. §§ 1806(f) and (g), if the Attorney General files an affidavit under oath that disclosure or an adversary hearing would harm national security, the U.S. district court may review in camera and ex parte the application, order, and other materials related to the surveillance, to determine whether the surveillance was lawfully authorized and conducted, whether disclosure or discovery is necessary, and whether to grant a motion to suppress. The Court of Review noted that these determinations are to be made by the U.S. district judge on a case by case basis, and stated that "whether such a decision protects a defendant's constitutional rights in a given case is not before us." Based on this comparison of Title III and FISA, the Court of Review found that "to the extent that the two statutes diverge in constitutionally relevant areas—in particular, in their probable cause and particularity showings—a FISA order may not be a 'warrant' contemplated by the Fourth Amendment.... Ultimately, the question becomes whether FISA, as amended by the Patriot Act, is a reasonable response based on a balance of the legitimate need of the government for foreign intelligence information to protect against national security threats with the protected rights of citizens." The court framed the question as follows: "does FISA amplify the President's power by providing a mechanism that at least approaches a classic warrant and which therefore supports the government's contention that FISA searches are constitutionally reasonable." In its analysis, the court first considered whether the Truong case articulated the correct standard. Truong held that the President had inherent authority to conduct warrantless searches to obtain foreign intelligence information, but did not squarely address FISA. Starting from the perspective that Truong deemed the primary purpose test to be constitutionally compelled as an application of the Keith case balancing standard, the Court of Review found that the Truong determination that "once surveillance becomes primarily a criminal investigation, the courts are entirely competent to make the usual probable cause determination, and ... individual privacy interests come to the fore and government foreign policy concerns recede when the government is primarily attempting to form the basis of a criminal investigation." The Court of Review found that this analysis was based upon a faulty premise that in the context of criminal prosecution "foreign policy concerns recede," and found further that the line the Truong court "sought to draw was inherently unstable, unrealistic, and confusing." The Court of Review opined that in the context of counterintelligence, foreign policy concerns did not recede when the government moved to prosecute. Rather "the government's primary purpose is to halt the espionage or terrorism efforts, and criminal prosecutions can be, and usually are, interrelated with other techniques used to frustrate a foreign power's efforts." In addition, the court found that the method of determining when an investigation became primarily criminal by looking to when the Criminal Division of the Department of Justice assumed the lead role, had led over time to the "quite intrusive organizational and personnel tasking the FISA court [had] adopted." The court found the "wall" procedure to generate dangerous confusion and create perverse organizational incentives that discouraged wholehearted cooperation of "all the government's personnel who can be brought to the task." This the court suggested could be thought to be dangerous to national security and could be thought to discourage desirable initiatives. In addition, the court saw the primary purpose test as administered by the FISC, "by focusing on the subjective motivation of those who initiate investigations ... was at odds with the Supreme Court's Fourth Amendment cases which regard subjective motivation of an officer conducting a search or seizure as irrelevant." Assuming arguendo that FISA orders were not warrants within the scope of the Fourth Amendment, the Court of Review returned to the question of whether searches under FISA are constitutionally reasonable. While the Supreme Court has not considered directly the constitutionality of warrantless government searches for foreign intelligence purposes, the balance between the government's interest and personal privacy interests is key to an examination of this question. The Court of Review viewed Keith as suggesting that a somewhat relaxed standard might be appropriate in foreign intelligence crimes as opposed to ordinary crimes. The Court of Review then briefly touched upon the Supreme Court's "special needs" cases, where the Court upheld searches not based on a warrant or individualized suspicion in extraordinary circumstances involving "special needs, beyond the normal need for law enforcement." In City of Indianapolis v. Edmond , 531 U.S. 32, 42 (2000), the U.S. Supreme Court held that a highway check point program designed to catch drug dealers was not within the "special needs" exception to the requirement that a search be based upon individualized suspicion, because "the government's 'primary purpose' was merely 'to uncover evidence of ordinary criminal wrongdoing.'" The Court stated that "the gravity of the threat alone cannot be dispositive of questions concerning what means law enforcement officers may employ to pursue a given purpose." The Court relied upon an examination of the primary purpose of the program, but not the motivations of individual officers, to determine whether the "special needs" standard had been met. The Supreme Court noted that an appropriately tailored road block could be used "to thwart an imminent terrorist attack." After summarizing Edmond , the Court of Review emphasized that it is the nature of the threat or emergency that took the matter beyond the realm of ordinary crime control. It concluded that, while the gravity of the threat alone cannot be dispositive of the reasonableness of a search under the Fourth Amendment standard, it is a critical factor in the analysis. In its view, the "programmatic purpose" of FISA, "to protect the nation against terrorists and espionage threats directed by foreign powers," was one which, from FISA's inception, was distinguishable from "ordinary crime control." The Court of Review also concluded that, "[e]ven without taking into account the President's inherent constitutional authority to conduct warrantless foreign intelligence surveillance, we think the procedures and government showings required under FISA, if they do not meet the minimum Fourth Amendment warrant standards, certainly come close." Applying the balancing test that it had drawn from Keith between foreign intelligence crimes and ordinary crimes, the Court of Review held surveillances under FISA, as amended by the USA PATRIOT Act, were reasonable and therefore constitutional. In so doing, however, the Court of Review acknowledged] ... that the constitutional question presented by this case—whether Congress' disapproval of the primary purpose test is consistent with the Fourth Amendment—has no definitive jurisprudential answer. The Supreme Court's special needs cases involve random stops (seizures) not electronic searches. In one sense, they can be thought of as a greater encroachment into personal privacy because they are not based on any particular suspicion. On the other hand, wiretapping is a good deal more intrusive than an automobile stop accompanied by questioning. The Court of Review reversed the FISC's orders before it for electronic surveillance "to the extent they imposed conditions on the grant of the government's applications, vacate[d] the FISA court's Rule 11, and remand[ed] with instructions to grant the applications as submitted and proceed henceforth in accordance with this opinion." 50 U.S.C. § 1803(b) provides that, where the Court of Review upholds a denial by the FISC of a FISA application, the United States may file a petition for certiorari to the United States Supreme Court. Since consideration of applications for FISA orders is ex parte, there is no provision in FISA for an appeal to the United States Supreme Court from a decision of the Court of Review by anyone other than the United States. Nevertheless, on February 18, 2003, a petition for leave to intervene and a petition for writ of certiorari to the U.S. Foreign Intelligence Surveillance Court of Review was filed in this case in the U.S. Supreme Court by the American Civil Liberties Union, National Association of Criminal Defense Lawyers, American-Arab Anti-Discrimination Committee, and the Arab Community Center for Economic and Social Services. On March 14, 2003, the Bar Association of San Francisco filed a motion to file an amicus curiae brief in support of the motion to intervene and petition for certiorari. On March 24, 2003, the Supreme Court denied the motion for leave to intervene in order to file a petition for a writ of certiorari and denied the motion for leave to file an amicus curiae brief. The Foreign Intelligence Surveillance Act, as amended, provides a statutory structure to be followed where electronic surveillance, 50 U.S.C. § 1801 et seq. , physical searches, 50 U.S.C. § 1821 et seq. , or pen registers or trap and trace devices, 50 U.S.C. § 1841 et seq. , for foreign intelligence gathering purposes are contemplated. In addition, it provides a statutory mechanism for the FBI to seek production of "any tangible things" for an investigation seeking foreign intelligence information not involving a U.S. person or to protect against international terrorism or clandestine intelligence with respect to any person under 50 U.S.C. § 1861. FISA creates enhanced procedural protections where a United States person is involved, while setting somewhat less stringent standards where the surveillance involves foreign powers or agents of foreign powers. With its detailed statutory structure, it appears intended to protect personal liberties safeguarded by the First and Fourth Amendments while providing a means to ensure national security interests. The USA PATRIOT Act, P.L. 107-56 , increased the number of FISC judges from 7 to 11, while expanding the availability of FISA electronic surveillance, physical searches and pen registers and trap and trace devices. For example, under P.L. 107-56 , an application for a court order permitting electronic surveillance or a physical search under FISA is now permissible where "a significant purpose" of the surveillance or physical search, rather than "the purpose" or, as interpreted by some courts, "the primary purpose" of the surveillance or physical search, is to gather foreign intelligence information. While the previous language withstood constitutional challenge, the Supreme Court has not yet determined the constitutional sufficiency of the change in the FISA procedures under the Fourth Amendment. On the other hand, the U.S. Foreign Intelligence Court of Review has examined a number of constitutional issues in In re Sealed Case , finding that FISA orders, if not satisfying the constitutional warrant requirement, are close to doing so; and finding that, even if a FISA order does not qualify as a warrant for Fourth Amendment purposes, electronic surveillance under FISA as amended by the USA PATRIOT Act is reasonable and therefore constitutional. At the same time, however, the Court of Review acknowledged that the constitutional question of whether Congress' disapproval of the primary purpose test is consistent with the Fourth Amendment "has no definitive jurisprudential answer." The USA PATRIOT Act also amended FISA to allow court orders permitting so-called multipoint or "roving" electronic surveillance, where the orders do not require particularity with respect to the identification of the instrument, place, or facility to be intercepted, upon a finding by the court that the actions of the target of the surveillance are likely to thwart such identification. P.L. 107-108 further clarified this authority. Under P.L. 107-56 , pen registers and trap and trace devices may now be authorized for e-mails as well as telephone conversations. In addition, the act expanded the previous FBI access to business records, permitting court ordered access in connection with a foreign intelligence or international terrorism investigation not just to business records held by common carriers, public accommodation facilities, physical storage facilities, and vehicle rental facilities, but to any tangible things. While expanding the authorities available for foreign intelligence investigations, FISA, as amended by the USA PATRIOT Act and the Intelligence Authorization Act for FY2002, also contains broader protections for those who may be the target of the various investigative techniques involved. For example, whether the circumstances involve electronic surveillance, physical searches, pen registers or trap and trace devices or access to business records and other tangible items, FISA, as amended by the USA PATRIOT Act, does not permit the court to grant orders based solely upon a United States person's exercise of First Amendment rights. In addition, P.L. 107-56 created a new private right of action for persons aggrieved by inappropriate disclosure or use of information gleaned or derived from electronic surveillance, physical searches or the use of pen registers or trap and trace devices. These claims can be brought against the United States for certain willful violations by government personnel. Finally, the inclusion of a sunset provision for the FISA changes made in the USA PATRIOT Act, with the exception of the increase in the number of FISC judges, provides an opportunity for the new authorities to be utilized and considered, and an opportunity for the Congress to revisit them in light of that experience. Sections 898 and 899 of the Homeland Security Act of 2002, P.L. 107-296 , amended FISA, 50 U.S.C. §§1806(k)(1) and 1825(k)(1) respectively, to permit federal officers conducting electronic surveillance or physical searches to acquire foreign intelligence information under FISA to consult with federal law enforcement officers "or law enforcement personnel of a state or political subdivision of a State (including the chief executive officer of that State or political subdivision who has the authority to appoint or direct the chief law enforcement officer of that State or political subdivision)." Such consultations are to coordinate efforts to investigate or protect against actual or potential attacks or other grave hostile acts of a foreign power or an agent of a foreign power; sabotage or international terrorism by a foreign power or an agent of a foreign power; or clandestine intelligence activities by an intelligence service or network of a foreign power or an agent of a foreign power. These sections also state that such consultations do not preclude the Assistant to the President for National Security Affairs or other designated Executive Branch officials from making the necessary certifications as part of the application process for a FISA court order under 50 U.S.C. §§ 1804(a)(7) or 1823(a)(7), nor are these consultations to preclude entry of an order under 50 U.S.C. §§ 1805 or 1824. Section 6001 of Title VI of FISA, as added by the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458 , expanded the definition of "agent of a foreign power" in the context of non-U.S. persons to encompass those who engage in international terrorism or in activities in preparation for international terrorism, regardless of whether they have any connection or affiliation with a foreign government or other foreign organization or entity. This new definition is included among those FISA provisions subject to the sunset provisions in Section 224 of the USA PATRIOT Act, as amended. Section of the new Title VI of FISA also imposed new, detailed semiannual reporting requirements to facilitate congressional oversight of the implementation of the Act, which are codified at 50 U.S.C. § 1871. The USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 (Reauthorization Act), Section 102, adopted a sunset of December 31, 2009, for FISC orders for multipoint or "roving" wiretaps under Section 105(a) of FISA, 50 U.S.C. § 1805(a), for FISC orders for production of tangible things under Section 501 of FISA, 50 U.S.C. § 1861, and congressional oversight requirements in Section 502 of FISA, 50 U.S.C. § 1862. Section 103 of P.L. 109-177 extended the sunset relating to "lone wolf" agents of foreign powers to December 31, 2009. Section 105 of P.L. 109-177 extended the maximum duration initial orders authorizing of electronic surveillances and physical searches under Sections 105(e) and 304 of FISA to 120 days, while extensions of such electronic surveillances and physical searches could be for up to one year. The duration of both initial orders and extensions to orders authorizing installation and use of FISa pen registers or trap and trace devices is extended from 90 days to one year in cases where the Government has certified that the information likely to be obtained is foreign intelligence information not concerning a U.S. person. Section 106(a) of P.L. 109-177 permits the FBI Director to delegate his authority to make an application for a production order regarding library circulation records, library patron lists, book sales records, book customer lists, firearms sales records, tax return records, educational records, or medical records containing information that would identify a person, to either the Deputy Director of the Federal Bureau of Investigation or the Executive Assistant Director for National Security (or any successor position). Neither the Deputy Director nor the Executive Assistant Director may not further delegate such authority. Section 106(b) of P.L. 109-177 requires an application for a FISA production order to include statement of the facts supporting a reasonable belief that the tangible things sought are relevant to an authorized investigation (other than a threat assessment) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. It provides that certain tangible things are "presumptively relevant" to such an investigation if the statement of facts shows that they pertain to a foreign power or agent of a foreign power, the activities of a suspected agent of a foreign power who is the subject of the authorized investigation, or an individual in contact with or known to a suspected agent of a foreign power who is the subject of the investigation. Section 106(c) of P.L. 109-177 provides that an FISC judge must approve a FISA production order if he or she finds that the application meets the statutory requirements. Under Section 106(d) of P.L. 109-177 , such an ex parte order must include a particularized description of the tangible things sought, must allow a reasonable time for such things to be assembled, must notify the recipients of the production order of applicable nondisclosure requirements, and must be limited to things which may be subject to a grand jury subpoena or any other federal court order directing production of records or tangible things. The order must not disclose that such order is issued for purposes of such an authorized investigation. Section 106(d) of the Reauthorization Act prohibits the recipient of a production order from disclosing to anyone except those persons to whom disclosure is necessary to comply with such order; an attorney to obtain legal advice or assistance with respect to the production of things in response to the order; or other persons as permitted by the FBI Director or his designee. Subsection 106(e) of the measure requires the production order recipient, upon the request of the FBI Director or his designee, to identify to the FBI those to whom such disclosure has been or will be made, unless the disclosure has been or is to be made to an attorney from whom legal advice or assistance is sought. Section 106(f) of P.L. 109-177 amends 50 U.S.C. § 1803 to establish a petition review pool of FISC judges to hear challenges to FISA production or related nondisclosure orders, and sets forth a detailed judicial review process for consideration of such petitions. Section 106A of the Reauthorization Act directs the Inspector General of the U.S. Department of Justice to conduct a comprehensive audit of the effectiveness and use, including any improper or illegal use, of the investigative authority provided to the FBI under 50 U.S.C. 1861 for calendar years 2002-2006, and requires the results to be filed in two unclassified reports to the House and Senate Intelligence and Judiciary Committees. Section 108(a) and (b) amend the requirements for an application and for an FISC order authorizing multipoint electronic surveillance under FISA. Subsection 108(c) expands the list of committees to whom the Attorney General's semiannual reports on FISA electronic surveillance to include not only the Intelligence Committees but also the Senate Judiciary Committee; and requires the report to include an additional category of information, that is, a description of the total number of applications made for orders approving such multipoint electronic surveillance. Section 109(a) of P.L. 109-177 modifies the list of congressional committees receiving two semiannual reports from the Attorney General on physical searches under FISA pursuant to 50 U.S.C. § 1826, and requires the second of these reports to include, among other things, the total number of emergency physical searches authorized by the Attorney General under 50 U.S.C. § 1824(e) and the total number of subsequent orders approving or denying such physical searches. Section 109(b) of P.L. 109-177 requires the Attorney General, in his semiannual statistical report submitted to the House and Senate Judiciary Committees on FISA pen registers and trap and trace devices, to include, among other things, the total number of pen registers and trap and trace devices whose installation and use was authorized by the Attorney General on an emergency basis under 50 U.S.C. §1843, and the total number of subsequent orders approving or denying the installation and use of such pen registers and trap and trace devices. Section 109(d) of P.L. 109-177 amends 50 U.S.C. § 1803 to permit the FISC and Court of Review to establish such rules and procedures, and take such actions, as are reasonably necessary to administer their responsibilities under this chapter. Any such rules and procedures are to be recorded and transmitted to all of the judges on the FISC and on the Court of Review, the Chief Justice of the United States, the House and Senate Judiciary Committees, the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. Section 128(a)(3) of P.L. 109-177 added 50 U.S.C. § 1842(d)(2)(C), which permits the FISC, in an order authorizing use of a pen register or trap and trace device, to direct a wire or communication service provider to provide the federal officer using the device specific subscriber or customer information upon request. That information may include, with respect to a customer or subscriber using the service during the period of the order, the name of the customer or subscriber; the address of the customer or subscriber; the telephone or instrument number, or other subscriber number or identifier, of the customer or subscriber, including any temporarily assigned network address or associated routing or transmission information; the length of the provision of service by such provider to the customer or subscriber and the types of services utilized by the customer or subscriber. In the case of a provider of local or long distance telephone service, the information provided may include any local or long distance telephone records of the customer or subscriber; if applicable, any records reflecting period of usage (or sessions) by the customer or subscriber; any mechanisms and sources of payment for such service, including the number of any credit card or bank account utilized for payment for such service; and, if available, with respect to any customer or subscriber of incoming or outgoing communications to or from the service covered by the order, the name of such customer or subscriber; the address of such customer or subscriber; the telephone or instrument number, or other subscriber number or identifier, of such customer or subscriber, including any temporarily assigned network address or associated routing or transmission information; and the length of the provision of service by such provider to such customer or subscriber and the types of services utilized by such customer or subscriber. Section 128(b) of P.L. 109-177 added the House and Senate Judiciary Committees to the list of committees to be kept fully informed by the Attorney General regarding all use of FISA pen registers and trap and trace devices. Section 506 of P.L. 109-177 amends the definition of "Attorney General" under 50 U.S.C. § 1801(g) to include the Assistant Attorney General for National Security, so that the term includes "the Attorney General of the United States (or Acting Attorney General), the Deputy Attorney General, or, upon the designation of the Attorney General, the Assistant Attorney General designated as the Assistant Attorney General for National Security under section 507A of title 28, United States Code." Section 3 of P.L. 109-178 amends the provisions in 50 U.S.C. § 1861(f) regarding judicial review of production orders and related nondisclosure orders. In addition, Section 4 of the measure amends 50 U.S.C. § 1861(d)(2) to provide that, at the request of the FBI Director or his designee, any person disclosing or intending to disclose that the FBI has sought or obtained tangible things under a FISA production order to someone in one of the three categories of individuals to whom such disclosure is permitted, shall identify to the Director or his designee the person to whom the disclosure will be or has been made. In so doing, the measure in effect deletes an exception to this identification requirement where the person to whom the disclosure is made is an attorney from whom the person making the disclosure is seeking legal advice or assistance. In addition to examining the statutory structure in FISA, as amended, this report has explored two published decisions, one from the FISC in In re All Matters Submitted to the Foreign Intelligence Surveillance Court and one from the U.S. Foreign Intelligence Court of Review in In re Sealed Case . Because historically the decisions of the FISC have not been made public, and because the opinion of the U.S. Foreign Intelligence Surveillance Court of Review discussed in this report was the first decision ever made by that court, the recent decisions of the FISC and the Court of Review provided a unique opportunity to observe the decision-making processes and differing perspectives of the two courts created by FISA. The FISC's decision was set against a backdrop of a significant number of instances in which the Department of Justice had failed to maintain a "wall" between foreign intelligence gathering and criminal investigations. All seven of the then sitting members of the FISC concurred in the May 17, 2002, order of the court, written by the then presiding judge of the court. The FISC, in its May 17 th opinion and order, treated the Attorney General's proposed 2002 "Intelligence Sharing Procedures for Foreign Intelligence and Foreign Counterintelligence Investigations Conducted by the FBI" as minimization procedures, and approved them as modified. The modifications made by the Court permitted the FBI, the Criminal Division, and OIPR to consult with one another "to coordinate their efforts to investigate or protect against foreign attack or other grave hostile acts, sabotage, international terrorism, or clandestine intelligence activities by foreign powers or their agents." In so doing, the FISC permitted such cooperation and coordination to address, among other things, the exchange of information already acquired, identification of categories of information needed and being sought, prevention of either foreign intelligence gathering or criminal law enforcement investigation or interest from obstructing or hindering the other; compromise of either investigation, and long term objectives and overall strategy of both investigations to insure that overlapping intelligence and criminal interests of the United States are both achieved. While permitting direct consultation and coordination between components, the FISC required that OIPR be invited to all consultations and, if OIPR was unable to attend, the modified procedures required that OIPR be "forthwith" informed in writing of the substance of the meeting so that the FISC could be notified promptly. In addition, under the procedures as modified by the FISC, law enforcement officials were prohibited from making recommendations to intelligence officials regarding the initiation, operation, continuation or expansion of FISA searches or surveillances. Nor could law enforcement officials direct or control the use of FISA procedures to enhance criminal prosecution. The FBI and the Criminal Division were given the responsibility to ensure that this did not occur, and were also required to make certain that advice intended to preserve the criminal prosecution option did not inadvertently result in the Criminal Division directing or controlling the investigation using FISA tools to further law enforcement objectives. In addition, the FISC adopted a new Rule 11, dealing with criminal investigations in FISA cases, to facilitate monitoring of compliance with its May 17, 2002 order. This rule required all FISA applications to include informative descriptions of ongoing criminal investigations of FISA targets, as well as the substance of consultations between the FBI and criminal prosecutors at the Department of Justice or a U.S. Attorney's office. In its November 18, 2002 opinion, the Court of Review took a starkly different view of the Attorney General's proposed procedures and firmly rejected the FISC analysis and conclusions. The issue came before the Court of Review as an appeal of two FISC orders, one granting an application to authorize electronic surveillance of an agent of a foreign power subject to restrictions stemming from the FISC May 17 th opinion and order and the other renewing the authorization for electronic surveillance subject to the same conditions. The Court of Review held that the FISC's interpretation of the augmented 1995 procedures and the proposed 2002 procedures as minimization procedures under 50 U.S.C. § 1801(h) was in error. The Court of Review found that the FISC had misconstrued 50 U.S.C. §§ 1801(h) and 1805 and may have overstepped its constitutional authority by asserting authority to govern the internal organization and investigative procedures of the Justice Department. It found that FISA, as originally enacted, did not create a dichotomy between foreign intelligence information gathering and law enforcement investigations, nor did it require maintenance of a "wall" between such investigations. While FISA as enacted in 1978 required that a national security official certify that "the purpose" of the investigation was to gather foreign intelligence information, the court regarded the definition of "foreign intelligence information" as including evidence of criminal wrongdoing where a U.S. person is the target of the FISA investigation. In light of the fact that the definition of "agent of a foreign power" applicable to U.S. persons involved criminal conduct, or, in the context of clandestine intelligence operations, the possibility of criminal conduct, the court distinguished "foreign intelligence crimes" from "ordinary crimes." In foreign intelligence crimes, intelligence gathering and criminal investigations may become intertwined. The Court of Review reviewed past court decisions requiring that, in seeking a FISA order authorizing electronic surveillance, the government must demonstrate that the "primary purpose" of the surveillance was to gather foreign intelligence information and not to further law enforcement purposes. Rejecting the "primary purpose test" as applied by the FISC and the courts of appeals of several circuits, the Court of Review did not find it to be compelled by the statutory language of FISA as originally enacted or by the Fourth Amendment. The Court of Review also held the FISC to have been in error in its refusal "to consider the legal significance of the Patriot Act's crucial amendments...." In particular, the court focused upon the change of the required certification by the national security official from a certification that "the purpose" of the surveillance was to obtain foreign intelligence information to a certification that "a significant purpose" of the surveillance was to obtain foreign intelligence information in 50 U.S.C. § 1804(a)(7)(B); and the enactment of 50 U.S.C. § 1806(k), authorizing consultation and coordination by federal officers engaged in electronic surveillance to acquire foreign intelligence information with federal law enforcement officers. Finding that the "significant purpose" amendment recognized the existence of a dichotomy between intelligence gathering and law enforcement purposes, the Court of Review concluded that this test was satisfied if the government had "a measurable foreign intelligence purpose, other than just criminal prosecution of even foreign intelligence crimes." While the gathering of foreign intelligence information for the sole objective of criminal prosecution would be precluded by the "significant purpose" language, if "the government entertains a realistic option of dealing with the agent [of a foreign power] other than through criminal prosecution," the court found the "significant purpose" test satisfied. Although the court was of the view that, prior to passage of the USA PATRIOT Act, the FISC may well not have had authority under 50 U.S.C. § 1805(a)(5) to inquire into anything other than the issue of "whether the information sought was a type of foreign intelligence information, in light of the significant purpose amendment of section 1804" the Court of Review concluded that "it seems section 1805 must be interpreted as giving the FISA court the authority to review the government's purpose in seeking the information." The court held that the government's purpose under 50 U.S.C. § 1804(a)(7)(B) was "to be judged by the national security official's articulation and not by a FISA court inquiry into the origins of an investigation nor an examination of the personnel involved.... [I]f the FISA court has reason to doubt that the government has any real non-prosecutorial purpose in seeking foreign intelligence information it can demand further inquiry into the certifying officer's purpose—or perhaps even the Attorney General's or Deputy Attorney General's reasons for approval." The Court of Review also considered whether FISA, as amended, passed constitutional muster under the Fourth Amendment. It deemed the procedures and government showings required under FISA to come close to the minimum requirements for a warrant under the Fourth Amendment, if not meeting such requirements. Assuming arguendo that a FISA order was not a warrant for Fourth Amendment purposes, the Court of Review found FISA constitutional because the surveillances authorized thereunder were reasonable.

The Foreign Intelligence Surveillance Act (FISA), 50 U.S.C. § 1801 et seq., as passed in 1978, provided a statutory framework for the use of electronic surveillance in the context of foreign intelligence gathering. In so doing, Congress sought to strike a delicate balance between national security interests and personal privacy rights. Subsequent legislation expanded federal laws dealing with foreign intelligence gathering to address physical searches, pen registers and trap and trace devices, and access to certain business records. The USA PATRIOT Act of 2001, P.L. 107-56, made significant changes to some of these provisions. Further amendments were included in the Intelligence Authorization Act for Fiscal Year 2002, P.L. 107-108, and the Homeland Security Act of 2002, P.L. 107-296, the Intelligence Reform and Terrorism Prevention Act, P.L. 108-458, the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177, and the USA PATRIOT Act Additional Reauthorizing Amendments Act of 2006, P.L. 109-178. In addressing international terrorism or espionage, the same factual situation may be the focus of both criminal investigations and foreign intelligence collection efforts. Some of the changes in FISA under these public laws are intended, in part, to facilitate information sharing between law enforcement and intelligence elements. In its Final Report, the 9/11 Commission noted that the removal of the pre-9/11 "wall" between intelligence and law enforcement "has opened up new opportunities for cooperative action within the FBI." On May 17, 2002, the U.S. Foreign Intelligence Surveillance Court (FISC) issued a memorandum opinion and order written by the then Presiding Judge of the court, and concurred in by all of the other judges then on the court. The unclassified opinion and order were provided to the Senate Judiciary Committee in response to a letter from Senator Leahy, Senator Grassley, and Senator Specter, who released them to the public on August 22, 2002. In its decision, the FISC considered a motion by the U.S. Department of Justice "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." The FISC granted the Department's motion, but modified part of what it saw as proposed minimization procedures. This decision was not appealed directly, but the Department of Justice did seek review of an FISC order granting as modified an application for electronic surveillance of an agent of a foreign power and for an FISC order renewing that surveillance, both subject to restrictions based on the May 17 memorandum opinion and order by the FISC. The U.S. Foreign Intelligence Surveillance Court of Review reversed and remanded the FISC orders on November 18, 2002. This report will examine the detailed statutory structure provided by FISA and related provisions of E.O. 12333, and will discuss the decisions of the U.S. Foreign Intelligence Surveillance Court and the U.S. Foreign Intelligence Surveillance Court of Review. It will be updated as subsequent changes require.

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For many years, Congress has debated the risks of projected climate change and what, if any, federal action might be appropriate to address those risks. In 2013, the Government Accountability Office (GAO) identified the changing climate (see Text Box below) as one of the 30 most significant risks facing the federal government. The purpose of this report is to provide background to Congress regarding efforts under way to identify and address through adaptation potential vulnerabilities of federal agencies' resources (lands, facilities, operations, personnel) to projected climate change. To date, the executive branch has guided federal agency climate change adaptation planning, although some Members of Congress have introduced bills to promote adaptation. President Obama established adaptation as a prominent part of his Climate Action Plan, released in June 2013. The November 2013 Executive Order 13653, Preparing the United States for the Impacts of Climate Change , continued the Administration's focus on federal climate change preparedness through agency and department adaptation planning. As of December 2014, more than 30 federal departments and agencies had, to varying degrees, produced climate change adaptation plans, vulnerability assessments, adaptation milestones, or adaptation performance metrics to address the potential vulnerabilities of their missions, property, operations, and/or personnel to climate change. Agency efforts identified wide-ranging vulnerabilities that could result from climate changes, as well as some opportunities. For Congress, federal adaptation efforts may raise questions of authorization, appropriations, and oversight. For example, some Members of Congress may be concerned that federal agency climate change adaptation planning may divert resources and attention from other, more near-term asset management and mission challenges. In contrast, other Members may believe that current federal action to adapt to climate change is insufficient. Key policy issues include determining the level, nature, and mechanisms for investment in federal agency adaptation. This report aims to synthesize information on the federal government's efforts to adapt itself to a changing climate. It is largely based on a CRS review of the adaptation planning documents released by selected federal departments and agencies as of late 2014, as well as several reviews by other organizations. Part I of the report provides an introduction to federal adaptation efforts and challenges and a synthesis of these efforts. Part II provides summaries of these efforts at the department and/or agency levels. The report's focus is the state of climate change knowledge and planning by federal agencies addressing the potential vulnerabilities of their missions, property, operations, and/or personnel related to projected climate change. The review is not intended to address how agencies and their programs may help or hinder nonfederal entities in adapting to climate change, although the lines between these topics are sometimes blurry. For example, agencies may consider that achieving their core missions may be at risk unless they assist nonfederal entities in addressing climate change-related risks. Programs within the Department of Agriculture (USDA) may consider that they must assist agricultural producers in anticipating and preparing for climate change in order to maintain productivity. Or the Environmental Protection Agency (EPA), which has a mission to help communities finance drinking water infrastructure, may consider that expanding the water utility sector's understanding of climate change risks is important to delivering future water services. This report is not comprehensive. Instead, it reviews adaptation plans of selected agencies, aims to illustrate federal actions to prepare and adapt the government to projected climate change, and offers emergent issues and questions for Congress. Irrespective of driving causes, strong evidence shows that the United States' climate has been changing in recent decades. Most scientific theory and modeling forecast that climatic variables, such as temperature, precipitation, lengths of seasons, and permafrost patterns, will continue changing and may become less predictable. GAO concluded that the federal government faces multiple fiscal exposures to climate change including, but not limited to its role as (1) the owner or operator of extensive infrastructure such as defense facilities and federal property vulnerable to climate impacts, (2) the insurer of property and crops vulnerable to climate impacts, (3) the provider of data and technical assistance to state and local governments responsible for managing the impacts of climate change on their activities, and (4) the provider of aid in response to disasters. Many federal agencies have identified specific ways in which climate change factors, such as altered precipitation patterns, soil moisture, or ocean conditions, bring risks and opportunities. As examples, numerous federally owned and federally supported assets may face increasing flood risk as a result of projected sea-level rise. The opening of Arctic waters with less summer sea ice increases opportunities for resource development, tourism, and shipping, while also raising concerns for security, safety, and protection of natural and cultural resources. Similarly, while many factors contribute to the incidence of wildfires, some researchers expect further warming and, in some areas, precipitation changes to increase risks of wildfires on federally owned lands. Additional researchers have identified highways, railways, and aviation facilities that have experienced failures in recent years due to high temperatures and other extreme weather, which are expected to increase with climate change. The Department of Defense (DOD) expects that thawing permafrost and rising sea levels will affect military training, installations, and land management in some locations. The Department of Health and Human Services (HHS) considers that climate change will affect the department's mission and strategic goals. USDA's Animal and Plant Health Inspection Service (APHIS) expects that changing climate conditions will increase demand for genetically engineered crops, resulting in a corresponding increase in numbers of permits, field trials, inspections, and other demands on APHIS resources. Numerous resource managers, engineers, economists, and others have identified benefits of anticipating and preparing for climate change. For example, some analysis suggests that every dollar spent on certain risk mitigation projects to reduce the consequences of natural disasters can generate several times more in monetary benefits. Based on such findings, many researchers and observers believe that anticipating the wide array of likely impacts and reducing risks through adaptation measures would be more efficient than incurring damage, responding to the immediate event, and then adapting reactively. The benefits of adaptation are expected to increase as the climate system moves further and further from historical "climate normals," and as man-made and natural systems increasingly exceed their thresholds of tolerance and resilience. A range of stakeholders has recommended that federal agencies begin the adaptation process. What is meant by "adaptation" to ongoing and expected climate change varies widely. For some, adaptation may be development of new varieties of plants that will grow optimally in the expected climate. For others, it may mean new investments to address opportunities and risks associated with the opening of sea routes in the Arctic, or to protect or replace infrastructure at risk (e.g., from flooding with more extreme rainfall or from higher temperatures). For others, it may entail examining assumptions built into decision-support models—for example, for projecting electric load demand by consumers for heating and cooling, and then planning future capacity needs on that basis. The federal agency climate change adaptation plans discussed in this report aimed to use a common set of projected changes in temperature and precipitation for the continental United States. The following four figures illustrate some of the ranges of projections that agencies used when identifying potential impacts of climate changes and plans to adapt to them. These projections are no longer the most recent projections, but are provided in this report because they are those used by most agencies in their existing adaptation plans. They are not dramatically different from updated modeling. In recent years, the executive branch has increased the federal government's planning efforts to adapt to projected impacts of a changing climate. Two recent cross-agency initiatives, the Climate Data Initiative and the Climate Resilience Fund (both discussed later), may support agencies' own efforts as well as the assistance they provide to the public and state and local governments. For several decades, some agencies have invested in relatively small amounts of research to support adaptation to climate change. However, few if any agencies have comprehensively assessed how climate change may affect their abilities to achieve their authorized missions and abilities to safeguard their properties and personnel. Since 2009, Obama Administration initiatives have generally increased the priority, number of participants, and specificity of products and actions aimed at federal adaptation to climate change. Executive Order (E.O.) 13514 , Federal Leadership in Environmental, Energy, and Economic Performance , in October 2009, directed agencies to begin a formal process of Strategic Sustainability Performance Planning that included steps to develop agency climate change adaptation plans. Section 8(i) of the executive order requires that each federal agency evaluate agency climate change risks and vulnerabilities to manage both the short- and long-term effects of climate change on the agency's mission and operations. On November 1, 2013, President Obama strengthened existing directives with E.O. 13653, Preparing the United States for the Impacts of Climate Change . The executive order reshuffled and upgraded preceding organizational arrangements. Notably, it sunset and built on the work of the Interagency Climate Change Adaptation Task Force (CCATF), begun in 2009 (discussed later). In its place, E.O. 13653 established a higher-level coordinating Council on Climate Preparedness and Resilience (the Council), chaired by the White House and drawing on at least 33 White House offices and federal agencies, to be represented at the Deputy Secretary level. The Council's administration was provided by the Council on Environmental Quality (CEQ). The executive order also added, as a co-chair of the Council, the Assistant to the President for Homeland Security and Counterterrorism, apparently to improve coordination. Among the mandates to the Council were preparation of an interagency inventory and assessment of changes to land- and water-related policies, programs, and regulations necessary to make watersheds, natural resources, and ecosystems—and the communities and economies that depend on them—more resilient to a changing climate. E.O. 13653 also required agencies to track their implementation of federal high-priority adaptation actions. E.O. 13653 also created a State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience composed of invited elected officials including 8 governors, 16 county and local officials, and 2 tribal leaders. At its final meeting on July 16, 2014, the Task Force provided recommendations to the Council. In response, the Administration announced additional efforts to support nonfederal climate preparedness such as assistance to tribes and investing in the rural electric system. (As these are outside the scope of this report, the announced initiatives are not discussed further here.) In October 2014, the Council published "Priority Agenda: Enhancing the Climate Resilience of America's Natural Resources." It reports the initial inventory, assessment, and plan called for in Section 3 of E.O. 13653, compiled by a Climate and Natural Resource Working Group (CNRWG) composed of the Departments of Defense, Interior, and Agriculture, EPA, NOAA, the Federal Emergency Management Agency (FEMA), and the U.S. Army Corps of Engineers (USACE or the Corps). The report, or "Agenda," identifies four priority strategies to make U.S. natural resources more resilient to a changing climate: 1. foster climate-resilient lands and waters; 2. manage and enhance U.S. carbon sinks; 3. enhance community preparedness and resilience by utilizing and sustaining natural resources; and 4. modernize federal programs, investments, and delivery of services to build resilience and enhance sequestration of biological carbon. Under the direction of the interagency Council on Climate Preparedness and Resilience, the CNRWG will track the implementation of this Priority Agenda in coordination with the existing efforts to implement the National Ocean Policy; the National Action Plan: Priorities for Managing Freshwater Resources in a Changing Climate; and the National Fish, Wildlife and Plants Climate Adaptation Strategy. In 2015, federal agencies will conduct a 12-month appraisal of implementation. Pursuant to E.O. 13514, a set of 2011 Implementing Instructions directed that [t]hrough adaptation planning, each agency will identify aspects of climate change that are likely to impact the agency's ability to achieve its mission and sustain its operations and respond strategically. Adaptation planning will help an agency reduce the negative effects and take advantage of new opportunities that climate change may bring. Integration of climate change adaptation planning into the operations, policies, and programs of the Federal Government will ensure that resources are invested wisely and that Federal services and operations remain effective in current and future climate conditions. Implementing Instructions relied on common planning steps identified by the CCATF for federal agencies: set a mandate to adapt with clear objectives and metrics; understand how climate is changing; apply understanding to assess implications for agency mission and operations; develop, prioritize, and implement actions; evaluate and learn; and build awareness and skills. Presumably, the magnitudes of each of these steps are not equal. For example, much effort would be entailed in the step of development, prioritization, and implementation of actions. The CCATF also offered two guiding principles for agencies' efforts to build federal resilience to a changing climate; agencies should ensure that "[f]ederal resources are invested wisely," and the federal government's operations and services remain effective in a changing climate. In many cases, government agencies were expected to seek efficient decisions, for example, by selecting options in which the benefits of adaptation to climate change would exceed the costs. In practice, formal cost-benefit analyses may be difficult to produce or have wide ranges of certainty. The 2013 E.O. 13653 in some ways promoted "mainstreaming" of climate change efforts into existing processes and operations, rather than establishing adjunct offices and separate sets of activities. E.O. 13653 Section 2(c) charged a variety of interagency working groups with ensuring that climate change risk considerations were incorporated into their processes. Those groups included the Steering Committee on Federal Infrastructure Permitting, the Task Force on Ports, the Interagency Working Group on Coordination of Domestic Energy Development and Permitting, and the Federal Interagency Working Group on Environmental Justice. Many observers would consider more mainstreaming a positive and important objective. Some instances of mainstreaming adaptation efforts in agencies are identified in a later section of this report. On December 18, 2014, CEQ issued updated draft guidance for review and public comment on when and how federal agencies should consider the effects of GHG emissions and climate change in their evaluations of proposed federal actions under the National Environmental Policy Act (NEPA). The draft guidance "counsels agencies to use the information developed during the [NEPA] review to consider alternatives that are more resilient to the effects of a changing climate.... " The draft guidance would apply to all proposed federal actions including site-specific actions, grants for or funding of small-scale or broad-scale activities, rulemakings, and land and resource management decisions. It does not cover actions over which agencies have no discretion or control, including actions carrying out congressional directions. To illustrate some ways in which climate changes may be relevant, the guidance provides the following description: For example, a proposed action may require water from a stream that has diminishing quantities of available water because of decreased snow pack in the mountains, or add heat to a water body that is exposed to increasing atmospheric temperatures. Such considerations are squarely within the realm of NEPA, informing decisions on whether to proceed with and how to design the proposed action so as to minimize impacts on the environment, as well as informing possible adaptation measures to address these impacts, ultimately enabling the selection of smarter, more resilient actions. The temporal bounds for considering climate change risks to a project under NEPA review would be determined by the life span of the proposed project, so that this guidance might be most relevant to long-lived projects including infrastructure that may have a useful life of several decades or more. The guidance, among other recommendations, suggests that agencies periodically engage their environmental justice experts, and potentially the Federal Interagency Working Group on Environmental Justice, to identify approaches to mitigate potential adverse effects on vulnerable communities including minority and low-income populations. Effective coordination across agencies and programs has been a concern expressed by some stakeholders. Overarching coordination occurs through the Council on Climate Preparedness and Resilience established by E.O. 13653, described above. The Council convened a Climate and Natural Resources Working Group (CNRWG), which published in October 2014 a "Priority Agenda: Enhancing the Climate Resilience of America's Natural Resources," identifying federal and nongovernmental actions aimed at protecting important landscapes and developing new science, planning and tools to foster climate-resilient lands and waters; enhancing U.S. carbon sinks such as forests, grasslands, wetlands and coastal areas; promoting innovative 21 st century infrastructure that integrates natural systems into community development, including green stormwater infrastructure; and modernizing Federal programs, investments, and services to build resilience and enhance carbon storage. The Priority Agenda outlined further interagency monitoring and evaluation of these efforts: Under the direction of the interagency Council on Climate Preparedness and Resilience, the CNRWG will track the implementation of this Priority Agenda in coordination with the existing efforts to implement the National Ocean Policy, the National Action Plan: Priorities for Managing Freshwater Resources in a Changing Climate, and the National Fish, Wildlife and Plants Climate Adaptation Strategy. In 2015, Federal agencies will conduct a 12 month appraisal of implementation. There exist additional mechanisms for information sharing such as through FedCenter.gov and an Interagency Forum on Climate Change Impacts and Adaptations. The latter appears to have limited participation. To facilitate agency adaptation planning, the Administration has supported cross-agency data exchange efforts such as the Climate Data Initiative, described below, and announcements to officials from FedCenter.gov, "the Federal government's home for comprehensive environmental stewardship and compliance assistance information for Federal facility managers and their agencies." Within some departments such as the Department of the Interior, coordination among agencies appears to be strong and substantive. In others, coordination mechanisms among subagency programs are less evident, though they may operate effectively through informal practices rather than through formal bodies. Overall, there have been growing efforts in many agencies to increase attention to potential climate changes and consideration of how future changes may affect their mainline missions and operations. This is often referred to as "mainstreaming." Numerous federal policies and programs exist that may reduce agencies' vulnerabilities to climate change, but are not labeled as "adaptation" projects or do not have explicit mandates to support adaptation to climate change. Because they are not directly tied to climate change adaptation in mission or title, it may be difficult to identify them. For example, the requirement in E.O. 13514, "Federal Leadership in Environmental, Energy, and Economic Performance," that agencies reduce their potable water intensity by 2% annually through FY2020, would likely improve agencies' resilience to climate-induced shortages, but are not expressly categorized as climate change adaptation programs. In some instances, programs closely related to adaptation might be more effectively employed rather than if agencies created separate climate change adaptation tasks. In March 2014, President Obama announced a new Climate Data Initiative, at http://climate.data.gov , to provide "resources to help companies, communities, and citizens understand and prepare for the impacts of coastal flooding and sea-level rise. Over time, this community will expand to include more datasets." The web portal provides access to federal climate change-related statistics and information. This portal may help alleviate some of the data accessibility issues that federal agencies identified (discussed later in this report). The data sets available at this portal may help agencies with their own climate vulnerability assessments and planning efforts, and may help to identify gaps and redundancies in the data available, as well as to evaluate the data's quality and relevance. As of December 1, 2014, 38 federal departments and agencies had produced initial (2012) Climate Change Adaptation Plans and, in most cases, second-round (2014) Plans; vulnerability assessments; adaptation plans with milestones; and/or metrics to evaluate adaptation performance. Few, if any, departments or agencies have prepared comprehensive, quantitative assessments of the vulnerabilities of their missions and programs to projected climate change. DOD is perhaps the farthest along in assessing its vulnerabilities; Secretary Hagel stated in October 2014 that the department had nearly completed a baseline survey of its nearly 7,000 bases, installations, and other facilities that would be used to integrate climate change considerations into planning, operations, and training. Most agencies' assessments have been at a "high level"—broad views with generalized information, though some have been preparing detailed assessments for locations that appear to have mission-critical vulnerabilities. Many agencies remain primarily in stages of "fact-finding," initial analysis, and broad planning, and sometimes outreach and training for personnel. Some agencies appeared in late 2014 to be in early stages; they appear to have done little thus far to assess the potential risks of climate change specifically to their property, operations, or personnel, though they may conduct scientific research or produce data or decision-making tools to serve their customers (e.g., the public, state and local agencies, etc.). For example, the Departments of Energy and Health and Human Services (HHS), and the Tennessee Valley Authority (TVA), among others, released climate change adaptation plans dated in 2014 that do not contain evidence of having conducted the vulnerability assessments or adaptation planning required by Section 5, "Federal Agency Planning for Climate Change Related Risk," of E.O. 13653. Their "plans" may contain many pages of descriptions in general terms of potential climate change impacts, but do not evidence the location- and event-specific analysis displayed by many other agencies. In some cases, it is also apparent that little updating occurred in the 2014 releases of planned actions identified in the 2012 documents. Acknowledgements of the modicum of current information on adaptation planning in these agencies, and explanations of the reasons (e.g., other pressing priorities, greater priority to serving the agencies' customers, lack of financial or expert resources, etc.) might be more useful to Congress and other readers than the generalized and outdated presentations provided. CRS found few specific adaptation actions, either planned or taken, that tangibly alter federal vulnerabilities at this point in time. Certainly, selected actions resulting in risk reductions are apparent in some agencies. Some may provide significant risk reductions over time. This seems especially likely where agencies have identified mission-critical infrastructure that may be vulnerable to certain aspects of climate change, or secondary effects that may result from, say, outages or overload of electricity supply during extreme events. These examples appear to represent the leading edge rather than the norm. The challenge in identifying on-the-ground adaptation actions may reflect the high level of aggregation of most agency-level reporting. It is likely that some federal programs are acting to reduce their vulnerabilities to climate in ways that may not be captured in agency-level planning processes. Also, some agencies have begun pilot activities that, pending positive evaluations, may be propagated more broadly for risk reductions. CRS found that federal agencies are largely using a set of common approaches in their climate change adaptation efforts. These include the following: researching, assessing, and planning (which are the main focus and deliverables of current relevant executive orders); implementing initial actions that are obvious, easy, and offer low- to no-regret options; developing general options and "decision tools" transferable to other situations; demonstrating response measures or pilot programs that, if successful, could be disseminated within an agency or by partner organizations; and arranging outreach and training to federal personnel and contractors. Climate change has long been addressed adjunct to the line missions of agencies. That is, in most agencies, climate change has been researched and analyzed in specialized staff offices that were not generally integral to the mission-oriented "line" operations of the agency. As federal efforts to prepare for climate change have expanded, some observers expressed concerns that adaptation efforts might evolve as parallel, side-lined, or redundant efforts, rather than integrated into agency operations. The November 2013 E.O. 13653 encouraged agencies to "mainstream" consideration of future climate changes into their line operations. CRS found that some agencies have moved beyond general awareness-building and broad policy statements, and some have transitioned from stand-alone climate change teams and efforts (producing primarily reports) toward "mainstreaming" climate change data and considerations into programmatic decisions and actions. An official from DOD voiced this approach as follows: "... [T]he crux of this report is, rather than creating a stovepipe within the DOD organizational structure to deal with climate change, we are going to integrate climate change considerations into the normal processes, the day-to-day jobs of everybody." A few active examples include the following: The Northwoods Climate Change Response Framework of the U.S. Forest Service in northern Wisconsin. It encompasses a team of land management agencies, private forest owners, conservation organizations, and others to share information and experience, develop tools to factor climate change into decision making, and implement those new tools. The Exotic Plant Management Teams of the National Park Service (NPS) identify, control, and manage plant species that are new to, and may have substantial impacts on, park resources. Such efforts may help protect parks from invasive species whose ranges shift because of climate change, although the teams' mandate is broader than, and not formally part of, NPS's climate adaptation framework. A 2012 National Aeronautics and Space Administration (NASA) Facilities Design Guide incorporated climate change-related principles that "could be used by NASA facilities project managers when determining design requirements and writing statements of work, and by Architect-Engineer firms who might have limited experience working with NASA." This guidance is limited to principles and references to requirements and standards, and is a step toward considering what design modifications might be merited in a particular project. The Army Corps of Engineers (USACE or the Corps) has launched the Comprehensive Evaluation of Projects with Respect to Sea Level Change (SLC) (CESL) to screen and provide an initial assessment of the vulnerability of its coastal projects to sea-level change in the 50- and 100-year planning horizons. It is a web-based tool that allows users to enter data, view project information, view SLC curves for tidal gauges at or near project sites, view Extreme Water Level information, and view projects on a map interface. DOD has identified the Hampton Roads, VA, region, which houses the largest concentration of U.S. military sites in the world, as experiencing recurrent flooding today. The department has begun to address a projected sea-level rise there of 1.5 feet over the next 20 to 50 years. While CRS identified these examples, CRS was not able to identify widespread changes in federal decision making, management, or operations associated with adaptation to projected climate change. A recent academic survey of four federal land management agencies concluded that "These adaptation efforts within agencies, however, all represent initiatives promulgated at the headquarters level. Ultimately, to be considered effective, these policies must result in changes to decision making practices 'on the ground' by agency resource managers connected with the resource in question." To date, many agencies have invested the majority of their efforts in understanding their vulnerabilities to, or benefits from, climate change. Agency officials and observers have identified a number of ways in which climate shifts may affect agencies' operations and assets, including the following examples: Arctic sea ice melting allows increased activity in the Far North, prompting the U.S. Coast Guard and DOD to increase attention to an evolving Arctic Strategy for safety, security, resource development, and environmental protection. DOD, in its FY 2014 Climate Change Adaptation Roadmap , concluded that "A changing climate will have real impacts on our military and the way it executes its missions. The military could be called upon more often to support civil authorities, and provide humanitarian assistance and disaster relief in the face of more frequent and more intense natural disasters. Our coastal installations are vulnerable to rising sea levels and increased flooding, while droughts, wildfires, and more extreme temperatures could threaten many of our training activities. Our supply chains could be impacted, and we will need to ensure our critical equipment works under more extreme weather conditions. Weather has always affected military operations, and as the climate changes, the way we execute operations may be altered or constrained." The report further noted that climate change-related effects have been observed at DOD facilities. "The Department of Agriculture estimates an increase of as much as 100 percent in the number of acres burned by wildfires annually by 2050, putting residents and firefighting employees at greater risk, further impacting the agency's budget and resources, and reducing its capacity to provide other critical services. Fire suppression funding has already grown from 16 percent in 1995 to 42 percent of the U.S. Forest Service's budget." USDA's Farm Service Agency (FSA) is evaluating whether its commodity crop programs encourage adaptation to a changing climate or the status quo. Many NASA facilities have been damaged or closed temporarily in recent years by tornadoes, hurricanes, flooding, and wildfires. An agency-wide assessment noted that more than two-thirds of its infrastructure property value—assets worth about $20 billion—are within 16 vertical feet of current sea level and at risk from sea-level rise (see Figure 5 ) alone. The assessment found that "changing climate will impact facility operations (e.g., water management, energy demands), natural resources (e.g., tidal marsh habitat and increase in invasive species, increase in pest species), infrastructure that is vital to mission success (e.g., flooded buildings and launch assets, buildings too hot to work in), quality of life in the community (e.g., increased number of hot days), and the region's economy (e.g., increased percentage of public funds for utility costs, firefighting, and flood control)." NASA identified climate-related vulnerabilities to its missions including launch capabilities, space operations, ground systems, and training and test facilities. NASA is pursuing detailed analysis and planning at a minimum of eight facilities. NPS found that "The widespread nature of climate change effects amplifies ongoing resource impacts such as habitat fragmentation, water scarcity, pollution, invasive species, etc." It plans to "mainstream" climate change adaptation at a policy level; it is proposing that its fundamental mission of preserving lands in their historical condition may need to be rethought in an era of shifting climates and habitats. NPS is also analyzing specific park and facility issues associated with climate change. EPA plans to examine how climate change may put at risk more contaminant releases due to severe weather, flooding, or sea-level rise at Corrective Action sites, Superfund sites, Brownfield sites, chemical storage facilities, or landfills. Saltwater intrusion and increased ground water salinity in coastal aquifers may also increase the permeability of clay liners installed at waste sites such as landfills, allowing contaminants to spread to nearby properties. Contaminant releases may increase the risk of adverse health and environmental impacts. The Text Box above describes an action at Hoover Dam that could help improve an agency's resilience to a changing climate, though it is not an adaptation to projected climate change per se. The likelihood of complementary benefits of actions that improve the resilience of agencies to climate changes and that provide other benefits may make it difficult to discern and evaluate, now and in the future, the degree to which agencies are making adaptations and what effect they may have. Most agencies and multiagency consortia are regionalizing their approaches to climate change adaptation. This facilitates their assessments according to physically linked locations. Looking more broadly, this is also a complicating factor as definitions of regions often differ across programs and agencies. They often are not consistent with the eight geographic regions used under the United States Global Change Research Program (USGCRP) and the nine plus Alaska and Hawaii used by the National Climatic Data Center (NCDC) for science and climate monitoring purposes. (See Figure 6 .) DOI uses Landscape Conservation Cooperatives (LCCs) and Climate Science Centers (CSCs) as geographic coordinating units. The Bureau of Land Management (BLM) further uses regions for Rapid Ecological Assessments (REAs) to support vulnerability and adaptation assessments. NOAA relies on centers of Regional Integrated Science and Assessments (RISAs), in addition to NCDC's regions. EPA uses the USGCRP regions and adds a "Montane" region in the Intermountain West, though these do not correspond with EPA's organizational Regional Offices. The different definitions of regions present a challenge within and across agencies, as well as to stakeholders, in accessing relevant information and understanding climate change impacts and related programs. Figure 6 illustrates some of the major federal regional schemes used by various agencies, and also overlays state and congressional district boundaries. The different regional schemes are tied to the agencies' varying missions and resources; however practical, the differences also pose challenges for sharing and interpreting information across agencies and with the public. (This is discussed later in this report.) (A URL below Figure 6 provides access to an interactive PDF version of this map that allows the user to turn on and off map layers to facilitate viewing and comparing of different boundary definitions.) In sum, most agencies have planning efforts under way to identify the vulnerabilities and opportunities of their missions, assets, and personnel to climate change. Much of the current adaptation planning appears confined to information gathering and analysis at a high level. A number of agencies focus almost exclusively on how they may help their clients (e.g., states, businesses, specific populations, etc.) understand risks and understand adaptation planning, but have done little to understand the vulnerabilities or opportunities to the federal agency itself. Among those agencies that have begun implementation, measures to adapt appear mostly as pilot or demonstration efforts. A number of agencies acknowledge that they have not moved substantially into implementing adaptation actions. A few federal entities, including DOD, EPA, NASA, and the Department of Transportation (DOT), appear to be among the more advanced in preparing their assets, programs, and operations for climate change. (Other agencies may have focused their attention primarily on assisting their clients to anticipate and prepare for climate change.) A number of agency action plans have identified some of the benefits that could arise from planning for climate change adaptation. Examples include the following: identifying actions that have no cost or would have net benefits regardless of the magnitude of future climate change impacts (e.g., EPA/OPPTS, identifying where toxic chemicals are stored in existing flood zones); limiting federal financial liability for disaster losses and encouraging efficient risk management by private decision makers (e.g., increasing community preparedness for extreme weather events); modifying infrastructure specifications or considering locations for new facilities to be compatible with uncertain future climate conditions (e.g., NASA's review and re-specification of building requirements); making assets and operations robust to potential disruptions of water or energy supplies (e.g., making arrangements for national laboratories to maintain essential operations when water supplies become extremely low); facilitating more rapid and efficient responses to acute weather events where and when they occur; and identifying potential emerging opportunities with climate change such as increasing accessibility of Arctic resources or lengthening growing seasons in some locations. Most of these benefits are abstract, as relatively few adaptation activities have yet been carried out. Evaluations may be planned to develop empirical, and possibly quantitative, information about the effectiveness, costs, and benefits of various adaptation measures. Most reports on climate change adaptation identify "barriers" to effective adaptation. For example, a 2009 GAO review of the status of federal adaptation efforts concluded the following: The challenges faced by federal, state, and local officials in their efforts to adapt fell into three categories, based on our analysis of questionnaire results, site visits, and available studies. First, available attention and resources are focused on more immediate needs, making it difficult for adaptation efforts to compete for limited funds. Second, insufficient site-specific data, such as local projections of expected changes, makes it hard to predict the impacts of climate change, and thus hard for officials to justify the current costs of adaptation efforts for potentially less certain future benefits. Third, adaptation efforts are constrained by a lack of clear roles and responsibilities among federal, state, and local agencies. Evidently, the attention to vulnerabilities and adaptation at the White House level has resulted in a great deal of effort at communication and report-writing in most agencies. Beyond reports, there remain challenges of sharing useful information, making programmatic decisions, and carrying out first-priority measures that reduce agency vulnerabilities. Three of the most frequently cited challenges are funding, information management and use, and uncertainty. Each is discussed below. Adaptation competes with other agency priorities and missions. Recent reports have cited "lack of funding" as a primary challenge to adaptation. Resources for fact-finding, assessment, and decision-making resources may be most readily identifiable. In contrast, adaptations may take place as actions incremental to and obscured within existing program efforts. For example, adaptation plans may call for updating climate data in decision models or operational plans, or may require changing the types of materials or locations for infrastructure projects. The costs of such adaptation efforts may be difficult to estimate or identify in agency budget requests. Only a few agencies specifically requested appropriations in the FY2016 or earlier budget requests for adaptation activities. Current budget constraints and federal budget scrutiny may not permit greater financial resources for federal adaptation actions. While the President's FY2016 budget request and other recent announcements (e.g., executive order on flooding and proposed FEMA rules) may mention adaptation (or "resilience") to climate change, most pertain to programs outside the narrow scope of this report: assessments and actions that agencies may be undertaking to address potential risks to their missions, property, operations, and personnel . For further detail or updates on climate change adaptation plans by individual agencies, the report provides contact information for CRS analysts at the end of each agency section in Part II. Multiple federal agencies, as well as nonfederal entities, readily acknowledge that finding and accessing the climate and related data they need—and having the right skill sets to use those data—remain important obstacles to preparing for climate change. For example, federal officials often lack information applicable to their particular agencies, programs, or localities, especially regarding climate data (recent and projected). Agencies identified challenges in acquiring information on projections of demographic, economic, technological, and other factors that might influence choices among options. For example, a number of agencies identified lack of information on facilities and other built infrastructure (e.g., dams, roadways, railways, etc.) as a key need to further develop their adaptation plans under E.O. 13514 and E.O.13653. Acquiring information to inform adaptation decisions is not solely a lack of precise information, but also its disarray or difficulty to use from a user's perspective. In response, the Obama Administration initiated an Internet portal ( http://www.data.gov/climate/ ) intended to provide eventually a one-stop shop for climate-related data and tools. The website provides data sets, mapping tools, and "challenges" to nonfederal entities to help address specific problems by developing applications (i.e., apps) or other solutions. Its initial phases incorporated agency information related to coastal flooding, resilience of food supply, and ecosystems. Some agencies are also tackling this access problem. The U.S. Geological Survey (USGS), for example, sees among its functions the responsibility to provide climate change information to other agencies within DOI (and to nonfederal entities) to assist them in adaptation assessment. It, along with DOD, DHS, and the National Geospatial Intelligence Agency, provides data sets containing mapping information on infrastructure and geographical features that can assist federal and nonfederal organizations with climate preparedness. There are several data portals in various agencies with climate-related data, and the location and distinctions among them may not be clear to most potential users. President Obama, in June 2013 and again in March 2014, announced a "climate data initiative" to make relevant data more easily accessible (discussed earlier). One effort to make climate projections more easily available is a publicly available archive of high-resolution ("downscaled") results from the latest phase of global climate modeling (CMIP5). Another is the USGCRP's MATCH portal, a Metadata Access Tool for Climate and Health, which offers centralized access to thousands of government-held data sets related to health, the environment, and climate science. The ability of organizations to take advantage of climate change-related information is also critical. A number of reports suggest that improving in-house expertise to use such information may be important, as well as institutional flexibility to adapt to new information. Planning and decision making in the face of uncertainty are a challenge in many fields. For adaptation action, the wide range of uncertainty in global climate projections increases over time, and increases as regional and local trends and impacts are protected. Uncertainties also are greater for variables other than annual average surface-air temperature (e.g., precipitation, runoff) and for more regional or local precision. The federal adaptation planner is tasked with acquiring and using future climate scenarios and meshing those projections and their uncertainties with local and historical information and science relevant to federal missions, property, personnel, and/or operations. Planning for climate change means trying to discern when that change may become important and how—when it may exceed the weather or environmental variability to which the existing assets or operations may already be adapted. Statistical methods become important to making robust decisions, and determining which statistical measures to use is an element of ongoing research. (See Text Box below.) A question of particular concern for planning adaptation regards the existence and timing of potential "tipping points," at which climate change exceeds the tolerance of existing climate-related systems and may change abruptly, and in possibly unexpected ways. To date, the White House has guided federal agency climate change adaptation planning. As agencies continue their planning efforts, Congress may opt to oversee adaptation efforts, consider responses to third parties' recent and past recommendations regarding federal adaptation, and provide advice or statutory direction to the executive branch or specific agencies, as well as consider the funding and data used to support these efforts. Congress may consider the following: reviewing the significance and nature of the climate change risks to the federal government (including the distribution and timing of those risks); evaluating which, if any, preparations and adaptations are cost-beneficial and feasible; and assessing whether to alter specific agencies' existing authorities. Congress may act to provide federal agencies direction on whether and how adaptation efforts are to be organized and funded, and their performance measured and evaluated (e.g., effectiveness at reducing damage to property, lives, and habitat relative to the federal and private investment of an adaptation measure). Congress may decide to review the accessibility of adaptation-relevant information and the strategies under way to improve it, and consider options for authorities, directions, and resources to overcome data management and accessibility challenges. Congress may consider the role, costs, and benefits of adapting federal agencies to projected climate change. Considerations may arise in the broader context of whether and how to address climate change, as well as in other public policy concerns such as policies affecting natural disaster preparedness; ocean, energy, environmental, agricultural, and federal lands management; national and international security; public health; and public finance and budgets. There are complementarities and trade-offs among major adaptation approaches and actions in these broader fields of policy. Congress may seek improved information and analysis to support examination of the socioeconomic, distributional, political, and moral dimensions of various adaptation approaches, of making policy choices under uncertainty, and of appropriate federal and nonfederal roles and responsibilities. More than 30 federal departments and agencies have produced reports on their climate change adaptation efforts. Agencies' adaptation plans are available from many agencies as appendixes to their 2012 and 2014 sustainability performance plans. CRS has researched materials beyond what is included in these documents, but has not comprehensively identified or reviewed information from all agencies regarding their climate change adaptation efforts. Additional agencies and updates may be added to the summaries in this section, subject to congressional interest. For further information on specific departments and agencies, each section that follows identifies relevant CRS experts. The Department of Agriculture (USDA) is responsible for the management of 193 million acres of national forests and grasslands in the National Forest System, and provides assistance in managing the nation's 1.3 billion acres of farm, ranch, and private forest lands through public and private partnerships. Studies have suggested that climate change will have a varying impact on agricultural production. The overall impact to agricultural production depends partly on the direction, magnitude, and rate of changes in temperature and precipitation. Producers have, and continue to, adapt to these changes; however, the long-term response to climate change may require new management techniques and technologies. Similarly, some research indicates that climate variability is reshaping forest landscapes by altering the frequency, intensity, and timing of disturbance events (e.g., wildfires, precipitation events, and insect and disease infestations) that influence the structure, composition, and function of the forest and grassland ecosystems. Forest ecosystems have inherent characteristics that enhance their capacity to survive disturbance events (resistance) or facilitate recovery after disturbance (resilience). Despite this inherent capacity, current thinking suggests that the rapid pace and magnitude of climate change may exceed the resistance and resilience capacity of many forests. Forest ecosystems and agricultural land also play a role in mitigating against rising carbon levels: growing vegetation removes carbon from the atmosphere and stores ("sequesters") it in wood and soil. Carbon is released back into the atmosphere during some disturbance events (e.g., a forest fire). Thus, appropriate management of disturbances may be critical for avoiding potential future releases of large amounts of carbon. In June 2011, USDA issued Departmental Regulation 1070-001, establishing USDA's Official Policy Statement on Climate Change Adaptation within the Office of the Chief Economist. This policy recognized the Climate Change Program Office (CCPO) as the point of contact for development of the Adaptation Plan required by Executive Order 13514, and called for department-wide integration of climate change adaptation planning and actions. The department's Adaptation Plan was updated in 2014 in response to E.O. 13653. In addition to climate change adaptation activities, the CCPO represents USDA to the U.S. Global Change Research Program (USGCRP), chairs the USDA Global Change Task Force, oversees departmental greenhouse gas accounting capabilities and responsibilities, and directs international climate change initiatives. Under the direction of the CCPO, USDA offices and agencies provided input for the USDA Climate Change Adaptation Plan in addition to identifying vulnerabilities to key agency resources and mission areas. The USDA Climate Change Adaptation Report includes specific plans from the following USDA agencies and offices: Agricultural Research Service (ARS), Animal and Plant Health Inspection Service (APHIS), CCPO, Farm Service Agency (FSA), Foreign Agricultural Service (FAS), Forest Service (FS), Grain Inspection Packers and Stockyards Administration (GIPSA), National Agricultural Statistics Service (NASS), National Institute of Food and Agriculture (NIFA), Natural Resources Conservation Service (NRCS), Risk Management Agency (RMA), and Rural Development (RD). Each agency identified specific actions related to climate change adaptation, and provided timelines, performance metrics, and agency leads in a tabular format as appendixes to individual plan documents. The full plan and individual sections can be found on USDA's climate change website, http://www.usda.gov/oce/climate_change/adaptation/adaptation_plan.htm . Of USDA's four overall strategic goals in its strategic plan for FY2010-FY2015, one is specifically related to climate adaptation; Goal 2 states that USDA will "ensure our national forests and private working lands are conserved, restored, and made more resilient to climate change, while enhancing our water resources." While other strategic goals allude to varying challenges associated with climate change adaptation, this goal is reflected throughout the annual budget request, adaptation plan, and office and specific agency activities. Although a full accounting of department-wide adaptation activities is beyond the scope of this report, a brief description of activities is provided below regarding the department overall, followed by selected offices and agencies. As previously stated, the department's Climate Change Program Office has primary responsibility for coordinating and leading USDA's response to climate change, including the following: analysis, planning, and research coordination; development of climate change response strategies; providing liaison with other federal agencies; informing department leadership of related scientific developments and policy issues; and ensuring climate change concerns are fully integrated into USDA's research, planning, and decision-making processes. At the department level, USDA participates in a number of interagency efforts including the Council on Climate Preparedness and Resilience, U.S. Global Change Research Program, National Climate Assessment, National Fish, Wildlife and Plants Climate Adaptation Strategy Implementation Team, Agricultural Air Quality Task Force, Joint Fire Science Program, and the National Interagency Fire Center. In February 2014, USDA announced the creation of regional hubs for risk adaption and mitigation to climate change. These hubs are based on existing statutory authorities within USDA, and do not require additional resources. Hub locations were chosen through a competitive, internal application process among USDA facilities (see Figure 7 ). The purpose of these hubs is to (1) provide technical support for agricultural producers and landowners responding to climate change, (2) assess and monitor the risk to agricultural production, and (3) conduct research and education to the department's clients about the effect of climate change on agriculture and forests. The U.S. Forest Service (FS) is an agency within USDA with a mission to sustain the health, diversity, and productivity of the nation's forests and grasslands to meet the needs of present and future generations. FS is responsible for managing national forests and grasslands, conducting forestry research, and providing assistance to state, private, and international forestry agencies. Each of these FS mission areas has activities related to the effects of climate variability and change on forest ecosystems. While the CCPO has primary responsibility for organizing and leading USDA climate change activities, FS's mission increases its presence in climate change activities above those of most other agencies at USDA. In fulfilling the FS mission, the agency has identified several intertwined roles regarding climate change management including federal land management, research, and engagement and outreach with other forestry managers. As a land manager, FS addresses climate change through strategic planning and policy initiatives regarding the management of the National Forest System. FS also is responsible for responding to active wildfires on federal lands and on nonfederal lands by request. In the FS Research and Development office, climate change research is one of five priority areas for emphasis, and the Global Change Research Strategy 2009-2019 includes research on adaptation, mitigation, and decision-support strategies. Through the State and Private Forestry office, FS provides technical and financial assistance to states and private forest landowners, including a program to fund restoration and other forest health management projects. Several of the USDA Regional Climate Hubs (see Figure 7 ) are operated in partnership with both Research and Development and State and Private Forestry activities. FS also conducts a regular forest inventory and analysis program that provides both a baseline on ecosystem composition and monitoring of changes across time. In addition, FS addresses climate change in international forestry issues through policy engagement and technical cooperation to develop capacity and strengthen existing institutions related to forest governance and management worldwide. The Climate Change Resource Center is a compilation of FS's related research, outreach, and management activities. This resource provides land managers and other decision makers—private and public—with information, research, decision-support models, maps, and simulations. These tools may be used to incorporate climate change management activities into planning and project management. FS developed several policy initiatives in accordance with E.O. 13514 and E.O. 13653. The agency published the Strategic Framework for Responding to Climate Change, which set forth seven goals as the overarching structure for agency strategies, priorities, policy decisions, and resource allocations for responding to climate change. To implement the strategic framework, FS published the National Roadmap for Responding to Climate Change in 2011. The roadmap describes three interconnected modes of action for FS response: assessing current risks, vulnerabilities, policies, and gaps in knowledge; engaging employees and stakeholders to seek solutions; and managing for resilience through adaptation and mitigation strategies. From the action items in the roadmap, FS developed a performance scorecard to measure progress, with the goal of each national forest and grassland achieving 7 out of 10 of the scorecard's benchmarks by 2015. A 2011 baseline measurement found that 16% of the national forests already achieved the performance goals. In 2013, 49% of the national forests were in compliance. For the national forests, the National Roadmap for Responding to Climate Change outlined how the agency plans to address major stressors from climate variability and provide direction for landscape restoration goals. FS is establishing a restoration and resilience policy to provide a foundational policy for sustainable management of the national forests. As part of the policy, the agency is focusing on restoration strategies aimed to improve the capacity of the ecosystem to withstand stressors and return to specified desired conditions post-disturbance. The desired conditions are to be determined at the landscape level by assessing the adaptive capacity and enhancing the resistance and resilience of forest ecosystems. The FS 2012 Planning Rule, through which the agency makes land use decisions for the national forests as directed by the National Forest Management Act, provides an adaptive framework for incorporating resilience goals into land management planning and decision making. The adaptive framework includes an expanded inventory and monitoring system as part of the planning process to assess progress toward the restoration goals and refocus efforts as necessary. FS also has several programs to accelerate restoration activities in the national forests, including the Collaborative Forest Landscape Restoration Program, which leverages local resources to encourage large-scale, long-term restoration projects. The Natural Resources Conservation Service (NRCS) has primary responsibility for assisting private landowners with addressing natural resource concerns. In addition to providing technical assistance related to soil and water, the agency also administers a number of financial incentive programs that pay farmers and ranchers to alter production practices to achieve environmental benefits. NRCS conducted an internal examination of these programs and technical resources, and found that conservation practices prescribed within these programs were effective at both mitigation of greenhouse gases (GHGs) and climate change adaptation. Existing practices such as residue management, forest stand improvement, cover crops, and prescribed grazing may make agricultural systems more resilient to changes in climate. The NRCS adaptation report makes few action recommendations that would require congressional action. The report states that integrating adaptation to changes in climate can be developed within the current NRCS conservation structure. Adjustments to traditional conservation planning approaches will be required in order to focus on a more holistic approach to conservation delivery that includes flexibilities for producers to adapt to changing climate conditions. The Agricultural Research Service (ARS) is the in-house research agency at USDA. The agency is organized into "National Programs" that coordinate the research carried out by ARS. Under the National Climate Change, Soils, and Emissions program (NP #212), ARS works "to improve the quality of atmosphere and soil resources affected by, and having an effect on agriculture and to understand the effects of, and prepare agriculture for, adaptation to climate change." ARS research activities within NP# 212 support a number of soil and atmospheric research projects, including mechanisms for enabling agriculture to adapt to climate change. As part of this effort, ARS is also co-leading the collaborative research project known as the Agricultural Model Intercomparison and Improvement Project (AgMIP), with a goal to improve the characterization of risk of hunger and world food security due to climate change, and to enhance adaptation capacity in developing and developed countries. The Risk Management Agency (RMA) offers federal crop insurance and other production risk management products through a network of private-sector entities. RMA also funds partnerships with state departments of agriculture, universities, and other public or private organizations to develop risk management tools to assist producers in minimizing their risks and adapting to increased risks from climate change, drought, and other weather-related conditions. In 2010, RMA released a report on the potential effects of climate change on crop insurance. The report found that the effects will vary greatly across the country, with production in the South and Southeast more negatively impacted than production in the West. Another such collaboration is with Oregon State University to build PRISM—a climate and weather web portal that houses USDA's climatological data. The agency is also changing program implementation procedures including the establishment of emergency adjustment procedures for catastrophic loss events to ensure that the crop insurance program reflects changes in the climate and agronomics for crops currently covered; the expansion of programs to ensure that crop insurance coverage is available to new areas where crops are grown due to changes in the climate; the development and maintenance of maps for identification of at-risk areas; and the development of special provisions to address unique crop or regional conditions that pose potential program vulnerabilities. Congress has shifted risk management for agriculture away from ad hoc disaster payments and toward more permanent disaster support programs and federal crop insurance, as authorized in the 2014 farm bill ( P.L. 113-79 , §1501 and Title XI of P.L. 113-79). As RMA adapts these risk management programs to a changing climate, shifts in traditional production and the continued use of historical crop yield data could prove to be a challenge. Extreme weather events and possible increased production damage could prove costly to the current system. The National Institute of Food and Agriculture (NIFA) supports research, education, and extension programs in the Land-Grant University System and other organizations. The agency does not perform research, education, or extension, but rather provides funds and national leadership in these areas. Climate change is a "priority science area" at NIFA. Projects are administered through the Institute of Bioenergy, Climate, and Environment (IBCE), a division of NIFA that manages programs to help agricultural, forest, and range production systems adapt to climate variables. Most NIFA-funded grants that are focused on climate change are multimillion-dollar, integrated, transdisciplinary projects that address the adaptation of food, feed, and fiber production systems to changing climates and the goal of reducing greenhouse gas emissions and increasing carbon sequestration in the agriculture and forestry sectors. According to NIFA's adaptation report, the agency anticipates the need to balance an increasing demand for scientific research, modeling, educational programs, and extension activities in order to address climate change issues with other research, education, and extension needs for agriculture. For example, investigations of climate stressors and tipping points could become more important to climate adaptation science research, and would have to be balanced with susceptible areas of crop and livestock production research and formal and informal state educational programs. The Animal and Plant Health Inspection Service (APHIS) is tasked with protecting and promoting the health of U.S. agriculture and natural resources. As climate changes, pests and diseases can pose increased threats to the agricultural industry. The primary role of APHIS in USDA's climate change response is to analyze and anticipate changes in these threats. APHIS focuses on plant health response programs, early-warning systems for and management of vector-borne diseases—diseases spread by insects—in livestock and wild animal populations, trade regulations and management in regard to international disease outbreaks, emergency preparedness for both pest and disease emergencies as well as natural disasters and biosecurity hazards, and collaboration with federal, state, local, academic, and business community partners, and other stakeholders. According to the APHIS adaptation report, the agency does not anticipate that climate change will require a modification of its statutory authority. The agency plans to continue to adopt regulations and policies to address new or shifting pest and disease scenarios. The Farm Service Agency (FSA) administers a number of financial incentives for farmers and ranchers through farm loans and commodity, disaster, and conservation programs. FSA identified three climate change adaptation actions in the USDA adaptation report, including amending policy to facilitate adaptation, providing outreach to producers through the existing FSA service center structure and USDA's new climate change hubs, and conducting a "continuity of operations" exercise to prepare for an increase in large-scale crop failures resulting from climate change. With the passage of the Agricultural Act of 2014 ( P.L. 113-79 , the 2014 farm bill), Congress reauthorized a number of the existing programs FSA cited as necessary for its response to climate change (e.g., the Conservation Reserve Program, the Conservation Reserve Enhancement Program, loan programs, and disaster programs). Congress did not, however, amend these existing programs to specifically change the agency's current limited use for adaptation. In most cases, the agency's use of these programs has continued relatively unchanged since the issuance of the adaptation plan. Agriculture and forestry face a number of challenges (e.g., weather, disease, pests) that could be substantially affected by a changing climate. As the federal entity tasked with providing "leadership on food, agriculture, natural resources, rural development, nutrition, and related issues based on sound public policy, the best available science, and efficient management," USDA could play an integral role in assisting U.S. producers with climate adaptation. A number of challenges related to climate change and its role in agricultural and forestry adaptation remain for USDA. First, existing federal policies both help and hinder adaptation-related activities. For example, many of USDA's programs rely on voluntary participation by producers. This could slow the application of adaptation-related activities and reduce the agriculture industry's ability to adapt to climate change in the long term. Producers are not required to adopt practices recommended by USDA, or, if paid to do so, are not required to maintain practices beyond the period for which payment is received. Similarly, FS technical and financial assistance programs also rely on voluntary participation by nonfederal forest landowners. Second, federal funding for research, conservation, outreach, and other adaptation-related activities has declined in recent years. While some private-sector funding has increased over time to fill some of the gap in public spending—namely in research and conservation—there is growing concern among some that private-sector funding focuses primarily on taking existing technologies to market (i.e., more applied research), and does not focus on basic problems and/or longer-term challenges that the agricultural and forestry sectors may face in the future, such as adaptation to climate variability. The rising of cost of suppressing wildfires—both on federal and nonfederal land—is another funding concern. Finally, while there is recognition at the department level that a coordinated response to climate adaptation may be most effective, agency-level actions appear to diverge in some respects. A number of USDA agencies have developed adaptation plans, but the diversity of agency mission areas has resulted in an inconsistent application of those plans. Some USDA agencies have recognized the need to adapt current programs to potential effects of climate change, and have carried out adaption measures with tangible results, such as RMA's expansion of program coverage to new areas in which crops are grown due to changes in the climate and agronomics. Other USDA agencies have identified the need for adaptation, but lack the program flexibility or funding to act, such as the cost to fully implement FS's restoration strategy for the national forests. USDA: [author name scrubbed], Specialist in Agricultural Conservation and Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. Forest Service: [author name scrubbed], Analyst in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The Department of Commerce (DOC) is composed of 12 bureaus with a wide range of responsibilities. DOC focuses on five basic missions: promoting the development of U.S. business and increasing foreign trade; improving the nation's technological competitiveness; encouraging economic development; fostering environmental stewardship and assessment; and compiling, analyzing, and disseminating statistical information on the U.S. economy and population. On August 31, 2011, in response to E.O. 13514, the Secretary of Commerce signed Departmental Administrative Order (DAO) 216-18, which states that "it is the policy of the Department to undertake comprehensive climate change adaptation planning in order to ensure that the Department fulfills its mission and maintains its programs and operations in a changing climate." The DAO established a Climate Coordinating Committee to develop DOC's Climate Change Adaptation Strategy (CCAS). In June 2012, the strategy was released as an appendix to the 2012 update of DOC's Strategic Sustainability Performance Plan. In June 2014, the CCAS was updated to reflect lessons learned since the first strategy was released, and to incorporate guidance provided by the Council on Environmental Quality (CEQ) on implementing E.O. 13653. The CCAS identifies key climate change vulnerabilities and outlines the department's approach to addressing these vulnerabilities. Climate change vulnerabilities also were linked to priority adaptation actions that were updated for FY2014. The key climate change vulnerabilities and priority adaptation actions are organized by the following strategic themes: economic growth, science and information, environmental stewardship, and infrastructure, facilities, and operations management. Each of these themes is discussed below in more detail. The CCAS also presents five-year strategic goals for adaptation planning, describes how interagency coordination can be supported, addresses barriers to federal climate resilience investment, and identifies opportunities to support climate resilient investments by states, local communities, and tribes. Most of DOC's bureaus support economic growth by developing the tools, systems, policies, and technologies that foster U.S. competitiveness, improve efficiency, and facilitate the development of new businesses. Climate change may present challenges to U.S. businesses by interfering with their ability to produce, transport, and deliver goods and services. Sea-level rise and extreme weather events influenced by climate change could damage infrastructure and harm natural resource-dependent industries such as forestry, fishing, and agriculture. Businesses may be challenged to develop new technologies and processes to help themselves or others adapt. Climate change challenges may also present opportunities for businesses that satisfy the demand for clean energy and climate-friendly technologies. According to the CCAS, DOC will need to ensure it is positioned to assist companies to turn innovative products such as climate-friendly technologies into a competitive advantage for the U.S. economy. Moreover, the CCAS states that the department will need to enhance efforts to promote trade, economic and business development, innovation, entrepreneurship, supply chain information, best practices, and standards that consider climate change. In the CCAS, DOC identified the following adaptation actions to address economic growth in FY2014, and identified lead offices for each action within DOC: Factor in resiliency (including resiliency to the effects of climate change) into economic development investments. Lead Office /Bureau—Economic Development Administration (EDA) Help businesses capitalize on an increased demand for green technologies sparked by a changing climate. Lead Office/Bureau—International Trade Administration (ITA) Improve the ability to process patent application filings for climate change adaptation-related technologies in a timely manner. Lead Office/Bureau—U.S. Patent and Trademark Office (USPTO) DOC science and information agencies enhance scientific knowledge and provide information to stakeholders to improve innovation and technology, support economic growth, and improve public safety. Climate change is anticipated to increase the need for climate, weather, economic, ecological, and demographic data in the private and public sectors. These data are needed to model and assess physical, biological, and social processes that may be altered by climate change; much of this data is significant to adaptation efforts of other federal agencies and departments. Enhancing understanding of climate-related changes to the U.S. economy, society, and the environment can improve decision making broadly. For example, buildings, infrastructure, and communities may suffer losses associated with climatic events such as drought, hurricanes, floods, and wildfires. By improving understanding of climate change, standards and practices can be developed to minimize risks to public safety and economic losses. DOC agencies will need to enhance information collection, scientific knowhow, and services capabilities to meet the data and knowledge needs of federal partners, state and local government, nongovernmental organizations, and businesses that are vulnerable to changing climate. DOC identified the following adaptation actions to address federal vulnerabilities related to science and information in FY2014: Continue coordinating climate and related ecological research and services partnerships within the department and with department partners to better understand climate variability and change and how climate variability and change may affect communities and ecological processes. Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Develop frameworks and tools to help coral reef managers incorporate climate change information into effective decision making that minimizes their risks to climate change. Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Develop performance-based standards and tools for new and retrofit building designs resistant to extremes of wind, storm surge, and fire and that prevent or mitigate collapse. Lead Office/Bureau—National Institute of Standards and Technology (NIST) Understand and prepare for ocean acidification. Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Support adaptation decisions through the National Integrated Drought Information System (NIDIS). Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Support adaptation decisions with climate data, forecasts, and tools in order for the nation to better respond to extreme weather and water events. Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Develop climate change adaptation decision-support information for the Arctic region. Lead Office/Bureau—National Oceanic and Atmospheric Administration (NOAA) Within DOC, the National Oceanic and Atmospheric Administration's (NOAA's) mission is to understand and predict changes in climate, weather, oceans, and coasts; to share that knowledge and information with others (including other federal entities); and to conserve and manage coastal and marine ecosystems and resources. Climate adaptation is a central element of NOAA's mission and its future vision of resilient ecosystems, communities, and economies. In many cases, existing approaches to natural resource management assume relatively static conditions. One of NOAA's tasks is modify management systems to increase resilience to rising sea level (and associated coastal flooding), higher air and water temperatures, ocean acidification, and droughts. For example, climate change may allow pathogens, parasites, and invasive species to live in new areas, which may affect the health of coastal and ocean ecosystems and species. Moreover, the distribution and abundance of fish stocks, protected species, and other marine organisms may shift with changing ocean conditions. According to the CCAS, NOAA will need to incorporate climate considerations into natural resource and coastal planning to maintain healthy and resilient coastal communities. DOC identified the following adaptation actions to address vulnerabilities related to environmental stewardship for which NOAA is the lead office: Continue developing networks of "sentinel sites" to coordinate assets and efforts to increase understanding of, and improve response to, sea-level change impacts on coastal ecosystems and adjacent communities. Track and assess climate-related impacts on U.S. marine ecosystems and the distribution of major fish stocks. Assess the climate vulnerability and resilience of fish stocks and fishing communities. Increase understanding of current and future climate impacts on living marine resources. Provide training to coastal communities to build their capacity to adapt to climate change. Enhance climate resilience of endangered corals. Develop climate-ready protection and recovery of Pacific Northwest salmon and other riverine-dependent species—projecting climate impacts and designing resilient salmon restoration projects. Inform and advance the use of natural and nature-based infrastructure for coastal resilience, including through increased understanding of the value of the ecosystem services and benefits provided. Climate change could affect DOC's performance and its ability to deliver its services effectively and efficiently. Climate change may affect DOC's facilities and infrastructure and impede its ability to carry out its missions and operations. DOC identified the following adaptation actions to address vulnerabilities related to infrastructure, facilities, and operations management in FY2014: Assess the vulnerability of the department's leased facilities to climate change. Lead Office/Bureau—Chief Financial Officer/Assistant Secretary for Administration Continue to work with the General Services Agency (GSA) to assess and analyze climate change vulnerabilities for real property assets GSA has assigned to the Department of Commerce. Lead Office/Bureau—Chief Financial Officer/Assistant Secretary for Administration One of many challenges to implementing both short- and long-term actions related to climate change in ocean and marine areas is the need for coordination among federal agencies and other governmental entities. For example, elevated levels of carbon dioxide, warming oceans, and sea-level rise are expected to affect marine ecosystems, coastal infrastructure, and marine-related activities. Actions needed to meet these challenges will depend on many different federal, state, and local authorities. For broad regional and global changes, coordination is especially important for avoiding gaps or duplication in efforts related to climate change adaptation. Effective communication is also needed to ensure the free flow of information among agencies including state and local governments. According to the U.S. Commission on Ocean Policy, at the federal level, 11 of 15 Cabinet-level departments and 4 independent agencies play important roles in the development of ocean and coastal policy. Although the Administration has developed a national ocean policy, it remains an open question whether Congress will provide new authorities to improve coordination of efforts to mitigate, increase resilience to, and adapt to cross-cutting ocean issues, such as climate change. [author name scrubbed], Analyst in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The Department of Defense (DOD) can be affected by climate change in several areas including potential impacts on geopolitics and national security interests that could result in military operations, risks to existing military infrastructure, and hindrances to readiness and the ability to execute missions. For example, the Air Force has found that the combination of thawing permafrost, decreasing sea ice, and rising sea levels on the Alaskan coast has increased coastal erosion at several Air Force radar early-warning and communication installations. The U.S. Army Corps of Engineers (USACE or the Corps) is an agency in DOD with both military and civilian responsibilities. The Corps' civil works activities associated with domestic water resources are discussed separately in a later section. In the National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 ), Congress required the first national security strategy and first national defense strategy prepared after January 2008 to include guidance for military planners to assess the risks of projected climate change to current and future mission of the armed forces; to update defense plans based on these assessments, including working with allies and partners to incorporate climate mitigation strategies, capacity building, and relevant research and development; and to develop the capabilities needed to reduce future impacts. Congress also required DOD to include in the first Quadrennial Defense Review (QDR) prepared after 2008 an analysis of "the capabilities of the armed forces to respond to the consequences of climate change, in particular, preparedness for natural disasters from extreme weather events and other missions the armed forces may be asked to support inside the United States and overseas." Subsequently, DOD included a discussion of climate change (and energy) in the 2010 QDR, and the Administration included a discussion of climate change in the 2010 national security strategy (the first of either documents published after 2008). According to DOD, the 2010 QDR is the foundation for the department's strategic policy on climate change adaptation. In 2012, pursuant to Executive Order 13514, DOD published a nine-page FY 2012 Climate Change Adaptation Roadmap , which laid out in broad strokes the challenges of climate change and the initial steps being taken by DOD. While these initial efforts were mandated by Congress and the President, DOD has continued to address the issue and is working to develop a more robust approach for managing the risks posed by climate change. DOD issued a brief FY2013 update to the Climate Change Adaptation Roadmap and a more robust Climate Change Adaptation Roadmap in FY2014, and included a discussion on climate change in the 2014 QDR, even though there was no legislative or executive dictate to do so. DOD considers climate change to pose two broad categories of risk: 1. Climate change could affect the type, scope, frequency, tactics, and location of military operations worldwide. 2. Climate change could impact the force structure and the effectiveness and configuration of bases, training facilities, and other infrastructure that DOD relies upon to execute its mission. 1. Effect of Climate Change on Military Operations Climate change can serve as a catalyst for conflict between nations, instability within nations, and more severe or frequent natural disasters and humanitarian crises. The military may be called upon to respond to these scenarios, potentially affecting the type, scope, frequency, and location of military operations. Climate change can also alter the physical environment within which DOD must operate. For example, sea-level rise could affect amphibious landings, and weather pattern changes could alter operational timing and intelligence-gathering capabilities from airborne platforms. Exacerbating Conflict and Instability Climate change can serve as "an accelerant of instability or conflict." Rising sea levels, rising temperatures, changing precipitation patterns, and competition for water, among other factors, could have significant geopolitical impacts contributing to "poverty, environmental degradation, the weakening of fragile governments and food and water scarcity." The 2014 National Intelligence Strategy stated the following: Many governments will face challenges to meet even the basic needs of their people as they confront demographic change, resource constraints, effects of climate change, and risks of global infectious disease outbreaks. These effects are threat multipliers that will aggravate stressors abroad such as poverty, environmental degradation, political instability, and social tensions—conditions that can enable terrorist activity and other forms of violence. The risk of conflict and mass atrocities may increase. According to news reports, the National Intelligence Council reportedly found that Sub-Saharan Africa, the Middle East, and Central and Southeast Asia are most vulnerable to climate change-related drought, flooding, extreme weather, and resulting food insecurity. DOD may be called upon to respond to climate change-related conflict or instability, thereby impacting the roles and missions of the military. Nonconflict Operations DOD has an established mission to conduct humanitarian assistance/disaster relief, and has long played a role in U.S. efforts to assist foreign populations, militaries, and governments. The historical DOD role in providing assistance and support to foreign nations can be regarded as serving three purposes: 1. responding to humanitarian and basic needs, 2. building foreign military capacity and capabilities, and 3. strengthening foreign governments' ability to deal with internal and international threats through state-building measures. The use of DOD to provide foreign assistance stems in general from the perception that DOD can contribute unique or vital capabilities and resources because it possesses the manpower, materiel, and organizational assets to respond to international needs. The United States may have a significant interest in having the military conduct selected nonconflict operations (such as training and capacity building) as a means of preempting conflict, instability, or humanitarian crises that could otherwise emerge. DOD has unique capabilities to address climate-related challenges. For example, a nuclear-powered aircraft carrier can produce more than 400,000 gallons of drinking water from sea water per day, thereby providing fresh water to remote seacoast populations in times of crisis. The Army Corps of Engineers possesses the capability to assist nations in developing the infrastructure necessary to manage critical government services such as water access and allocation. 2. Installations, Readiness, and Mission Assurance DOD maintains more than 555,000 facilities at more than 5,000 locations worldwide, covering 28 million acres. DOD installations are found in all 50 states, 7 U.S. territories, and 40 foreign countries. The total value of its buildings and structures is estimated at approximately $874 billion. Given the extent of the DOD infrastructure, adapting to climate change impacts that affect installations and facilities worldwide could require significant financial investments. DOD's operational readiness and capabilities depend on continued and reliable access to functioning installations (including ports and bases), and training and testing facilities. DOD's portfolio of installations faces direct risks from some impacts of climate change. Some of these risks include the following: sea-level rise, storm surge risks, and storm runoff at coastal installations; drought and competition for water resources with local populations; extreme heat and severe flooding; and changes in weather conditions that make training facilities unusable for their intended purpose (for example, a facility dedicated to alpine training may not be useable if warming temperatures result in insufficient snow depths). Climate change-related effects are already being observed at military installations worldwide. As the Strategic Environmental Research and Development Program found, "Climate-related effects already are being observed at DOD installations in every region of the United States and its coastal waters. The direction, degree, and rate of these changes will differ by region, as will the impacts to the military's infrastructure and capabilities." These impacts could increase the cost of maintaining installations and critical infrastructure, as well as impact the ability of the installations to support operations. DOD installations often rely on non-DOD infrastructure. Bases may rely on local towns or cities for food, housing, local workforce, and infrastructure (such as the maintenance of surrounding roads). Climate changes that affect these towns or cities could adversely affect the functionality of military installations located nearby. In October 2014, DOD released its FY 2014 Climate Change Adaptation Roadmap . The roadmap outlines three broad goals for addressing climate change: 1. identifying and assessing the effects of climate change, 2. managing risks associated with climate change by integrating climate change considerations into department planning and policy, and 3. collaborating with other agencies, foreign governments, international organizations, and industry to meet the challenges of climate change. DOD is already incorporating climate change considerations into installation and training plans, and is beginning to include the science and strategic implications of climate change in formal military training and education. In recent testimony, Dr. Daniel Chiu, Deputy Assistant Secretary of Defense for Strategy and Force Development stated, "the Department initiated in 2013 a review of existing directives, policies, manuals, and associated guidance document and criteria to identify which ones should incorporate considerations of a changing climate. The initial screen reviewed 58 documents and identified 28 policies, programs and procedures for update; five have already been updated, all dealing with installations." In addition to DOD's climate change adaptation roadmap, DOD also established goals related to the reduction of energy, water, and fuel use, as well as the reduction of greenhouse gas emissions and more sustainable practices as part of its strategic sustainability plan. Meeting these goals may contribute to more climate-resilient installations and activities. DOD Research on the Impact of Climate Change According to DOD, "more comprehensive and region/installation-specific vulnerability assessments are needed to determine which adaptive responses are appropriate." Given the pace of climate change, many of its potential effects on DOD could take time to develop. In addition to the efforts currently under way (as described above), DOD intends to research climate system modeling, environmental process models, and assessment and adaptation methods. This effort could help inform a strategic approach to managing the risks of climate change. Regarding DOD's efforts to collect and analyze data regarding the vulnerabilities of its installations to climate change, GAO concluded that "[w]ithout a plan, including interim milestones to gauge progress, DOD may not finish its assessments in a timely and complete manner." GAO recommended that DOD develop a plan with milestones, and provide further information to installation planners, clarifying actions that should be taken to account for climate change in planning documents, and clarify the processes used to compare military construction projects for funding to include consideration of potential climate change impacts. DOD concurred with GAO's recommendations and explained how they will be implemented. Much of the research is conducted by DOD in partnership with DOE and EPA under DOD's Strategic Environmental Research and Development Program (SERDP). SERDP, established in 1990 to coordinate environmental research across military services, has been tasked with developing climate change assessment tools for DOD installations. Under this program, DOD is producing several reports focusing on adaptation science and vulnerability and impact assessment (see Table 2 ). Military Department Adaptation Activities The Under Secretary of Defense for Acquisition, Technology, and Logistics is the Senior Sustainability Official responsible for implementing E.O. 13514 and overseeing climate change adaptation. The Deputy Under Secretary of Defense (Installations and Environment) is responsible for overseeing implementation of DOD climate change adaptation efforts, and published the FY 2014 Climate Change Adaptation Roadmap . In addition, each military department is undertaking climate change adaptation activities. The Army has formed a climate change working group, which is working on incorporating climate change considerations into policies, guidance, and plans; assessing vulnerabilities across locations and missions; and performing pilot demonstrations at two locations to include climate change concerns in installation plans. To support these efforts, the Army Science Board issued a report, Planning for Climate Change: Actions for the Army to Better Adapt to the Effects of Climate Change in 2030 (November 2013), and the Office of the Assistant Secretary of the Army (Installations, Energy, and Environment) released a report, High-level Climate Change Vulnerability Assessment (December 2013), which "provides an overview of potential Army installation vulnerabilities to climate change." The Air Force's 2010-2030 Strategic Environment Assessment includes climate change as a strategic consideration. The Air Force is also developing installation management plans that include climate change impacts for two coastal installations. The Navy's climate change adaptation activities appear to be the most fully developed within DOD. The Navy's Task Force Climate Change was established in May 2009, earlier than the other military services or establishment of the DOD-wide task force. Figure 8 shows an example of facility-specific assessments that have been initiated. The Navy released its first Arctic Roadmap in 2009 (four years before the DOD-wide Arctic Strategy was released) and a Climate Change Roadmap in April 2010 (three years before the DOD-wide roadmap was released). The Navy does not intend to issue an updated climate change roadmap, as all the military services now work within the DOD-wide task force and roadmap. The Arctic and Beyond According to the November 2013 Department of Defense Arctic Strategy, Fiscal constraints may delay or deny needed investment in Arctic capabilities, and may curtail Arctic training and operations. As the Department downsizes to meet budgetary targets, it will have to prioritize engagements for the resulting smaller force. There is also a risk that desired investments in Arctic capabilities may not compete successfully against other requirements in the Department's budgetary priorities. As such, DOD's approach is to monitor changes in the Arctic and the geostrategic situation to "determine the appropriate timing for future capability investment." Given the fiscal environment and DOD's acknowledgement that it may not prioritize Arctic investment, Congress may consider where climate change should rank in the list of DOD priorities, and to what extent DOD should dedicate limited resources to the potential risks posed by climate change generally, and to the evolving arctic climate specifically. In addition to the Arctic, Congress may consider the extent to which DOD is preparing now for the potential effects that climate change may have globally. Congress may examine the extent to which DOD is 1. identifying regions of the world most vulnerable to climate change, 2. incorporating climate change impacts into plans, operations, and infrastructure maintenance in these regions, and 3. dedicating sufficient resources to mitigate climate change risks in these regions. Industrial Base Congress may also consider whether and to what extent DOD should examine the potential risks climate change poses to the industrial base supporting DOD. As discussed above, climate-related effects are already being observed at numerous DOD installations. DOD and the services are working to develop predictive models, evaluate the impact of climate change, and incorporate climate change into installation management. It is unclear whether DOD plans to take a similar systematic approach to determine what impact, if any, climate change may have on critical industrial base facilities, such as shipyards, or whether DOD plans to evaluate the extent to which contractors are adequately preparing for potential environmental change. [author name scrubbed], Specialist in Defense Policy, [email address scrubbed] , [phone number scrubbed]. The Army Corps of Engineers (USACE or the Corps) is an agency in DOD with both military and civilian responsibilities. Under its civil works program, the Corps plans, builds, operates, and maintains a wide range of water resources facilities (e.g., dams, levees, navigational channels) throughout the country. These facilities are sensitive to changes in climate, in particular changes in hydrologic (e.g., droughts, floods, runoff) and coastal processes (e.g., storms, sea-level rise, sediment transport). Climate change is expected to affect all Corps mission areas and activities such as its responsibilities for navigation, flood control, hydropower, and ecosystem restoration. The effects of altered climate are of particular concern where Corps projects have documented vulnerabilities due to flooding (e.g., flood control projects in the Sacramento area or in Greater New Orleans), drought (e.g., water supply projects on the Apalachicola-Chattahoochee-Flint River), and wetland degradation/sea-level rise (e.g., ecosystem restoration projects in coastal Louisiana and the Florida Everglades). A complete assessment of the vulnerability of Corps projects has yet to be completed. The Corps has outlined its role in responding to climate change as (1) characterizing and understanding potential threats to its missions and operations, and (2) engineering and deploying adaptation strategies and policies that reduce these threats. While the Corps is itself a user of actionable climate science knowledge, it considers the conduct of climate science to be outside of its primary mission. Efforts to respond to climate change may not directly affect the decision making of nonfederal entities. However, many nonfederal entities rely on infrastructure operated or built by the Corps, and are thus affected by its policies (e.g., operations of reservoirs, planning standards for levees, etc.). Additionally, many of the issues encountered by the Corps are common to managers of nonfederal water resources infrastructure; thus Corps adaptation strategies may be translatable to other agencies and decision makers. The Corps conducts its climate change planning under the Obama Administration's broader climate change policy framework. In 2012 the Corps prepared and submitted a Climate Change Adaptation Plan and Report in accordance with Executive Order 13514. The Corps is a member of the federal Climate Change and Water Working Group (CCAWWG), an interagency working group that provides engineering and scientific collaborations in support of water management. The Corps also sits on the Water Resources Working Group, one of five interagency working groups established by the Council on Environmental Quality (CEQ) to develop a national strategy for adapting to climate change. These efforts inform other climate change-related work by the Corps at the agency level. The Corps carries out climate adaptation-related activities in accordance with its 2011 Climate Change Adaptation Policy Statement. According to this statement, it is Corps policy to integrate climate change planning and adaptation into agency missions, operations, programs, and projects, and to consider climate change adaptation at every step of the project development process. The policy established the USACE Climate Change Adaptation Steering Committee (ASC), chaired by the Chief of Engineers, to oversee and coordinate implementation of this policy. The Corps established a program in 2010, the Responses to Climate Change (RCC) program, to develop methods, policies, and processes to reduce the vulnerability of Corps facilities to climate change. To date, some of the primary activities under the Responses to Climate Change program have focused on the creation of assessment frameworks and tools to help characterize vulnerabilities of Corps projects. Future efforts are expected to further incorporate these changes into its planning. For example, in 2011 the Corps developed an Engineering Circular with the help of NOAA and USGS, which established guidance for assessing the effect of sea-level change impacts on coastal projects. The Corps also developed tools for project managers to understand these effects, including a web-based calculator to aid in assessing sea-level rise potential at Corps projects. The Corps is currently developing a screening process to assess the vulnerability of its projects to sea-level change, and is formulating additional guidance for developing and evaluating alternatives to address these changes at the project level. For areas in which less actionable science is available, the RCC program has focused largely on characterizing known needs and potential impacts. Through its work on the CCAWWG, the Corps has contributed to multiple interagency reports and forums identifying needed supporting information for water management decisions. For instance, in 2011 and 2013 the Corps and other agencies produced reports identifying needs for long-term and short-term water resources planning and management, respectively. Additionally, the Corps has coordinated workshops to familiarize water managers with changing assumptions due to climate change in project planning, design, and operations such as those related to potential changes in hydrologic extremes. In the future, it plans to build on this work to provide more specific guidance on incorporating these assumptions into project-level climate change impact assessments. The Corps is also conducting limited regional impact assessments and pilot studies under its RCC program. It is conducting regional climate impact assessments in specific areas such as Alaska, the Pacific Islands, eastern regions, and the Caribbean Basin. The Corps has also conducted pilot studies at specific locations to better understand the potential effects of climate change at Corps facilities throughout the nation. Issues for Congress may include whether available information provides an actionable basis for changes to Corps project development and management, the extent to which the Corps and other water resources managers have the authority and capability (including funding) to implement alterations, and the extent to which Congress agrees with the specifics of these plans. If implemented, alterations to Corps projects may affect the established distribution of Corps project benefits (e.g., altered reservoir operations may provide more water for some purposes and less for others), and could thus prove controversial. Finally, Congress may also weigh in on the status and priority of information "gaps" identified in previous water resources planning forums, including the relative priority and adequacy of various research efforts. There are significant connections between the adaptation activities of the Corps and other federal agencies, both in the early stages of climate change planning and in day-to-day operations of water resources facilities. Congress may consider these connections as it provides further direction for Corps adaptation activities. In addition to its relationship with other federal agencies, Congress may also provide further guidance and direction for Corps work with nonfederal entities. For instance, Congress may weigh in on the Corps role in facilitating adaptation work related to levees that were constructed by the Corps but operated by nonfederal partners. Charles Stern, Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The Administrator of the Environmental Protection Agency (EPA), in a June 2011 Policy Statement on Climate Change Adaptation, declared that to fulfill EPA's mission of protecting human health and the environment, the agency must adapt to climate change. Much of EPA's work is organized by medium—preventing or reducing pollution in air, soils, and water. EPA also regulates certain chemicals (e.g., pesticides), works to prevent environmental emergencies such as unexpected pollution releases, and responds to releases including those associated with homeland security incidents. The Administrator at that time cautioned that EPA, its partners, and the regulated community may no longer reliably predict future accomplishments when assuming historical climate conditions. EPA enumerated ways in which its mission may be vulnerable to a changing climate, but has not conducted a detailed, quantitative assessment of the vulnerability of its mission to climate change. Among the potential vulnerabilities, EPA noted that projected higher air temperatures and more stagnant air masses may make it more difficult to achieve health-based standards for smog in some regions, with potentially adverse effects on health and regulatory compliance. Projected increases in flooding, prolonged drought, wildfires, and associated losses of vegetation increase risks of contamination of water and reduced ecosystem services such as water supply and filtration. More heavy rainfall events may increase fertilizer runoff from lands and augment harmful algal blooms in lakes and oceans. Flooding and sea-level rise could lead to contaminant releases from facilities that manage wastes or store hazardous materials, and/or disrupt access in waste management systems. Chemicals, such as pesticides and herbicides, may be used with different frequencies or in different ways. The report further noted that increasingly extreme weather events could divert EPA's resources to emergency responses and away from day-to-day responsibilities. EPA reports that the nation's water resources and infrastructure may be particularly susceptible to climate change. Variable climate conditions, including changes in precipitation (amount, timing, form, and location), changes in the intensity and frequency of extreme weather events, and sea-level rise can result in increased coastal and inland flooding, shoreline erosion, saltwater infiltration into groundwater resources, and diminished supplies of freshwater resources. These events can threaten water utilities' ability to serve their essential functions; and can alter the quality and function of lakes, estuaries, and other water resources and aquatic ecosystems. For the most part, EPA's adaptation plan concerns potential effects of climate change on achieving EPA's mission. The agency also stated that it has begun to assess "the safety of its personnel, the safe and continued operation of its buildings and other critical assets (e.g., vehicles), and the integrity of its grants and procurement systems" to changes in the climate. Elements of risks to EPA's infrastructure, personnel, and operations are visible in some of the National Program Offices' and Regional Offices' Implementation Plans. EPA released an updated Climate Change Adaptation Plan in October 2014. EPA's adaptation-related efforts were also evident in the agency's budget request for FY2015. In its Congressional Justification for FY2014, the agency set three Strategic Measures for climate adaptation activities, to achieve by 2015, with performance metrics to measure agency-wide integration of climate change vulnerability assessments and plans: integration of science trend and scenario information into five scientific models and/or decision-support tools used in implementing agency environmental management programs, consistent with existing authorities; integration of science trend and scenario information into five rulemaking processes to further EPA's mission, consistent with existing authorities; and consideration of impacts and adaptive measures into five major grant, loan, contract, or technical assistance programs, consistent with existing authorities. These adaptation-related performance metrics did not appear in EPA's FY2015 Congressional Justification. EPA was among the first federal agencies to release implementation plans across all of its programs and geographic regions to facilitate their adaptation to climate change. In most cases, these implementation plans identify program- and location-specific vulnerabilities and needs for further assessment, though they also identify some concrete actions and timetables. Common actions across offices include the following: increased training of staff on science, engineering, risks, and options to anticipate, monitor, and respond to emerging climate challenges; consideration of options for greater reliance on distributed energy to reduce vulnerabilities of EPA offices and operations—especially of emergency response resources—to grid and telecommunication interruptions possible with extreme events or high cooling demand for electricity; and enhancing priority of EPA facilities' water conservation in drought-susceptible areas. EPA's climate adaptation policy gives emphasis to developing external partnerships, and has a goal of mitigating impacts on the nation's most vulnerable populations including children and the elderly, and minority, low-income, and indigenous populations. In many cases, EPA's documents reflect the agency's view that it occupies one niche in a broader societal response to climate changes. For example, EPA Region 6's adaptation implementation plan notes that "[i]n some cases, market forces will continue to push desired outcomes even without the Agency's involvement.... The federal government has an important and unique role in climate change adaptation, but is only one part of a broader effort that must include public and private partners throughout the country and internationally." Likewise, the Office of Solid Waste and Emergency Response explicitly asked, "Does EPA have a unique or lead role or technical expertise ... ?," as it evaluated opportunities and set priorities in a resource-constrained environment. EPA's Adaptation Implementation Plans lay out actions to be undertaken in its own programs and through work with partners in the private sector and with public agencies at the federal, state, local, and international levels. For example, the agency is assisting selected communities, states, and businesses to revise design guidelines for water treatment systems, develop extreme heat warning systems with selected cities, and help coastal communities prepare for sea-level rise. EPA appears to have reduced some of its early adaptation activities as other agencies have expanded related efforts such as in urban heat warning systems and coastal zone analysis. These supplement ongoing EPA observational and research activities related to climate change. Some highlights of EPA's adaptation plans for individual office operations are identified below. Office of Administration and Resource Management (OARM) . EPA will consider enhancing the resilience of existing agency facilities in coastal areas to protect them from severe weather, flood damage, and sea-level rise, and work with the General Services Administration (GSA) to account for climate change in design and construction of new or leased facilities. A particular example is incorporation of considering resilience to climate change into GreenCheck, OARM's process to evaluate building projects. The effort aims to ensure that EPA laboratories—which need water for experiments and building cooling—are prepared to respond in drought or adverse water quality events. Likewise, facilities will prepare to reduce reliance on the electrical grid, which may suffer interruption with weather events and rising temperatures. Also, the agency may need to redirect personnel to assist emergency management, assess environmental damage, or test sites for contamination following severe weather or other climate-related events. Office of Air and Radiation (OAR) . OAR plans to review and revise information regarding the potential impacts of climate change on concentrations of criteria air pollutants (such as ozone and particulate matter) as well as indoor air quality. Better understanding of climate change on air pollution may inform outreach to citizens as well as guidance and tools for partners. OAR will consider whether research indicates that the office needs to modify the analytical tools and models used for developing and implementing regulations. Office of Chemical Safety and Pollution Prevention (OCSPP). EPA is concerned that changes in the climate could affect exposures to chemicals by altering environmental patterns or use patterns. The office intends to ensure that its tools and methods reasonably reflect environmental changes, including climate changes, and how these may affect assessments of the rate, timing and/or frequency of chemical uses, or alter disease or invasive species distributions. Historical weather data sets may be updated. The office will consider new pathways and changes in chemical behavior that may result from a changing climate. In addition, the office may acquire better data on the locations of existing facilities such as chemical storage in low-lying areas that may be susceptible to flooding. The agency notes that it has not assessed potential changes to exposures for some kinds of chemicals, such as lead or asbestos used in buildings, and how they may be altered by any changes in fires, high winds, or flooding. Office of Water. The Office of Water strategy is to "integrate climate change considerations and awareness into day-to-day management decisions for clean water and drinking water programs at national, Regional, State, Tribe, and local levels." Program areas covered by adaptation initiatives include water infrastructure, watersheds and wetlands, coastal and ocean waters, and water quality. Priority adaptation initiatives include, among others, (1) encouraging climate change consideration in managing the Clean Water and Drinking Water State Revolving Loan Fund programs, (2) developing screening criteria to identify water sector utilities in coastal areas that may be at risk of inundation from storm surges, (3) building state and local capacity to protect watersheds, (4) expanding WaterSense partners and products, (5) identifying ways to integrate climate change considerations into water quality management planning, and (6) promoting the use of an Extreme Events Workshop Planner for water utilities. EPA also integrated climate change into wetland program grants. Under the Climate Ready Water Utilities (CRWU) Initiative, EPA has developed a climate change risk assessment tool (Climate Resilience Evaluation and Awareness Tool, or CREAT). In FY2015, EPA plans to promote climate change adaptation by water, wastewater and stormwater systems by increasing the role of the CRWU Initiative in emergency response and preparedness efforts. EPA proposes to use funds realigned from the water security program for this purpose and to develop and distribute a more robust climate resilience evaluation tool that incorporates sea-level rise and storm surge components, and allows mapping of facilities. Office of Solid Waste and Emergency Response (OSWER) . Among 23 OSWER priority actions over three years, several will increase outreach and informational tools to prepare to manage possible surges in waste and debris from the impacts of extreme climate-related events. This would entail cooperation with the Department of Homeland Security (DHS). Efforts to prevent contamination from chemical releases will involve enhanced inspector training and guidelines. Regarding waste cleanup, OSWER offices will gather further information, increase outreach, and in some cases require grantees to consider potentially changing climate conditions when evaluating alternative measures. In addition, the agency has begun to apply screening analysis mapping to identify the sites most likely to be vulnerable to climate change. Office of Research and Development (ORD). ORD will work with OARM to identify and reduce vulnerabilities of laboratory assets, and identify particular facilities that may be most vulnerable to severe weather or flooding. ORD will also need to safeguard and maintain continuity of other research assets such as field experiments, equipment, archived samples, and personnel from extreme temperature and precipitation. ORD reports it has incorporated criteria for climate change adaptation in grant development. Office of Enforcement and Compliance A ssistance (OECA). Federal laws broadly hold federal facilities to the same standards of environmental compliance as others in the regulated community. In some instances, OECA will inspect facilities that manage hazardous wastes, oil, toxic chemicals, and/or discharge stormwater in FEMA flood zones to determine environmental compliance and recommend best management practices to avoid unexpected releases. Beyond the actions of program offices highlighted above, EPA Regional Offices have undertaken additional types of actions. One example is working with the National Response Framework and the National Disaster Recovery Framework to incorporate climate adaptations into post-disaster redevelopment plans. Another is developing methods to identify the most vulnerable populations within regions. Some regions are developing plans to alert schools and other susceptible populations to air quality emergencies that may increase with climate change, such as wildfire pollution episodes. EPA's adaptation plan also emphasizes that climate change impacts may be most severe on certain already vulnerable populations, including the elderly and low-income communities, as well as tribes. The agency has established a principle to give priority to addressing the vulnerabilities to climate change of these people and communities. EPA has not prepared comprehensive quantitative assessments of the vulnerability of health and environmental protection to climate change. Some limited studies are available. Though the agency set three quantitative Strategic Measures to achieve by 2015—to incorporate consideration of climate change into decision tools, grants or assistance, and rulemakings (see above)—the October 2014 report included little specific discussion of progress toward achieving those quantitative measures. It cited only inclusion of a Climate Assessment Tool within the broader watershed and water quality analysis tool, BASINS, available to help regional, state, and local agencies assess water resource and management issues. Often in cooperation with other federal agencies or state or local governments, EPA has produced a number of resources intended to assist the agency in helping others (communities, tribes, private companies, etc.) anticipate and respond to climate change. One of EPA's earliest efforts, with the Centers for Disease Control and Prevention (CDC), the National Weather Service (NWS), and nongovernmental organizations, was support for development of Heat Health Watch/Warning Systems to reduce deaths related to extreme heat events that may increase with climate change. For example, EPA helped the Philadelphia Department of Public Health develop a heat warning system that one study estimated saved 117 lives between 1995 and1998, with benefits that greatly exceeded the costs of the system. The approach has been replicated and tailored to numerous other localities. As Congress oversees EPA operations and considers related budget proposals and priorities, there are multiple issues it may consider with regard to climate change adaptation: Does EPA's research and that of other agencies and institutions meet the needs of EPA's programs for reliable climate change-related data and models, in order to identify potential risks and their locations? Through what mechanisms are EPA's information needs identified? Are climate change data accessible to the regulated community and the public? Are there specific questions of authority that may arise as EPA pursues adaptation measures? For example, EPA noted in its 2012 Adaptation Plan that it may need to determine the extent of its authorities to consider climate change impacts in setting standards or issuing permits. Similarly, relationships between EPA's statutory authorities and various expenditures for climate initiatives may be of oversight interest. Could metrics of adaptation outcomes (rather than agency activities) for health and the environment be quantified in budget justifications? What may be the challenges? Could quantitative metrics related to effectiveness of adaptation activities be meaningful and effective? In the water sector, many EPA adaptation activities are compatible with, but may fall outside, the core statutory responsibilities. It may be difficult to discern the level of resources allocated to climate change adaptation activities separately from spending on core mission activities, or to determine whether focus on climate change may have an effect on implementation of core statutory missions. Is the allocation of resources allotted to adaptation planning and initiatives in this or other programs adversely affecting congressionally required functions? [author name scrubbed], Specialist in Environmental and Energy Policy, [email address scrubbed] , [phone number scrubbed]. [author name scrubbed], Specialist in Environmental Policy, [email address scrubbed] , [phone number scrubbed]. The Department of Homeland Security's (DHS's) Federal Emergency Management Agency (FEMA) has the primary mission to reduce the loss of life and property from all hazards, including man-made and natural disasters. FEMA accomplishes this mission by leading and supporting the nation in a risk-based, comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. Through this mission, FEMA has a lead role in guiding nationwide adaptation to the impacts of climate change related to extreme weather events. Scientific research organizations have highlighted the potential impact of climate change as it relates to the frequency, and potential severity, of extreme weather events. FEMA expects that climate change will adjust the likelihood and magnitude of certain extreme weather events, but not create novel threats. Therefore, FEMA expects that the nation will experience more natural disasters of certain types—namely meteorological phenomena such as heavy precipitation events, flooding, heat waves, and droughts—that may also produce greater damages when they strike communities. When the prospective change in likelihood and severity of threats is accounted for, it may result in new risk for communities across the nation. Not all changes to risks will have negative outcomes for the nation or individual communities. It is possible, for instance, that the likelihood of certain extreme weather events will decrease in a particular region with changing climate conditions such as a lower likelihood of drought in a region. Changes to risk are also unlikely to be consistent across geographic regions of the nation. Further, future risk to extreme weather events may be offset or exacerbated by other correlated or uncorrelated factors. For example, enhanced building design or other technological advancements may reduce physical vulnerability to a particular extreme weather event. As these types of natural disasters already threaten the nation, FEMA is primarily working to integrate climate change adaptation into existing programs and policies that mitigate these threats, as opposed to developing additional, climate change-specific programs/policies. In a strategic plan, FEMA has identified climate change as a key "driver" of future needs for emergency management. In a supporting assessment of this driver of future needs, the agency noted that the implications of climate change on emergency management may be exacerbated by other projected changes including aging infrastructure, forecasts of lower government budgets, and increasing demographic concentration in cities and coastal areas. In review of these strategic assessments, FEMA has identified actions to integrate climate change adaptation planning into its existing programs, policies, and operations. In addition to its agency-specific work, FEMA, as a component of DHS, has led a DHS Task Force set up to evaluate the risks of climate change effects to DHS missions and operations. Working in conjunction with other components of DHS such as the U.S. Coast Guard and U.S. Customs and Border Protection (CBP), FEMA has contributed to the development of several DHS-wide policy documents on climate change adaptation, including a 2010 Climate Change Adaptation Report , 2012 Climate Change Adaptation Roadmap , 2013 DHS Climate Action Plan , and 2014 "Addendum" to the DHS Climate Action Plan . These documents comply with adaptation planning requirements initiated under E.O. 13514. FEMA was also one of the seven departments and agencies specifically identified in E.O. 13653 that were directed to "complete an inventory and assessment of proposed and completed changes to their land- and water-related policies, programs, and regulations" to make U.S. natural resources more resilient to a changing climate. To fulfill this requirement, FEMA was a participating agency in the Climate and Natural Resource Working Group (CNRWG), which published in October 2014 a "Priority Agenda: Enhancing the Climate Resilience of America's Natural Resources." Analyzing the array of policy documents noted above, FEMA has committed to fulfilling a broad set of actions related to climate change adaptation, such as (but not limited to) increasing its internal training and communications for FEMA emergency management staff on the connections between climate change and emergency management programs and functions; improving its existing cost-benefit analysis methods for post-disaster assistance programs provided through the Stafford Act, such as the Public Assistance and Hazard Mitigation Grant Program, to incorporate future flood risks (e.g., sea-level rise) and other climate factors; updating risk assessment models that FEMA currently provides to accurately account for possible increases in risk due to climate change, including the Threat Hazard Identification Risk Assessment; and advance and participate in intergovernmental and "whole of community" partnerships to address specific extreme weather events that may increase in frequency and intensity with climate change, such as through the National Cohesive Wildland Fire Management Strategy and the National Drought Resilience Partnerships. Prior to its FY2015 budget request, the Administration did not request or receive funding specifically related to climate change adaptation activities for FEMA. However, the strategic planning activities of FEMA's Office of Policy and Program Analysis related to climate change have been cited in past budget justification documents. In the FY2015 supplemental budget request, labeled the "Opportunity, Growth, and Security Initiative," the Administration requested $400 million for the Pre-Disaster Mitigation (PDM) grant program. If appropriated by Congress for FY2015 or in other future fiscal years, this type of funding could be used by communities to adapt to extreme weather events exacerbated by climate change, in addition to other types of disasters. A general lack of specific funding for climate change adaptation may reflect FEMA's objective to integrate adaptation activities into existing programs, thus making it difficult to specifically identify funding for adaptation activities in appropriated resources for current programs. Arguably, any funding directed toward the general goal of emergency preparedness may assist the nation as it adapts to changing likelihoods of extreme weather events, in addition to other disasters. [author name scrubbed], Analyst in Emergency Management and Homeland Security Policy, [email address scrubbed] , [phone number scrubbed]. HHS is the lead federal agency responsible for researching and responding to the health effects of climate change. According to the most recent version of the HHS climate adaptation plan, the Office of the Assistant Secretary for Health (OASH) within HHS is the lead office on climate adaptation. OASH works closely with the "Office of the Assistant Secretary for Administration (ASA), Office of the Assistant Secretary for Preparedness and Response (ASPR), Centers for Disease Control and Prevention (CDC), and the National Institutes of Health (NIH)." Activities to address climate change within HHS are multipronged and in different stages of development. For example, some activities are an extension of ongoing work, led by ASPR, to prevent, prepare for, and respond to public health emergencies and disasters. As noted in the HHS plan, "ASPR has a major role in identifying communities and at-risk individuals most vulnerable to disasters as climate change progresses." Other activities, led by the CDC and NIH, involve collecting data and creating mapping tools to track the effects of climate change and assess potential health impacts. Many of these efforts are preliminary, focused on establishing the infrastructure necessary to ameliorate the potential impacts of climate change (e.g., identifying key personnel, programs, and policies that need updating or replacement; assessing facilities and infrastructure). One of these efforts is expected to produce a special report that "will be an evidence-based, quantitative assessment of the observed and projected climate change impacts on human health in the United States." A draft of the report is expected in early 2015. The 2014 climate adaptation plan presents vulnerability assessments for populations and HHS missions. It identifies climate-related health risks affecting the U.S. population, including deaths and illnesses from heat stress; injuries and illnesses due to extreme weather events (e.g., severe storms, heat waves); respiratory and cardiovascular illness and deaths caused by smoke from heat-related and drought-related wildfires, as well as changes in air pollution, particularly ozone smog; allergic illnesses from elevated pollen levels, caused by more vigorous weed growth and longer pollen seasons; changing rates and ranges of infectious diseases carried by insects or in food and water; threats to the safety and availability of food and water supplies; and greater levels of mental and emotional stress in response to climate change and extreme weather-related emergencies. According to the plan, those most vulnerable in general—children, the elderly, those living in poverty, those with underlying health conditions, and those living in certain geographic areas—are also at increased health risk from the effects of climate change. The HHS plan also includes (1) NIH efforts to identify and protect vulnerable populations, (2) CDC programs to help state and local governments prepare for the potential impacts of climate change on populations within their jurisdictions, and (3) work by the Substance Abuse and Mental Health Services Administration to help states, territories, tribes, and local governments respond to the behavioral health impacts of climate change. HHS has not conducted a formal risk assessment of climate change on its brick-and-mortar facilities; however, the adaptation plan notes that HHS intends to partner with the General Services Administration to "address the vulnerabilities of these sites and facilities to incremental climate change and variability." Adapting the health care and public health sectors to respond to climate change generally involves infrastructure and activities already in place; however, to optimally address climate change concerns, such activities may need to be expanded. As Congress considers the issues associated with the HHS climate adaptation plan, Members may assess the extent to which the existing public health preparedness and disaster response infrastructure is sufficient to handle the anticipated impacts of climate change over different periods of time—the next 1 to 5 years, the next 5 to 10 years, and beyond. Congress may also want to get a better sense of the level of current and projected HHS spending for the various initiatives included in its climate adaptation plan. [author name scrubbed], Specialist in Public Health and Epidemiology, [email address scrubbed] , [phone number scrubbed]. The Department of the Interior (DOI) has a wide range of responsibilities primarily related to managing lands and resources throughout the nation. For example, DOI houses three of the four major federal land management agencies. Together, these agencies—the Bureau of Land Management (BLM), the Fish and Wildlife Service (FWS), and the National Park Service (NPS)—manage approximately 20% of the nation's lands and related cultural and natural resources, as shown in Figure 9 . The department also manages 35,000 miles of coastline and 1.76 billion acres of the Outer Continental Shelf, and has considerable responsibilities for water and power resources. Among the properties managed by DOI are the nation's national parks, monuments, and recreation areas; national wildlife refuges; other public lands and resources including forested lands and rangelands; lands held in trust for Native American Indians; and more than 300 dams and reservoirs owned and operated by the Bureau of Reclamation (Reclamation). DOI facilities provide large quantities of water and produce considerable hydroelectric power for communities and farmers in the 17 western states. The department is also responsible for managing energy and mineral resources located below ground and offshore. This includes oil and gas leasing, as well as leasing for certain renewable resource development. It also provides financial and technical to U.S. territories. Through its agencies, DOI manages and monitors species and their habitats, as well as ecosystems. In addition to its cultural and natural resource stewardship role, the department plays an important role in providing scientific information to other federal agencies, states, local and tribal governments, and other nonfederal entities. For example, DOI's U.S. Geological Survey (USGS) and other agencies play a large role in measuring and monitoring resources and developing science-based tools for land and water resource managers nationwide. The department also is involved in numerous private-public partnerships involving monitoring, research, and resource management. Because of DOI's widespread land and resource management responsibilities, including protection of threatened and endangered species, its operations and missions are particularly sensitive to climate conditions, whether they are due to naturally occurring climate variability or the predicted intermediate and long-term effects of climate change. Multiple climate factors affect DOI's ongoing operations; among the likely key climate change effects for the department are changing soil and air temperatures, precipitation patterns, streamflow and runoff, sea-level rise, habitat conditions, and extreme events such as storms, floods, and droughts. For example, climate conditions can affect the health and well-being of fish and wildlife; they also can expand or restrict access to and development of natural resources and infrastructure upon which many communities and industries depend. More detailed examples are discussed below in the individual summaries of agency climate adaptation plans. Issues for Congress regarding DOI agency climate change adaptation activities are discussed at the end of this DOI overview section, due to overlap among many of the issues at the agency level. DOI has undertaken numerous activities related to climate change adaptation. In accordance with E.O. 13514, the department has issued Strategic Sustainability Performance Plans since FY2010, and more recently, Climate Change Adaptation Plans. The 2014 Climate Change Adaptation Plan (2014 CCAP) includes a brief summary of DOI's Climate Change Adaptation policy, a brief assessment of DOI climate-related vulnerabilities, and a description of current and planned climate change adaptation implementation strategies. The department's focus through the 2014 Climate Change Adaptation Plan is to increase the resilience of DOI facilities and resources in the face of climate vulnerability. DOI also issued a climate change adaptation plan for FY2013, and on December 20, 2012, issued a Departmental Manual for Climate Change Policy . These DOI plans and policies apply to all DOI agencies. Many of these actions build upon DOI's 20-year history of increasingly ecologically based—or landscape scale—management, and incorporate several different programs and activities undertaken by the department under various initiatives of different names in the past. For example, to address the growing need for collaboration, to streamline funding, and to reduce duplicative efforts among agencies, several interagency science committees, initiatives, programs, and projects (CIPPs) have been created within DOI—all of which may play a role in the department's and broader federal agency climate science and adaptation. DOI also plays a role in the President's Climate Action Plan through activities such as accelerating clean energy permits and conserving land and water resources through a variety of mechanisms including grants and private-public partnerships. DOI also addresses climate change impacts through department-wide secretarial orders. Secretarial Order (S.O.) 3289, issued in September 2009 and amended in February 2010, provides the primary guidance for DOI agencies, and established "a Department-wide approach for applying scientific tools to increase understanding of climate change and to coordinate an effective response to its impacts on tribes and on the land, water, ocean, fish and wildlife, and cultural heritage resources that the Department manages." Pursuant to S.O. 3289, DOI has created or reorganized several different department-wide initiatives. Major initiatives include the establishment of a Climate Change Response Council and the creation and renaming of eight regional Climate Service Centers, the National Climate Change and Wildlife Science Center, and Landscape Conservation Centers. These initiatives are briefly described below. Another secretarial order, S.O. 3297, addresses water resources management. Activities under S.O. 3297 are discussed in the USGS and Bureau of Reclamation sections below. The DOI Climate Change Adaptation Plan (CCAP) for 2014 describes department-wide vulnerabilities to climate change in three key mission areas: natural and cultural resources, people and communities, and infrastructure and equipment. The plan also includes "guiding principles" covering a range of natural and cultural resource factors, and states that "[I]t is the policy of the Department to effectively and efficiently adapt to the challenges posed by climate change to its mission, programs, operations, and personnel." The guiding principles are organized into eleven areas: (1) Science; (2) Ecosystem-Based Management; (3) Ecosystems and Wildlife; (4) Energy, Mining, and Water; (5) Cultural and Heritage Resources; (6) Minority Populations and Low Income Populations; (7) American Indians, Alaska Natives, and Insular Areas; (8) Coordination and Partnerships; (9) Human Health and Safety; (10) Public Use and Enjoyment; and (11) Infrastructure and Equipment. A summary of current and planned agency climate change adaptation strategies is also included in the 2014 CCAP. The 2013 CCAP also included implementation direction and discussed "near-term actions." According to the department, the 2013 CCAP focused on assessing climate change vulnerabilities, whereas, the 2014 CCAP focuses on "addressing" climate change adaptation through secretarial orders and other policy guidance. DOI's Energy and Climate Council is responsible for implementing the CCAP. The Energy and Climate Council was established under S.O. 3289. DOI activities also are likely to receive funding from the Administration's Climate Resilience Fund. DOI also produces annual Strategic Sustainability Performance Plans pursuant to Executive Order 13514, which include numerous goals ranging from greenhouse gas emissions reduction to climate change resilience. Climate Change Response Council. DOI's Climate Change Response Council—created pursuant to S.O. 3289 in 2009—is charged with coordinating a department-wide strategy to increase scientific understanding and develop tools to address the impacts of climate change on natural and cultural resources. The Council is in the Office of the Secretary, where the Secretary serves as the Chair, the Deputy Secretary as the Vice-Chair, and the Counselor to the Secretary as a second Vice-Chair; other members include the Assistant Secretaries, agency Directors, and the Solicitor. The Council coordinates all climate change activities with all relevant federal departments and agencies, including the Council on Environmental Quality, the Office of Energy and Climate Change, the Office of Science and Technology Policy, the National Science and Technology Council, the Department of Agriculture, the Department of Commerce, the Department of Defense, and the Environmental Protection Agency. National Climate Change and Wildlife Science Center (NCCWSC) and DOI Climate Science Centers (CSCs). These eight regional centers support research, assessment, and synthesis of global change data for use at regional levels, including undertaking research relevant to on-the-ground managers. (See Figure 10 .) The NCCWSC is located at the USGS headquarters in Reston, VA. S.O. 3289 broadened the missions of the CSCs, which were once known as "regional hubs" of the NCCWSC; their missions now encompass other climate change impacts on DOI's resources. The CSCs were established to evaluate global climate change models to scales appropriate for natural resource managers, identify science priorities, and facilitate departmental data integration and outreach to collaborators and stakeholders including other federal agencies. Further, in FY2013, DOI required these centers to incorporate climate change adaptation into their policies, studies, and programs. For FY2014, the Administration proposed to use the centers to conduct adaptation planning for issues such as sea-level rise and drought, work with tribal communities, and create a system for facilitating adaptation coordination among DOI agencies. USGS manages and maintains the centers. Landscape Conservation Cooperatives (LCCs) . These centers were created in 2009 under S.O. 3289, and are part of a network designed to ameliorate the effects of climate change on land and water resources. The LCCs are an amalgam of research institutions, federal resource managers and scientists, and cover lands managed by agencies at various levels of government. Each has a focus on one of 22 specific regions of the United States. Other than the offices of individual LCC coordinators, an LCC may be a virtual organization without a physical presence at a specific location. (See further discussion under the " Fish and Wildlife Service ," including Figure 12 .) A prominent issue for Congress is one of potential overlap and duplication among DOI agencies and other federal agencies. It appears that DOI agencies have expanded their emphasis on global climate change in recent years per secretarial and presidential guidance, which may raise questions of overlap, duplication, and even gaps in agency science and adaptation portfolios. Others may be concerned that what appears like more attention to climate change science may be simply repackaging of existing efforts. Thus, it is difficult to tell without in-depth analysis what is duplication due to similar names or confusing agency or program histories. Additionally, the relationship among some DOI programs is unclear, as their missions seem similar. Even so, the differing cultures and missions of DOI agencies may lead to differing views on science and data needs. Constraints on reducing any duplication or gaps could be statutory, budgetary, or cultural. Another issue for DOI could be the effectiveness of adaptation measures, considering the uncertainties surrounding climate change and its effects on resources. Reliable metrics for adaptation effectiveness and progress are difficult to develop or obtain. For example, the Fish and Wildlife Service (FWS) notes in its 2015 budget justification that its LCC program has supplied 46 "decision-support tools ... to conservation managers to inform management plans/decisions and [Endangered Species Act] Recovery Plans" in FY2013, and noted 15 "conservation delivery strategies and actions evaluated for effectiveness." The meaning of these descriptions and their metrics is somewhat unclear; further reporting might clarify the results of efforts at adaptation. Thus, an oversight issue may be how best to assess or measure the effectiveness of adaptation programs and activities, given the varying climatic conditions nationwide, and changing conditions at the regional level. Other issues relate to agency budgets and appropriations for climate change adaptation activities. For example, issues may include congressional interest in the related appropriations levels for individual DOI agency activities and programs, efforts to expand or restrict ongoing monitoring programs, or initiatives to alter DOI agency participation in the multitude of cooperative programs related to climate in which DOI agencies participate. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. CRS Report R42346, Federal Land Ownership: Overview and Data , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report R43429, Federal Lands and Natural Resources: Overview and Selected Issues for the 113 th Congress , coordinated by [author name scrubbed]. DOI's Bureau of Land Management (BLM) administers more onshore federal lands than any other agency—247.3 million acres. BLM lands are heavily concentrated (99.8%) in 12 western states. Nearly half of the total acreage is in two states—Alaska (29%) and Nevada (19%). BLM lands, officially designated the National System of Public Lands, include grasslands, forests, high mountains, Arctic tundra, and deserts. BLM lands often are intermingled with other federal or private lands, and the agency has authority to acquire, dispose of, and exchange lands under various authorities. BLM generally manages its lands to provide for sustained yields of multiple uses including recreation, grazing, energy and mineral development, timber, watershed, wildlife and fish habitat, and conservation. Some lands are withdrawn (restricted) from one or more uses, or managed for a predominant use. The agency inventories its lands and resources, and develops land use plans for its land units. The public uses BLM lands for their diverse attributes and opportunities. Climate change has been cited by DOI as a contributing factor to changes in western lands and resources. One example is the desertification of public lands, which may result in part from increased temperature and reduced precipitation. This could contribute to a decrease in the productivity of rangelands. Changing climate also may increase the vulnerability of BLM forested lands to damage from insects and disease. As temperatures rise, in some locations there also may be an increase in the size and frequency of wildfires and an expansion of noxious weeds and invasive species. Another potential change is the increased melting of glaciers and permafrost in Alaska, perhaps contributing to erosion and a loss of soil stability. BLM is focused on two efforts in part to adapt to climate change: a landscape approach to managing lands and rapid ecoregional assessments (REAs). The goal is to help BLM managers understand land conditions and trends, as well as influences and opportunities for land use, from a broader perspective that may not be apparent when focusing on smaller areas. The landscape approach looks at large, connected geographic areas defined by their similar ecological characteristics, such as the Sonoran Desert or Colorado Plateau. In conducting REAs, BLM uses landscape classification known as "ecoregions." The ecoregions span land ownerships, including both federal and nonfederal land, and they range in size from about 11 million to 160 million acres. The assessments are called "rapid" because they use existing information and generally are to be completed within 18 months. They are prepared in cooperation with other federal and state land management agencies. They seek to synthesize scientific information about natural resource conditions and trends, highlight and map areas of high ecological value, and gauge the potential risks from climate change and other environmental challenges. They also intend to identify areas of high energy development potential and relatively low ecological value. BLM anticipates completing 15 REAs. Several have been completed, with others expected in 2015 and beyond. Figure 11 shows the 15 REA areas, which will cover more than 800 million acres of public and nonpublic lands. The information from the REAs will be used to plan for, and respond to, the effects of climate and other environmental changes to public lands, and will generally help BLM to identify and coordinate resource conservation, rehabilitation, and development priorities over the long term. BLM is working with DOI Climate Science Centers and Landscape Conservation Cooperatives, as well as other partners, to develop management strategies for the ecoregions covered by several REAs. REAs also may be helpful to the various landowners in the region, according to BLM. REAs can be updated as new information becomes available. BLM is completing agency-specific guidance to implement departmental direction on climate change. The agency anticipates completing its guidance in 2015. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] or [phone number scrubbed]. DOI's Bureau of Reclamation (Reclamation) manages water resource projects primarily in 17 western states. Reclamation's mission is to "manage, develop, and protect water and related resources in an environmentally and economically sound manner in the interest of the American public." Reclamation built and manages most of the large federal dams in the West, in addition to hundreds of other dams and diversion projects; it now operates more than 300 storage reservoirs and 58 hydropower plants serving approximately 30 million people. As the nation's largest wholesale distributor of water and the second-largest hydropower producer in the West, Reclamation's considerable infrastructure and mission could be at risk under projected climate change. Key impacts of concerns include changes to soil and air temperature, precipitation, seasonal runoff, long-term stream flow, and extreme events. Since most of the surface water "stored" in the West is stored in snowpack, changes that reduce snowpack or accelerate or change the timing of runoff may result in less effective reservoir storage and major changes in reservoir and river operations. Extreme events—long periods of lower-than-normal precipitation and/or hot weather and mega-storms—pose additional risks. Because much of the West, particularly the Southwest, is naturally semiarid and arid, and has experienced periods of decades-long drought in the past millennia, some observers have noted that if climate change predictions prevail, the Southwest may face a "double-whammy" impact on water supplies due to recurrent mega-drought and climate change. Irrigated agriculture, hydropower production, municipal water deliveries, and aquatic species that rely on the Lower Colorado River and the Rio Grande may especially be at risk. Planning for such potential conditions is difficult, particularly for the Colorado River Basin, which has multiple storage reservoirs across a wide geographic area—some parts of which may see less precipitation, and others the same or more, according to different climate models. Reclamation facility operations are closely intertwined with myriad stakeholders including other federal agencies, states, Indian tribes, local water and irrigation districts, and other nongovernmental organizations. Although Reclamation built, owns, and continues to operate much of its infrastructure, local sponsors play a large role in system operations and maintenance, and are obligated to reimburse the federal government for a portion of construction costs. Thus, many stakeholders are likely to play a role in ensuring Reclamation's facilities continue to provide water, power, and ecosystem services into the future under varying climatic conditions. Reclamation is carrying out climate change adaptation-related activities pursuant to DOI's adaptation plan as described in S.O. 3289, and a related DOI secretarial order on the department's WaterSMART program, which is designed to implement the 2009 SECURE Water Act ( P.L. 111-11 , Subtitle F, §§9501-9510). The SECURE Water Act directed Reclamation to undertake numerous climate-related research and adaptation activities. The resultant WaterSMART program focuses on the long-term sustainability of water resources (including the embedded energy use in water supplies). The WaterSMART program includes both adaptation activities and research and development. Key research and adaptation activities include a Basin Studies program, in which Reclamation collaborates with partners to assess water supply and demand imbalances within individual basins, and to develop strategies to adapt to these imbalances. Reclamation also provides funding for WaterSMART grants to develop climate analysis tools and improve water and energy efficiency and systems operations and water treatment options.  The WaterSMART program also now includes among its suite of activities Reclamation's 20-year-old water reuse program, known as Title XVI of P.L. 102-575 . Reclamation's climate change adaptation activities include assessing broad-scale climate change risks on land and water resources through "West-Wide Climate Impact Assessments," identifying climate change water-related research needs of water resource managers, compiling climate data for water managers, and developing adaptation tools for water resource managers. Reclamation has produced numerous reports in these areas, largely since 2009, and works closely to coordinate its adaptation research and actions with other DOI agencies such as USGS and FWS, and other federal agencies such as the U.S. Army Corps of Engineers, NOAA, and DOE. Reclamation also participates in larger DOI-wide and government-wide efforts, including the Landscape Conservation Cooperatives, Climate Science Centers, and various task forces and work groups. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The 405 units of the National Park System (NPS) face a diverse array of potential impacts from climate change. Warming temperatures, precipitation changes, streamflow changes, sea-level rise, wildfire, invasive species, and wildlife migration, among other changes, all have the potential to significantly alter park resources (depending on their location and vulnerability) and to affect tourism and recreation in the parks. Some natural resource changes have attracted particular public attention, such as ongoing glacial melting in Glacier National Park (MT), rising temperatures that may eventually drive the Joshua trees from Joshua Tree National Park (CA), and sea-level rise that could damage or submerge parts of Everglades and Biscayne National Parks (FL). Attention has also focused on potential impacts of climate-related events to the iconic cultural resources administered by the NPS, such as the Statue of Liberty in New York. NPS is addressing climate change through research, education, and adaptive management, as well as through efforts to reduce its own carbon footprint. Some have suggested that managing the parks for adaptation requires a fundamental rethinking of the NPS mission, from one that has historically focused on preserving lands in an unimpaired state to one that would "steward NPS resources for continuous change that is not yet fully understood." For example, one study discusses Point Reyes National Seashore in California, where preservation of the shoreline and intertidal wetlands are important goals. The study suggests that, in the future, it may be most effective for park managers to facilitate these goals by guiding the inland migration of these features, rather than attempting to resist sea-level rise, as would be called for under traditional management strategies. NPS released its Climate Change Response Strategy in September 2010, focusing on four types of actions: science, adaptation, mitigation, and communication. It followed this with a Climate Change Action Plan in November 2012, emphasizing the same four response areas and detailing over 50 immediate actions to incorporate climate change considerations into NPS operations. The actions, some of which have been implemented, include training park personnel on climate change issues, assessing park management plans and project plans for climate considerations, partnering with universities to research park-specific climate trends, developing a "risk screening tool" to assess the vulnerability of park facilities to erosion and sea-level rise, creating interpretive exhibits for park visitors on climate effects, and initiating youth outreach programs, among others. The agency sees itself as having a unique role as an "extraordinary educational institution where millions of people learn about the environment." Thus, raising public awareness of climate change and potential responses is a key aspect of NPS's strategy. DOI's Climate Change Adaptation Plan , released in October 2014, identified similar goals for NPS, focusing especially on adaptation planning and communication. It identified NPS's climate adaptation priorities as (1) developing guidance for incorporating climate change science into park and strategic plans, and implementing them at the field level; (2) building workforce capacity to apply climate-smart conservation practices; (3) improving infrastructure resilience and sustainability; (4) communicating climate science, potential impacts, and strategies to 300 million park visitors annually; and (5) implementing a comprehensive risk evaluation approach and prioritizing adaptation actions to protect facilities and cultural and historic resources. Some of NPS's ongoing programs and activities specifically support the agency's climate change strategy . For example, NPS maintains a Climate Change Response Program, and participates in DOI's climate change efforts, including Landscape Conservation Cooperatives and Climate Science Centers. Other agency activities, although not explicitly targeted toward climate change, also play a role in NPS's adaptation efforts—for example, the geographic information systems (GIS) program, exotic plant management teams, the wildlife health team, the acoustic monitoring program, and others. Despite these initiatives at the agency management level, it is not clear to what extent the planning efforts have translated into adaptation actions at individual park units. A 2012 study of climate change adaptation on public lands in Colorado, Utah, and Wyoming found that 78% of surveyed NPS unit managers and staff reported either that no adaptation planning was taking place at their unit, or that they did not know whether such planning was occurring. Staff cited budget constraints, lack of information at a relevant scale, and uncertainty of available information as barriers to adaptation planning. Recent research has aimed to address some of these issues by translating large-scale climate change effects to the individual park level. Laura Comay, Analyst in Natural Resources Policy, [email address scrubbed] or [phone number scrubbed]. The official mission of DOI's Fish and Wildlife Service (FWS) is "working with others to conserve, protect, and enhance fish, wildlife, and plants and their habitats for the continuing benefit of the American people." With this mission, climate change and its effects on wildlife and refuge resources pervades most agency activities and can be difficult to separate from its general programs. As species from oak trees to alligators find habitat in their current range too hot, too dry, too wet, too variable, or otherwise unsuited to their needs, FWS is a leader in determining the nature of the threat and, second, in working with partners at federal, state, tribal, and local levels to develop strategies to address climate impacts on wildlife at local and regional scales and relevant adaptation strategies. FWS administers a wide range of statutes and programs, many of which need to address climate adaptation in some way. These include endangered species, coastal programs, migratory bird management, refuge management, various international programs and grants, fish and hatchery management, construction, land acquisition, grants to states and tribes, and others. According to FWS, its climate adaptation goals include (1) participating in the development of a National Fish, Wildlife, and Plants Climate Adaptation Strategy, (2) partnering to create a National Biological Inventory and Monitoring Partnership for sharing monitoring data across a wide variety of sources, and (3) sharing information with many partners through a network of Landscape Conservation Cooperatives (LCCs) to ameliorate the effects of climate change. (See Figure 12 .) The Endangered Species Act of 1973 (ESA; 16 U.S.C. §1531 et seq.) plays a role in FWS activities in climate change adaptation, and—equally important—adaptation plays a role in endangered species conservation. The additional pressure on habitat from climate change, along with other stressors, is likely to lead to more species being listed under the ESA. For listed species, adaptation efforts may include safeguarding corridors linking populations of listed species. FWS also attempts to reduce genetic isolation and inbreeding that may result from loss of habitat due to climate change. As a result of these and similar measures, the strong protections available under the ESA could lead to more environmental protection and thereby indirectly alleviate the effects of climate change on multiple species, including those that are not listed and those that are game species. The ESA's role in federal climate change adaptation may therefore be indirect as well as direct. However, FWS has explicitly avoided any efforts to use the ESA as a means whereby plaintiffs could seek to prevent or control general threats to the global climate system. Because of climate change, managers of the National Wildlife Refuge System (NWRS) and other FWS lands and waters face many decisions daily on a range of practical issues. These include which plants to select in a re-vegetation project, what lands deserve priority for acquisition in the face of rising sea levels, and how to manage a coastal refuge whose land base is slowly disappearing. More frequent fires, heavy precipitation, and storm surges also affect refuge operations. Examples may include repair or replacement of roofs, docks, boats, roads, walkways, and other facilities. Were the frequency of extreme weather events to increase, many coastal refuges would play an increasing role in protecting areas farther inland, while simultaneously being eroded by rising ocean levels. The NWRS is a key player in providing the linkage of natural areas (whether owned by FWS or other federal, state, or local agencies or private parties) to allow species to move more freely to suitable habitats. FWS has also compiled a variety of tools and information resources on climate change for its resource managers. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The mission of DOI's United States Geological Survey (USGS) is to provide reliable scientific information to describe and understand the geological processes of the Earth; minimize loss of life and property from natural disasters; manage water, biological, energy, and mineral resources; and enhance and protect the nation's quality of life. USGS has eight interdisciplinary program areas that include (1) water resources, (2) climate and land use change, (3) energy and minerals and environmental health, (4) natural hazards, (5) core science systems, (6) ecosystems, (7) administrative and enterprise information, and (8) facilities. Much of the work relevant to climate change adaptation is done through the climate and land use change program area; portions of several other program areas also relate to climate change adaptation. USGS is primarily a science agency. Unlike other DOI agencies, USGS does not manage large tracts of lands, or construct infrastructure or modify waterways or habitat. Further, the agency does not have regulatory authority under any laws. Consequently, USGS addresses climate change adaptation through conducting scientific studies; collecting and analyzing data related to climatic variables; modeling and predicting the effects of climate variability on natural resources, natural processes (e.g., natural hazards), wildlife, and ecosystems; and monitoring resources such as water flows, habitat changes, and wildlife. For example, USGS provides data on natural resources and scientific analysis to support adaptive management strategies implemented by DOI land management agencies (as well as for other federal agencies, state and local governments, and others) that address climate change adaptation. DOI agencies rely on USGS for scientific data and interpretations to inform their land management decisions. Memorandums of understanding (MOUs) and scientific agreements between USGS and other federal and state agencies allow USGS to provide research results on climate change processes and impacts, as well as data for making decisions on specific geographic areas. USGS is still evaluating the vulnerability and adaptation to the potential effects of climate change on its facilities. USGS evaluates facility projects through a capital planning and investment review process. An Investment Review Board analyzes agreements and the costs and benefits of actions related to facilities. Beyond that effort, USGS is conducting several scientific and monitoring activities that directly and indirectly relate to climate change adaptation. This section provides an overview of some of these activities. National Climate Change and Wildlife Science Center and DOI Climate Science Centers . As noted above, one of the primary functions of the Climate and Land Use Change Program under USGS is the implementation and maintenance of the National Climate Change and Wildlife Science Center (NCCWSC) and its regional entities—referred to as the DOI Climate Science Centers (CSCs). These centers support research, assessment, and synthesis of global change data for use at regional levels. The CSCs aim to evaluate global climate change models to scales that are appropriate for research managers of species and habitats, and facilitate data integration and outreach to collaborators and stakeholders including federal agencies. Climate Change Research and Development . One of the objectives of USGS's climate change research and development is to understand regional responses to climate change and estimate how climate change might affect future scenarios or processes. Two areas of research under this program include understanding the effects of sea-level rise on coastal communities and infrastructure, and studying the long-term effects of drought. Under both lines of research, USGS plans to provide insight into how various stakeholders in the country can adapt to these changes. Biological Carbon Sequestration . USGS is in the process of conducting a quantitative assessment of the carbon released and stored in the ecosystems of the United States. This work is intended to help quantify interactions between carbon storage, land use, and climate change, which can inform land management policies and practices. Data Collection and Monitoring. USGS collects data and monitors natural processes that are relevant to climate change adaptation. For example, The National Streamflow Information Program, along with the Cooperative Water Program, monitors streamgages throughout the country that collect data on stream flow. These data can be analyzed to determine changes in water flows and water quality over time, and can be used in projecting future flows under various climate scenarios. Anticipating how climate change may influence the timing and levels of flows in the future could inform federal land managers, federal infrastructure investments and preparedness, and nonfederal decision making. Collaborative Efforts to Address Adaptation. USGS collaborates with several other agencies to address climate change adaptation. The agency generally provides scientific analysis and data resources for these efforts. For example, USGS participated with the Army Corps of Engineers, Bureau of Reclamation, and NOAA to create a strategy for addressing water management needs in a changing climate. The strategy concluded that several water management or system operational changes may be considered to facilitate adaptive management to address a changing climate. A potential issue for USGS is how to include climate variability in its scientific studies. For example, efforts to model long-term changes in ecosystems could require an understanding of how climate variability might affect ecosystem processes. Another issue associated with USGS work relevant to climate change adaptation is the potential for duplicating other federal (or nonfederal) activities. To temper this possibility, USGS is attempting to coordinate its climate change adaptation activities with other federal agencies, especially within DOI, as described earlier. Specifically related to the Climate Change Program within USGS, some question whether the CSCs and the NCCWSC are fulfilling their mission of providing natural resource managers with the tools and information they need to develop and execute strategies for successfully adapting to and mitigating the impacts of climate change. Addressing this concern might be difficult, considering the short length of time data have been collected. [author name scrubbed], Specialist in Natural Resources Policy, [email address scrubbed] , [phone number scrubbed]. The Department of State (DOS) considers climate change to be a threat multiplier that potentially puts at risk not only the department's facilities and personnel but also its mission to "create a more secure, democratic, and prosperous world for the benefit of the American people and the international community." State's 2010 Quadrennial Diplomacy and Development Review (QDDR) highlights climate change as one of six development areas targeted for action. While it accepts that "specific impacts of climate change on conflict, migration, terrorism and complex disasters are still uncertain," the department recognizes that a number of its more than 275 posts worldwide are located in areas vulnerable to potential climate change impacts that could adversely affect its ability to carry out its mission. For example, DOS forecasts that rising temperatures in most regions will impact its energy use and building infrastructures as demand for cooling grows; extreme weather events, such as heavy precipitation events, could damage local infrastructure on which U.S. diplomatic facilities rely; storm surges and rising sea levels could directly impact U.S. facilities in coastal areas; deteriorating air quality could result in increased risks to the health of DOS personnel; and destabilization, in part caused by the effects of climate change, of a country in which the department operates could adversely impact DOS operations. The department's strategy to address these challenges is outlined in its FY2014 Climate Change Adaptation Plan , published in June 2014, as required by E.O. 13514. To address the risks of climate change to both its operations and its mission, the department's Adaptation Plan outlines three broad goals: (1) using reporting, planning, and training to integrate adaptation policies in both domestic and international operations; (2) promoting integration of adaptation policies into "at risk" sectors such as agriculture and disaster risk management, while also implementing policies for adaptation internationally; and (3) encouraging multilateral entities to pursue adaptation strategies. The department plans to minimize climate change impacts on its operations overseas through building and maintaining awareness of potential impacts, building relevant expertise among its employees, and in particular educating and advising its facilities managers and engineers on how to identify natural hazard risks in their planning and design of DOS facilities, both domestically and overseas. For example, the Bureau of Administration, which manages all domestic facilities, seeks to minimize the impact of department facilities on the environment, and identify threats to those facilities from extreme weather events. Further, it seeks to better understand and address vulnerabilities to the department's procurement supply chain. The Bureau of Overseas Building Operations (OBO) has also increasingly emphasized sustainable design criteria for new facilities overseas. The annual Greening Activities Inventory, a sustainability survey of posts conducted since 2010, provides an assessment of climate change risks and potential impacts on operations that OBO uses to provide guidance to posts regarding steps to improve resilience to climate change impacts. The department also states that it will, where appropriate, integrate climate change considerations into its Natural Hazards Program. This initiative, launched in 2005, seeks to identify measures that could save lives and reduce damage to diplomatic facilities from naturally occurring events such as tsunamis, floods, hurricanes, or volcanoes, and trains department facilities managers and engineers on climate change considerations. Under the program, posts are encouraged to report potential threats, which may be matched with budgeted mitigation funds. The department reports that while it considers opportunities for climate impact mitigation at its facilities, specific posts are already taking adaptation measures independently, sometimes through "green teams" operating at more than 150 locations. In one example, Embassy Canberra has installed solar panels on government-owned residences in order to reduce energy consumption and provide backup energy supply. Among its longer-term goals, the department reports that it plans to expand training for its foreign service officers on sustainability issues, initially focusing on entry-level personnel but in future years expanding to include mid- and senior-level officers. DOS plans to deepen partnerships with other federal agencies on these issues—for example, through collaboration with EPA to monitor air quality in diplomatic facilities overseas, and by joining DOD-led efforts to develop vulnerability assessment tools based on regional scenarios. By FY2016-2017, the department seeks to develop climate adaptation criteria for evaluating global operational decisions ranging from energy procurement to processes for evaluating relocation priorities of existing facilities. As the primary function of the department is diplomatic, the FY2014 Climate Change Adaptation Plan details policies and activities in support of adaptation actions within foreign countries. To this end, DOS and the U.S. Agency for International Development (USAID) issued a Joint Strategic Plan in spring 2014 that set forth a number of priorities for both organizations in the coming years. These include the following: promoting the transition to a low-emission, climate-resilient world while expanding global access to sustainable energy; enhancing U.S. leadership on global climate change; advancing scientific understanding on climate change impacts and adaptation actions; and coordinating with other federal agencies, such as USAID, NOAA, EPA, DOI, USDA, and the Treasury, and partnering with other countries, to advance climate change policy through various multilateral fora such as the United Nations Framework Convention on Climate Change, the Intergovernmental Panel on Climate Change, and the Global Environment Facility, as well as other international financial institutions and organizations that support adaptation activities in developing countries. Under the Obama Administration, international development assistance for adaptation actions has been articulated primarily as the Global Climate Change Initiative (GCCI), a platform within the President's 2010 Policy Directive on Global Development. The GCCI aims to integrate climate change considerations into U.S. foreign assistance through a full range of bilateral, multilateral, and private-sector mechanisms to foster low-carbon growth, reduce emissions from deforestation and land degradation, and promote sustainable and climate-resilient societies in each partner country. The GCCI is implemented through programs at three "core" agencies—the Departments of State, Treasury, and USAID—and related funding is requested by the Administration through its International Affairs activities (Budget Function 150). Adaptation-related programs in the GCCI aim to assist low-income countries with reducing their vulnerability to climate change impacts and building climate resilience. Most adaptation-related activities at USAID are implemented through the agency's bilateral development assistance programs. State and Treasury funding is generally channeled through international organizations (e.g., the United Nations) or multilateral financial institutions (e.g., the World Bank). Multilateral activities aim to leverage international donor and private-sector contributions in order to coordinate and finance large-scale infrastructure projects. Initiatives supported by DOS include the Least Developed Country Fund and the Special Climate Change Fund, which focus on climate resilience and food security provisions in countries with the greatest needs. The department also supports adaptation activities through its contributions to the United Nations Framework Convention on Climate Change (including the work of the Adaptation Task Force) and to the Energy and Climate Partnership of the Americas. Multilateral initiatives supported by the Department of the Treasury include the World Bank's Strategic Climate Fund: Pilot Program for Climate Resilience, which is tasked with coordinating comprehensive strategies in several of the most vulnerable countries to support actions that respond to the potential risks of a changing climate. Congress plays an important role in authorizing, funding, and overseeing the department's operations. As it considers the challenges of climate change on U.S. diplomatic facilities and personnel, and on the department's ability to carry out its mission (including assistance of U.S. citizens abroad), Congress may consider issues such as the relative priority of climate change adaptation efforts in the department's overseas facility construction and maintenance programs, and mechanisms for the monitoring and evaluation of those programs. Another potential concern may be the effectiveness of interagency coordination between DOS and the dozens of agencies represented abroad—in particular DOD—which is required to understand and respond to climate change, including questions of cost sharing at posts overseas. U.S. reliance on host nations to address climate-related risks to and consequences for U.S. facilities overseas could also be of interest. Further, Congress is responsible for several aspects of foreign development assistance including authorizing periodic appropriations for federal agency programs and multilateral fund contributions, enacting those appropriations, providing guidance to the implementing agencies, and overseeing U.S. interests in the programs and multilateral funds. As Congress considers potential authorizations and/or appropriations for activities administered through the GCCI, it may have questions concerning the cost, purpose, direction, efficiency, and effectiveness of these programs, as well as the GCCI's relationship to U.S. industries, investments, humanitarian efforts, national security, and international leadership. [author name scrubbed], Analyst in Foreign Affairs, [email address scrubbed] , [phone number scrubbed]. [author name scrubbed], Analyst in Environmental Policy, [email address scrubbed] , [phone number scrubbed]. CRS Report R41845, The Global Climate Change Initiative (GCCI): Budget Authority and Request, FY2010-FY2016 , by [author name scrubbed].

Though Congress has debated the significance of global climate change and what federal policies, if any, should address them, the Government Accountability Office (GAO) since 2013 has identified the changing climate as one of the 30 most significant risks facing the federal government. President Obama established adaptation as a prominent part of his Climate Action Plan in June 2013. The November 2013 Executive Order 13653, Preparing the United States for the Impacts of Climate Change, directed agencies to undertake vulnerability assessments and planning for adaptation. The Administration aimed efforts at reducing agencies' own risks, taking advantage of "no-regrets" adaptation opportunities, and actions that promote resilience to climate changes. Scope of Report This report reviews current actions (as of January 2015) of selected federal departments and agencies to adapt their own missions, infrastructure, operations, and personnel to projected climate change. (It does not address federal programs meant primarily to assist others to adapt, although the boundary is often hard to delineate.) This synthesis is not comprehensive. It identifies common approaches among agencies, examples of specific actions, and notable barriers the federal government faces. As of December 2014, almost 40 federal departments and agencies had, to varying degrees, produced climate change adaptation plans, climate change vulnerability assessments, adaptation milestones, and/or metrics to evaluate adaptation performance. These efforts have identified wide-ranging vulnerabilities to potential climate changes, as well as some opportunities. Most agencies are in formative stages of their assessments and strategic planning. Some agencies are embarking on more detailed analyses and limited implementation actions. Overall, few examples are apparent of day-to-day agency decisions or actions that are different as a result of their adaptation efforts. Numerous challenges face federal officials in their efforts, including constrained resources, data gaps regarding location-specific climate changes or existing facilities, insufficient personnel training, and—sometimes—low priority among priorities. CRS identified few on-the-ground adaptations and few evaluations, as yet, of the effectiveness and efficiency of alternative adaptation approaches and actions. It may not be possible to tally budgetary resources associated with federal adaptation efforts. While some are reported in the President's budget proposals, many are indivisible from the activities with which they are associated, reflecting more of a change in how efforts are undertaken than a change in level of effort. Role of Congress In light of agencies' risk assessments and adaptation planning, Congress may consider whether agencies have appropriate statutory authorities to take various climate change adaptation actions; how to make data pertinent to adaptation more accessible and usable by federal agencies and the public; the appropriate priority for federal adaptation efforts in the context of agency missions and budgetary constraints; and timeliness of activities. Congress may provide federal agencies direction on how they should organize and fund their adaptation efforts; whether and how to measure and evaluate program performance (e.g., effectiveness at reducing risks to property, lives, and habitats relative to the federal and private investment of an adaptation measure); and desirable reporting and accountability to Congress and the public. Congress also may assess the role, costs, benefits, and timing of adaptation in the context of discussions regarding climate change mitigation and other broad policy fields such as natural disaster, infrastructure, energy, environmental, agricultural, federal lands, defense, health, tax, and budget policies. The President's FY2016 budget request and other related administrative announcements roughly concurrent with its release on February 2, 2015, are not addressed in this report. While the President's FY2016 budget request and other recent announcements (e.g., executive order on flooding and proposed FEMA rules) may mention adaptation (or "resilience") to climate change, most pertain to programs outside the narrow scope of this report: assessments and actions that agencies may be undertaking to address potential risks to their missions, property, operations, and personnel. For further detail or updates on climate change adaptation plans by individual agencies, the report provides contact information for CRS analysts at the end of each agency section in Part II.

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